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Several Limited Distribution Deals Confirmed

Announcements for newly approved specialty drugs often state that the product will be available through specialty pharmacy in limited distribution. However, the press releases rarely specify the specialty pharmacy(ies) selected as the designated partner(s).

Here are a few LD deals that have been recently publicly confirmed subsequent to the approvals.

Orsini Specialty Pharmacy
Sanofi has selected Orsini as a limited distribution partner for Nexviazyme (avalglucosidase alfa-ngpt). Nexviazyme, an enzyme replacement therapy (ERT), is used for treating patients one year of age and older with late-onset Pompe disease (lysosomal acid alpha-glucosidase [GAA] deficiency).

AllianceRx Walgreens Prime.
Arcalyst (rilonacept) is the first and only FDA-approved product for the treatment of recurrent pericarditis and reduction in risk of recurrence. Pericarditis is a painful and debilitating autoinflammatory cardiovascular disease associated with swelling of the sacklike membrane surrounding the heart. Arcalyst is also approved by the FDA for the treatment of Cryopyrin-Associated Periodic Syndromes (CAPS), a group of rare hereditary autoinflammatory disorders, including Familial Cold Autoinflammatory Syndrome and Muckle-Wells Syndrome, and for the maintenance of remission of Deficiency of Interleukin-1 Receptor Antagonist (DIRA), an autoinflammatory disease affecting fewer than 50 people worldwide. Kiniksa Pharmaceuticals manufactures Arcalyst, which is also a registered trademark of Regeneron Pharmaceuticals, Inc.

Gavreto (pralsetinib) is a once-daily oral prescription medicine used to treat certain cancers caused by abnormal RET-positive (rearranged during transfection) genes in non-small-cell lung cancer that has spread (metastatic) or advanced thyroid cancer that may have spread. Blueprint Medicines manufactures Gavreto.

Maxor Specialty Pharmacy
Elixir has selected Maxor as its exclusive Cystic Fibrosis (CF) provider in its specialty pharmacy network. Maxor Specialty Pharmacy will provide Elixir CF patients with case management, education, such as how to clean and maintain their equipment, and fulfill their prescriptions. Maxor is one of four pharmacies in the United States with access to all CF drugs, including Trikafta.


FDA Approves Implantable Tx for AMD – Susvimo

The FDA approved a new therapy, Susvimo (ranibizumab injection) from Genentech, indicated for intravitreal use via ocular implant for wet age-related macular degeneration (AMD) with at least two prior anti-vascular endothelial growth factor (VEGF) injections. The implant is surgically inserted into the eye during a one-time, outpatient procedure and can be refilled every six months.

Wet AMD impacts approximately 1.1 million people in the United States and is a leading cause of blindness in people aged 60 and older. Age-related macular degeneration (AMD) is a condition that affects the macula, the part of the eye that provides sharp, central vision. AMD is an advanced form of the disease that can cause rapid and severe vision loss. Approximately 11 million people in the United States have some form of AMD.

Genentech developed the first anti-VEGF medicine, Lucentis (ranibizumab injection), approved for wet AMD by the FDA in 2006. Susvimo, however, is different from the ranibizumab intravitreal injection.

Pricing for Susvimo was not released. By way of reference, Lucentis costs approximately $2,000 / month and is administered monthly….. so upwards of $24,000 annually. Analysts believe that Susvimo will generate more than $1 billion in 2022 sales. The 2020 AMD market in the US generated more than $35 billion in sales.
Distribution details on were not released. However, virtually all other therapies for AMD and other high-cost Ophthalmology injectable therapies are currently in limited distribution, direct-to-provider, via specialty pharmacies.
Susvimo will be available in the United States later this quarter.

CLICK HERE to access the full Genentech press release.

FDA Approves Genentech’s Susvimo, a First-of-Its-Kind Therapeutic Approach for Wet Age-Related Macular Degeneration (AMD)

Susvimo, previously called Port Delivery System with ranibizumab, is the first wet AMD treatment in 15 years to provide an alternative to standard-of-care eye injections needed as often as once a month
By continuously delivering medicine into the eye through a refillable implant, Susvimo may help people with wet AMD maintain their vision with as few as two treatments per year

October 22, 2021 — Genentech, a member of the Roche Group, today announced that the U.S. Food and Drug Administration (FDA) has approved Susvimo (ranibizumab injection) 100 mg/mL for intravitreal use via ocular implant for the treatment of people with wet, or neovascular, age-related macular degeneration (AMD) who have previously responded to at least two anti-vascular endothelial growth factor (VEGF) injections. Wet AMD is a potentially blinding condition that requires treatment with eye injections as often as once a month. Susvimo, previously called Port Delivery System with ranibizumab, is the first and only FDA-approved treatment for wet AMD that offers as few as two treatments per year.

