Marty Schladen, Author at Missouri Independent https://missouriindependent.com/author/marty-schladen/ We show you the state Wed, 09 Oct 2024 19:21:55 +0000 en-US hourly 1 https://wordpress.org/?v=6.6.2 https://missouriindependent.com/wp-content/uploads/2020/09/cropped-Social-square-Missouri-Independent-32x32.png Marty Schladen, Author at Missouri Independent https://missouriindependent.com/author/marty-schladen/ 32 32 Senators demand another antitrust investigation into pharmacy middlemen https://missouriindependent.com/2024/10/09/senators-demand-another-antitrust-investigation-into-pharmacy-middlemen/ https://missouriindependent.com/2024/10/09/senators-demand-another-antitrust-investigation-into-pharmacy-middlemen/#respond Wed, 09 Oct 2024 19:09:01 +0000 https://missouriindependent.com/?p=22263

The St. Louis County office of Express Scripts, one of the nation's largest pharmacy benefit managers (Google Maps).

A federal antitrust watchdog is already conducting an investigation into, and has filed a lawsuit against, huge pharmacy middlemen. Now two U.S. senators want the Federal Trade Commission to open a separate investigation into an emerging practice of their even bigger parent companies.

The middlemen are called pharmacy benefit managers or PBMs, and they have long claimed that their size enables them to force drugmakers to lower their prices and create savings for patients. But two of the big-three middlemen have entered into “co-manufacturing” agreements with some of the very drugmakers that are supposedly their adversaries in drug-pricing negotiations.

The health conglomerates that own CVS Caremark and Express Scripts already own businesses that occupy huge swaths of the health care space. The co-manufacturing agreements mean that they’ll extend their tentacles into yet another, and that won’t be good for consumers, said a letter sent to the FTC last week by two Democratic senators — Sherrod Brown of Ohio and Ron Wyden of Oregon.

“The concern with these ‘co-manufacturing’ agreements is that they are a veiled attempt by PBMs to control additional parts of the supply chain which has resulted in additional harm to consumers in the form of fewer drug choices and higher drug costs,” their letter said.

For its part, CVS says that measures such as co-manufacturing agreements have helped it save clients $500 million on immunosuppressive drugs similar to Humira.

The company’s PBM, CVS Caremark, handles drug transactions on behalf of insurers, including Aetna, which CVS Health also owns.

They create networks of pharmacies and they decide how much to reimburse them from the drugs they dispense. And because CVS owns a mail-order pharmacy in addition to the largest retail chain, it determines how much to pay itself and its competitors — an arrangement in which the company’s critics see an inherent conflict.

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CVS Caremark, Express Scripts and a third PBM — OptumRx — control access to about 80% of people whose prescriptions are covered by insurance. Since the PBMs decide which drugs are covered and by how much, they have enormous leverage to get drugmakers to give them huge, often nontransparent rebates and fees.

The FTC last month sued the big PBMs over their practices in this arena, saying that they forced up insulin list prices starting in 2012. The agency is also engaged in a sweeping “6(b)” investigation of the big PBMs and in July released a scathing interim report saying they appeared to be artificially increasing drug prices and harming patients.

In their letter, Brown and Wyden, both members of the Senate Finance Committee, are asking the FTC to open a separate 6(b) investigation into the co-manufacturing arrangements of CVS Caremark and Express Scripts. They say that with the agreements, the conglomerates don’t seem to be making anything, they’re just taking control of yet another part of the drug supply chain.

The agreements are with companies that make versions of adalimumab, a drug used to treat arthritis that is known under the brand names Humira and Hyrimoz.

The letter by Brown and Wyden included a graphic from a CVS earnings call. It’s in the shape of a heart and it shows that through its vertical integration, a customer with Aetna insurance can have CVS Caremark as a PBM, get adalimumab as a product of a CVS co-manufacturing agreement, get primary care at Oak Street Health, get in-home evaluations from Signify Health, and get meds from a CVS pharmacy. All those companies are subsidiaries of CVS Health.

