Tomorrow morning, UnitedHealth Group will report earnings. I’m no Gordon Gekko, but you can put good money on UHG’s Optum unit delivering record-setting profits, driven in part by its OptumRx PBM. Just because the news is bad doesn’t mean the financial performance is.
I remain fascinated by the PBM response to the FTC report last week calling the industry out for its business practices (and the New York Times doing the same last month … and a thousand smaller examples).
I pointed out the initial reply by PCMA in the newsletter last week, suggesting “a heavy vibe here of an industry that doesn’t have a strong data-grounded rebuttal.” Since PCMA’s statement, the group has put out two more posts attempting to shore up its position.
Both of them were efforts by PCMA to highlight others who objected to the FTC’s report, including FTC commissioners with reservations, some FTC-hating free-market think-tank types, and a couple of former members of Congress (at least one of whom is now on the PCMA payroll). The idea seems to be to overwhelm with appeals to these other authorities.
So I spent part of the weekend treading through these other objections, looking — again — for the kind of data-driven response that would provide a counter-narrative to the FTC’s POV. I saw lots of complaints about the FTC’s methodology and a few broadsides against the FTC as an organization.
What I didn’t see was a meaningful effort to engage with the core critiques of the FTC’s report.
Is that because there isn’t a good response and the FTC is basically right? Is PCMA hamstrung by its members? Is this just a strategic fail? It’s hard to know. But I don’t think PCMA or its allies are changing any minds by bashing the FTC while ignoring the FTC’s arguments.
CVS seems to be trying out a slightly different line of attack, and I was taken by this LinkedIn post from CVS’ Edward DeVaney, who pointed out that CVS’ retention rate for employers who use the company’s PBM is better than 98%. The logic here is simple: if those folks, as the ultimate drivers of the system, are OK with the current setup, are the PBMs really doing anything wrong?
But that’s not a watertight argument. My sense is that lots of employers aren’t paying sufficiently close attention to their PBM selection to be making an informed decision. (This is the Mark Cuban position.) Others may not be super-happy with their options but want to stick with the comfortable route. Still others may find it disruptive or expensive to move.
And the fact that there aren’t many (any?) employers who have come out and defended their PBM partners also suggests that the “employers made us do it” narrative may not have legs.
But it does raise an interesting question: where are the big employers in all of this?
If a PBM were a person, what would he be like? It’s a surprisingly popular exercise, and it seems to have a consensus answer. PhRMA has a whole ad campaign around a smug, suit-clad “PBM” who delights in making care delivery more difficult.
Now, the National Community Pharmacists Association is out with its own commercial featuring a suit-wearing “PBM” horrifying a class of elementary school kids on career day.
These insufferable, besuited representations of the PBM industry are part of a tradition that appears to date back more than a decade: NCPA developed a PBM ad built around a similar character — Phil MyPockets — back in 2012.
Any other classic PBM avatars? Let me know at brian@reidstrategic.com.
Elsewhere:
There is a common belief that one of the core problems in the U.S. pharmaceutical market is that medicines are protected for competition for too long. But a new paper in Pharmaceutical Medicine — led by Harvard PORTAL folks, no less — suggests that the median length of exclusivity on meds in the United States is six months shorter than it is in France and two years shorter than in Australia.
STAT has a good op-ed explaining the issues with CMS’ broad definition of a “qualifying single-source drug” in the IRA. This is the policy that allows CMS to impose price controls on all versions of a molecule the same, regardless of whether they have different approvals, different doses, different formulations, etc. Avalere has raised this issue before, too. Feels like litigation might be coming.
It’s become increasingly popular to advocate for the idea that we should weaken the incentives for the development of orphan drugs. NEJM has a new “Perspective” along those lines. But I’m a “if it ain’t broke, don’t fix it,” and these pieces don’t seem to make a very compelling case for orphan drug development being broke.
Novo Nordisk will talk Levemir with congressional staffers, per Reuters. (Maybe: the company told Reuters no such meetings were on the calendar.) Novo is pulling Levemir off the market because it’s tough to make and insurers won’t cover it.
There is something profoundly dystopian in the idea that, here in the most wealthy society in the history of humankind, people throw ragers when their health insurance actually kicks in. Yes: deductible parties are a thing.
Header image by Laurynas Me on Unsplash
Thanks for reading this far. I’d be flattered if you shared all or part of Cost Curve. All I ask is for a mention or tag. Bonus points if you can direct someone to the subscription page.