“Susvimo represents a major advancement in the treatment of retinal disease and is an important new option for patients with wet AMD,” said Carl Regillo, M.D., Chief of Retina Service at Wills Eye Hospital in Philadelphia and an Archway study investigator. “With Susvimo, my patients now have an option that can help them maintain their vision as well as anti-VEGF injections, but on a more manageable twice-yearly treatment schedule.”

Susvimo delivers ranibizumab continuously, offering people living with wet AMD an alternative to anti-VEGF eye injections needed as often as once a month

The approval is based on positive results from the Phase III Archway study primary analysis, which showed wet AMD patients treated with Susvimo achieved and maintained vision gains equivalent to monthly ranibizumab injections – +0.2 and +0.5 eye chart letters from baseline, respectively – at weeks 36 and 40 of treatment. In addition, only 1.6% of Susvimo patients received supplemental ranibizumab treatment before their first refill, and more than 98% could go six months before their first refill.

Genentech is committed to helping people access the medicines they are prescribed and will be offering comprehensive services for people prescribed Susvimo to help minimize barriers to access and reimbursement. Patients can call 833-EYE-GENE for more information. For people who qualify, Genentech plans to offer patient assistance programs through Genentech Access Solutions. More information is also available at (866) 4ACCESS/(866) 422-2377 or

Genentech’s late-stage ophthalmology portfolio also includes faricimab, a bispecific antibody under FDA and EMA review for the treatment of wet AMD and DME. The FDA is additionally reviewing faricimab for the treatment of diabetic retinopathy.

Press release continues…………


FDA Approves Second Interchangeable Biosim – Cyltezo

A little over two years ago we reported on the approval of yet another biosimilar to Humira (yawn), Cyltezo (adalimumab-adbm) a sub-q therapy from Boehringer Ingelheim. It was noteworthy at the time, but didn’t create any ripples in the pharmacy world….. till now.

This week the FDA approved Cyltezo….. again.
But the big news is that now the therapy has earned a precious gold star designation as an interchangeable biosimilar to AbbVie’s Humira. This is only the second interchangeable biosimilar to date.

Cyltezo still won’t be available until July 1, 2023 as a result of settlement with AbbVie that allows marketing in the United States. Pharmacists will then be able to routinely substitute Cyltezo for AbbVie’s mega-blockbuster without a prescriber’s OK. Payers and PBMs will also have broader latitude to regigger their formularies to steer selection to the lower cost interchangeable(s?).

The remaining question is….. “So, how much will it cost?”
Analysts suggest that the discounts (vs. Humira) of up to 50% as seen in Europe may be the upper limit in the US. Even a 30+% discount would deliver huge $$ savings in the US.

Cyltezo has the leg up on a crowded field of Humira competitors with its interchangeable title. Current frontrunners include Amgen’s Amjevita (adalimumab-atto) (also likely to launch in January 2023), Sandoz’s Hyrimoz (adalimumab-adaz), Pfizer’s Abrilada (adalimumab-afzb) and Samsung’s Hadlima (adalimumab-bwwd). Others are pending FDA approval and/or are seeking the interchangeable designation crown as well.

FDA Approves Cyltezo, the First Interchangeable Biosimilar to Humira

Second Interchangeable Biosimilar Product Approved by Agency

The U.S. Food and Drug Administration approved the first interchangeable biosimilar product to treat certain inflammatory diseases. Cyltezo (adalimumab-adbm), originally approved in August 2017, is both biosimilar to, and interchangeable with (may be substituted for), its reference product Humira (adalimumab) for Cyltezo’s approved uses. Cyltezo is the second interchangeable biosimilar product approved by the agency and the first interchangeable monoclonal antibody. Once on the market, approved biosimilar and interchangeable biosimilar products can play a role in facilitating access to treatments for many serious health conditions.

