Express Scripts Sues FTC, Demands Withdrawal of PBM Report and other notes from around the interweb:

• Express Scripts Sues FTC, Demands Withdrawal of PBM Report. In a lawsuit filed in federal court in Missouri, Express Scripts by Evernorth, a subsidiary of The Cigna Group (NYSE: CI), demanded that the Federal Trade Commission (“FTC” or the “Commission”) retract its July 2024 report, which is filled with false and misleading claims about the pharmacy benefit management (PBM) industry and fails to serve the interests of American consumers. Information about Express Scripts’ lawsuit to protect those it serves is available at https://www.evernorth.com/advocate. “The FTC has taken unconstitutional actions in publishing a report that ignores the evidence provided by our company and other PBMs, demonstrates clear ideological bias and advances a false and damaging narrative – a narrative that could harm the health care system by removing essential checks and balances which would result in higher drug prices for American consumers,” said Andrea Nelson, Chief Legal Officer for The Cigna Group. “We don’t take this step lightly, but as advocates working to lower drug prices for millions of Americans and the employers, labor unions, and government agencies that provide their prescription drug benefits, we cannot let the FTC’s unlawful actions and false information stand.”

• Walgreens paying $106.8 million to settle US prescription billing fraud charges. Walgreens Boots Alliance (WBA.O), agreed to pay $106.8 million to settle charges it fraudulently billed the U.S. government for prescriptions that were never dispensed, the Department of Justice said on Friday. The Justice Department said Walgreens violated the federal False Claims Act between 2009 and 2020 by submitting payment claims to Medicare, Medicaid, and other healthcare programs for prescriptions it processed but which were never picked up. This caused the pharmacy chain to receive tens of millions of dollars for prescriptions it never provided to patients, the department said. “Federal health care programs provide critical health care services to millions of Americans,” said Brian Boynton, head of the Justice Department’s civil division. “We will hold accountable those who abuse these programs by knowingly billing for goods or services they did not provide.”

• Elevance intensifies Ozempic crackdown. Anthem Blue Cross Blue Shield is requesting payments from some providers it alleges falsified patients’ medical records when prescribing Ozempic, Bloomberg reported Sept. 12. A spokesperson for Elevance Health, which owns Anthem BCBS, told Bloomberg it contacted a small number of providers about repayments for Ozempic prescribed to their patients. In some cases, the amount of repayment requested was more than $1 million. Representatives for Elevance told Bloomberg that Anthem BCBS only covers Ozempic for patients with Type 2 diabetes. The drug is not approved by the FDA for weight loss but is often prescribed off-label for that purpose. Ozempic is a prescription medication used to improve blood sugar control in adults with type 2 diabetes. It’s a once-weekly injection that also helps with weight loss by reducing appetite. Its active ingredient is semaglutide, a GLP-1 receptor agonist.

• Copay Adjustment Chess Match: What Will Payers Do Next?. The primary reason that payers created copay adjustment programs lies within the very nature of their business, namely that insuring patients means taking on the risk of patients’ lives for the pharmaceutical benefit. Additionally, the payers’ clients—employers—demand that payers and pharmacy benefit managers (PBMs) keep drug costs under control since the cost of providing healthcare to their employees remains high. Over the years, formularies, exclusions, and prior authorizations have been created to support this cost control, but using the accumulator technique, in which the patient’s annual out-of-pocket (OOP) maximum is affected by taking off the manufacturer’s contribution, is a newer approach. It all stems from the same reasoning—payers are seeking ways to control costs to benefit their bottom line, while employers are seeking ways to control the costs of providing healthcare to their employees.

Pharmacy Benefit Managers (PBMs) play a crucial role in managing prescription drug benefits for employers, brokers, and benefits consultants. However, the lack of transparency in their operations often leaves many organizations struggling to fully understand the costs associated with their pharmacy benefits. This is where our webinar, Unlocking the Secrets of PBMs: Strategies to Navigate Their Profit Tactics, comes in—offering a deep dive into the opaque world of PBMs and equipping you with the knowledge to take control of your pharmacy spend.

The strategies we discuss in this session are designed to help employers, brokers, and benefits consultants identify and mitigate hidden profit tactics that can lead to inflated costs. PBMs often employ complex pricing structures, hidden fees, and undisclosed rebate arrangements that can significantly impact the overall cost of pharmacy benefits. By attending this webinar, you’ll learn how to spot these tactics and implement effective strategies to minimize their financial impact.

