Radar on Drug Benefits

An earlier version of this story incorrectly said that per Prime Therapeutics LLC’s recommendation, one health plan shifted to oncology biosimilars from the reference drugs and realized hundreds of millions of dollars in savings. The plan realized millions in savings. This version has been corrected.

As payers continue to look for ways to tackle the rising spending on specialty drugs, Prime Therapeutics LLC is launching a medical drug management program. Known as MedDrive, the offering will be rolled out in phases, with the initial one focused on increasing the use of biosimilars.

Emerging cell and gene therapy oncology treatments are well suited to value-based payment arrangements, but new contracting models must be able to contend with a complex regulatory and financial environment, experts say.

A new generation of oncology treatments that can cure specific cancers offer a potential breakthrough. Patients who would have had to struggle through chemotherapy and still faced long odds now have the chance to make a significant recovery with one or two rounds of treatment. However, these treatments are extraordinarily expensive — some can cost tens of thousands of dollars for a single course of treatment.

Walmart Inc. — which like Amazon has been diving deeper and deeper into health care — recently made one of its biggest moves yet in that space by partnering with Novo Nordisk to launch private-label insulin at a steeply discounted cash price. While the new offering still may be too expensive for some and likely won’t solve the overarching insulin-affordability problem, some observers say it’s indicative of how well-poised certain companies are to disrupt the health care industry’s least consumer-friendly practices.

“Insulin is, from a business point of view, attractive to competitors like Walmart — they see a product that has a very big audience that is grossly overpriced, where that audience is stressed and dissatisfied because they don’t believe they’re getting the value that they should be getting,” says Michael Abrams, a principal and co-founder at health care consulting firm Numerof & Associates.

State governments have begun to pursue aggressive policies to make PBMs more transparent, accountable to plan sponsors and less expensive to contract with — efforts that are bolstered by Rutledge v. Pharmaceutical Care Management Association (PCMA), a lawsuit decided by the Supreme Court at the end of 2020 in which the justices held that states were not in violation of the Employee Retirement Income Security Act of 1974 (ERISA) in attempting to regulate the rates at which PBMs reimburse pharmacies.

According to the National Academy for State Health Policy (NASHP), a think tank and policy advocacy group, so far this year 42 states have considered 108 bills relating to PBM regulation. That wave of legislation is in part driven by Rutledge, which, as a March Milliman Inc. report put it, “creates a clear pathway for states to impose minimum thresholds on pharmacy…prices affecting reimbursement levels paid by plan sponsors,” which “means PBMs could be forced to pay pharmacies a minimum price for drugs.”