If you know any payer or self-insured employer who has a pharmacy benefit management contract with one of the big 3, you also know someone who is screaming for greater transparency into the value they are receiving. Even if the payer or employer requests and receives all available reporting from the PBM, they will not know what the PBM paid for a drug and the money they may be leaving on the table. At the Association for Accessible Medicines’ annual Access 2024 meeting, payer, employer, and legal representatives offered their thoughts and remedies this lack of PBM transparency and what it means for the future of pharmacy benefits.
Blue Shield of California had announced last August that it was dis-integrating its pharmacy benefit services, rejecting its previous conventional service from CVS Health. Alison Lum, PharmD, Vice President of Pharmacy Services, stated that as of January 1, CVS Health provides specialty pharmacy services, Prime Therapeutics handles nonspecialty PBM services, Navitus Health Solutions manages the pharmacy network, and Amazon takes responsibility for home delivery services.
Dr. Lum emphasized, “Transparency goes beyond the cost of the drug itself. [By taking greater control of our pharmacy benefits], we now know what we’re paying for the drugs and the administrative fees. Our drug payment is no longer based on a high WAC and rebate, but the net cost of the drug.”
What is the Value of the Pharmacy Benefits Employers Receive?
Employers are generally in the dark regarding the prices they pay for individual drugs. Fully funded or self-funded employers may have to pierce through layers of health plan and PBM-generated reports for a clearer view of their drug costs (and any actual savings). Bret Jackson, President of the Economic Alliance for Michigan, an association representing 2,000 employers, believes it is the employer’s responsibility to closely scrutinize their pharmacy benefits. He predicted that the lawsuit announced against Johnson & Johnson last week will jumpstart this movement. “There had to be an incentive, like this, to force change. Otherwise, it will be the status quo,” he said.
In 2019, Mr. Jackson’s organization coordinated an effort by Ford Motor Company, Priority Health, and Blue Cross Blue Shield of Michigan to convert patients to biosimilar infliximab from Remicade®. The savings accrued to Ford through this initiative (which also included switches to 4 other medical benefit biosimilars) reached $5 million when it was first reported in December 2021. These savings were achieved without provider or member blowback, noted Mr. Jackson.
However, this effort has not been replicated with the biosimilars covered under the pharmacy benefit, like adalimumab, he said, even with the same stakeholders who saw the savings on Remicade. “We want to survey employers across the country about why they didn’t see a switch to Humira® biosimilars,” remarked Mr. Jackson. “We want to get ahead of the pharmacy benefit biosimilars coming down the pipeline.
“Humira is the canary in the coal mine,” Mr. Jackson commented. “We need to figure it out. It will set the tone for what comes next. If we don’t get it right, we’ll be in a lot of trouble.”
Jesse Dresser, Esq., Partner in Frier Levitt, is not confident in CVS Health’s motives for creating Cordavis, its own subsidiary biosimilar company. “In reality, it is creating an even more vertically oriented set up, with control over pricing,” he stated, “and it may be an effort to drive revenue for themselves. If the CVS strategy takes off, we’ll be back to the Merck Medco fiasco.” [Note: 30 years ago, the pharmaceutical company Merck purchased the PBM Medco in an aborted attempt to vertically integrate the drug supply chain, which would have allowed Merck to exclude competitor products from their PBM’s formulary.]
PBM Bill Congestion in Congress
Numerous bills on PBM transparency and practices have been introduced or are being written in Congressional committees. The real question is, when will something be passed that makes a difference in terms of drug costs and rebates? What will be its impact? Will it ever really happen, seriously? If the safe harbor for pharmaceutical rebates cannot be removed finally, one has to wonder about Congressional commitment to their current proposals.
Mr. Dresser sees many similarities among today’s PBM proposals. “I think we’ll see a greater requirement of reporting, transparency, and disclosure,” he predicted. “Spread pricing is another target, but this will probably be addressed in the Medicaid space first.” He believes that de-linking the price of the drug from the provider’s reimbursement, which is an important goal, could be tricky: “We must be able to ensure the provider’s profitability,” he cautioned.
De-linking is a key element more often in the Senate bills than in the House, noted Mr. Jackson. “We’re looking to push beyond what the House is proposing (just PBM transparency). There are too many levers PBMs can pull, too many games they can play. We need to change things more globally to make the system work. Transparency and de-linking, both of which we support, is not enough. We have a list of asks, and we’ll need all of them to happen to achieve change.”
Mr. Jackson said, “We prefer Senate Bill 1339, but the House doesn’t want to take it up at all. Now’s the time to act, before the federal government runs out of money again,” he said.
Mr. Dresser thinks it may be wiser to create an opportunity for private enforcement than to rely on governmental legislation and enforcement. “The federal and state governments are stretched too thin,” he explained, and pointed to the Johnson & Johnson lawsuit as an example; plan sponsors may face more private class action suits for not better managing their PBMs.
After several years of Congressional inaction, said Dr. Lum, it was time for Blue Shield of California to act, not wait. “We can’t wait for a magic pill. We have to take action now, for our family and friends.”