One of the key takeaways from this webinar is understanding the importance of a fiduciary standard of care. Unlike traditional PBM models that prioritize profits, a fiduciary approach ensures that the PBM acts in the best interest of the plan sponsor and its members. This approach not only aligns with ethical standards but also helps in achieving cost savings without compromising patient outcomes. We’ll explore real-world examples and case studies that highlight the difference a fiduciary PBM model can make in controlling pharmacy costs.

Additionally, the webinar covers actionable insights on negotiating better contracts, optimizing formulary management, and leveraging data analytics to make informed decisions. These strategies empower you to create a more transparent and cost-effective pharmacy benefits program tailored to your organization’s needs. By understanding how to navigate the PBM landscape, you can ensure that every dollar spent on pharmacy benefits delivers maximum value to your organization and your members.

For employers, brokers, and benefits consultants committed to reducing pharmacy costs while maintaining high-quality care, this webinar is a must-watch. Don’t miss out on the opportunity to learn from experts who have been on the front lines of PBM negotiations and cost management. Equip yourself with the knowledge and tools to challenge the status quo and drive meaningful change in your pharmacy benefits strategy.

Watch Unlocking the Secrets of PBMs: Strategies to Navigate Their Profit Tactics today and take the first step towards regaining control over your pharmacy spend. Your path to a more transparent, cost-effective, and patient-centered pharmacy benefit plan starts here.

In today’s complex healthcare landscape, understanding the roles of rebate aggregators and Group Purchasing Organizations (GPOs) owned by Pharmacy Benefit Managers (PBMs) is crucial. These entities significantly influence prescription drug costs and the management of pharmacy benefits. This comprehensive guide explores their functions, origins, and how you—as an employee benefit broker, HR executive, or CFO—can leverage these relationships in maximizing benefits with rebate aggregators and controlling costs.

What Is Rebate Aggregation?

Understanding Rebate Aggregators

Rebate aggregation involves the collection and management of pharmaceutical manufacturer rebates by PBMs. Manufacturers offer these rebates to promote their drugs’ inclusion on PBM formularies and to incentivize higher utilization. PBMs negotiate rebate terms based on expected drug volumes and market share, aggregating rebates across multiple plan sponsors to enhance negotiating power. Depending on contractual agreements, rebates are either passed back to plan sponsors like employers and insurers or retained by PBMs.

The Purpose of Rebate Aggregation

The primary aim is cost reduction. By pooling rebates, PBMs can lower the net cost of prescription drugs for plan sponsors. This aggregation increases market leverage against pharmaceutical manufacturers and streamlines processes for employers and insurers, simplifying the rebate management process.

The Role of PBM-Owned GPOs

What Are Group Purchasing Organizations?

GPOs are entities that consolidate the purchasing power of multiple organizations to secure discounts from vendors, including drug manufacturers. In healthcare, they play a pivotal role in reducing costs for medications and medical supplies by negotiating lower prices and improved contract terms.

Why PBMs Own GPOs

PBMs have acquired or established GPOs to enhance their negotiating power further. Owning GPOs allows PBMs to amplify their purchasing volume, streamline procurement and rebate processes under one umbrella, and potentially increase revenue by retaining more rebates and fees. However, this ownership structure can raise transparency concerns, potentially obscure rebate flows and fee arrangements, and lead to conflicts of interest where PBMs might prioritize their profits over client savings. It also attracts regulatory scrutiny over anti-competitive practices and compliance issues.

Why Were Rebate Aggregators and GPOs Created?

Historical Context and Intended Benefits

The creation of rebate aggregators and GPOs was driven by rising drug prices and a fragmented market where individual buyers lacked the clout to negotiate favorable terms. Employers and insurers sought efficient strategies to manage complex pharmacy benefits. These entities were designed to achieve cost savings by reducing prices for all members through collective bargaining, simplify negotiations, and provide improved access to medications through broader bargaining power.

Leveraging Relationships with Rebate Aggregators and PBM-Owned GPOs

Effectively navigating these relationships is key to maximizing benefits and minimizing costs.

