If you want to search Cost Curve back issues or link to anything you read here, the web links and archive are online at costcurve.beehiiv.com. You can subscribe there, too.
The business model of PBMs is going to have to shift. That’s been clear for years now**.
The big question, then, is “how?” What’s going to force that shift?
There are a handful of possibilities, which Rep. Jake Auchincloss has laid out in the past, and which I like to represent like this:
I’ve always thought that the legal option was the most fascinating, and the most interesting legal approach was the one launched last year against J&J (and a couple of other similar suits), alleging that the company’s selection of a health plan with ridiculously high specialty generic prices was a violation of J&J’s fiduciary duty.
That the lawsuit was aimed not at the health system participants but at the employers themselves made it all the more noteworthy. Employers have always been treated like bystanders in health policy discussions, and this put them where they belong: as the ultimate arbiters of what’s acceptable.
Anyway: We have a ruling in the J&J case, and it came out mostly in favor of the company. Hat tip to STAT’s Bob Herman, who spotted the ruling, and Bloomberg Law, which has the only coverage I’ve seen.
The basis for the decision is fairly narrow. The judge said that the employee who brought the suit wasn’t harmed in a legally meaningful way and therefore didn’t have standing the sue. Ironically, part of the decision turned on a question of broader benefit design (OOP max and such).
You can read the whole decision here. My usual caveats apply: not a lawyer, this may be appealed, not going to prognosticate, etc. But I’m unconvinced that this decision puts a stake through the heart of the idea that employers who engage health plans with questionable design are in the clear.
More to come, no doubt.
** tbh, it’s probably most clear to the big PBMs themselves, which have started — in a hundred clever ways — to change their approach. Whether the PBMs can change faster than these other forces are pushing is the open question.
With the exceptions of some run-of-the-mill pro-PBM-rebate chatter (see the Boston Globe editorial here, a readout from an AEI meeting last week that included an affirmation that the House is interested in keeping on the pressure, and an op-ed from a biosimilars leader), it’s kind of a wonkfest today:
An AEI-backed effort from Brian Miller, Deb Williams, and Steven Zima looked at the way that attempts to regulate drug pricing have backfired (think Medicaid rebates, the ASP+6 approach in Medicare Part B, the IRA) and how alternative approaches that emphasize competition might work better.
The Sagebrush/HRSA legal skirmish over 340B continues. I’m not sure how much detail you need, but the gist is that HRSA kicked a bunch of physician practices out of 340B, Sagebrush sued, and a judge told HRSA to hold up until the litigation could be resolved. HRSA maintains that the judge’s order wasn’t retrospective — HRSA isn’t allowed to kick out more practices, but it doesn’t have to reinstate the practices already kicked out — and Sagebush argues that stance is ridiculous. There’s a hearing this week, so we should get resolution soon.
Honestly, the most interesting piece of this is that the law firm for Sagebrush is using the Comic Sans font in their back-and-forth with the government.
It’s been pretty well established that 340B raises health care costs for employers (by diverting to hospitals rebate dollars that would have otherwise flowed to employers), and a new Magnolia Market Access analysis calculated the tax impact of that loss. Turns out that the federal government misses out on about $1.4 billion in tax revenue, and the states lose another $400 million or so.
This is kind of tangential to what we talk about around here, but China’s big pharma negotiation program — which is designed to promote Chinese-made products — is running into issues because the Chinese-made products have some quality issues.
Cost Curve is produced by Reid Strategic, a consultancy that helps companies and organizations in life sciences communicate more clearly and more loudly about issues of value, access, and pricing. We offer a range of services, from strategic planning to tactical execution, designed to shatter the complexity that hampers constructive conversations.
To learn more about how Reid Strategic can help you, email Brian Reid at brian@reidstrategic.com.
