Curiouser and curiouser…….
Over the past three years the three largest PBMs each formed a GPO to, in their words, “capitalize on scale to get better drug prices.” That, in itself, should not be a surprise since better pricing is the essential definition of a GPO….. the more ya buy the better the prices. Right?

What is a surprise is that these GPOs were formed on a counter intuitive premise…. that their volume was soooo large that they could unilaterally negotiate better acquisition prices than by partnering with a traditional GPO that would bundle their volume with many other purchasers to drive even greater bargaining power. And, as cited below, “nowhere will you find some particular customer need that is being better served by the existence of this new entity.” Makes one think.

That at least two of the GPOs referenced in the article were formed in Europe (Switzerland and Ireland) may hold new insights on ‘global’ vs. ‘US only’ purchasing power. Are we witnessing a gosh darned paradigm shift…. by golly? Or, is this just part of a strategy to help insulate a key element of the PBM model given the looming US regulatory initiatives that have been targeting their business practices of late. Makes one think.

Dear readers….. there have been few articles published recently that raise as many issues and questions as the article below. It is well worth a thoughtful reading.

Three PBMs, three PBMs
See how they run, see how they run

Did you ever see such a sight in your life as these three PBMs?

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PBMs are Creating GPOs, and Stirring Debate as to Why

The ‘Big Three’ all set up group purchasing organizations recently, but some industry observers question the timing of the move and who will benefit.

July 12, 2022 — In 2019, Express Scripts PBM formed Ascent Health Services GPO (group purchasing organization), based in Switzerland. In 2020, CVS Caremark formed Zinc GPO. And in 2021, OptumRx formed Emisar Pharma Services, based in Ireland. With pharmacy benefits for approximately 75% of U.S.-covered lives under their control, why would these PBMs need GPOs — to capitalize on their scale to get better drug prices?

“In each case, there’s what the PBM said, and then you have to do your best to fill in the blanks of what could possibly be going on,” says Howard Deutsch, principal at ZS Associates, a global professional services firm with offices in Boston. “They haven’t said a heck of a lot. They’ll say things about serving customer needs, but nowhere will you find some particular customer need that is better being served by the existence of this new entity.”

With the Big Three PBMs already covering a majority of prescription claims, “the idea that they needed to create some sort of new entities so they can have some bargaining power is kind of ludicrous,” Deutsch says. “They already had plenty of bargaining power and were using that quite effectively. It’s unclear from what they’ve publicly said what the value proposition is to the rest of the healthcare system. The value proposition to the PBM is somewhat clear.”

Pricing is one reason Ken Paulus, president and CEO of Prime Therapeutics, gave in an interview last year with Managed Healthcare Executive®. Prime entered into an agreement with Express Scripts three years ago whereby Express Scripts handles some of the negotiations with pharmaceutical manufacturers. As a minority owner of Ascent GPO, Prime has direct access to all the GPO contracts and received savings it would not have gotten otherwise, Paulus said in the interview. Prime still processes its own claims and performs utilization management, Paulus said, but the GPO was “a fairly elegant solution for us to save significant dollars for clients and members and employers, but do so without giving up our strategic optionality, which is continuing to run our own business.”

Alan Lotvin, president of CVS Caremark, CVS Health’s PBM, said in a recent interview with Managed Healthcare Executive® that the GPO was a way for CVS Caremark to “separate out all the different lines of business onto separate contracts” and gain some bargaining power.

“It wasn’t, at least in our minds, so much about regulation,” Lotvin said. “I thought about more that if we have a single rebate contract that covers multiple lines of business, if one line of business is impacted by a decision, if I have to go back to pharma and renegotiate, I am renegotiating from a position of weakness. So, if I disaggregate proactively, now I’ve taken a tool away from the manufacturers.”

With the consolidation in the PBM industry and with large payers now integrated with PBMs, “the payer value proposition is pretty important,” observes Ashraf Shehata, national sector leader for healthcare and life sciences for KPMG, a consulting and accounting firm. Over the years, PBMs have moved into a shared services role within their health plan owner systems. The PBM would typically be the largest single entity in the shared services business. But Shehata anticipates seeing other capabilities like care management, IT services and data analytics moving into various shared services buckets as these frameworks for large multientity payer enterprises mature.

GPOs negotiate prices of drugs, medical products and devices for members. In healthcare, the members have traditionally been hospitals and nursing homes. The idea is to lower prices and reduce transaction costs by increasing the purchasing power of a larger group. The GPOs are often member-owned and funded by administrative fees.

Suspicious of the timing
The spate of GPO launches by PBMs came as Congress was debating legislation that would establish new transparency requirements for PBMs, notes James Gelfand, executive vice president, public affairs, of the ERISA Industry Committee, a trade association representing large employers. Transparency language was included in the Lower Health Care Costs Act in 2019, which the PBMs lobbied against, according to Gelfand. PBM transparency provisions are also included in the now-defunct Build Back Better bill.

Gelfand finds the timing for forming GPOs suspicious. “Are you creating another intermediary in the supply chain to prepare for transparency requirements that are going to be specific to the PBM?” he asks. Many have worked to bring more transparency to the drug supply chain and healthcare system in recent years. With so many entities involved in the drug supply chain, such as insurance companies, PBMs and vendors that set up and run the plans, adding another intermediary — the GPO — risks losing some of the progress made, Gelfand believes.

Employers want to know whether the new GPO entity will retain rebates or discounts instead of them going back to plan sponsors, Gelfand says. Will this new layer add costs? Will GPOs be able to negotiate better than the PBMs? Will the PBM use the excuse that it cannot provide the requested data or information because the GPO has it and there is a firewall?