“This graphic clearly shows the benefits that CVS and its shareholders reap by capturing patients and directing them through the vertically integrated array of CVS subsidiaries,” Wyden and Brown wrote.

Express Scripts didn’t respond to a request for comment, but CVS spokesman David Whitrap said the senators are missing a basic point — that CVS has brought down the cost of adalimumab by preferring lower-cost “biosimilars” to Humira.

“Unlocking the biosimilar market was not easy, and it required many of the tools that CVS Health brings to bear: Caremark’s proven ability to transition patients to more affordable prescription drugs, the will and trust of the businesses that hire us, our investments in (electronic-medical-record) connectivity that drive a better patient and provider experience, the consultative care and product delivery from CVS Specialty Pharmacy, and (drugmaker) Cordavis’ ability to identify biosimilar drugmakers that produce high-quality alternatives at a sustainable supply on which our members can rely,” Whitrap said in an email.

Brown and Wyden, however, suspect that the opposite is the case.

“Vertical integration of PBMs into yet another aspect of the health system,” they wrote, “intensifies our concerns about the ability of PBMs to markup the cost of biosimilars and steer patients to their higher cost ‘co-manufactured’ products while limiting access to products from non-affiliated manufacturers.”

This story was originally published by the Ohio Capital Journal, a States Newsroom affiliate. 

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Pay gap narrows, but CEOs still get way more than regular workers, new report says https://missouriindependent.com/2024/08/29/pay-gap-narrows-but-ceos-still-get-way-more-than-regular-workers-new-report-says/ https://missouriindependent.com/2024/08/29/pay-gap-narrows-but-ceos-still-get-way-more-than-regular-workers-new-report-says/#respond Thu, 29 Aug 2024 19:22:51 +0000 https://missouriindependent.com/?p=21665

The gap between CEO pay and the middle-paid employee actually fell between 2022 and 2023 (Getty Images)

The pay gap between corporate leaders and workers at low-wage companies narrowed a little between 2022 and 2023, but it’s still huge, according to a report that was released Thursday.

In addition, those leaders invested far more heavily in a strategy that boosts their already-lavish pay than they did in employee retirement benefits. Nearly half of them even invested more in the strategy — stock buybacks  — than they did in their own companies, the report said.

The report, Executive Excess 2024, is the 30th such report by the Institute for Policy Studies, a think tank that examines inequality, among other topics.

The report looks at the 100 S&P 500 corporations with the lowest median worker pay and monitors changes from one year to the next.

A topline finding in this year’s report is that the gap between CEO pay and the middle-paid employee actually fell between 2022 and 2023. That might be due to the fact that the Inflation Reduction Act of 2022 imposed a 1% excise tax on them.

However, the difference remains vast, dropping from the chief executive getting 603 times what the median employee got, to 538. The slight narrowing of the pay gulf is due both to a 9% increase in median worker pay — to $34,522 in 2023 — and a 4% drop in CEO pay — to $14.7 million, the report said.

Such huge disparities between the money the top boss makes and the median worker does aren’t just an issue of fairness. The divergence between executive and worker pay helps drive income inequality in the United States, and that’s been linked to higher rates of crime, greater consumer debt, and poorer health outcomes, a separate report from last year said.

This year’s Executive Excess report again looked at a major mechanism through which CEO’s boost their pay.

When they decide to use company revenue to buy back stock, they’re serving themselves because much of their compensation comes in the form of company stock. The value of that stock increases with demand, and buybacks boost demand.

That dynamic can create warped incentives for executives to put their own interests ahead of those of their companies and their employees. And in many cases, the Low Wage 100 spent more on buybacks than they spent on their companies.

In total, the companies spend more than a half-trillion dollars on buybacks over the five years ending in December, while they made three-quarters of a trillion in capital expenditures over the same period, the report said.

Even so, nearly half of those companies — 47% — spent more on buybacks than they made in capital expenditures.

And while CEOs are spending heavily in ways that will add comfort to their own, already-cushy retirement, they’re spending far, far less on retirement benefits for their employees.

