Radar on Drug Benefits

✦ The HHS Office of Inspector General on Aug. 4 revealed that it will investigate the how the FDA implements its accelerated approval pathway in the wake of the agency approving the controversial Alzheimer’s drug Aduhelm (aducanumab). FDA Acting Commissioner Janet Woodcock, M.D. — who was not involved in the decision to approve Aduhelm — had asked the OIG to investigate the approval process for the drug, citing concerns raised about “contacts between representatives from Biogen and FDA during the review process.” In its announcement, the OIG said it will review “interactions between the FDA and outside parties as well as other aspects of the [accelerated approval] process, such as deciding on this pathway and scientific disputes,” and that it will make recommendations based on a sample of drugs using the pathway, including Aduhelm.

✦ A new lawsuit filed by Kaiser Foundation Health Plan accuses drugmaker Merck & Co. of conspiring with Indian pharmaceutical manufacturer Glenmark Pharmaceuticals in a “pay-for-delay” scheme to prevent generic versions of cholesterol medications Vytorin and Zetia from entering the market, Modern Healthcare reported. The lawsuit, filed in the U.S. District Court of Northern California on July 16, alleges that the drugmakers reached a “quid pro quo” agreement in which Glenmark agreed to drop a patent challenge against Merck and Merck promised not to launch a generic competitor during Glenmark’s 180-day drug exclusivity period — resulting in Kaiser overpaying by “hundreds of millions” of dollars for the drugs. The suit accuses Merck of breaking antitrust laws in California, Washington D.C., Hawaii and Oregon.

Prescription drug utilization management and moves to counteract it introduce billions in costs to payers, providers, manufacturers and consumers alike, a new report suggests. The report, published in the journal Health Affairs by researchers from the University of California, Berkeley and Novartis Pharmaceuticals Corp., argues that such practices inflate already-too-high drug prices — though one outside expert says she is skeptical about some aspects of the study.

The research article concludes that utilization management practices could introduce as much as $93.3 billion to the U.S. health care system annually. Some of the cost drivers identified in the article include, for payers, “cost of administering prior authorizations”; for manufacturers, the cost of “administrative support programs,” “direct financial payments to assist commercially insured patients” and providing insured patients with free medications; for physicians, the “cost of physician practices’ time interacting with payers over prior authorization”; and for patients, “spending on branded drug cost sharing.”

With President Joe Biden starting to stake out his preferred strategy to lower drug prices, Washington, D.C. insiders say that policies allowing the importation of drugs from Canada and pegging Medicare drug prices to an index of international pharma costs are still under consideration by Congress. However, the experts add that both measures face long odds of making their way through the Senate.

The concept of an international drug pricing index is tied to a policy that would see Medicare negotiate the reimbursement rate of drugs with manufacturers. The international pricing index — which would likely see HHS aggregate price data from other developed countries, particularly those with Most Favored Nation trade status — would serve as the basis for the drug prices HHS negotiates with pharma. The Trump administration in December 2020 unveiled a mandatory demonstration of a most-favored-nation model that was blocked by a federal court in January. The rule was under review by the Biden administration until Aug. 6, when Biden’s HHS issued a proposed rule that would cancel the demonstration. But that draft regulation left the door open for a similar policy to be implemented later.

Despite experiencing medical cost trends during the second quarter of 2021 that were much less favorable than they were a year ago, publicly traded health insurers during their recent earnings calls were eager to tout the performance of their pharmacy-related holdings. They placed particular emphasis on how integrated PBMs are poised to mine the cost-saving potential of biosimilar drugs.

“During the quarter, the strength of our Evernorth business was clearly a standout,” Cigna Corp. CEO David Cordani, for example, said during the company’s Aug. 5 conference call with investors to discuss quarterly financial results. Specifically, adjusted revenues for the segment — which includes the PBM Express Scripts — grew 14% year over year to $32.6 billion, and Evernorth’s pretax earnings grew 13% to $1.4 billion.