“We have moved pretty far ahead in terms of making sure that the plan sponsor owns the plan and the data in the plan. But this could be a setback depending on how it’s implemented,” Gelfand says.

Vendors will always say they are performing better and overall savings have improved. But plan sponsors need to do complex data reconstruction and analysis to be sure. “Vendors are going to guarantee us that we’re reaping the benefits of lower prices, but it’s a trust-but-verify situation. I haven’t had time to verify,” Gelfand says.

Deutsch suspects that the new GPO layer will keep some of the rebates and only pass through a percentage to the PBMs. With PBMs, “almost every single penny on the dollar is passed through to the plan sponsors now,” so PBMs do not have that revenue stream. The GPO can take a cut through an administrative or data-use fee to retain some of the rebate, he said.

Ultimately, many experts anticipate prices going up. “I don’t see how you can add another middleman and not add more cost to the system,” says Kevin Young, co-founder and chief product officer of Prescryptive, a prescription data platform with a PBM product.

“It’s going to be up to the plan sponsor to evaluate the benefits and the value they’re getting from the PBM relationship,” says Shehata. If the overall benefit is good, they will not care about individual fees, he says. “Most buyers of PBM services and most consultants that evaluate (PBM contracts) look at the total value rather than separating individual fees.”

Outside experts also have questions about why Express Scripts located its GPO in Switzerland and OptumRx did so in Ireland. “They stand to lose a lot if they get regulated on rebates,” notes Young. “Creating another organization that’s offshore, they can protect their interests, protect their shareholders’ interests.” Europe does not make much sense as a location for U.S. healthcare entities, says Deutsch: “Switzerland is not exactly a hotbed of U.S. pharmaceutical activity.”

But Shehata thinks placing the GPOs outside the U.S. makes sense: “Going back to that shared services model, the belief is that many organizations build shared services structures at a global scale to actually optimize their ability to work at scale.” He says many payers run organizations in multiple countries and have global businesses ranging from infrastructure to call centers. “I think of this as consistent with their global delivery model and less of a short-term move to try to reduce liabilities.”

No matter where a vendor is located, Gelfand wants to make sure it is still subject to transparency and accountability rules. “I don’t know that basing your company in another country gets you out of any of that,” he says. “If being based in Ireland or Switzerland gives you a better tax rate, that’s not our business as customers. We don’t care about that. We care about what effect will it have on patients and our ability to provide the best benefits for the patients.”

GPO creation “could be a really good thing or it could be a really bad thing. And … it’s too early for us to tell,” Gelfand says.

Deborah Abrams Kaplan
MHE Publication, MHE July 2022, Volume 32, Issue 7
CLICK HERE to access the published article

We’ve been watching the slow but steady growth of value based contracting (VBCs) for some years now. Conceptually VBCs make a lot of sense. Payors always want discounts but manufacturers are reluctant to offer discounts especially on high-cost, rare therapies where patient counts can be scarcer than hens’ teeth.

So, years after appearing on the healthcare stage VBCs are essentially still as scarce as hens’ teeth. The reason…. they are gosh darn difficult to structure, measure in real time, and establish equitable rules that ultimately determine when a payor gets paid a penalty when the data says a therapy hasn’t performed up to the terms of the ‘warranty’. In other words, manufacturers don’t want wanky data collection to be the reason that they get spanked for non-performance.

The article below offers some insights on the proliferation of VBCs in the marketplace. One author suggests that there are four verities of VBCs (news to me). More noteworthy is the approach taken by MassHealth in which a cross functional team from all key areas of the organization (clinical, admin, finance, IT, etc.) are integral to developing a comprehensive, and enforceable, contract model that meets the organization’s needs along with terms acceptable (palatable?) to the manufacturer. Perhaps most importantly, the model goes further to ensure the contract is rigorously supported and maintained post implementation.

The article suggests when a VBC makes most sense….. “Drugs well suited for VBCs include those that may have been approved based on biomarkers, those with limited real-world evidence and those in which there is a question surrounding safety and efficacy. It allows the manufacturer to stand behind the expected outcomes of a drug.”

In our experience, one thing seems to be overlooked in developing a VBC. Specialty pharmacies are often completely overlooked as key partners in the contract model. SPs are most likely to dispense or distribute the kinds of therapies most likely to be targeted for a VBC. SPs are only one degree of separation from the patient. They also have a long track record of collecting very discreet and highly detailed clinical data…. and reporting that data to manufacturers further adding to their credibility. SPs may want to promote these skills to both payors and manufacturers when VBCs are being negotiated.

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4 Value-Based Contracting Strategies

Value-based contracts (VBCs) provide an opportunity for manufacturers to evaluate outcomes not studied in clinical trials, while offering payors attractive pricing.

Speakers at a panel discussion at the AMCP 2022 annual meeting provided insight into these benefits, along with an assessment of the Value Based Contracts (VBC) marketplace and advice on how payors can pursue such contracts.

“I see this as an organized scramble right now,” Paul Jeffrey, PharmD, the principal at Paul Jeffrey Consulting and retired senior director of pharmacy for MassHealth, the Massachusetts Medicaid program, said during the discussion.

Growth
VBCs can be traced to the 1930s, with the start of managed payment plans, Dr. Jeffrey noted. At that time, he said, it wasn’t about value as much as a way for people to purchase healthcare.

Over the past 30 years, payors have shifted from paying for service to quality and then to value, he said. The term “value-based care” was introduced in the early part of this century, he said, and has progressed continually with the formation of accountable care organizations. “Value-based contracts” as a term began entering the literature and lexicon starting around 2010.