Strategies for Employee Benefit Brokers

• Demand Transparency: Insist on clear disclosure of rebate amounts and distribution methods from PBMs.
• Thorough Contract Review: Examine PBM contracts for terms related to rebates and GPO affiliations, ensuring they align with client interests.
• Market Comparison: Evaluate multiple PBMs and GPOs to secure the best terms for clients, considering both cost and service quality.

Best Practices for HR Executives

• Align Benefits with Company Goals: Ensure that pharmacy benefits support overall organizational objectives and employee wellness.
• Educate Employees: Inform staff about formulary changes, how to maximize their benefits, and encourage the use of cost-effective medication options.
• Monitor Performance: Regularly assess the effectiveness of pharmacy benefits, employee satisfaction, and seek improvements where necessary.

Financial Insights for CFOs

• Analyze Cost Impacts: Evaluate how rebate structures and GPO affiliations affect the company’s financial health and budget forecasts.
• Assess Risks: Be aware of compliance and regulatory risks associated with PBM and GPO dealings, including potential audits and legal implications.
• Negotiate Aggressively: Leverage the organization’s size and PBM knowledge to negotiate better terms.

The Importance of Transparency and Compliance

Addressing Transparency Issues

To mitigate transparency concerns, require PBMs to provide comprehensive reports on rebate earnings and allocations. Include contractual provisions that allow for third-party audits of rebate dealings to ensure accuracy and honesty. Staying informed about laws governing rebate practices is essential to ensure adherence and avoid regulatory penalties.

Mitigating Conflicts of Interest

Structure agreements that align PBM incentives with your organization’s goals, such as performance-based contracts that reward cost savings and quality service. Consider engaging independent consultants or third-party advisors to assess PBM relationships and negotiations objectively, ensuring that decisions are made in the best interest of your organization and employees.

Conclusion

Understanding and maximizing benefits with rebate aggregators and PBM-owned GPOs is essential for controlling prescription drug costs and enhancing pharmacy benefits. By staying informed, being proactive in contract management, and prioritizing transparency, you can significantly impact your organization’s healthcare spending and employee satisfaction.

Optimize Your Pharmacy Benefits Today

Don’t let the complexities of rebate aggregation and PBM-owned GPOs hinder your organization’s success. Take action now to maximize your benefits and minimize costs. For personalized assistance, contact our experts who specialize in navigating these intricate relationships.

Walgreens will pay $106.8 million to settle claims of fraudulently billing for undispensed prescriptions and other notes from around the interweb:

• Walgreens paying $106.8 million to settle US prescription billing fraud charges. Walgreens Boots Alliance (WBA.O), agreed to pay $106.8 million to settle charges it fraudulently billed the U.S. government for prescriptions that were never dispensed, the Department of Justice said on Friday. The Justice Department said Walgreens violated the federal False Claims Act between 2009 and 2020 by submitting payment claims to Medicare, Medicaid, and other healthcare programs for prescriptions it processed but which were never picked up. This caused the pharmacy chain to receive tens of millions of dollars for prescriptions it never provided to patients, the department said. “Federal health care programs provide critical health care services to millions of Americans,” said Brian Boynton, head of the Justice Department’s civil division. “We will hold accountable those who abuse these programs by knowingly billing for goods or services they did not provide.”

• Elevance intensifies Ozempic crackdown. Anthem Blue Cross Blue Shield is requesting payments from some providers it alleges falsified patients’ medical records when prescribing Ozempic, Bloomberg reported Sept. 12. A spokesperson for Elevance Health, which owns Anthem BCBS, told Bloomberg it contacted a small number of providers about repayments for Ozempic prescribed to their patients. In some cases, the amount of repayment requested was more than $1 million. Representatives for Elevance told Bloomberg that Anthem BCBS only covers Ozempic for patients with Type 2 diabetes. The drug is not approved by the FDA for weight loss but is often prescribed off-label for that purpose. Ozempic is a prescription medication used to improve blood sugar control in adults with type 2 diabetes. It’s a once-weekly injection that also helps with weight loss by reducing appetite. Its active ingredient is semaglutide, a GLP-1 receptor agonist.

