Florida Takes Additional Actions to Lower Prescription Drug Prices and other notes from around the interweb:

• Florida Takes Additional Actions to Lower Prescription Drug Prices for Floridians. The Executive Order directs all executive agencies to include provisions in all future contracts and solicitations with these PBMs, services that include the following: prohibit spread pricing for all PBMs; prohibit reimbursement clawbacks for all PBMs; directs agencies to include data transparency and reporting requirements, including a review of all rebates, payments, and relationships between pharmacies, insurers, and manufacturers; and directs all impacted agencies to amend all contracts to the extent feasible with these same provisions. A copy of Executive Order 22-164 can be found HERE.

• 300 drugs now in generic ‘cartel’ probe. What started as an antitrust lawsuit brought by states over just two drugs in 2016 have exploded into an investigation of alleged price-fixing involving at least sixteen companies and three hundred drugs, Joseph Nielsen, an assistant attorney general and antitrust investigator in Connecticut who has been a leading force in the probe, said. His comments represent the first public disclosure of the dramatically expanded scale of the investigation. The unfolding case is rattling an industry that is portrayed in Washington as the white knight of American health care. “This is most likely the largest cartel in the history of the United States,” Nielsen said. He cited the volume of drugs in the schemes, that they took place on American soil and the “total number of companies involved, and individuals.” The lawsuit and related cases picked up steam last month when a federal judge ruled that more than one million emails, cellphone texts and other documents cited as evidence could be shared among all plaintiffs.

• The drug rebate curtain. Lawyers for PBMs carefully define what a “rebate” means. For example, according to one template, “inflation payments” are not considered rebates. PBMs receive inflation payments from drug companies to cover year-over-year hikes to a drug’s list price. If employers don’t ask about inflation payments, PBMs keep them by default. The state of Delaware, however, modified its contract in 2015 to ensure those inflation payments are routed back to Delaware’s state employees, according to a copy of the contract that is publicly available.

• Formulary Steering Prevents Members from Accessing Generics. A suit, first obtained by Stat, was filed by Alexandra Miller, who worked at CVS for nearly two decades before leaving the company three years ago. Miller says that when she reported the behavior to a superior, she was told that the company had decided the benefits of the alleged scheme outweighed the likelihood of being caught. Miller claims that CVS’ SilverScripts Part D subsidiary as well as its Caremark pharmacy benefit manager and retail pharmacies worked together to prevent access to generics, which allowed it to pocket higher rebates because members were pushed to buy branded medications rather than lower-cost options.

A Big Three” PBM and the National Association of Chain Drug Stores (NACDS) part ways in a what seems to be a disagreement on the path forward. I can recall growing up when one kid who had the only basketball or baseball bat would storm off with his equipment when things didn’t go his way. The rest of us would be left empty-handed trying to figure out what to do next. It didn’t take us long to figure out we needed our own equipment.

When the selfish kid realized we didn’t need him anymore his attitude changed. He learned how to play fair and to stick around when things didn’t go his way. CVS Health is that selfish kid. CVS pharmacies made up almost a quarter of the nearly 40,000 pharmacies NACDS says it represents, and the CVS departure will also cost the trade group a nice chunk of change.

The National Association of Chain Drug Stores made announcements CVS Health didn’t agree with, so it decided to take its bat and ball (i.e. money) elsewhere.

• CVS Health reported paying $1.6 million in dues to NACDS last year, less than only its membership dues for America’s Health Insurance Plan, Better Medicare Alliance, and the Pharmaceutical Care Management Association.

• CVS Caremark controls the largest chunk of the market among PBMs, one of six companies that controls 98 percent of the PBM market, according to Health Industries Research.

• NACDS has applauded state legislation to regulate PBMs and last month, it praised an announcement that the FTC would probe PBM practices as contributing to momentum for PBM reforms.

Conclusion – “Big Three” PBM and NACDS Part Ways

Congress has a fight on its hands as the large PBMs won’t tuck tail and run. They will put up a strong front to protect profit margins and to ensure the survival of their companies. Wikipedia defines a broker as a person or entity that recommends “suitable” products, not necessarily the best or most cost-effective, and then earns a commission or other transactional fees based upon those recommendations. A fiduciary adviser, on the other hand, must put clients’ interests before their own. They charge a fixed fee. Like NACDS, the timing is ripe to take on more of an adviser role. In other words, recommend to your clients or purchase for your members the best services not just suitable ones.

The cat is now out of the proverbial bag. John F. Kennedy said, “The greater our knowledge increases the more our ignorance unfolds.” Most self-insured employers, and their advisers, don’t know what they don’t know. Pharmacy Benefit Managers provide transparency and disclosure to a level demanded by the competitive market and generally rely on the demands of prospective clients for disclosure in negotiating their contracts. The best proponent of transparency is informed and sophisticated purchasers of PBM services.

300 drugs now in generic ‘cartel’ probe and other notes from around the interweb:

• 300 drugs now in generic ‘cartel’ probe. What started as an antitrust lawsuit brought by states over just two drugs in 2016 have exploded into an investigation of alleged price-fixing involving at least sixteen companies and three hundred drugs, Joseph Nielsen, an assistant attorney general and antitrust investigator in Connecticut who has been a leading force in the probe, said. His comments represent the first public disclosure of the dramatically expanded scale of the investigation. The unfolding case is rattling an industry that is portrayed in Washington as the white knight of American health care. “This is most likely the largest cartel in the history of the United States,” Nielsen said. He cited the volume of drugs in the schemes, that they took place on American soil and the “total number of companies involved, and individuals.” The lawsuit and related cases picked up steam last month when a federal judge ruled that more than one million emails, cellphone texts and other documents cited as evidence could be shared among all plaintiffs.

• PBMs pocketing savings from generic prescriptions, report says. The new report adds to a growing body of evidence showing that consumers overpay for generics, as “pharmacy benefit managers game opaque and arcane pricing practices to pad profits,” the white paper said. Generics make up more than 90% of prescriptions in the U.S. but just 18% of drug spending. By one estimate, the use of generic and biosimilar drugs in place of their branded equivalents saved the healthcare system $338 billion in 2020 alone. However, despite generics driving down prices relative to branded drugs, consumers are not benefiting from savings, the white paper said. “Generics are overlooked when we talk about drug pricing issues in this country,” said Erin Trish, co-director of the USC Schaeffer Center, in a statement. “But the same lack of transparency that is causing outrage over high and rising spending on branded drugs is also creating issues in the generic drug space.”

• The drug rebate curtain. Lawyers for PBMs carefully define what a “rebate” means. For example, according to one template, “inflation payments” are not considered rebates. PBMs receive inflation payments from drug companies to cover year-over-year hikes to a drug’s list price. If employers don’t ask about inflation payments, PBMs keep them by default. The state of Delaware, however, modified its contract in 2015 to ensure those inflation payments are routed back to Delaware’s state employees, according to a copy of the contract that is publicly available.

• Formulary Steering Prevents Members from Accessing Generics. A suit, first obtained by Stat, was filed by Alexandra Miller, who worked at CVS for nearly two decades before leaving the company three years ago. Miller says that when she reported the behavior to a superior, she was told that the company had decided the benefits of the alleged scheme outweighed the likelihood of being caught. Miller claims that CVS’ SilverScripts Part D subsidiary as well as its Caremark pharmacy benefit manager and retail pharmacies worked together to prevent access to generics, which allowed it to pocket higher rebates because members were pushed to buy branded medications rather than lower-cost options.