Our Take: HHS will require health insurers to report data on prescription drug costs and coverage
Editor’s Note: Due to the Thanksgiving holiday, Our Take will return on Dec. 6.
The Biden administration released an interim final rule on Wednesday that will require health plans and health insurance issuers in the group and individual markets to submit detailed information on prescription drug and health care spending each year.
- Enrollment and premium information, with a comparison of average monthly premiums paid by employees versus employers
- A breakdown of total health care spending by categories such as hospital care, primary care, specialty care, and prescription drugs; the data for prescription drug spending will need to specify what plan members have spent versus what their employers and plan issuers have spent
- The 50 prescription drugs that were dispensed most often
- The 50 prescription drugs that were the costliest, based on total annual spending
- The 50 prescription drugs that had the greatest increase in plan expenditures relative to the previous year
- Prescription drug rebates, fees, and other compensation received from manufacturers, reported for each therapeutic class and for each of the 25 drugs yielding the highest amount of rebates
- The impact of those rebates, fees, and other compensation on premiums and out-of-pocket costs
The requirements will start with the reporting of data for the 2020 calendar year, which technically is due on Dec. 27 of this year. Subsequently, reports will be due on June 1 for the previous year’s data. However, to give insurers time to comply, enforcement of the requirement to report data for 2020 and 2021 will be deferred until Dec. 27 of next year.
The Department of Health and Human Services (HHS) will use the data to increase transparency by compiling and publishing biennial reports on pricing trends for prescription drugs, reimbursements for prescription drugs, and the impact that prescription drug costs have on premiums and out-of-pocket costs.
HHS issued the interim final rule together with the Department of Labor, the Department of the Treasury, and the Office of Personnel Management, as required under the Consolidated Appropriations Act of 2021. It was issued as another step toward implementing consumer protections designated in the No Surprises Act, which Congress passed with bipartisan support last year.
The interim final rule includes a request for comments, which are being accepted through Jan. 24, 2022.
Our Take: With health care costs taking an ever-bigger bite out of the average consumer’s budget, the federal government keeps trying to find a way to rein in those costs — usually with limited, if any, success.
Part of the problem is that various health care industry stakeholders have been able to pass the buck by blaming each other for the escalating costs. A goal of the No Surprises Act is to shine some light on what exactly is driving up costs.
We’re glad to see that this final rule could finally shine some of that light on the role that pharmacy benefit managers have played in increasing drug costs. So far, PBMs have had the luxury of operating in the shadows, though it’s widely believed that they have been handing themselves a tidy profit for their services.
Maybe, as the figures become more apparent, PBMs will face greater scrutiny. And then maybe somewhere down the road they’ll be subject to regulation.
David Balto, a former policy director for the Federal Trade Commission, wrote the following in an opinion piece published by Healthcare Dive:
“PBMs are supposed to lower drug prices for the employers and unions they serve. But since they profit through … non-transparent rebates, they have an interest in higher — not lower — drug prices.”
Balto explained that since PBMs decide which drugs are included in insurers’ formularies, they can basically force drugmakers into paying them discounts or rebates, which in turn leads drug companies to raise their list prices to pay for the discounts and rebates.
“Eye-popping list prices for medication are a direct result of PBM tactics,” he wrote.
One of the solutions Balto proposed is for Congress to mandate that PBMs be fully transparent “by making regular reports to the public and private insurers who rely on them, detailing costs and fees associated with rebate negotiations.”
While the final rule that HHS just released takes a somewhat different approach to doing that, the result could be the same.
Balto also suggested that lawmakers could require PBMs to pass negotiated rebates on to health plans and patients, retaining only a fixed fee for their services instead of an undisclosed percentage of the rebates. We’re wondering why that hasn’t already happened.
A third solution Balto recommended is prohibiting a PBM practice referred to as “spread pricing,” in which they charge health plans more for drugs than what they, the PBMs, pay for those drugs. That idea has been kicked around quite a bit the last few years, but so far nothing has come of it.
We expect insurers to push back against the interim final rule, probably citing the challenges they’ll face in reporting such huge quantities of data. But given the enormous profits that insurers have been enjoying, we can’t exactly feel sorry for them. Our sympathies lie with the average Joes and Josephines who can’t afford the prescription drugs they need — or their health insurance premiums, for that matter.
Kaiser Permanente and an alliance of unions representing about 50,000 workers reached a tentative labor agreement, thereby averting a strike that could have resulted in an estimated 32,000 workers walking off the job last Monday. The agreement includes new language pertaining to safe staffing and workload, as well as annual wage increases through 2025 and no reduction in health benefits, the health system noted in a news release. Kaiser Permanente also reached a tentative agreement with its pharmacists in the Northern California region but as of press time had not yet reached an agreement to resolve a two-month-old strike by engineers in that same region. Tens of thousands of workers in Northern California participated in sympathy strikes on Thursday and Friday in a show of solidarity with the engineers.