The number of publicly disclosed VBCs increased from two in 2009 to 19 in 2018, representing eight therapeutic areas, said Mahsa Salsabili, PharmD, PhD, a pharmacoeconomics specialist at University of Massachusetts Chan Medical School, in Shrewsbury. Cardiology and neurology have been the top therapeutic areas covered by VBCs, followed by endocrinology, she said.

Several types of contracts exist today, Dr. Jeffrey said.
There are warranties, in which payors get their money back if a product doesn’t work.
Some contracts allow payors to spread out payments for drugs.
Subscription models allow payors to pay one price to treat as many beneficiaries as needed.
Hybrid models combine elements of these different plans.

“All of these are undergoing evaluation,” Dr. Jeffrey said. “This market is anything but settled.”

4 Negotiating Stages
MassHealth’s team goes through four stages during direct negotiations with manufacturers, said Neha Kashalikar, PharmD, a clinical pharmacist with the Office of Clinical Affairs, the MassHealth clinical decision support unit staffed by UMass Chan Medical School. The multidisciplinary team includes clinical and operational pharmacists who lead negotiations, evaluate offers and implement new contracts. They are backed up by senior leadership, pharmacoeconomics specialists, data analysts, and legal and information technology supports.

Team members meet with manufacturers frequently, often several times a week to discuss pipeline products, or proposed value-based or supplemental rebate agreements.

Once a contracting proposal has been submitted, the team conducts a thorough review, including clinical evaluation of current evidence-based medicine as well as a review of any market trends or pricing, coupled with utilization data. The team then compiles a fiscal analysis to determine savings that may come from the contract. When appropriate, the team consults other stakeholders, such as physicians, to ensure alignment around the proposed contract terms.

Once the team and other stakeholders agree on the proposed contract terms, MassHealth enters into negotiations with the manufacturer to ensure the contract provides the greatest value to the state program.

Then, they work to put the agreement in place. This includes implementing any criteria changes to the MassHealth drug list, communicating to providers about upcoming changes and coordinating with managed care organization plans to ensure alignment in formulary decisions. Most contracts signed by the program are for one year, Dr. Kashalikar said.

MassHealth takes a proactive approach to identifying high-priority drugs for contracting on the basis of how they may provide value to the program, she said. Her team runs a focused report each year to identify drugs that are high cost, that have a high average-per-member per-year cost, that have low rebates and those with increasing utilization among their beneficiaries. Once high-priority drugs are identified, a pharmacoeconomics specialist helps the team further refine its priority based on market landscape, utilization data, international pricing and other characteristics, to determine which drugs may be most successful for negotiation.

It’s important to be wary of scenarios where contract terms may potentially put a plan at odds with best practice, Dr. Kashalikar cautioned.

To date, MassHealth has reached agreements for supplemental rebates with 17 manufacturers for 45 drugs, for a nearly $201 million annual value, Dr. Kashalikar said. The program has eight value-based agreements in place, one for a novel digital therapeutic product, and continues to have ongoing negotiations with manufacturers for many medications.

VBCs vs. Supplemental Rebate Agreements
One of the first questions the team members ask themselves is whether a particular drug is better suited for a VBC or a supplemental rebate agreement, in which a manufacturer may provide an enhanced rebate (on top of the federal rebate) for preferred status for its product compared with clinical competitors, Dr. Kashalikar said. Drugs well suited for VBCs include those that may have been approved based on biomarkers, those with limited real-world evidence and those in which there is a question surrounding safety and efficacy. It allows the manufacturer to stand behind the expected outcomes of a drug.

On the flip side, those more suited to supplemental rebate agreements include drugs with established safety and efficacy data; those with a high monitoring or administration cost; and with patient-reported outcomes. High-cost drugs, pipeline products and those with increasing utilization fall in the middle and could be suitable for either arrangement, she said.

It’s important for payors and manufacturers to work together to identify the best endpoints for value-based contracts. Those end points should be clinically relevant, tracked as part of routine patient care and able to be reported easily by providers or office staff. Contracts must be structured in a manner that is operationalizable with an objective end point that can be tracked either on a prior authorization form or through pharmacy or medical claims data.

Next Steps
Future trends to look for include continued state legislation in this area; publications of evaluations on the utility of value-based agreements; the evolution of a standardized approach to contracts; the solidification of best practices; and the application of VBCs to digital therapeutics, Dr. Jeffrey said.

“I don’t think that value-based contracting is going to go away,” he said. “I think it’s going to continue to escalate and become more prevalent.”

Karen Blum – Specialty Pharmacy Continuum

Fins to the left of me…… fins to the right….. and I’m the only PBM in town….(with apologies to Jimmy Buffet)

What we are really talkin’ about here is the ongoing attacks on PBMs now coming from the left… and the right…. politically speaking. Even conservative, right-wing politicians, as noted in the article below, are piling on the PBM bashing movement.

Specifically, Florida Gov. DeSantis is using his executive powers to require that state agencies impose new, rigorous policies managing contracts with PBMs. The aim is to correct onerous PBM practices that frequently generate unreasonable profits for the PBMs while shortchanging independent pharmacies.

The profit squeeze is easy to understand. The PBM jury riggs prescriptions to their owned pharmacies that are then reimbursed at maximum profit margins. By comparison, independent specialty pharmacies typically end up with less than 30% of available profit…. often as a result of clawback practices. This would be prohibited by the new executive orders along with other practices.