• Copay Adjustment Chess Match: What Will Payers Do Next?. The primary reason that payers created copay adjustment programs lies within the very nature of their business, namely that insuring patients means taking on the risk of patients’ lives for the pharmaceutical benefit. Additionally, the payers’ clients—employers—demand that payers and pharmacy benefit managers (PBMs) keep drug costs under control since the cost of providing healthcare to their employees remains high. Over the years, formularies, exclusions, and prior authorizations have been created to support this cost control, but using the accumulator technique, in which the patient’s annual out-of-pocket (OOP) maximum is affected by taking off the manufacturer’s contribution, is a newer approach. It all stems from the same reasoning—payers are seeking ways to control costs to benefit their bottom line, while employers are seeking ways to control the costs of providing healthcare to their employees.

• 3 Trends Reshaping Pharmacy Benefits Management. We offer a comprehensive analysis of three critical areas transforming the sector: GLP-1 medications, biosimilars, and PBM transparency. Our analysis covers diabetes and weight loss management trends, the impact of biosimilars on the market, and the complexities of PBM rebate structures. The prevalence of diabetes in the United States has reached alarming levels, with approximately 12% of adults diagnosed with the condition. Even more concerning is the additional 40% of the population classified as pre-diabetic, underscoring the potential for a significant increase in diabetes diagnoses in the near future. This epidemiological landscape has profound implications for employer-sponsored health plans, particularly in relation to the coverage of GLP-1 (Glucagon-Like Peptide-1) receptor agonists.

Navigating the world of pharmacy benefits can be complex, but it’s essential for those managing employee health plans. A key piece of this puzzle is understanding how formulary positions are decided. Formulary position refers to the placement of drugs on a list that determines how easily they can be accessed and how much they will cost. This placement can have significant cost implications for employers and employees alike. Here are three main points from the paper “The Market Design for Formulary Position” that are particularly relevant for employee benefit brokers and self-funded employers.

Formulary Position as a Market: How It Works

• Imagine the formulary position like a market where drug manufacturers (Pharma) bid for prime spots on the list. These spots are often managed by Pharmacy Benefit Managers (PBMs), who act as gatekeepers. The more favorable the position, the more likely a drug will be used, which means big business for Pharma companies.
• This process is similar to an auction. Like Google’s ad placement system, where higher bids secure better ad positions, Pharma companies pay rebates (a type of discount given after a drug is sold) to PBMs for these prime formulary positions. The PBMs then decide which drugs to favor based on these rebates, expected demand, and other factors like drug effectiveness.

Impact on Costs: Mature vs. Immature Therapeutic Classes

• The paper explains that the way drugs are positioned can depend on whether the therapeutic class (the category of treatment) is “mature” or “immature.” Mature classes have a lot of competition with multiple drugs offering similar benefits, like different brands of painkillers. In these cases, PBMs have a history of how well these drugs work, which helps them make cost-effective decisions.
• For immature classes, where new drugs are just entering the market, things get trickier. There’s uncertainty about how well these new entrants will perform. This uncertainty gives established drugs (incumbents) more power because PBMs are hesitant to favor new drugs that might not meet demand, even if they are cheaper. This dynamic can keep prices high and limit the cost-saving potential of new competition.

Rebates and Exclusionary Tactics: A Double-Edged Sword

• Rebates can help lower the cost of drugs by incentivizing PBMs to choose certain drugs over others. However, the paper highlights that these rebates can also be used in ways that exclude new market entrants. Incumbent drugs might offer lump sum rebates, a large upfront payment to PBMs, to maintain their dominance and keep new competitors out.
• This practice can drive up the overall cost for employers and employees because it limits competition. Without competition, there’s less pressure on incumbents to lower prices. This can result in higher costs for health plans and, ultimately, higher premiums for employees.

Key Takeaway for Employers and Brokers:

Understanding the market dynamics of formulary positions can help you advocate for more cost-effective pharmacy benefits. By recognizing the strategies PBMs and Pharma companies use, you can push for formulary designs that prioritize not just rebates but also value and access, ensuring that your employees get the medications they need at a fair price.