The biggest disparity among the 20 largest low-wage employers was for Chipotle Mexican Grill. It spent $2.1 billion on buybacks over five years, while spending just $24 million on retirement benefits for its 114,000 employees, the report said. In other words, Chipotle spent nearly 50 times as much on buybacks over the period as it did on retirement benefits for its employees.

Meanwhile, CEO Brian Niccol’s compensation in 2023 alone — $22.4 million — was almost equal to retirement benefits paid out to all company employees over the last five years combined.

Among the 20 largest low-wage employers, Cincinnati-based Kroger had one of the lowest buyback-to-employee retirement ratios. Even so, it spent almost four times as much on buybacks as it did on employee retirement over the five-year period, the report said.

In addition to the 1% excise tax on buybacks imposed by the Inflation Reduction Act, other measures are being taken to curb the practice. Sens. Sherrod Brown, D-Ohio, and Ron Wyden, D-Oregon, have authored a bill that would quadruple that percentage.

In addition, the Biden administration has proposed preventing executives from selling their stock over a multi-year period after a buyback, “preventing CEOs from timing share repurchases to cash in personally on a short-term price pop they themselves have artificially created,” the report said.

This story was first published by the Ohio Capital Journal, a States Newsroom affiliate. 

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Federal regulator: Pharmacy middlemen appear to be raising prices, hurting patients https://missouriindependent.com/2024/07/10/federal-regulator-pharmacy-middlemen-appear-to-be-raising-prices-hurting-patients/ https://missouriindependent.com/2024/07/10/federal-regulator-pharmacy-middlemen-appear-to-be-raising-prices-hurting-patients/#respond Wed, 10 Jul 2024 14:09:56 +0000 https://missouriindependent.com/?p=20973

The St. Louis County office of Express Scripts, one of the nation's largest pharmacy benefit managers (Google Maps).

The federal trade watchdog on Tuesday released an interim report saying that sprawling health care conglomerates are driving out competition in the pharmacy sector and appear to be increasing prices in the process.

The interim report comes after the Federal Trade Commission in 2022 announced that it was undertaking a sweeping investigation of pharmacy middlemen known as pharmacy benefit managers, or PBMs.

Each of the largest three PBMs — CVS Caremark, Express Scripts and OptumRx — is part of a much-larger corporation that also owns a top-10 health insurer. They also own pharmacies, doctors offices and other links in the health chain, prompting the FTC to say they’re “vertically integrated.”

The corporations’ pharmacy benefit managers act as insurers’ representatives in pharmacy transactions. They decide which drugs are covered, they create pharmacy networks, and through an opaque system, they decide how much to reimburse pharmacies for the drugs they dispense.

The three biggest PBMs together are handling nearly 80% of prescription-drug transactions on behalf of insured Americans, the FTC report said. The largest six PBMs manage nearly 95% of all such prescriptions in the United States, it said.

“Amidst increasing vertical integration and concentration, these powerful middlemen may be profiting by inflating drug costs and squeezing Main Street pharmacies,” an executive summary of the report said.

The summary adds that the big PBMs “wield enormous power and influence over patients’ access to drugs and the prices they pay. This can have dire consequences for Americans, with nearly three in ten surveyed Americans reporting rationing or even skipping doses of their prescribed medicines due to high costs.”

For its part, and industry group representing PBMs said the businesses “have a proven track record of reducing prescription drug costs” and that they “recognize the vital role pharmacies play in creating access to prescription drugs for patients.”

JC Scott, president of the industry group, the Pharmaceutical Care Management Association, said the FTC had treated the PBM industry unfairly.

“Throughout this process, FTC leadership has shown that they have pre-determined conclusions that they want to advance irrespective of the facts or the data, and this report demonstrates an intention to follow through on their agenda regardless of the evidence,” Scott said in a statement.

But many independent and small-chain pharmacies dispute that PBMs have their interests at heart. U.S. Rep. Buddy Carter, a Republican from Georgia, is a pharmacist and has long called for the FTC to investigate the PBM industry.