As we’ve been saying in the past several reports, the bull’s eyes on the backs of the PBMs seem to be growing larger by the month.

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DeSantis issues executive order in attempt to lower prescription drug costs

by Caden DeLisa | Jul 8, 2022

Gov. Ron DeSantis issued an executive order that aims to lower prescription medicine costs for Floridians

The order directs state agencies to amend contracts with Pharmacy Benefits Managers

Prior studies indicate that health care companies utilizing Pharmacy Benefit Managers tend to pocket more money

Gov. Ron DeSantis issued an Executive Order today aimed at increasing transparency in prescription costs for Floridians. The order ensures changes to keep Pharmacy Benefits Managers (PBMs) accountable when administering prescription drug benefits for insurance companies are implemented.

The executive order directs all executive agencies to include provisions in all future contracts and solicitations with PBMs including the prohibition of spread pricing for all PBMs, the prohibition of reimbursement clawbacks, instructions for all state 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 match the new requirements.

“Florida continues to lead the nation in ensuring accountability in the health care industry and in introducing reforms to combat rising prescriptions costs,” said DeSantis. “This executive order requires accountability and transparency for pharmaceutical middlemen when doing business with the state, thereby reducing the upward pressure on prescription drug costs.”

A 2020 Florida study found that major health care companies using PBMs positioned themselves to pocket millions of dollars from the state’s Medicaid system that was intended to lower costs for millions of low-income Floridians. The study found that despite processing less than half of one percent of all pharmacy claims, specialty pharmacies affiliated with PBM’s managed to collect 28 percent of the available profit margin from dispensing prescription drugs.

According to the study, vertically integrated health care companies – companies where the health insurance company and PBM also control their own pharmacies – have a significant advantage in prescription drug pricing and reimbursement rates over smaller pharmacy operations that only focus on dispensing prescription drugs. These organizations use their leverage and contracts with the state to squeeze dollars from their competitors by requiring patients to go to pharmacies where they have a financial interest.

This process frequently involves rewarding their own pharmacy operations with significantly higher reimbursement rates from Medicaid, according to the study. The study provided an example of this situation where Sunshine Health directed 95 percent of all claims for generic cancer drug Gleevac to Acaria, its wholly-owned specialty pharmacy. It reimbursed this specialty pharmacy an average of $4,399 above the national average cost for the drug.

“For far too long leaders have chosen the path of inaction, rather than action, and fallen victim to a pharmaceutical system driven by drug companies rather than consumers,” said Agency for Health Care Administration Secretary Simone Marstiller. “Fortunately, Governor DeSantis leads with principle, always putting Floridians first and today’s actions will further this commitment by providing insight into the FDA’s review process and all agency health care contracts through the end of the decade.”

Florida has previously taken steps to reduce drug costs for residents, but the federal government has yet to take action on the proposal. According to DeSantis, the FDA has been reviewing the state’s Canadian Prescription Drug Importation program for approximately 600 days.

In response to the federal government’s inaction, DeSantis granted AHCA officials the power to negotiate pricing for pharmaceuticals that are not eligible for importation, such as insulin and epinephrine.

https://thecapitolist.com/desantis-issues-executive-order-in-attempt-to-lower-prescription-drug-costs/

Last week we sent two reports highlighting the increasing pressure on PBMs in response to onerous business practices. The first described action being taken in Washington to investigate and legislate ‘fixes’ to many of the questionable practices….. top of the list being DIR fees and clawbacks. The second detailed how a small independent SP was successful in obtaining an arbitrator’s ruling restoring millions of dollars in DIR fees that were clawed back by CVS.

Only hours later, another specialty pharmacy, AHF Pharmacy (part of the AIDS Healthcare Foundation) announced that it was also filing suit against Express Scripts.

The crux of the law suit is now seemingly a song as old as time….. AHF claims that Express Scripts manipulates the Medicare “Star Ratings” system resulting in inaccurate performance scores for many of its pharmacies. These arbitrary low scores allow the PBM to claw back Medicare benefits ($$s) from pharmacies. As we have seen, the claw backs can occur months or years later. AHF says that the cash then goes into the PBM’s pocket. The manipulation especially impacts specialty pharmacies due to the ‘rigging’ of the rating system.

Specialty pharmacies nationally should be alert to how these actions play out (PBM owned SPs may watch for other reasons). It may be too early to say that these examples are sufficient to point to a trend….. but if it walks like a duck….. ya know how that continues. Even if federal relief is in the offing, there is small likelihood that restitution of previously clawed back $$s will be included.

CLICK HERE to read the full AHF press release.

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Express Scripts Sued by AHF Over ‘Claw Backs’

July 14, 2022 — LOS ANGELES–(BUSINESS WIRE)–AIDS Healthcare Foundation (AHF), the largest global AIDS organization, which cares for over 100,000 individuals living with HIV or AIDS in the United States, filed a lawsuit in the U.S. District Court for the Eastern District of Missouri, Eastern Division, against Express Scripts, one of the three dominant U.S. pharmacy benefits managers (PBMs), and a subsidiary of Cigna, the $47-billion global health-insurance behemoth. The case, AIDS Healthcare Foundation v. Express Scripts, Inc. (Case No. 4:22-cv-00743), was filed yesterday.

AHF is the owner of the “AHF Pharmacy” chain of pharmacies, ………… (press release continues)

Earlier this week we issued a report on PBM business practices coming under increased scrutiny at the federal level. Well, the bullseye is not limited to federal action with increased activity at the state level as well.