“The biosimilar and interchangeable approval pathway was created to help increase access to treatment options for patients with serious medical conditions,” said Acting FDA Commissioner Janet Woodcock, M.D. “We continue to be steadfast in our commitment to provide patients with alternative high-quality, affordable medications that are proven to be safe and effective.”

Cyltezo is approved for the following indications in adult patients:
– moderately to severely active rheumatoid arthritis;
– active psoriatic arthritis;
– active ankylosing spondylitis (an arthritis that affects the spine);
– moderately to severely active Crohn’s disease;
– moderately to severely active ulcerative colitis; and
– moderate to severe chronic plaque psoriasis
– moderately to severely active polyarticular juvenile idiopathic arthritis in patients two years of age and older
– pediatric patients six years of age or older with Crohn’s disease.

Biological products, generally derived from a living organism, include medications for treating many serious illnesses and chronic health conditions. A biosimilar is a biological product that is highly similar to, and has no clinically meaningful differences from, a biological product already approved by the FDA (also called the reference product). Patients can expect the same safety and effectiveness from the biosimilar as they can from the reference product. Interchangeable biosimilar products can be expected to produce the same clinical result as the reference product in any given patient and, for biological products administered more than once to an individual, the risk in terms of safety or diminished efficacy of switching between the two products is not greater than the risk of using the reference product without such switching.

Cyltezo, offered in a single-dose, pre-filled glass syringe (40 mg/0.8 mL, 20 mg/0.4 mL), is administered subcutaneously (under the skin) under the guidance of a physician. The most serious known side effects with Cyltezo are infections and malignancies (cancers). The most common expected adverse reactions are upper respiratory and sinus infections, injection site reactions, headache and rash.

Like Humira, the labeling for Cyltezo contains a boxed warning to alert health care professionals and patients about an increased risk of serious infections that may lead to hospitalization or death. The boxed warning also notes that lymphoma and other malignancies, some fatal, have been reported in children and adolescent patients treated with tumor necrosis factor blockers, including adalimumab products. The drug must be dispensed with a patient Medication Guide that describes important information about its uses and risks.

The FDA granted approval of Cyltezo to Boehringer Ingelheim on October 15, 2021.


What are Your Customers’ Social Determinants of Health

Last week we published a review of the 2021 Medication Access Report which detailed a variety of access barriers including COVID-19, logistics, financial burdens, and more. We suggested that understanding the scope of access challenges would be good knowledge for anyone working in the specialty pharmacy segment, but especially those that work in marketing, communications and web messaging. Today we turn up the heat.

The results of a recent research survey, sponsored by AllianceRx Walgreens Prime, offer deep dive insights into the social determinants of health and, specifically, how these determinants impact patient access to health.

Here are the key areas covered in the survey…..
When we say it is a deep dive we mean it – especially for a specialty pharmacy.
Safe housing, transportation, and neighborhoods
Racism, discrimination, and violence
Education access, job opportunities, and income
Access to nutritious foods and physical activity opportunities
Polluted air and water
Language and literacy skills

The findings are highly insightful and are appropriate for leadership in specialty pharmacies as well as those involved in communications to better know their customers.

CLICK HERE to access the survey findings

How Specialty Pharmacies Address Social Determinants of Health
Specialty pharmacies are uniquely positioned to identify social determinants of health that could impact medication adherence and health outcomes.

Specialty pharmacies play an integral role in ensuring patients receive, understand, and adhere to medications prescribed by their providers. This role also includes coordinating the numerous aspects of patient care and disease management.

“Specialty pharmacies are responsible for assisting patients through their treatment journey, which in many cases may be a lifelong journey with many complexities and challenges,” says AllianceRx Walgreens Prime Vice President of Clinical and Professional Services Rick Miller, MS Pharm, MBA, BS Pharm, CSP.

Many specialty patients present with autoimmune disorders, cancer, bleeding and blood disorders, HIV/AIDS, multiple sclerosis (MS), along with other chronic and rare conditions. As a result of working so closely with patients, specialty pharmacies are uniquely positioned to spot obstacles likely to impact the patient’s ability to begin and stay on their medications — including those obstacles that are commonly known as the social determinants of health.

The US Department of Health and Human Services defines social determinants of health (SDOH) as the conditions in the environments where people are born, live, learn, work, play, worship, and age that affect a wide range of health, functioning, and quality-of-life outcomes and risks.