“I’m proud that the FTC launched a bipartisan investigation into these shadowy middlemen, and its preliminary findings prove yet again that it’s time to bust up the PBM monopoly,” Carter said in a statement.

“We are losing more than one pharmacy per day in this country,” he said, “causing pharmacy deserts and taking the most accessible health care professionals in America out of people’s communities. I am calling on the FTC to promptly complete its investigation and begin enforcement actions if – and when – it uncovers illegal and anti-competitive PBM practices.”

Because they control access to so many patients, most pharmacies — especially small operations — feel they have little choice about signing the contracts the big PBMs offer them. For years, they’ve been complaining of declining reimbursements and seemingly arbitrary clawbacks from the huge PBMs. Many have been fleeing the business, saying they’re unable to cover their expenses.

Late last month, for example, news broke that Rite Aid would close hundreds of stores in Ohio and Michigan, with many more likely to close in the other 14 states where the bankrupt chain operates. The company tends to operate in smaller communities and the FTC says pharmacy closures in such communities are particularly harmful to patients.

“PBMs also exert substantial influence over independent pharmacies, who struggle to navigate contractual terms imposed by PBMs that they find confusing, unfair, arbitrary, and harmful to their businesses,” the agency said in a statement accompanying the interim report.

Between 2013 and 2022, about 10% of independent retail pharmacies in rural America closed.

“Closures of local pharmacies affect not only small business owners and their employees, but also their patients,” the agency said. “In some rural and medically underserved areas, local community pharmacies are the main healthcare option for Americans, who depend on them to get a flu shot, an EpiPen, or other lifesaving medicine.”

CVS operates the largest retail chain, so when its PBM decides how much to reimburse pharmacies for drugs, it’s using what the FTC called an “extraordinarily opaque” system to pay its own pharmacies and its competitors for the drugs they dispense.

Similarly, all three of the biggest PBMs operate mail-order pharmacies for expensive “specialty” drugs such as cancer medication. And they often encourage — if not require — patients to get their medicine from them. That has resulted in PBM-affiliated specialty pharmacies controlling 70% of sales in that class of drugs, the FTC report said.

Using mail-order for complex, quickly changing cancer drug regimens has led to horror stories among patients forced to get their drugs that way. Meanwhile, the FTC report uncovered evidence that in at least some instances, PBMs are paying their own companies’ pharmacies more for drugs in those transactions than they do their competitors.

“Our analyses also highlight examples of affiliated pharmacies receiving significantly higher reimbursement rates than those paid to unaffiliated pharmacies for two case study drugs,” it said. “These practices have allowed pharmacies affiliated with the three largest PBMs to retain levels of dispensing revenue well above estimated drug acquisition costs, resulting in nearly $1.6 billion of additional revenue on just two cancer drugs in under three years.”

Such practices have already prompted Ohio Attorney General Dave Yost to sue Express Scripts under the state’s antitrust law, the Valentine Act.

PCMA, the industry group, accused the FTC of using an unrepresentative sample in its analysis.

“Today’s interim FTC report falls far short of being a definitive, fact-based assessment of PBMs or the prescription drug market,” Scott, the group’s president said.

“Members of the commission themselves disagree with the content of the report and the decision to release it,” Scott continued. “This report is based on anecdotes and comments from anonymous sources and self-interested parties, and supported only by two cherry-picked case studies that are implied to be representative of the entire market. The report completely overlooks the volumes of data that demonstrate the value that PBMs provide to America’s health care system by reducing prescription drug costs and increasing access to medications.”

The FTC report also slammed arrangements under which the big PBM’s negotiate huge rebates and other discounts from drugmakers.

Because PBMs control access to so many patients, they have great leverage when they negotiate rebates and other discounts from makers of patented or “branded” drugs. The middlemen control the “formulary,” or list of covered drugs, and manufacturers have to cough up big if they want their products to be on it.