As the article below details, a feisty, independently-owned specialty pharmacy in California took CVS Caremark to arbitration….. and won. The small pharmacy claimed that CVS was in breach of contract and that the pharmacy was owned 100% of the direct and indirect remuneration (DIR) fees that had been clawed back from the pharmacy….. a cool $3.6million!!

Although DIR fees were included in the pharmacy contract, CVS recouped 150% of the pharmacy’s net profit, in effect, forcing the pharmacy to lose money. The arbitrator found that CVS failed to show adequate calculations for calculating the fees.

Attorneys representing the pharmacy say that the controversy around DIR fees are widespread and a threat to independent pharmacies. They also claimed that they were able to “invalidate Caremark’s DIR fees in entirety.”

Perhaps it is time for other specialty pharmacies to evaluate their legal bases for DIR restitution.

CLICK HERE to read the full article

Specialty Pharmacy serving HIV patients wins arbitration against CVS in rare public case

Confidentiality agreements typically prevent the public from obtaining a window into the cases against pharmacy behemoths but a public court filing makes this one different.

Jun 23, 2022 — A small, woman-owned specialty pharmacy in San Francisco serving HIV-positive patients has won a case against CVS Caremark, but the pharmacy benefit manager refuses to pay, and now the case is public.

CVS Caremark owes Mission Wellness $3.6 million after an arbitrator ruled in favor of the small pharmacy that accused CVS of breach of contract, and the arbitrator ordered CVS to return 100% of the direct and indirect remuneration (DIR) fees recouped from Mission Wellness. DIR fees include any kind of remuneration Part D Plan Sponsors (PDPs) or their PBMs receive from any source after the point of sale that offsets the PDP’s costs. In this case, Silverscript was the plan sponsor and the point of sale applies to Mission Wellness.

According to the lawsuit, CVS Caremark inaccurately assessed DIR fees agreed upon in the contract with Mission Wellness. In 2020, CVS recouped 150% of Mission Wellness’ net profit. And so while CVS was docking Mission Wellness’ pay when it was participating in Caremark’s Medicare Part D networks, the small pharmacy was losing money.

While Medicare Part D is a governmental prescription drug program for those aged 65 or older – called SilverScript, HIV patients qualify for Medicare regardless of age.

In arbitration documents made public this week, Mission argued that it was not reasonable for CVS to pay Mission a negative reimbursement rate under “take it or leave it” contractual terms, as this is not the contract they agreed upon. The arbitrator agreed, ruling that CVS failed to show adequate calculations for coming up with the fees it imposed.

“Caremark and SilverScript have profited at the expense of Mission Wellness, HIV patients and Medicare,” according to a news release from Mission Wellness on Tuesday.

It’s a rare occasion that arbitration between a small, minority-owned specialty pharmacy serving HIV patients and a pharmacy behemoth like CVS would be unsealed. Confidentiality agreements and “gag clauses” prevent the public from obtaining a window into the cases against pharmacy benefit managers. But this case was brought into the public eye after Mission Wellness filed a case in Arizona District Court asking a judge to confirm the arbitration award and force CVS to dish out the money it owes the pharmacy.

Jonathan Levitt, who represents Mission Wellness, said his firm Frier Levitt has helped clients win several such awards, which pharmacy giants such as CVS or Cigna pay following arbitration with specialty pharmacies. However, they are never able to talk about those wins publicly because they’re confidential.

Meanwhile, CVS Caremark said it had recouped DIR fees that Mission Wellness owed because the San Franscisco pharmacy didn’t follow adherence metrics, which show how well a drug is working for a patient. But Levitt claimed that Mission Wellness has the data to show they did follow adherence metrics. In particular, since the case involves HIV drugs for which they do blood testing to see if the drug is working, there is no question that Mission Wellness followed adherence metrics, Levitt said.

During arbitration, CVS Caremark failed to provide the adherence metrics they were basing their claims off of, according to Levitt.

CVS Health, which owns CVS Caremark, did not respond to request for comment.

Following the Federal Trade Commission’s announcement earlier this month that they’re investigating the “drug middleman industry,” involving pharmacy benefit managers, such as CVS Caremark, Levitt expects these victories against PBMs to be less shrouded in darkness .

“Everyone’s afraid to tell the FTC what’s going on because of confidentiality clauses and gag clauses, but this is exactly what the FTC is asking about,” Levitt said.

He hopes the victory shows that specialty pharmacies should be aware they have rights under federal law, that can be vindicated in a court of law.

The case is 2:22-cv-00967 in the District Court of Arizona.

By AMANDA JAMES

PBMs continue to be under the microscope. The scrutiny comes on the heels of the FTC announcing that it was reversing its decision to shelf taking action on the issue. The FTA received more that 20,000 \nasty grams’ demanding that they live up to their mission of defending FAIR TRADE. 

Organizations including the APhA, AHA, and NASP all joined hands to put the pressure on. It contributed to a meaningful turnaround with a “5-0 vote at the FTC to initiate a study to scrutinize the impact of vertically integrated pharmacy benefit managers on the access and affordability of prescription drugs….. as well as PBMs’ unfair, deceptive, or anticompetitive business practices have impacted pharmacies and patients.”

All that sounds promising….. but, where’s the teeth to ensure compliance? Well, the FTC would be given broad enforcement powers. Violations could incur civil penalties up to $1,000,000. Additionally, state attorneys general could bring civil actions if they believe that patient interests are being abridged. Whistleblowers are even protected. 

