And here, I thought I’d get the last Curve of the week out in the morning. Thanks for your patience.
And thanks to Jennifer Kim, Josh Schimmer, and my fellow panelist, South Capitol’s John Brooks, for an engaging conversation today at Cantor’s conference on what we know — and the loads we don’t yet know — about what happens next for the IRA.
This is a fantastic, insights-filled report from PSG on health plan/employer satisfaction with PBMs. It would be tempting to just cut and paste every chart in the report into the newsletter, but it’s easier just to say: read the whole thing.
The report makes three really important points that — again — are blown out in a lot more detail in the full text of the document:
Satisfaction with PBMs is dropping, and that’s a phenomenon being driven by the “big three” PBMs. The numbers are as low as they’ve been in a decade, and even if the year-over-year change isn’t dramatic, the overall trend is clear.
Nearly every measure that could tilt against PBMs is tilting against them. It’s not like there’s a mixed bag here. Respondents are worried about GPOs and rebates, and a third aren’t satisfied with the kind of transparency they’re getting.
Reality check: In an absolute sense, things are still fine. The bottom hasn’t dropped out. The satisfaction scores might be lower, but they’re not objectively bad.
Broadly, the PBM best defense has been the fact that clients are generally not up in arms. And that is generally still true. But the trend is not in the right direction for the PBMs.
One of my core beliefs is that there are forces working to make sure that health care system in general — and the drug supply chain in particular — is as complex as possible. Complexity is both a great shield against scrutiny as well as a great way to create plausible deniability for just about every accusation.
That’s why I applaud any industry player who takes the time to try to explain what’s going on, to simplify rather than confuse.**
And the best effort in this area *** comes from Janssen, which provides great detail on how the money flows through the system in its just-published Transparency Report, starting with the company’s own pricing. Janssen said its net prices increased about 1.4% in 2023, well below inflation.
(The company doesn’t give the list price change, but they do publish a nice chart showing change since 2016 that suggests that the list price growth in 2023 was in line with the modest growth in 2022.)
But the real power of the report is that Janssen not only gives the overall number of the total rebates and discounts it pays out — $42.8 billion — it also itemizes that number, which is hugely useful in understanding where the rebate explosion is coming from.
More than $13 billion is commercial-market rebates. That’s up eightfold from 2016. 340B rebates totaled $6 billion,**** three times the 2016 number. Another $5.9 billion went to Medicare.
The whole thing is worth the read.
** I don’t want to be the guy who takes gratuitous shots at the PBM industry, but I feel like I have to note that Express Scripts stopped publishing its excellent and illuminating Drug Trend report in 2021. That report, published annually for almost two decades, used to try to tell the same story as the Janssen report from the other side of the field. The decision to kill it was a blow against transparency.
*** Props to Sanofi, which publishes the second-best effort in this area.
**** Reminder that HRSA data on the size of the 340B program in 2023 is due this month. This is where they should be posted. Let me know if you hit “refresh” and see it before I do.
I thought I’d heard it all when it comes to the IRA. And then I opened this MedPage Today story about the Senate Finance Committee’s hearing on the IRA earlier in the week.
The second paragraph of the story included this quote on the impact of the IRA on pharma, from Rena Conti of Boston University (Go Terriers!): “By creating stronger incentives for long-lived brand drugs to go generic, competition will induce companies to innovate [in order] to grow.”
That’s bonkers, no?
The idea that the IRA, by undermining exclusivity, will so panic biopharma companies that they’ll, I don’t know, try harder, thus boosting innovation?
There are a lot of good-faith arguments that maybe the IRA is not that bad for industry. I don’t necessarily subscribe to those arguments, but they exist. “Early generic competition will drive innovation” is not one of those good-faith arguments.
(Conti also suggested that the lower prices will drive volume increases that will offset the price cuts, which is not so much bad-faith as it is naive, but that’s a discussion for another day.)
Elsewhere:
The Part D stabilization story is going to be an important policy argument for at least the next three years, so props to CNN for getting a clear overview of what’s going on out to the general public. Related: the Part D stabilization story is now mainstream enough for CNN.
Some patent links: there was a Senate discussion today of a couple of patent bills viewed as pro-pharma. I haven’t seen a readout from the discussion, but Axios’ preview is pretty good. And STAT has a deep dive on “use codes” — brief descriptions of a medicine’s use filed in an FDA database — which clearly documents that such codes are becoming more prevalent. Less is clear is what effect that’s having in the real world.
The ERISA Industry Committee thinks that PBMs should be legally required to act as fiduciaries for the employers for whom they work. That feels like an interesting idea that’s unlikely to go anywhere, but I’m open to more thoughtful commentary on that.
Thanks for reading this far. I’m always flattered when folks share 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.