CMS is pointing the finger at Aduhelm as the reason for a 15% increase in Medicare Part B premiums for next year. The standard monthly premium will increase by $21.60 (from $148.50 to $170.10) — the largest increase in Medicare’s history in terms of dollar amount, according to The Associated Press. By comparison, increases for the past three years have been $1.50, $3.90, and $9.10. CMS attributed about half of the upcoming increase to contingency planning in case Medicare ends up covering Aduhelm, Biogen’s recently approved Alzheimer’s drug that is priced, on average, at $56,000 per patient per year. In a press statement, CMS Administrator Chiquita Brooks-LaSure said, “The increase in the Part B premium for 2022 is continued evidence that rising drug costs threaten affordability and sustainability of the Medicare program.” The annual Part B deductible will also increase 15%, from $203 to $233.
Jefferson Health and Bayada Home Health Care are planning a joint venture to enhance care provided to Jefferson patients in their homes. The joint venture, referred to for now as Jefferson Health at Home, will have joint leadership and governance, the organizations noted in an announcement. Jefferson will contribute its home health and hospice services at Jefferson Health New Jersey and Abington Jefferson Health to the partnership, and Bayada will oversee the joint venture’s operations. “[W]e will use this platform to launch bold and innovative digital health care experiences at home — where people want to be most,” said David Baiada, CEO of Bayada Home Health Care. The definitive agreement the organizations signed last week is expected to be finalized in the spring.
Pfizer signed a deal to expand access to its investigational COVID-19 pill in low- and middle-income countries. The company signed a licensing agreement with the Medicines Patent Pool (MPP), a Geneva-based public health organization, that will allow MPP to grant sub-licenses to qualified generic drug manufacturers for Pfizer’s oral antiviral treatment candidate PF-07321332, which is administered with a low dose of ritonavir as a treatment for non-hospitalized adults with COVID-19 who are at high risk for progressing to severe illness. The terms of the agreement will allow the generic drug manufacturers to supply the combination treatment, after it has been approved or authorized, to 95 countries. Pfizer requested emergency use authorization for the pill, which will be marketed as Paxlovid, on Tuesday. The company said it would invest up to approximately $1 billion to support the manufacture and distribution of Paxlovid.
LifePoint Health announced the launch of 25m Health, a “healthtech venture studio.” The new startup incubator, which will be based in Nashville, Tenn., is the product of a partnership between LifePoint Health, a New York-based venture studio called 25madison, and Apollo Global Management. “Our 25m Health venture allows us to expand beyond investing in existing capabilities to also incubating and building businesses that can benefit LifePoint, our communities, and the broader health care delivery system,” said David Dill, CEO of LifePoint Health. Steven Price, cofounder and CEO of 25madison, said, “Together with LifePoint, we are excited to begin cultivating innovative businesses and ideas that improve access to high-quality care; use technology to enhance the deliver of care across the health care continuum; and support the continued evolution toward value-based care.”
CVS will close about 900 stores over a three-year period, starting next spring. The move follows a corporate evaluation of changes in population, consumer buying patterns, and future health needs, the company said Thursday in a press release. Even as CVS Health shifts more of its focus to a digital strategy in response to changes in consumer behavior stemming from the pandemic, CEO Karen Lynch acknowledged that retail stores are “fundamental to our strategy and who we are as a company.” Accordingly, the company plans to create new store formats — including sites that are dedicated to offering primary care services and HealthHUB locations that are enhanced with additional products and services to meet everyday health and wellness needs. It is unclear whether the planned primary care sites will expand on or replace CVS’ existing MinuteClinics.
The FDA expanded the eligibility for COVID-19 booster shots on Friday to include all fully vaccinated adults. The agency amended the emergency use authorizations for Pfizer-BioNTech and Moderna’s COVID-19 vaccines to authorize a single booster dose for all individuals age 18 or older who have completed the primary vaccination with any FDA-authorized or approved COVID-19 vaccine, including Johnson & Johnson’s. Adults who initially received the Pfizer-BioNTech or Moderna vaccine can receive a booster dose six months or more after completing the primary vaccinations, and those who initially received the J&J vaccine can receive a booster two months or more after the primary vaccination. Later on Friday, an advisory panel to the Centers for Disease Control and Prevention endorsed the expanded eligibility, stating that adults older than 50 “should” get a booster shot and other adults “may” get one.
What we’re reading
Is pharma ready to focus on the consumer? Deloitte, 10.28.21
Preparing for 2022: Considerations for managed Medicaid programs. McKinsey & Company, 11.1.21Shock, Disbelief as NCCN Changes Prostate Cancer Guidance. Medscape, 11.12.21 (registration required)
Lead with Imagination, by Brian Paradis.