Time will tell what the legislation looks like at the end of the Congressional process.
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APhA welcomes FTC study of PBMs’ anticompetitive business practices – urges agency to act

June 7, 2022 – WASHINGTON, D.C.—The American Pharmacists Association (APhA) issued the following statement applauding the FTC’s announcement of a 5-0 vote to initiate a 6(b) study “to scrutinize…..

CLICK HERE to read the full press release from APhA

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PBMs Continue to Draw Federal Scrutiny: PBM Transparency Act of 2022

Thursday, June 30, 2022As we noted in our last PBM Regulatory Roundup, there has been a wave of state regulation focused on PBM practices in the wake of Rutledge and Webhi. However, PBMs are also facing federal reform efforts. The Pharmacy Benefit Manager (PBM) Transparency Act of 2022 (the Act) was recently proposed in the U.S. Senate and ………………

CLICK HERE to read the full article posted by The National Law Review

Biosimilars are still struggling to gain maximum traction in the marketplace….. and a recent survey says that communications are at the heart of the problem.

Some of the highlights include:
Oncologists felt that switching decisions were typically initiated by pharmacies (29.0%) or hospital/treatment centers (19.4%). Note, there is only a handful of biosimilars with ‘an interchangeable’ designation.
Patients (55.2%) said they were given an option to switch to a biosimilar. 63.9% went through with the switch / 8.6% declined to switch.
Patients reported (40.8%) that they were never notified of a payer driven biosimilar switch, and only 26.4% said their oncologist or physician briefed them.
The top three most common reasons for switching, as reported by oncologists

• Payer requirements (23.5%),
• Biosimilars were considered identical (14.1%), and
• Hospitals wanted to save money (12.9%).
  Only 9.3% of patients felt that the payers could be trusted to make the right decisions about switching! It is also noteworthy that only 12.1% of oncologists felt similarly!
  35.3% of patients felt they had been given the opportunity to ask questions about biosimilars
  Only 43.4% of patients felt that the biosimilar would be as effective in treating their cancer! And, only 79.4% of oncologists felt the biosimilar would be just as effective as the reference product!!!

As the researchers said, “If biosimilar acceptance is to grow, it’s going to take a great deal of work to improve the levels of trust between payers, patients, and oncologists.”

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Researchers Identify a Communications Breakdown Over Herceptin Biosimilars

June 6, 2022Researchers have identified what they say is a critical lack of communication about biosimilars between patients with breast cancer and their oncologists, based on surveys conducted from 2020 to 2021.

They also said many switches from the reference product Herceptin (trastuzumab) are dictated by payers and much needs to be done to improve the levels of trust between payers, patients, and oncologists if biosimilar acceptance is to grow.

“There is a need for tailored and effective patient and oncologist information and education on trastuzumab biosimilars, along with improved health care communications regarding switching,” wrote lead author Elizabeth Lerner Papautsky, Ph.D., M.S., an assistant professor in the Department of Biomedical and Health Information Sciences at the University of Illinois at Chicago. Papautsky and her colleagues reported their results in May in the journal Breast Cancer Research and Treatment.

In two separate surveys, Papautsky and her colleagues collected responses from 143 patients with breast cancer and 33 medical oncologists. The researchers said that 63.9% of patients reported they had been switched to a trastuzumab biosimilar–most often Kanjinti (69.8%)–and of those, 40.8% reported they had been given no prior notice they would be switched.

In none of the responses did oncologists ever say that the switch to a biosimilar was initiated by them. It was most commonly the case that the switch was mandated by the payer (45.2%). Oncologists were much more likely than patients to report satisfaction with the way biosimilar information had been communicated.

“The discrepancy between patient-reported experiences and oncologists’ perceptions of the patient experience suggests a lack of adequate information that may be a challenge not only to the uptake of trastuzumab biosimilars, but to the patient oncologist relationship,” Papautsky and her fellow researchers wrote.

The authors expressed strong concern that these communication gaps be rectified because, they said, Herceptin is a costly drug and biosimilars represent an important opportunity to improve patient access and lower the cost of health care. Payers have latched onto the savings aspect, they said. “Literature suggests that with increasing availability of biosimilars, a variety of switching scenarios have become common across disease types.”

They cautioned that “with guidelines often being vague, the practice of switching is largely unregulated.”

Because of the above-described patient/doctor disconnect on biosimilars, many patients resorted to self-directed research to find out about these biologic alternatives, the report said.

Among patients participating in the survey, 58.1% were fully covered by private insurance and 99.3% and 91.4% were female and white, respectively. Responding oncologists were most likely to work in an urban setting (68.0%) or at an academic center or affiliate (35.3%).

Despite the communication problems, most patients (55.2%) said they were given an option to switch to a Herceptin biosimilar–it wasn’t forced on them. And of patients who responded, 63.9% went through with the switch. Papautsky said 8.6% declined to switch.

However, lack of prior notification about switching was a problem, patients reported (40.8%); and just 26.4% said their treating oncologist or physician briefed them beforehand about biosimilars. Smaller percentages of patients said they got that type of information instead from advanced practice practitioners (5.7%), chemotherapy nurses (15.5%), or others.

Oncologists said that if not dictated by payers, switching decisions were typically initiated by pharmacies (29.0%) or hospital/treatment center administrations (19.4%).

The three most common reasons for switching, as reported by oncologists, were payer requirements (23.5%), biosimilars were considered identical to Herceptin (14.1%), and hospitals wanted to save money (12.9%).

Few patients or oncologists felt that the payers could be trusted to make the right decisions about switching (9.3% vs 12.1%, respectively). Patients were less likely than oncologists to agree they had been given the opportunity to ask questions about biosimilars (35.3% vs 58.8%) or that the biosimilar would be as effective in treating the cancer (43.4% vs 79.4%).