These social determinants of health have a major impact on patient care, with access to and the quality of medical care impacting approximately 20 percent of a patient’s health and well-being, SDOH factors impact the remaining 80 percent of health outcomes.

Economic stability is a leading social determinant of health with implications for patient outcomes when patients cannot afford necessary care, including medications. Individuals facing financial hardship are in a precarious situation and often opt to avoid care, which can have severe implications for those with complex and chronic medical conditions requiring specialty medications.

A growing body of literature indicates that cancer patients are more likely to not receive necessary medical care due to financial hardship and report changes in prescription drug use due to financial reasons. What’s more, estimates show that medication non-adherence costs the healthcare industry $300 billion, one-third of total waste, with $100 billion alone tied to avoidable hospitalizations.

High costs are a defining feature of specialty medications, though definitions vary. Whereas the Centers for Medicare & Medicaid Services indicated costs of more than $670 per month back in 2017, the Congressional Budget Office stated an annual cost of $6,000 as recently as 2015.

With cost being a significant factor in medication adherence, specialty pharmacies on the frontlines have the power to identify and address economic stability among the patients they serve, improving health outcomes and reducing costs by avoiding hospitalizations and emergency care services were a patient’s condition to deteriorate.

Specialty pharmacies assist with implementing the care plan developed in collaboration between the physician, patient, and/or patient’s caregiver and ensuring the medications are properly dispensed and taken.

Earlier this year, AllianceRx Walgreens Prime and Highmark launched a pilot to identify the impact of SDOH on patients with MS in terms of quality of life and health outcomes. Trained nurses at the specialty pharmacy contact patients who have agreed to participate in the pilot by phone to administer a 13-question SDOH survey. The results of which are reviewed by the health plan to determine the support necessary for individuals facing these financial, behavioral, or environmental challenges.

In addition to the SDOH pilot, AllianceRx Walgreens Prime’s staff focuses on identifying potential obstacles to patient care.

“At AllianceRx Walgreens Prime, many of the cues will be verbal in nature due to the high prevalence of the way in which we telephonically interact with patients,” Miller explains. “We work with our staff to properly train them in active listening. You need to listen to the patient, listen to their responses. For example, focusing on any hesitation, any language barriers, or any confusion.”

A combination of staff and services allows the specialty pharmacy to holistically meet the needs of patients head-on, including pharmacists, nurses, patient care coordinators, and financial experts. The ability to provide wrap-around support services puts the specialty pharmacy in a position to work with charitable foundations and pharmaceutical companies as well as health plans and providers to coordinate appropriate care for each patient.

But the coordination of services is only as effective as the specialty pharmacy staff’s ability to recognize that a problem exists. This is especially true for patients with MS who often experience depression and fatigue during therapy. Nurses at the specialty pharmacy are equipped to screen for these factors and report the results to the appropriate specialist.

Responsible for the initiation of therapy and each subsequent refill, the specialty pharmacy has numerous opportunities to engage with patients and screen them for potential obstacles for optimal care and outcomes. In truth, providing holistic care to patients has been a staple of successful specialty pharmacies, given their central role in medication adherence.

There are two ways the specialty pharmacy helps ensure medication adherence among its patient population. First, they can empower patients by educating them about their condition, therapy, medication, expected clinical outcomes, and potential adverse events. Second, specialty pharmacies can reach out to patients “off-cycle” to identify potential issues between refills that could negatively impact adherence.

In short, it all comes down to working closely with patients and listening to their needs.

“We collaborate with the patient. We let them also know that they’re not traveling through this journey alone and that we’re here to help them 24/7,” Miller concludes.

While the focus on social determinants of health has grown considerably before and throughout the pandemic, specialty pharmacists have remained well suited to address and overcome these obstacles to improve the lives of patients they serve.

as published in Health Payer Intelligence


What’s Up with White / Brown / Clear Bagging?

We’ve written frequently on two of the biggest trends in channel access, the shift away from buy-and-bill to other, less costly, sites of service as well as payer policies that have shifted reimbursement away from physician / hospital purchased drugs to specialty pharmacies. An article we want to review today is from Drug Channels. It is a great read and includes some fresh data to document these trends.

That article, an excerpt from a larger market report available for purchase from the company, first refreshes our understanding of the types of patient access now being employed. By now we are all familiar with White Bagging and Brown Bagging (if not, read the article). A term that is beginning to catch on is Clear Bagging in which the hospital-owned specialty pharmacy does the fulfillment.

