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The second-most important story in health care is the continued effort by big insurance companies to vertically integrate in ways that give them additional leverage over health care spending.
The most fascinating effort is the move by CVS, United, and Aetna to create subsidiaries that act as pseudo-pharmaceutical companies. These units (Cordavis, Nuvaila, and Quallent, respectively) contract with biosim manufacturers, slap their own branding on the product, and prefer it on their PBM formularies.
On the one hand, the move has massively increased biosimilar penetration. On the other, the white-labeled versions tend not to be the lowest-cost option.
There hasn’t been a lot of formal pushback against the phenomenon, though.
Until yesterday.
J&J sued Samsung Bioepis for getting in bed with one of the insurer-backed pseudo-pharma companies, with J&J claiming that the move violated the patent settlement that allowed Samsung to launch last week.
There’s lots of redactions in the legal filing, so we don’t know which pseudo-pharma is involved. STAT — which has the best coverage — thinks it might be CVS. Andrew Bourgoin from All Things Biosimilar wonders if it could be United.
Regardless, the suit suggests that the biosims market may get even more complicated. J&J’s move is a sign that existing agreements around patent settlements (and, certainly, future ones) will be leveraged to keep the pseudo-pharmas at bay.
I have the docket for this case bookmarked … should be a wild ride.
Here’s the full J&J statement for their official perspective:
We support biosimilar competition and we have in good faith entered into multiple early entry agreements that will allow up to seven ustekinumab biosimilars to launch in the U.S. this year. In fact, the first biosimilar launched on the agreed-upon settlement date of no earlier than January 1, 2025, and additional biosimilars have since launched.
We have an early entry agreement with Samsung Bioepis to enable the introduction of an ustekinumab biosimilar earlier than our STELARA® patent expiry. The agreement allows Samsung Bioepis to launch its own biosimilar independently or through a commercialization partner, but not further assign or sub-license these rights to other parties. Indeed, Samsung and Sandoz announced the launch of Pyzchiva on February 24. This litigation does not seek to prevent Samsung from selling that product, but instead to prevent it from improperly sublicensing a second, additional product to a Pharmacy Benefit Manager (PBM)’s private label distributor.
Samsung Bioepis is in breach of contract. After numerous attempts to resolve Samsung Bioepis’ breach of our settlement agreement, we have brought a complaint against Samsung Bioepis to enforce the terms of our early entry agreement.
The preliminary injunction we are seeking against Samsung Bioepis would not block them from marketing their authorized biosimilar in the U.S. Rather, our complaint against Samsung Bioepis relates to their breach of the contract in attempting to license a second biosimilar, which is prohibited by their agreement with us, and nonadherence to the agreement terms.
It’s transparency report season. Or, at least, it should be transparency report season.
Over the past eight years, it has become in vogue, if not standard practice, for large pharma companies to disclose their annual list and net price changes.
There have really been a couple of reasons why companies have opted to do this.
The first, and most strategic, is that the disclosures generally told a compelling story about the gross-to-net bubble and emphasized that list price increases were largely divorced from the net prices companies received.
The second, and more general, is that for an industry forever on its rear foot reputationally, the disclosures were a sign that companies believed in sunlight and open dialogue. Pricing was not an issue to approach with shame and diversion but a place where the industry was willing to explain why prices were the way they were. (And, indeed, what a “price” even is.)
By both standards, transparency has been a boon. It’s not difficult to imagine that pricing disclosures have played a key role in catalyzing PBM reform, growing the understanding of 340B, or building “value” as a buzzword.
Despite those gains, there’s reason to be concerned that industry is pulling back. The early efforts to go all in on promotion have faded, with some notable exceptions (J&J and Sanofi deserve credit). And some companies have stopped their pricing transparency efforts altogether.
Last year, it was Novartis, which ceased reporting list- and net-price changes, even as it reported against other SASB metrics. (Novartis, for those deep into the ESG details, didn’t report any SASB metrics in this year’s report.)
And now Novo appears** to have joined Novartis. Last year, the company’s annual report disclosed those changes. I can’t find them in this year’s edition. It’s likely there will be more to say on this, and it’s likely that this week will bring some additional datapoints, either from companies maintaining their disclosure standards or from firms opting to scrub that kind of data.
** If I have this wrong and Novo is still reporting those numbers in some other fashion, please let me know and I’ll correct the record.
Last week, PhRMA dropped a report, “A New Era of Biopharmaceutical Innovation.” I gave it a quick glance at first — there’s been a lot to triage this week! — under the assumption that it just recapitulated the existing literature on innovation, albeit in a stylish wrapper.
And while it is indeed well-packaged, there are some worthwhile new nuggets scattered throughout the piece. This graphic, in particular, caught my eye because it illustrates something critical about medicine today versus medicine a decade or two ago: there is a lot of competition in the most powerful and broadly used drug classes.
ELSEWHERE:
Lilly is expanding the cash-pay options for its Zepbound obesity drug. The topline is straightforward: Lilly is making larger doses available via vials and lowering the cost of the lower-dose vials. It’s also implementing the Zepbound Self Pay Journey Program, which offers additional discounts. The whole strategy deserves a lot more attention than I’m giving it today, especially in light of the FDA declaration that semaglutide is out of shortage. More to come.
This is a borderline-incoherent set of arguments against PBM reform from a Townhall op-ed. There may well be a principled, thoughtful set of objections to reform, but “Hey, it’s all pretty complicated” is not one of them.
If there’s one thing we should all agree on, it’s that talking about gross sales of medicines is an empty exercise. If you can’t account for rebates — especially in therapeutic areas where rebates are enormous — you’re wasting everyone’s time. That is a warning against reading this HHS OIG report (or the corresponding Axios coverage) about “surging” diabetes drug spending. To be clear: diabetes drug spending is probably jumping considerably. But using gross numbers to make that point is unserious.
Mirum won approval for Ctexli, which treats a rare genetic disorder, but the company didn’t disclose price, noting only that it would be priced “in line” with a prior version of the medicine.
I rarely use “cheeky” and “340B” in the same sentence, but you should read Preston Alexander’s cheeky 340B overview. And subscribe to his newsletter while you’re at it.
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.