Tony Hagen, Managed Healthcare

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Anton RX Reports are copyrighted by Anton Health, LLC.

June 28, 2022
Winter Garden, FL
The FDA recently approved a new sub-cutaneous, specialty therapy, Amvuttra (vutrisiran) from Alnylam Pharmaceuticals, for the treatment of the polyneuropathy of hereditary transthyretin-mediated (hATTR) amyloidosis in adults.

Hereditary ATTR including polyneuropathy is a rare condition that has had few treatment options. It affects about 50,000 people worldwide. The disease is rapidly progressive with a high mortality rate.

Amvuttra is administered via subcutaneous injection once every three months (quarterly). The prescribing information for the product states that it should be administered only by a medical professional.

Amvuttra joins the market with another Alnylam product, Onpattro, with the same indication. Amvuttra is sub-q, whereas Onpattro is infused. Amvuttra has a potential to treat another form of ATTR that affects the heart. That indication, called ATTR cardiomyopathy, may reach $1.8 billion in global sales by 2026.

Alnylam is pricing Amvuttra at an annual list price of $463,500. Given the small patient population in the US, it is expected that Amvuttra will launch through limited distribution (direct-to-office). By way of reference, Onpattro launched in 2018 via LD provided by US Bioservices and Orsini Healthcare.

CLICK HERE to access full prescribing information for Amvuttra

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Alnylam Announces FDA Approval of Amvuttra (vutrisiran)
RNAi Therapeutic for the Treatment of the Polyneuropathy of Hereditary Transthyretin-Mediated Amyloidosis in Adults

CAMBRIDGE, Mass.– Jun 13, 2022 — Alnylam Pharmaceuticals, Inc., the leading RNAi therapeutics company, today announced that the U.S. Food and Drug Administration (FDA) approved Amvuttra (vutrisiran), an RNAi therapeutic administered via subcutaneous injection once every three months (quarterly) for the treatment of the polyneuropathy of hereditary transthyretin-mediated (hATTR) amyloidosis in adults. hATTR amyloidosis is a rare, inherited, rapidly progressive, and fatal disease with debilitating polyneuropathy manifestations, for which there are few treatment options. The FDA approval is based on positive 9-month results from the HELIOS-A Phase 3 study, where Amvuttra significantly improved the signs and symptoms of polyneuropathy, with more than 50 percent of patients experiencing halting or reversal of their disease manifestations.

“Twenty years ago, Alnylam was founded with the bold vision for RNA interference to make a meaningful impact on the lives of people around the world in need of new approaches to address serious diseases with significant unmet medical needs, such as hATTR amyloidosis. Today, Amvuttra has the potential to change the standard of care for people living with the polyneuropathy of this devastating disease,” said Yvonne Greenstreet, MBChB, Chief Executive Officer of Alnylam Pharmaceuticals. “We are so thankful to the patients, families and investigators involved in making Amvuttra a reality for the hATTR amyloidosis community. As the fifth RNAi therapeutic developed by Alnylam to receive regulatory approval in less than four years, we believe Amvuttra represents an important milestone that brings us one step closer to achieving our P 5 x25 goals aimed at Alnylam’s transition to a leading biotech company.”

The word on the street is that CVS has acquired US Bioservices from AmerisourceBergen….. and it seems that CVS is treating it as a closely guarded secret. CVS only issued a ‘notice of a recent transaction’ only sufficient to meet SEC disclosure requirements. Moreover, the acquisition price was neither disclosed nor even hinted at. That alone seems very atypical for a top tier specialty pharmacy acquisition.

It has now been over two weeks and only one other blog post has so far made a passing reference to the deal!

US Bioservices was first acquired by Amerisource Bergen (ABC) in early 2003 for $160 million. It has been a leading specialty pharmacy….. but never gained sufficient traction to break into the Top 10 nationally. None the less, it is said to have turned in a very meaningful $1.5+ billion in 2021….. nothin’ to sneeze at!

Is this acquisition a surprise?
Not at all….. CVS acquired a variety of specialty pharmacy assets over the past decade. Does US Bioservices fill any other missing asset gaps?…. not really. CVS nailed down geographic access nationally years ago. There may be some payer deals that will be accretive to the CVS portfolio. CVS has many footholds in limited distribution deals with pharma (there might be a few therapies where CVS was not invited to play). And, there might also be some elements of specialty distribution that accrued to US Bio because of the ABC affiliation…. but, nothing is readily discernable.

So, why did AmerisourceBergen pull the plug on US Bioservices?
First, it is unlikely that ABC needed the cash…. unless ABC has plans to invest in a totally new direction. Second, wholesalers have stumbled trying to leverage their purchasing positions while simultaneously driving specialty pharmacy revenues in their owned SP shops. By comparison, Cardinal exited specialty pharmacy a few years ago. And, after several failed attempts over the past decade+, McKesson remains the lone holdout following its acquisition of Biologics which has had a stellar run competing for limited distribution therapies…. often as the exclusive provider.

The topic of the article below did not get much coverage in the media….. and that is unfortunate….. the issue should be important to all specialty pharmacies doing any substantial volume as a distributor/3PL provider.

As noted, the FDA is proposing some major rule changes that would establish a single national standard for wholesale drug distributors (WDDs) and third-party logistic providers (3PLs) with the goal of eliminating state level licensure. The FDA cites the changes are driven by conflicts in state requirements (especially vexing for entities with facilities in multiple states) and added unnecessary costs to the distribution chain.