What the data shows is that there has been a significant increase in White Bagging over the past two years with a 20% increase at physician practices and a 25% increase at hospital outpatient departments. Brown Bagging has virtually disappeared in these settings. Strangely, buy-and-bill at Home Infusion companies actually increased by a whopping 41% in the same time period and Brown Bagging more than doubled. Go figure! The data is based on a very large ‘n’ of payers nationally. 

There are several points for further consideration. 

  • First, the list of impacted drugs goes beyond Oncology….. and is growing.  
  • Secondly, a number of specialty pharmacies have been designated by manufacturers as limited distribution (LD) partners (often exclusive) for certain drugs….. even bypassing traditional wholesalers. Since virtually all of these SPs are now also licensed distributors they can sell direct for professional use as a buy-and-bill drug….. under the medical benefit. (Not popular with hospitals and many providers.
  • Next, Payer and PBM policies have ramped in the past year+ to push these transactions over to the pharmacy benefit (even less popular) through rewriting the patient benefit plan…. including introducing patient OOP if billed as a medical benefit. 
  • Concurrently, PBMs and Payers have been able to co-opt these dynamics to further their cost management efforts on other, non-LD drugs. The data does not separately break out these LD drugs which further muddies up the total White Bagging picture.  
  • And finally, we can more easily understand why hospitals are increasingly desperate to redirect fills internally to owned specialty pharmacies to recapture lost buy-and-bill revenue.

White Bagging Update: PBMs’ Specialty Pharmacies Keep Gaining on Buy-and-Bill Oncology Channels Drug Channels, October 2021


New Report Offers Fresh Insights on Patient Challenges

We all know that the past year has been nothing short of a massive monkey wrench thrown into the US healthcare machinery and the impacts are only now being assessed. Specialty pharmacies have been acutely attuned to patient psycho-social needs for a long time and need to adjust their patient facing programs according to changing times. Some fresh guidance might be timely.

A new study was recently released that you may not have seen. For many readers it may be outside your bailiwick, but the info is something that your marketing, media, and web messaging colleagues might want to review to keep pace with these challenging times.

The link below will connect to the 2021 Medication Access Report published by CoverMyMeds, part of McKesson’s Prescription Technology Solutions. It uses industry research, patient interviews and new survey data from patients, pharmacists and providers to investigate medication access barriers and how we can overcome them as an industry, especially in the wake of the COVID-19 pandemic.

CLICK HERE to read the report

The 2021 Medication Access Report emphasizes medication access barriers further impacted by the COVID-19 pandemic and technology that can make a difference

  • 36% of Patients Sacrifice Medications to Afford Basic Needs

COLUMBUS, Ohio, Jan. 26, 2021 /PRNewswire/ — The impact from the COVID-19 pandemic caused tens of millions of Americans to lose their jobs, health insurance and, for some, access to their medications. New research released today by CoverMyMeds found that 65 percent of patients were financially impacted by the COVID-19 pandemic and 36 percent sacrificed their treatments or medications to pay for bills and basic needs. Others have done the inverse: 43 percent have had to forgo paying for essential items and bills to afford needed medications,2 while 41 percent have skipped or modified medication doses to stretch out prescriptions.

“I don’t know how people can afford to be sick and still live their lives,” said Patricia F., a patient featured in the 2021 Medication Access Report who shared her experience managing multiple sclerosis. “I take it one day at a time and hope I’m not going to find out when it’s too late that I really should have been on medication.”

The 2021 Medication Access Report also highlights technology designed to help inform medication conversations with patients, support prescribing decisions, and empower patients and caregivers to become part of their own care team, including:

Prescription Price Transparency
Sixty-two percent of patients ask their provider about medication price and affordability options.2 Equipping providers and care team members with tools that show prescription cost, remaining deductible, formulary alternatives, cash price and cost savings programs at the point of prescribing can help bolster affordability conversations with patients.
When a prescription cost more than expected, 43 percent of patients in 2020 said they checked a pharmacy comparison app to find a better price, up from 28 percent in 2019.

Tech-Enabled Patient Support Services
Specialty therapies are often the hardest to access for patients, usually due to process complexity and affordability challenges. Nearly half of providers surveyed indicated they changed how they approach specialty patient appointments due to COVID-19 while nearly one in five providers saw a decrease in patient therapy compliance.
Through continued development of electronic patient support services, available at the point of prescribing for prescribers and their staff, more patients can experience end-to-end support to access specialty medications. In some cases, such programs have contributed to a 34 percent reduction in time to therapy.