Chairman Comer Calls on PBM Executives to Correct Hearing Testimony and other notes from around the interweb:

• Chairman Comer Calls on PBM Executives to Correct Hearing Testimony. House Committee on Oversight and Accountability Chairman James Comer (R-Ky.) today is calling on the CEOs of three major Pharmacy Benefit Managers (PBMs)—CVS Caremark, Express Scripts, and Optum Rx—to correct the record for statements made during their appearance before the House Oversight Committee at a hearing titled, “The Role of Pharmacy Benefit Managers in Prescription Drug Markets Part III: Transparency and Accountability.” At the House Oversight Committee’s hearing, the PBM chief executives made statements that contradict the Committee’s and the Federal Trade Commission’s findings about the PBMs’ self-benefitting practices that jeopardize patient care, undermine local pharmacies, and raise prescription drug prices. The chief executives for CVS Caremark, Express Scripts, and Optum Rx claimed they do not steer patients to PBM-owned pharmacies. The executives also made claims contradicting the Committee’s and FTC’s findings regarding contract negotiations, contract opt outs, and payments to pharmacies.

• Three Things That Employer Health Plan Sponsors Should Do When the New MHPAEA Rules Are Published. In particular, the proposed rules would implement amendments to MHPAEA that were passed under the Consolidated Appropriations Act of 2021 (CAA) to require documentation of comparative analyses for Non-Quantitative Treatment Limits (NQTLs). We anticipate that the Tri-Departments will publish new regulations for MHPAEA that will finalize most provisions of the NPRM in the coming days or weeks. We anticipate that most provisions of the new regulations will finalize the proposed requirements without significant modifications. However, robust public comments were submitted regarding several key provisions that may cause the Tri-Departments to modify or rescind the proposed rules. Three of the most controversial provisions from the proposed rules to watch for in the final rules are: Quantitative testing for Non-Quantitative Treatment Limits, Application of MHPAEA to intellectual and developmental disabilities, including autism spectrum disorder, and Fiduciary liability for health plan sponsors.

• 3 Trends Reshaping Pharmacy Benefits Management. We offer a comprehensive analysis of three critical areas transforming the sector: GLP-1 medications, biosimilars, and PBM transparency. Our analysis covers diabetes and weight loss management trends, the impact of biosimilars on the market, and the complexities of PBM rebate structures. The prevalence of diabetes in the United States has reached alarming levels, with approximately 12% of adults diagnosed with the condition. Even more concerning is the additional 40% of the population classified as pre-diabetic, underscoring the potential for a significant increase in diabetes diagnoses in the near future. This epidemiological landscape has profound implications for employer-sponsored health plans, particularly in relation to the coverage of GLP-1 (Glucagon-Like Peptide-1) receptor agonists.

• CMS’ negotiated drug prices: 12 notes. The brand names of the 10 drugs included under IRA price negotiations are as follows: Januvia; multiple Novo Nordisk variations to treat diabetes, including Fiasp; Farxiga; Enbrel; Jardiance; Stelara; Xarelto; Eliquis; Entresto; and Imbruvica. The largest discount among all 10 drugs is 79%, lowering the list price for a 30-day supply of Januvia in 2023 from $527 to $113. The most expensive drug covered, also the drug with the smallest discount at 38%, is Imbruvica for the treatment of blood cancers. Imbruvica’s list price for a 30-day supply in 2023 was just under $15,000 and will now be offered at $9,319 for Medicare-covered patients in 2026. Some of the other drugs included were approved to treat various conditions including diabetes, cardiovascular diseases, kidney disease, arthritis, psoriasis, Crohn’s disease, ulcerative colitis, blood clots, and more.

The 340B Drug Pricing Program, designed to provide discounted medications to healthcare organizations serving vulnerable populations, has long been a point of debate within the pharmaceutical industry. While its intent is noble, the ripple effects of 340B on commercial contracts are significant and complex, warranting a closer examination. Understanding the impact of the 340B program on commercial contracts is essential for navigating the complexities of the U.S. pharmacy reimbursement and distribution system.

The Basics of 340B

The 340B Program requires drug manufacturers to provide outpatient drugs at reduced prices to eligible healthcare organizations, known as covered entities. These entities include hospitals, community health centers, and clinics that serve many uninsured or low-income patients. The savings from these discounts are intended to support the covered entities’ ability to provide care to underserved communities.

Commercial Contracts and 340B: The Intersection

While the 340B Program is primarily aimed at supporting public health objectives, its impact on commercial contracts cannot be overlooked. Pharmaceutical manufacturers and commercial payers are increasingly scrutinizing the program’s influence on drug pricing dynamics and contract negotiations. This scrutiny stems from the fact that 340B pricing can distort the traditional market mechanisms that govern commercial drug pricing.