While a single national license sounds efficient, the devil is always in the details.
Some of the key ‘details’ include:
Requiring all 3PLs to obtain a license for each 3PL facility.
Establishing “Approved Organizations,” third-party organizations approved by states and FDA to review entity qualifications and conduct facility inspections (likely with increased frequency).
Licenses will be facility and owner specific, and not transferable when there is a change of entity ownership.
New requirements related to storage and handling practices, personnel, policies and procedures, record-keeping, and reporting
And….. much confusion will arise when both a state and the feds still have licensure requirements.

Specialty pharmacies should prepare for rule changes that may be issued later this year.

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One License to Unite Them All: FDA Proposes National Standards for Wholesale Distributors and Third-Party Logistic Providers

The US Food and Drug Administration (FDA) has issued a proposed rule— “National Standards for the Licensure of Wholesale Drug Distributors and Third-Party Logistics Providers” (Proposed Rule)— pursuant to FDA’s obligations under the Drug Supply Chain Security Act (DSCSA or the Act) that, when finalized, would require all US wholesale drug distributors (WDDs) and third-party logistic providers (3PLs) to be licensed according to a national standard.

In 2013, Congress enacted the DSCSA as part of the Drug Quality and Security Act (DQSA) to address and decrease the amount of counterfeit, stolen, contaminated, or otherwise harmful drugs in the US supply chain. Among the principal objectives of the new law was requiring implementation of an interoperable system to electronically track and trace most prescription drugs distributed in the United States and establishing national licensure standards for WDDs and 3PLs.

Once final and effective, the Proposed Rule will replace the defunct 21 CFR § 205 (Part 205), which currently provides guidelines for state licensing. Specifically, the new Part 205 will standardize requirements for licensure applications; storage and handling of prescription drugs, including facility requirements and security; personnel qualifications; and recordkeeping. Notably, when final, the rule will preempt state and local licensure requirements that are different from the new national standards. Until this rule is finalized, however, the current disparate system of different state licensing and compliance requirements will remain intact.

The rule will not, however, preempt “areas within the historical police powers of States, . . . including prohibiting employees of WDDs and 3PLs from engaging in criminal activity related to prescription drugs,” so long as the state requirements are not related to licensure.

Historically, states have set their own standards for WDD and 3PL licensure, which resulted in significant differences in requirements, creating difficulties for entities with facilities in multiple states. According to comments on a prior guidance, compliance with the different state standards is time consuming and adds unnecessary costs to the distribution chain.

Some of the proposed changes in the Proposed Rule include the following:

Requiring all 3PLs to obtain a license for each 3PL facility. Currently, not all states require 3PL licensure. Moreover, under the proposed regulation, if an entity engages in both 3PL and WDD activities, it would need to obtain separate licenses and implement separate systems and processes for each function.
Requiring all WDDs to obtain a license for all facilities. While all states require distributors of prescription finished products to be licensed, the new rule will also require distributors of bulk drug substance to hold a license.

Establishing “Approved Organizations,” which will be third-party organizations approved by states and FDA to review entity qualifications and conduct facility inspections. This proposal may have the effect of increasing the frequency that facilities receive inspections, requiring facilities to increase focus on maintaining inspection readiness. Notably, however, even with these new organizations, licensure decisions would still need to be made by either the state or FDA.

While the regulation establishes a federal licensing structure, if a WDD or 3PL’s facility is located in a state with state-licensing requirements, the facility will need to obtain a state license (rather than a federal license). This is particularly notable for 3PLs that ship product in interstate commerce. State-licensed 3PLs will still need to obtain licenses in both the facility’s home state and states into which a product is sent (to the extent required). However, if the 3PL is licensed on the federal level, it will not be required to obtain out-of-state licenses. Unlike 3PLs, WDDs will still be required to obtain licensure from the state into which the drug is distributed (to the extent required), regardless of whether the WDD’s facility is licensed on the federal or home state level.

Licenses will be facility and owner specific, and, thus, will not be transferable when there is a change of entity ownership. In the case of a corporation, a change in ownership will occur when there is a merger into another corporation or consolidation of corporations, resulting in the creation of a new corporation. The transfer of corporate stock or the merger of a corporation into the licensed corporation will not constitute a change of ownership.

Licensed facilities will need to comply with new requirements related to storage and handling practices, personnel, policies and procedures, recordkeeping, and reporting.

3PLs holding state licenses will need to obtain new licenses under the new licensure requirements once the proposed rule goes into effect. It is unclear whether WDDs holding state licenses will also need to obtain new licenses.

The regulation will provide for a phased implementation program, with the effective date of the regulation dependent on whether an entity is a 3PL or WDD. Even once effective, FDA also intends to exercise its enforcement discretion for certain activities.

Key Takeaways
In many ways, the Proposed Rule would simplify the licensure of 3PL and WDD services, as it will preempt the current patchwork of licensing standards across states. However, in some respects, the Proposed Rule may result in additional compliance obligations for facilities. This is especially true for 3PLs that are in states that do not currently require licensing, and that may never have been inspected.
While the Proposed Rule would create a standardized system of 3PL and WDD licensing, facilities will still face state differences. By example, facilities that handle, ship, and/or distribute controlled substances and/or listed chemicals will still need to comply with potentially disparate federal and state regulatory requirements, as the Proposed Rule does not impact the regulation of these products.
While it may still be some time before the current Proposed Rule is enacted and effective, this is a first step toward creating a uniform WDD and 3PL licensing and compliance system. Accordingly, entities should monitor the rule’s developments to ensure that there is sufficient time for the implementation of new requirements.