Electronic Prior Authorization
Due to manual prior authorization management, over one third of providers reported having less time for face-to-face interaction with patients—during which meaningful conversations about affordability, access or social circumstances could occur.

Adoption of a robust electronic prior authorization solution can help reduce manual processes and improve patient outcomes. In fact, 62 percent of prior authorization requests submitted electronically receive a determination within two hours, and 43 percent receive a determination automatically.

“Patients need reliable paths to medication access, and they shouldn’t have to choose between basic needs to access and afford their medications,” said Miranda Gill MSN, RN, NEA-BC, Senior Director, Provider Services and Operations at CoverMyMeds. “Encouraging patients to proactively participate in their care plan has shown to help improve outcomes. By utilizing reliable technology to view cost, quality and convenience options, the patient and provider can collaborate to make the best treatment decision for the patient.”


FTC Report on Rebates Will Fuel Fire in DC

The debate over rebate appropriateness has heated up over the past year. The focus on drug spend is now burning bright, especially given the current push in Washington to allow federal drug negotiation. But one thing is clear, rebates have a profound effect on the total drug price model.

The Federal Trade Commission recently issued a report on PBM rebate walls that is sure to add even more fuel to that fire. (Read on to get a definition of the “rebate wall”.)

As noted in the article….. “Federal agencies and plan sponsors—the clients of PBMs—are beginning to explore perverse PBM incentives and are waking up to abusive PBM practices. PBMs are incentivized to select higher list price drugs instead of lower list price drugs for their formularies in order to collect a higher rebate… Because rebating practices from drug companies to PBMs can make it more difficult for new, lower-priced drugs to succeed in the marketplace, PBMs may actually be causing drug prices to increase, rather than decrease.” This so called “rebate wall” is, among other things, driving up drug spending and hindering patients’ access to their medications.”

“Additionally, more than 77% of prescription claims in the country are processed by the top three , which have strategically created a complex web of vertically integrated plan sponsors, rebate aggregators, specialty pharmacies, and provider services.”

Specialty pharmacies are peripherally impacted by rebates. Higher drug costs translate into larger reimbursements when using the traditional percentage formulae used for calculating pharmacy reimbursements. However, higher cost translates into lower persistence rates, i.e., patients can’t afford to stay on their meds. The cost of that lost patient revenue can easily offset any increase in reimbursement that can be realized in up front margin.

Wherever you stand on the topic, the article below and the FTC report (link follows) will keep you abreast of what is happening on the front line of the debate.

CLICK HERE to access the FTC report (only 6 pages)

How PBM “rebate walls” impact drug spending, patient care and competition

Federal agencies and plan sponsors—the clients of PBMs—are beginning to explore perverse PBM incentives and are waking up to abusive PBM practices.

This article examines pharmacy benefit manager (PBM) “rebate walls” and the impact on the United States drug supply chain. The Federal Trade Commission head, Commissioner Rohit Chopra, recently issued a report on PBM rebate walls, and this can be seen as a pivotal industry moment. Federal agencies and plan sponsors—the clients of PBMs—are beginning to explore perverse PBM incentives and are waking up to abusive PBM practices. One of the Commissioner’s important is that “PBMs are incentivized to select higher list price drugs instead of lower list price drugs for their formularies in order to collect a higher rebate… Because rebating practices from drug companies to PBMs can make it more difficult for new, lower-priced drugs to succeed in the marketplace, PBMs may actually be causing drug prices to increase, rather than decrease.” This so called “rebate wall” is, among other things, driving up drug spending and hindering patients’ access to their medications.