Key Impacts:

1. Price Differentials and Contracting Challenges:
   • One of the most significant impacts of 340B on commercial contracts is the creation of price differentials. Manufacturers are required to offer steep discounts under 340B, often leading to substantial differences between 340B prices and those negotiated in commercial contracts. This disparity can complicate negotiations between manufacturers and commercial payers, as the latter may seek to leverage 340B pricing in their contracts, potentially leading to lower reimbursement rates.
2. Shift in Market Dynamics:
   • The expansion of the 340B Program has also led to changes in market dynamics. Covered entities may purchase drugs at 340B prices but dispense them to insured patients, including those with commercial insurance. This practice, known as “spread pricing,” allows covered entities to benefit financially from the difference between the 340B acquisition cost and the higher reimbursement rates from commercial insurers. While this can provide financial relief to covered entities, it also introduces complexities in commercial contracting, as payers attempt to address the potential for inflated drug costs.
3. Contractual Safeguards and Compliance:
   • As the influence of 340B on commercial contracts grows, manufacturers and payers are increasingly incorporating safeguards and compliance measures into their agreements. These may include clauses that adjust reimbursement rates based on the covered entity’s 340B status or provisions that require transparency in how 340B savings are utilized. The goal is to ensure that the 340B Program’s benefits are aligned with its original intent without inadvertently undermining commercial contracting integrity.

Navigating the 340B Landscape

For stakeholders in the pharmaceutical industry, understanding the nuances of the 340B Program is crucial for effective contract negotiation and management. As the program continues to evolve, manufacturers and payers must remain vigilant in assessing its impact on pricing strategies and commercial relationships.

Best Practices:

• Transparency: Ensuring transparent communication between manufacturers, payers, and covered entities can help mitigate the potential for conflict and misaligned incentives in commercial contracts.
• Adaptive Contracting: Contracts should be flexible enough to adapt to the changing landscape of the 340B Program, including adjustments for price differentials and compliance requirements.
• Collaboration: Engaging in collaborative discussions with all stakeholders involved in the 340B ecosystem can lead to more equitable solutions that balance the program’s public health goals with the financial realities of the commercial market.

Conclusion

The 340B Drug Pricing Program, while a critical tool for supporting healthcare organizations serving vulnerable populations, has far-reaching implications for commercial contracts in the pharmaceutical industry. As the program continues to shape the market, stakeholders must navigate the challenges and opportunities it presents with a strategic and informed approach.

Three Things That Employer Health Plan Sponsors Should Do When the New MHPAEA Rules Are Published and other notes from around the interweb:

• Three Things That Employer Health Plan Sponsors Should Do When the New MHPAEA Rules Are Published. In particular, the proposed rules would implement amendments to MHPAEA that were passed under the Consolidated Appropriations Act of 2021 (CAA) to require documentation of comparative analyses for Non-Quantitative Treatment Limits (NQTLs). We anticipate that the Tri-Departments will publish new regulations for MHPAEA that will finalize most provisions of the NPRM in the coming days or weeks. We anticipate that most provisions of the new regulations will finalize the proposed requirements without significant modifications. However, robust public comments were submitted regarding several key provisions that may cause the Tri-Departments to modify or rescind the proposed rules. Three of the most controversial provisions from the proposed rules to watch for in the final rules are: Quantitative testing for Non-Quantitative Treatment Limits, Application of MHPAEA to intellectual and developmental disabilities, including autism spectrum disorder, and Fiduciary liability for health plan sponsors.

• 3 Trends Reshaping Pharmacy Benefits Management. We offer a comprehensive analysis of three critical areas transforming the sector: GLP-1 medications, biosimilars, and PBM transparency. Our analysis covers diabetes and weight loss management trends, the impact of biosimilars on the market, and the complexities of PBM rebate structures. The prevalence of diabetes in the United States has reached alarming levels, with approximately 12% of adults diagnosed with the condition. Even more concerning is the additional 40% of the population classified as pre-diabetic, underscoring the potential for a significant increase in diabetes diagnoses in the near future. This epidemiological landscape has profound implications for employer-sponsored health plans, particularly in relation to the coverage of GLP-1 (Glucagon-Like Peptide-1) receptor agonists.