The system of granting huge, non-transparent discounts has already been shown to increase the “list” price of drugs. That’s the amount you would pay if you didn’t have insurance — and often the price on which your copayment or deductible is based.

The FTC said it came across another way the rebate system appears to be costing patients — by locking them out of cheaper generics that would work just as well.

“While this interim report principally focuses on the relationship between PBMs and pharmacies, we share evidence that PBMs and brand pharmaceutical manufacturers sometimes enter into agreements to exclude generic drugs and biosimilars from certain formularies in exchange for higher rebates from the manufacturer,” the report said. “These exclusionary rebates may cut off patient access to lower-cost medicines and warrant further scrutiny by the Commission, policymakers and industry stakeholders.”

FTC Chairwoman Lina Khan in March said that some of the PBMs weren’t cooperating with the investigation. Those problems apparently persist.

“The report notes that several of the PBMs that were issued orders have not been forthcoming and timely in their responses, and they still have not completed their required submissions, which has hindered the Commission’s ability to perform its statutory mission,” the agency said in a statement. “FTC staff have demanded that the companies finalize their productions required by the 6(b) orders promptly. If, however, any of the companies fail to fully comply with the 6(b) orders or engage in further delay tactics, the FTC can take them to district court to compel compliance.”

The story was originally published by the Ohio Capital Journal, a States Newsroom affiliate. 

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Feds expand probe into new layer of drug middlemen https://missouriindependent.com/briefs/feds-expand-probe-into-new-layer-of-drug-middlemen/ Wed, 21 Jun 2023 16:26:13 +0000 https://missouriindependent.com/?post_type=briefs&p=15829

(Mint Images/Getty Images)

The Federal Trade Commission this month announced that it was expanding its probe into drug middlemen — companies accused of increasing the cost of prescription drugs through secretive, one-sided arrangements with drugmakers and pharmacies. Specifically, it added a third company created by one of the biggest middlemen to its investigation.

The commission, which polices anti-competitive practices in the marketplace, on June 8 issued a compulsory order for Emisar Pharma Solutions to hand over “information and records on its business practices.” The order is part of a sweeping “6(b)” investigation into drug middlemen known as “pharmacy benefit managers” that began a year ago.

Part of some of the largest corporations in the United States, each of the PBMs is affiliated with a major insurer: CVS Caremark with Aetna, Express Scripts with Cigna, and OptumRx with UnitedHealth.

The PBMs create pharmacy networks, create lists of covered drugs and negotiate massive, secretive rebates and discounts from drugmakers in exchange for covering their products. The three largest are estimated to control 80% of the marketplace.

The PBMs have argued that they use their clout to negotiate discounts for the people they cover. But their critics say they aren’t transparent about their finances and that ever-increasing rebates are associated with even bigger increases in the list prices of drugs.

Even as concerns have been raised about the big-three PBMs, they’ve appeared to add another layer of secrecy.

The Capital Journal in 2021 reported the rise of “group purchasing organizations” started by each — CVS started one called Zinc Health Services, ExpressScripts launched Ascent Health Solutions and Optum launched Emisar. The companies negotiate rebates and other discounts from drug manufacturers on the behalf of the big three PBMs and some smaller players.

Critics are not just concerned that adding another corporate layer will put yet another curtain around the companies’ practices. They’re also concerned that two of the three group-purchasing organizations are headquartered overseas, potentially making some of their dealings undiscoverable.

Express Scripts’ Ascent is based in Switzerland and Optum’s Emisar is headquartered in Ireland.

The FTC last year opened its probe into the big-three PBMs and into Humana Inc., Prime Therapeutics LLC, and MedImpact Healthcare Systems Inc. Then last month, it added Zinc and Ascent to the probe. This month, it added Emisar.

“Emisar, like Zinc and Ascent, negotiates rebates with drug manufacturers,” the FTC said in announcing the move. “Emisar negotiates these rebates on behalf of OptumRx and, like OptumRx, is a subsidiary of UnitedHealth Group. The Order to Emisar is substantially similar to the orders recently issued to Zinc and Ascent.”

