While a new federal proposal to overhaul the prescription drug rebate system may not be a significant threat to major managed care companies' bottom lines, it will likely be disruptive for insurers and PBMs alike, AIS Health reported.
The proposed rule would remove safe-harbor protections under the federal anti-kickback statute for rebates paid by drug manufacturers to PBMs, Part D plans and Medicaid managed care organizations. Instead, it would create two new safe harbors: one for prescription drug discounts offered directly to patients, and one for fixed-fee service arrangements between drug manufacturers and PBMs.
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As states take a hard look at how they can reduce prescription drug spending in their Medicaid programs, they've put an already heavily scrutinized type of organization in their crosshairs: PBMs, AIS Health reported.
Ohio, for example, is forcing PBMs to abandon their current "spread pricing" models — in which PBMs pocket the difference between the amount they reimburse a pharmacy for a drug and the (usually higher) amount they charge a plan sponsor. Instead, they’ll move to a "pass-through" model, where PBMs will be paid an administrative fee by the Medicaid program and have to pay pharmacists the same amount that they bill the state for drugs, The Columbus Dispatch reported.
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Anthem, Inc. caused its stock to surge and Wall Street analysts to raise their 2019 and 2020 earnings estimates by revealing during its quarterly earnings call on Jan. 30 that it's planning to launch its in-house PBM three quarters earlier than it originally projected, AIS Health reported.
In its earnings release for the fourth quarter of 2018, the insurer said it will terminate its contract with Express Scripts Holding Co. on March 1, 2019, rather than the original expiration date of Dec. 31, 2019, because of Cigna Corp.'s acquisition of the PBM. Thus, Anthem expects to begin transitioning members to the new PBM platform, IngenioRx, in the second quarter of 2019.
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Under the direction of its new governor, Democrat Gavin Newsom, California is planning to take control of the pharmacy benefit for all of the state's Medi-Cal beneficiaries — the vast majority of which currently have that part of their care administered by private insurers and their PBMs, AIS Health reported. What's more, the order directs state agencies to create bulk-purchasing arrangements for high-priority drugs and establish a framework for letting private businesses and insurers join the state’s buying pool.
The idea of the state's Medicaid program shifting to an entirely fee-for-service drug benefits system is already sparking worries about what it will do to PBMs' bottom lines.
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CMS on Nov. 26, 2018 issued a proposed rule making changes to the Medicare Advantage and Part D programs that would take effect in 2020. Key provisions in CMS’s latest drug pricing rule include a proposal to extend new flexibility to plan sponsors in the area of so-called six "protected" drug classes and the required implementation of a new electronic real-time benefit tool (RTBT), AIS Health reported.
Under CMS's Contract Year 2020 Medicare Advantage and Part D Drug Pricing Proposed Rule, plans would be able to:
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As they look to win over employer clients this year, PBMs should be prepared to face stiff competition and embrace emerging trends such as value-based formularies and rebate-free models, benefits consultants tell AIS Health.
"I've heard more interest about RFPs and going out, looking for or market-checking vendors than I have in a while — particularly on the PBM side," says Suzanne Taranto, a principal and consulting actuary for Milliman, Inc.
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As 2019 gets under way, public outrage over high prescription drug prices does not appear to have abated, especially in light of recent news reports indicating manufacturers are raising prices on hundreds of drugs this month, AIS Health reported.
Yet there are plenty of reasons why this concern over drug prices might not result in any significant legislative or regulatory action, experts tell AIS Health. And whatever does occur might benefit health plans and PBMs more than challenge them.
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In November 2018, reports emerged that retail pharmacy giant and health insurer— Walgreen Co. and Humana Inc. — are in preliminary talks to take equity stakes in each other.
Walgreens and Humana are already collaborating on a pilot project in which the insurer opened senior- focused primary care clinics in two Walgreens stores in the Kansas City, Mo., region. Now the companies are in “wide-ranging” talks about either expanding that venture or taking stakes in each other, according to The Wall Street Journal.
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As states take a hard look at how they can reduce prescription drug spending in their Medicaid programs, they've put an already heavily scrutinized type of organization in their crosshairs: PBMs, AIS Health reported.
Ohio, for example, is forcing PBMs to abandon their current "spread pricing" models — in which PBMs pocket the difference between the amount they reimburse a pharmacy for a drug and the (usually higher) amount they charge a plan sponsor. Instead, they’ll move to a "pass-through" model, where PBMs will be paid an administrative fee by the Medicaid program and have to pay pharmacists the same amount that they bill the state for drugs, The Columbus Dispatch reported.
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Facing an unexpected judicial roadblock in the plan to combine their two business, CVS Health Corp. and Aetna Inc. successfully negotiated a deal to keep their PBM and health insurance operations separate for at least the next few months, AIS Health reported.
At the heart of the holdup is U.S. District Court Judge Richard Leon, who has the right to review the agreement that CVS and Aetna struck with the DOJ to resolve antitrust concerns with their deal.
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