• CMS’ negotiated drug prices: 12 notes. The brand names of the 10 drugs included under IRA price negotiations are as follows: Januvia; multiple Novo Nordisk variations to treat diabetes, including Fiasp; Farxiga; Enbrel; Jardiance; Stelara; Xarelto; Eliquis; Entresto; and Imbruvica. The largest discount among all 10 drugs is 79%, lowering the list price for a 30-day supply of Januvia in 2023 from $527 to $113. The most expensive drug covered, also the drug with the smallest discount at 38%, is Imbruvica for the treatment of blood cancers. Imbruvica’s list price for a 30-day supply in 2023 was just under $15,000 and will now be offered at $9,319 for Medicare-covered patients in 2026. Some of the other drugs included were approved to treat various conditions including diabetes, cardiovascular diseases, kidney disease, arthritis, psoriasis, Crohn’s disease, ulcerative colitis, blood clots, and more.

• Prescription Rebate Guarantees: Employer Insights. This study sheds light on employers’ perspectives of rebate guarantees, dependency upon rebate dollars, and the role that pharmaceutical rebates or employer benefits consultants play in their pharmacy benefits manager (PBM) selection. The common occurrence of rebate guarantees in the study sample raises concern given that rebate guarantees may obscure employer visibility into the actual net prices of drugs, resulting in formulary inclusion of higher-cost products and higher overall total pharmacy costs. Employers should consider the role of employer benefits consultants in presenting drug contracting options and, ultimately, PBM selection. It is important to keep the employer perspective in mind when considering reforms to the current rebate-centric incentives of pharmacy benefit management.

In the intricate world of pharmacy benefits, few topics are as controversial and impactful as DIR (Direct and Indirect Remuneration) fees. These fees, often buried within the fine print of PBM contracts, have far-reaching consequences that can significantly affect the financial health of self-funded employers. As a CHRO or CFO, understanding DIR fees and their implications is crucial to managing your organization’s pharmacy benefit strategy effectively.

What Are DIR Fees?

DIR fees are post-sale adjustments that PBMs (Pharmacy Benefit Managers) apply to the payments they make to pharmacies. Initially introduced as a way to capture rebates or discounts that weren’t accounted for at the point of sale, DIR fees have evolved into a complex and often opaque mechanism that PBMs use to claw back funds from pharmacies long after a prescription has been filled.

For pharmacies, this means that they might receive a payment for dispensing a medication, only to have a portion of that payment reclaimed by the PBM months later. This practice not only adds a layer of uncertainty to pharmacy revenue streams but also indirectly inflates drug costs for plan sponsors like your organization.

The Financial Burden on Employers

While DIR fees were originally intended to reduce overall drug costs by ensuring pharmacies are reimbursed fairly, the reality has been quite different. These fees often increase the out-of-pocket costs for your employees and inflate the overall spend of your pharmacy benefit plan. The lack of transparency surrounding DIR fees makes it challenging for employers to understand the true cost of their pharmacy benefits, leading to budgeting difficulties and unexpected financial strains.

For CFOs, the impact is clear: DIR fees contribute to the rising cost of providing healthcare benefits to employees, which can strain your organization’s financial resources. For CHROs, the implications are just as significant. Higher out-of-pocket costs and increased premiums can lead to dissatisfaction among employees, potentially affecting retention and recruitment efforts.

Legal Precedents and Employer Protections

Recent legal developments highlight the growing scrutiny of DIR fees and the efforts to protect plan sponsors and pharmacies from their detrimental effects. A notable case involved Frier Levitt, a law firm that secured a landmark $22 million trial victory against Caremark. This case recovered 100% of DIR fees, interest, and attorney fees on behalf of an independent pharmacy. The ruling underscored the importance of transparency and fair dealing in PBM contracts, setting a precedent that could benefit plan sponsors who are vigilant in managing their pharmacy benefit arrangements.

This victory is a reminder to employers that they are not powerless in the face of PBM practices. By carefully reviewing and negotiating PBM contracts, and potentially pursuing legal action when necessary, employers can protect their financial interests and ensure that their pharmacy benefit plans are truly serving their employees.

What Can CHROs and CFOs Do?

