|Summer is coming to a close, but actions around drug pricing and access just keep heating up. PBMs are dropping drugs from formulary… while the state of Ohio dropped PBMs. Read on for more—and, check out our very own senior advisor Peter Pitts' Health Affairs piece on creating more transparency around PBMs.
First, a few news nuggets of interest:
But there’s even more news, so let’s get to it.
|►CVS TAPS (A FEW) ICER QALYS
In a move designed to “put pressure on” drug manufacturers to reduce launch prices, CVS Caremark is initiating a program that allows clients to exclude any drug launched at a price greater than $100,000 per quality-adjusted life year (QALY), as determined by the Institute for Clinical and Economic Review (ICER). CVS’ move to adopt the third party-generated QALY benchmark was surprising given that most payers, including those interviewed for our own research, rely on proprietary formulas to determine value (and drive discounts with drug manufacturers)—as a means of differentiation from their competitors.
The CVS approach, as described in a new white paper, applies to “non-Breakthrough-designated” drugs that have ICER-generated QALYs. Under this guideline, it seems that only a limited number of ICER-reviewed drug categories—like rheumatoid arthritis, psoriasis and multiple sclerosis—would be impacted by the initiative. The announcement raises a number of questions: will ICER, which has increasingly focused on rare disease, pivot to review more widespread chronic conditions to help support the CVS initiative? Why is CVS using $100,000/QALY as its threshold when ICER uses $150,000/QALY as the upper limit in its reviews?
What we do know is that the move by CVS supports the new PBM trend to “just say no.” Last week, CVS competitor Express Scripts announced that it would drop 48 drugs from its national preferred formulary, effective Jan. 1, 2019. Facing increased scrutiny by the Trump Administration and the media for their role in driving up drug costs, PBMs appear to be trying to re-focus attention on drug manufacturers. It remains to be seen how much impact these policies will have on pharmacos and patients. Our advice? If you don’t have a value narrative for your medicine, start building one today. Developing messages to clearly articulate the costs and benefits of treatment for patients and society is the first step to ensuring that the value of your medicine resonates with all essential stakeholders.
|►OHIO FIRES ITS PBMS
Speaking of "just saying no," Ohio Medicaid has ordered the state's five managed care plans to cancel their contracts with pharmacy benefit managers over PBMs' use of "spread pricing." The tactic involves billing the state for an amount greater than what is reimbursed to pharmacists for filling prescriptions for Medicaid patients. Ohio will now require plans to adopt a transparent pass-through pricing model, and enter into new contracts with vendors who can adhere to that model by January 1st. Ohio’s move is the latest in an ongoing series of actions that states are taking in an effort to contain prescription drug expenses. The National Governors Association (NGA) promoted these actions and other state-based initiatives in a report released last week.
Despite the Rose Garden pomp, circumstance and robust tweeting, the Administration’s Blueprint to lower drug prices remains more of an outline than prescriptive policy recommendation. So it stands to reason that when it comes to drug pricing, the states are where the action is. Filling a federal legislative vacuum, many states are seeking solution to require greater reporting transparency from drug manufacturers and PBMs. The NGA report details other ideas being pursued by states, including:
Drug manufacturers should expect the trend of state innovation as a means to containing drug expenses to continue, and prepare accordingly by developing and continually assessing their strategic state-based plans for coverage.
With all this discussion about drug pricing, TWTW readers want to know: what should we expect heading into the mid-term elections and beyond? After all, healthcare consistently ranks at or near the very top of voter concerns heading into November. (Interestingly, more voters say a candidate’s stance on protecting pre-existing conditions is important to their vote than drug prices, ACA repeal and other healthcare issues.)
Here’s what the TWTW team knows: Predicting the outcome of congressional elections is for the Sunday morning talk shows, especially in these, um, extraordinary political times. So we won’t try to speculate on November 6th and beyond. We will predict that the chances for Congressional action on drug prices between now and Election Day are virtually nil. Congress hasn’t taken substantive action on drug pricing to date, and with the House and 33 Senate seats up for grabs, we expect the next 12 weeks will be focused on campaigning.
The likelihood of White House action is less predictable. If you recall, POTUS suggested there would be a healthcare-related announcement this past week, but it has yet to come to pass. In politics, timing is everything, so we wouldn’t be surprised to see POTUS reminding voters that he (and the GOP) promise “the hardest stance ever taken against drug prices” closer to November. Such a step could shake up both the industry and the dynamics of the pending elections.
Until next week,
- The Reputation & Risk Management Practice@ Syneos Health Communications