In a separate proceeding, Ohio Attorney General Dave Yost in March filed suit against Express Scripts and Ascent, alleging they violated the Valentine Act, Ohio’s antitrust law. The case is pending.

This article was initially published by the Ohio Capital Journal, a States Newsroom affiliate.,

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Cancer drug shortages decried in congressional hearing https://missouriindependent.com/briefs/cancer-drug-shortages-decried-in-congressional-hearing/ Thu, 15 Jun 2023 14:58:59 +0000 https://missouriindependent.com/?post_type=briefs&p=15745

A pharmacy manager retrieves a a medication. (Joe Raedle/Getty Images)

There’s an acute shortage of injectable cancer drugs because manufacturers can’t make money off of them, two experts told a U.S. House subcommittee Tuesday. But it’s unclear whether chaos in the GOP Caucus that’s supposed to be running the chamber will allow for action.

The testimony came before the Health Subcommittee of the House Energy and Commerce Committee. A subject of the hearing was to consider reauthorization of the Pandemic and All Hazards Preparedness Act, or PAHPA. It was passed in 2006 amid a threat of an Avian Influenza pandemic that didn’t materialize, but was used heavily during the coronavirus pandemic 14 years later.

Democratic members of the subcommittee have delayed support for the reauthorization as they push for broader reforms to the drug supply chain. But U.S. Rep. Richard Hudson, R-N.C., said the dynamics of the House Republican Caucus made passage of such ambitious legislation unlikely.

“I’m afraid that my colleagues are losing sight of the fact that we need to pass this bill this year,” he said. “From the beginning, I’ve worked with the Democrats to negotiate a bill that can pass the House — particularly considering the dynamics of this current Congress. I’ve been clear since the start about my priorities and the confines we’re working under.”

That likely was a reference to a small group of hard-right Republicans who only grudgingly voted to make Rep. Kevin McCarthy, R-Calif., speaker. Last week they blocked all legislative activity on the House floor out of anger over a deal McCarthy made with President Joe Biden to save the nation from defaulting on its debt and throwing global financial markets into chaos. On Monday, the lawmakers said they would temporarily suspend their blockade, The Hill reported.

In response to Hudson, Rep. Frank Pallone, D-N.J., on Tuesday said Congress shouldn’t allow a small group of radicals to dominate the legislative process.

“I’m sorry, but the Republican disarray on the floor should not be the basis not to act,” Pallone said of broad drug reforms. “Because I don’t know on any given day… We had four days without voting on anything. So what does that mean? Am I supposed to not introduce bills or try to act on anything because some people on the right are going to take down the speaker? We can’t act on that. We can’t proceed based on that. And PAHPA is a must-pass bill, so if we don’t include legislation addressing drug shortages now, it’s just not going to happen.”

Two experts told the panel that the shortage of certain injectable generic cancer drugs is acute and getting worse.

“Today’s shortages are the worst I have seen in my 30-year career,” Julie R. Gralow, Chief Medical Officer & Executive Vice President of the Association for Clinical Oncology, said in written testimony. “In 2022, approximately 100,000 Americans were diagnosed with ovarian, bladder and testicular cancers, cancers which may rely on cisplatin or carboplatin for treatment. These one hundred thousand patents may not have access to lifesaving treatment.”

Gralow said the drugs can also be used to treat cervical, endometrial, lung, head and neck, bladder, esophageal, gastric, breast and more cancers. She added that as many as half a million Americans might be affected by their shortages each year.

“From 2010 to 2020, eight of the 10 most frequently used drugs to treat acute lymphoblastic leukemia — the most common childhood cancer — were at some point temporarily unavailable,” Gralow said.

Ted Okon, executive director of the Community Oncology Alliance, put the problem even more starkly.

“There is a growing crisis of a severe shortage of low-cost generic drugs used to treat cancer including carboplatin, cisplatin and fluorouracil,” he said. “Although decades old, these are mainstays for many types of cancers — including curable cancers. As a result of these drug shortages Americans with cancer are facing treatment delays, potentially receiving inferior treatments and even having their treatment stopped.”