Indeed, gross-to-net bubble (i.e., difference in dollars between gross sales of brand name drugs’ list prices and their net sales prices after deducting rebates and other discounts) climbed to $175 billion in 2019 and is estimated to exceed $187 billion.[2] The growing trend in the gross-to-net bubble is directly associated with the current structure of the pharmacy industry. More than 77% of prescription claims in the country are processed by the top three , which have strategically created a complex web of vertically integrated plan sponsors, rebate aggregators, specialty pharmacies, and provider services.
The PBM/insurance companies’ vertical integration scenario provides an opportunity and incentivization for PBMs to create rebate arrangements that bring the most financial benefit to themselves, rather than benefiting plan sponsors, such as private plans and even Medicare and Medicaid Managed Care Organizations (MCOs). For example, Broward County (Florida) discovered that OptumRx was not accurately reporting manufacturer drug rebates and, in fact, contracted out its rebate duties to a rebate aggregator, which is a subsidiary of OptumRx’s parent company, UnitedHealth Group. The rebate aggregator further sub-contracted with Express Scripts. OptumRx ultimately paid back $833,772 to Broward County, the plan sponsor.[3] Also, it is often the case that PBMs exclude prescription claims processed by their own or affiliated pharmacies (e.g., specialty pharmacies and mail-order pharmacies) from rebates. By doing so, rebates that could have been passed on to plan sponsors are staying within PBMs’ vertically integrated network.

The “rebate wall” also correlates with the sharp increase in patients’ out-of-pocket expense, negatively impacting patient care. It was reported that patients’ out-of-pocket expense reached $53.7 billion in 2019. High out-of-pocket expenses discourage patients from adhering to their medication regimen. In fact, a study by Kaiser Family Foundation showed that “nearly 1 in 4 Americans who take prescription medications say it is difficult to afford them.” Unfortunately, non-adherence leads to unfavorable patient health outcomes and increases health care costs. As noted above, PBMs are incentivized to place high-priced medications in the formulary, which in turn, yield higher rebates, even if there exist cheaper and therapeutically interchangeable alternatives. For instance, TRICARE’s formulary managed by Express Scripts listed Yonsa, a brand-drug used to treat certain cancer, as a preferred-drug and listed a significantly cheaper generic alternative, Zytiga, as a no-preferred, and further required “step-therapy” before allowing patients to try Zytiga. In the end, plan sponsors need to carefully examine the contractual relationship with PBMs and also be aware of both the law and remedies to check abusive PBM practices.

Of course, ‘Who is on the losing side when PBM companies consolidate into market-dominating giants and then collaborate with drug manufacturers to protect big-pharma profits, to the detriment of lower-cost competitive solutions?’ was not easily answered by the FTC until now, as the agency has historically failed to scrutinize PBM and pharma deals. Yet, a new dawn has come: With the new administration arrives a novel approach to tackling the immense consolidation that has occurred in the multi-sided PBM marketplace and its interface with the pharma industry. Keep in mind, the underlying principle behind the PBM concept was originally meant to serve plan sponsors (and ultimately their covered patient lives) by more efficiently managing drug formulary and keeping down the ever-escalating prescription drug costs. In reality, however, the dominant PBMs often coopt big pharma’s strategic rebates, designed to make competitive entry more difficult, if not impossible, for generic alternatives, and reap the resulting benefits for themselves, as opposed to passing them on to their customers, the plan sponsors.

In a refreshing change of tune, in the FTC’s report, the federal antitrust watchdog summarizes the dangers as follows: “Rebates can become a ‘trap’ for payers and providers, causing them to make decisions about coverage and utilization for their beneficiaries due to the financial incentives created by the rebate structure. … In this way, some rebates can operate to increase overall drug spending. … In addition, rebate walls such as those described above may reduce incentives for biotechnology companies to develop new medicines and/or invest in biosimilars, harming competition and the quality of care available to patients.”

Even more promising, Commissioner Chopra issued a separate personal statement, calling out his agency’s prior inaction and the unfettered consolidation and market power of the “three main giants” of the PBM industry. Without hedging his bets, the Commissioner notes that, while PBMs are “supposed to exert their bargaining power on behalf of patients to get better prices on drugs,” the industry “suffers from serious conflicts of interest and lack of transparency.”
In short, the FTC has finally awakened to the anti-competitive nature of many PBM practices that have plagued the multi-faceted industry for many years. This means that the time to act is now for plan sponsors, independent pharmacies not affiliated with large PBMs, and competitive drug makers wishing to compete with Big Pharma in these difficult markets. The FTC and (at least some of) its commissioners have now shown a willingness to listen to antitrust complaints about PBM misbehavior, and their Washington, D.C. office doors are open to all industry players who have valuable information to bring to the enforcers’ attention

By Jonathan Levitt, Esq., Dae Lee, Pharm.D, Jesse C. Dresser, Esq., Andreas Stargard, Esq.
Benefits Pro October 01, 2021

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