PBM Reform Is (Probably, Mostly) Dead for 2024. But Will It Come Back Harder in 2025?

So PBM reform is dead, according to the political press covering the government funding negotiations. STAT confirmed that fact with 11 different people, which is a feat. 

(Modern Healthcare, not to be outdone, noted that four sources described the negotiation with the exact same words: “It’s a mess.” MH suggested that sometimes there were expletives between “a” and “mess.)

Though there is always a possibility that reform will wriggle its way into law this session in some other backdoor way, the coverage today feels like a requiem for the 2024 reform push. And I’m sure that will be painted as a victory for the PBMs, who escaped — for now — a fairly bipartisan consensus that something needed to be done. 

But I’m left wondering if this is a pyrrhic victory of sorts. Some of the legislative proposals were pretty weak sauce. I’m not suggesting that the industry would have been unfazed had something passed, but it’s not hard to imagine approaches that would more fully undermine the PBM business model than the ones under discussion. 

So it’s possible that future efforts will have more teeth than the past efforts.

And things are not going to get better, reputationally, for the PBMs. The business practices are not becoming more patient-friendly. Pharmacists are going to continue to feel the financial pain. More employers are going to wise up. The FTC (see below) and states will continue to amp up the pressure. 

A new Congress will get sworn in in early 2025 with a mandate to do something (ideally a bipartisan “something”). 

That leaves PBMs as a juicy target.

The problem with cost-effectiveness analyses is that it’s easy — and, I would imagine, very tempting — to put a thumb on the scale to show that a particular intervention is a better (or worse!) deal than it might appear. 

It’s part of the reason why every serious discussion about CEA includes a conversation about transparency. Because unless the underlying math can be thoughtfully examined, it’s hard to know whether there is bamboozling going on. 

So it’s good news that this JAMA Dermatology paper from last week (covered by Endpoints) is fairly transparent. It suggests that psoriasis medicines in the United States are massively overpriced, applying an approach to CEA known as “efficacy frontiers,” used most notably by Germany, that compares costs and benefits.

It’s also simplistic, making it easier to see potential bamboozlement. 

I’m absolutely not the right guy to do line-by-line rebuttals of this kind of stuff — I would welcome perspective from economists for a future newsletter! — but it seems less than ideal that the paper is built around a model of psoriasis that looks at a single marker of benefit (PASI 90, for those of you into this stuff.). 

That’s it. No assessment of other costs, no consideration of other efficacy values, nothing on safety or whatnot. (This is leaving aside more sophisticated thinking about CEAs, from the impact of genericization to the “value flower,” etc.)

Now, stripping away everything save one data point makes it easy to plot costs and benefits on a simple X/Y axis, but to boil the entire impact of a medication to a single figure is crude. This isn’t just my amateur assessment. An accompanying editorial raised some of these points, too: “Using a single disease outcome can fail to capture other aspects of treatment that may be of value to patients.”

I’m left asking what the point of the paper was, given that it’s hardly rigorous enough to shed light on the actual cost-effectiveness of psoriasis drugs and — as the editorial suggests — uses an approach that will be even more difficult “where there is less consistency in outcome measures.” 

I have to assume that it is, in part, an effort to lay the groundwork for a German-style approach to drug pricing (certainly, some of the JAMA Derm authors have lauded Germany’s approach in the past.)

And I don’t want to be overly conspiratorial, but a health insurance company co-sponsored the work. Make of that what you will.

So the FTC has been working on a report about the PBM industry for, like, forever, and Sen. Chuck Grassley asked what was going on over there. Apparently, per a new letter from the FTC to Grassley, the agency hasn’t yet received what it has asked for from the PBMs, which — again — probably means that PBMs aren’t in anyone’s good graces right now. 

I kind of zoned out on the march-in right commentary given how big (and predictable!) the deluge of comments has been. But STAT flagged a letter from 28 members of Congress — including a baseball team’s worth of Dems — raising red flags. It suggests that the support for march-in might be narrower than expected, reinforcing the idea that saber-rattling about breaking patents is way better politics than it is policy. 

I’m pretty sure no one cares about the remaining legal briefs in the IRA cases — even the judge overseeing oral arguments next week is moving ahead without seeing the last couple of HHS filings — but that doesn’t mean they’ve stopped. In the last week, there’s a new HHS one (completing the briefs for the Boehringer case) and a couple from Novo and Novartis. I haven’t seen any coverage.