Two New Reports Show That When PBMs Enter the Picture, Weird Things Happen (Plus the Top 10 Stories of the Week)

This was the week where PBM reform jumped back into the policy conversation. Republicans in the House -- along with a Democratic co-sponsor, New Jersey’s Frank Pallone -- introduced a health care transparency bill that would, among other things, ban spread pricing and boost reporting requirements for PBMs.?

Whether that bill can get through the Senate is probably an open question, but there is likely to be a fair amount of attention on the sausage-making from here on out.?

For those taking the long view, the legislation is probably not the most important PBM news of the week. Instead, two reports, one from the Government Accountability Organization and one from the Association for Accessible Medicines, shed some additional light into the way that PBMs operate.?

The headline of the GAO report -- as captured by Marketwatch -- is that there are a lot of medicines where Medicare beneficiaries are paying a lot more for their medicine than the health plans are, in no small part because deductibles and coinsurance is based on the list price of medicines, not the rebated price that payers get.?

And while changes to the Medicare benefit design may blunt this trend, it’s reflective of what’s going on more broadly in the commercial market: patients aren’t sharing in savings.?

The AAM report, too, emphasized the point that when PBMs enter the picture, weird things begin to happen. It’s well worth scrolling through the document looking for places when counterintuitive trends (or trends that would be counterintuitive in any other industry) appear. Such as: why are Medicare Part D plans so slow to substitute generics? And: why hasn’t biosimilar insulin taken off??

The answer, more often than not, is “because PBMs.” And the more those questions get asked, the more likely it is that there will be interest in PBM reform that goes beyond what’s being discussed in the new House legislation.?

The Top 10 Stories of the Week:?

1. The New York Times has one of the single best paragraphs on the IRA written in the past month: “The real issue here is not that pharma is good and government is bad or the other way around but that there is no clear standard for what a fair price should be for a drug that is available from only one source, that costs a lot to research and develop but very little to manufacture and that provides important health benefits.”?
2. Two new reports took aim at the Institute for Clinical and Economic Review. An EntityRisk/No Patients Left Behind report re-ran 20 ICER analyses using a methodology called “generalized cost-effectiveness assessment” and found that the number of medicines judged to be cost-effective doubled. This Janssen-funded Certara work slammed the Unsupported Price Increases effort that ICER conducts every year.??
3. Turns out that if you make asthma medicines available pre-deductible, patients spend less and do better. And while this sounds obvious, it’s also not the way the world (usually) works.?
4. There will be oral arguments in one of the IRA cases on Friday, which is kind of exciting. To me, anyway.?
5. AstraZeneca’s Pascal Soriot has a solution to the IRA’s (presumably) unintentional disincentivization of post-market research: don’t start the 7/11-year clock on a company’s freedom from price controls until a medicine is approved for a non-orphan indication. Makes sense to me.???
6. This is somewhat related to the point from the introduction (“when PBMs enter the picture, weird things begin to happen”): Amazon/GoodRx offer cash-price prices for generics that are lower than the out-of-pocket prices set up insurance plans/PBMs about 20% of the time.?
7. The Wall Street Journal talks to some of the individuals paying four figures, out of pocket, for weight-loss medicines, offering a glimpse into the people who will drive the obesity market over the next little bit.?
8. Everyone in my world is talking about this piece by KFF’s Larry Levitt in the New York Times, in which he takes aim at four pharma arguments around the IRA. I’m on the record: I don’t think Levitt made a particularly compelling case. But I’m not a particularly good barometer of public opinion …??
9. Wired has a deep dive that makes the case that the ever-increasing price of Gleevec created a template for the industry’s aggressive approach to price hikes. But I’ve always wondered if Gleevec is, at its core, a case of a medicine being priced way too low at launch.?
10. A new analysis from University of Chicago economists estimates that the United States will see 79 fewer small-molecule medicines approved over the next 20 years because of the IRA.?