Okon added, “What is heartbreaking is that Americans with potentially curable cancers may miss treatments or even a cure because of these shortages. Our inaction in fundamentally solving the cancer-drug shortage problem — which has existed for years, but is now as severe as we’ve ever faced — has likely signed a death sentence for Americans.”

Okon said that well-intentioned programs capping generic prices and requiring manufacturer discounts are band aids that are actually making the shortage of injectable generic cancer drugs worse.

“The fundamental, root cause of cancer drug shortages is financial,” he said. “Unfortunately, recent solutions deal with symptoms of the problem, but none address the underlying financial causes. If a generic drug manufacturer cannot make a profit off a drug, it will simply stop making the drug.”

Lives literally depend on Congress taking action, Okon said.

“Congress needs to stop band-aiding the problem and fix the fundamental financial problem, as well as bring manufacturing back to the United States,” he said.

This article first appeared in the Ohio Capital Journal.

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Federal authorities move to close mammoth drug-pricing loophole https://missouriindependent.com/2023/06/01/federal-authorities-move-to-close-mammoth-drug-pricing-loophole/ https://missouriindependent.com/2023/06/01/federal-authorities-move-to-close-mammoth-drug-pricing-loophole/#respond Thu, 01 Jun 2023 15:00:54 +0000 https://missouriindependent.com/?p=15561

Known as “pharmacy benefit managers,” the primary drug middlemen have long been accused of playing a major role in the increasing cost of prescription drugs, which have been one of the fastest-rising health expenses (Mint Images/Getty Images).

The federal agency that oversees Medicaid is moving to close a loophole that likely is worth billions to prescription drug middlemen.

The Centers for Medicare and Medicaid Services last week proposed a new rule that it said would help ensure compliance with a requirement under federal law that Medicaid dollars be spent in “proper and efficient” ways. Interested parties will have until late July to comment on the proposal.

At issue is whether the middlemen — known as pharmacy benefit managers, or PBMs — are wrongly mixing profits with what they actually pay for drugs when they bill state Medicaid programs.

If they are, it wouldn’t just be a huge boost to the companies’ bottom lines. It also would be improperly inflating taxpayers’ costs to provide health care to the poor and disabled.

The biggest PBMs are part of some of the biggest corporations in the United States, and the three biggest are estimated to control more than 80% of the marketplace.

The companies contract with insurers — which are often part of the same corporation — to administer prescription drug benefits. They create lists of drugs that are covered, negotiate huge rebates with drugmakers in exchange for putting their drugs on those lists, and they reconcile transactions at the pharmacy counter.

Crucially, PBMs also create pharmacy networks and determine how much to reimburse them for drugs. For years, pharmacies that aren’t under the same corporate roof as the PBMs have complained that they’re forced into “take-it-or-leave-it” contracts under which they often make little or no money. They say they have no real choice about signing the deals because not doing so would cost them most of their business.

Around the country, pharmacies have been complaining that CVS — which owns the largest PBM and the biggest retail chain — uses an opaque system of determining reimbursements to drive competitors out of business. CVS adamantly denies the claim, but the Federal Trade Commission is investigating it and the other big PBMs to see if they’re engaged in anticompetitive practices.

Another practice the big PBMs are known to have engaged in: “spread pricing.” That’s where they reimburse pharmacies at one rate and then turn around and bill the insurer, Medicaid or whomever’s paying another, often substantially higher rate.

A 2018 analysis by The Columbus, Ohio, Dispatch of confidential 2017 reimbursement data determined that CVS’s PBM was charging 12% more for drugs than it was paying pharmacies.

In court, drug middlemen fight to limit pharmacies insured patients can use

That prompted the state Department of Medicaid to obtain all the data and subject it to an independent analysis. It found that CVS’s PBM charged taxpayers almost $200 million more for prescription drugs in 2017 than it paid the pharmacies that dispensed them.