To mitigate the impact of DIR fees, CHROs and CFOs should:

1. Demand Transparency: Ensure that your PBM contracts clearly outline how DIR fees are calculated and applied. Full transparency allows you to better understand the true cost of your pharmacy benefits.
2. Conduct Regular Audits: Periodically review your pharmacy benefit plan’s performance and financials to identify any discrepancies related to DIR fees.
3. Consider Alternative PBM Models: Explore working with fiduciary-model PBMs that prioritize transparency and align their interests with those of your organization.
4. Stay Informed on Legal Developments: Keep abreast of the latest legal cases and rulings related to DIR fees, as they can inform your strategies and negotiations with PBMs.

Understanding and managing DIR fees is not just about controlling costs—it’s about ensuring that your organization’s pharmacy benefit plan is fair, transparent, and truly beneficial for your employees. By taking proactive steps, CHROs and CFOs can safeguard their organizations against the hidden costs and financial risks associated with DIR fees, ultimately creating a more sustainable and equitable benefits strategy.

3 Trends Reshaping Pharmacy Benefits Management and other notes from around the interweb:

• 3 Trends Reshaping Pharmacy Benefits Management. We offer a comprehensive analysis of three critical areas transforming the sector: GLP-1 medications, biosimilars, and PBM transparency. Our analysis covers diabetes and weight loss management trends, the impact of biosimilars on the market, and the complexities of PBM rebate structures. The prevalence of diabetes in the United States has reached alarming levels, with approximately 12% of adults diagnosed with the condition. Even more concerning is the additional 40% of the population classified as pre-diabetic, underscoring the potential for a significant increase in diabetes diagnoses in the near future. This epidemiological landscape has profound implications for employer-sponsored health plans, particularly in relation to the coverage of GLP-1 (Glucagon-Like Peptide-1) receptor agonists.

• CMS’ negotiated drug prices: 12 notes. The brand names of the 10 drugs included under IRA price negotiations are as follows: Januvia; multiple Novo Nordisk variations to treat diabetes, including Fiasp; Farxiga; Enbrel; Jardiance; Stelara; Xarelto; Eliquis; Entresto; and Imbruvica. The largest discount among all 10 drugs is 79%, lowering the list price for a 30-day supply of Januvia in 2023 from $527 to $113. The most expensive drug covered, also the drug with the smallest discount at 38%, is Imbruvica for the treatment of blood cancers. Imbruvica’s list price for a 30-day supply in 2023 was just under $15,000 and will now be offered at $9,319 for Medicare-covered patients in 2026. Some of the other drugs included were approved to treat various conditions including diabetes, cardiovascular diseases, kidney disease, arthritis, psoriasis, Crohn’s disease, ulcerative colitis, blood clots, and more.

• Prescription Rebate Guarantees: Employer Insights. This study sheds light on employers’ perspectives of rebate guarantees, dependency upon rebate dollars, and the role that pharmaceutical rebates or employer benefits consultants play in their pharmacy benefits manager (PBM) selection. The common occurrence of rebate guarantees in the study sample raises concern given that rebate guarantees may obscure employer visibility into the actual net prices of drugs, resulting in formulary inclusion of higher-cost products and higher overall total pharmacy costs. Employers should consider the role of employer benefits consultants in presenting drug contracting options and, ultimately, PBM selection. It is important to keep the employer perspective in mind when considering reforms to the current rebate-centric incentives of pharmacy benefit management.

• FTC Releases Interim Staff Report on Prescription Drug Middlemen. The Federal Trade Commission published an interim report on the prescription drug middleman industry that underscores the impact pharmacy benefit managers (PBMs) have on the accessibility and affordability of prescription drugs. The interim staff report, which is part of an ongoing inquiry launched in 2022 by the FTC, details how increasing vertical integration and concentration has enabled the six largest PBMs to manage nearly 95 percent of all prescriptions filled in the United States. This vertically integrated and concentrated market structure has allowed PBMs to profit at the expense of patients and independent pharmacists, the report details. “The FTC’s interim report lays out how dominant pharmacy benefit managers can hike the cost of drugs—including overcharging patients for cancer drugs,” said FTC Chair Lina M. Khan. “The report also details how PBMs can squeeze independent pharmacies that many Americans—especially those in rural communities—depend on for essential care. The FTC will continue to use all our tools and authorities to scrutinize dominant players across healthcare markets and ensure that Americans can access affordable healthcare.”