CVS denied it was gouging taxpayers, but the analysis concluded it was charging at least triple the going rate.

In the proposed rule, CMS cited a separate investigation that showed that CVS Caremark and OptumRx were inflating costs for generic drugs by almost a third when they billed taxpayers.

“For example, an analysis of Ohio’s Medicaid managed care program by the Ohio Auditor of State revealed $208.4 million of spread within their managed care plan’s PBM transactions for generic drug claims between April 1, 2017, and March 31, 2018,” the proposed rule says. “For the time period analyzed, this amount of PBM spread represented 31.4 percent of total generic drug expenditures within the State’s Medicaid managed care program.”

Ohio Attorney General Yost in March sued the other mammoth PBM, St. Louis-based ExpressScripts, claiming it has engaged in anticompetitive practices.

Now the federal agency that oversees Medicaid is trying to prevent another possible abuse. It has to do with PBMs hiding profits and growing the cost of the program.

The Center for Medicare and Medicaid Services requires Medicaid contractors to adhere to a “medical loss ratio.” Under it, at least 85% of what contractors are charging has to go directly to providing care. That caps profit and administrative charges at 15%.

But how can we know what the PBMs’ actual cost is for drugs if we don’t have all their pricing information, which they regard as trade secrets? In the Ohio case, the PBMs forked one year’s worth over under pressure from state officials amid bad publicity.

In its proposed new rule, CMS cited a lack of transparency as a major obstacle to meeting the legal requirement that program expenditures be as efficient as possible.

“This information deficit results in a lack of accountability and transparency to the Medicaid program, which we believe is contrary to proper and efficient operation of the State Medicaid program and potentially creates conflicts of interest in connection with payment for” prescription drugs, it said.

Federal regulators launch investigation into drug rebates said to drive up prescription costs

Secretly paying pharmacies much less for drugs than they charge Medicaid can create problems beyond allowing PBMs to pocket more profit than the law allows. It also would inflate the overall cost of Medicaid without doing anything to improve the health of poor and disabled Americans.

That’s because falsely labeling profit as a direct expenditure on patient care would be built into the overall cost of care for Medicaid patients in a given year. That amount would be used to set the following year’s “capitation rate” — the per-patient amount a state Medicaid program would pay a managed-care provider.

In other words, the money for hidden profits has to come from the taxpayers somehow, and it would inevitably lead to higher Medicaid costs.

Medical loss ratio “calculations are used to develop capitation rates paid to Medicaid managed care plans, thus their accuracy is critical in assuring that Medicaid payments are reasonable, appropriate and necessary for health care services when using a Medicaid managed care plan,” the proposed CMS rule says.

Even if it is adopted, the rule is unlikely to be sufficient to prevent PBMs from gaming the Medicaid system.

They’re also known to reimburse pharmacists at one rate and then come back and demand that some of the money be refunded. Some Ohio pharmacists have said such “clawbacks” have cost them as much as 7% of their annual revenue.

So what are PBMs reporting when they bill taxpayers and how much are they saying went to patient care and how much to profit? Is it the amount they initially paid pharmacists? The net amount after they’ve clawed some back? Both?

Asked that question at a legislative hearing in late 2021, Ohio Medicaid Director Maureen Corcoran said she didn’t know. Her agency dealt with the lack of transparency by firing the big-three PBMs and moving to a system in which it has direct access to drug-pricing information.

However, the proposed CMS transparency rule doesn’t address the issue.

This story first appeared in the Ohio Capital Journal, a States Newsroom affiliate. 

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https://missouriindependent.com/2023/06/01/federal-authorities-move-to-close-mammoth-drug-pricing-loophole/feed/ 0
Federal regulator expands investigation of prescription drug middlemen https://missouriindependent.com/briefs/policing-drug-price-middlemens-middlemen/ Fri, 19 May 2023 15:26:40 +0000 https://missouriindependent.com/?post_type=briefs&p=15411

Known as “pharmacy benefit managers,” the primary drug middlemen have long been accused of playing a major role in the increasing cost of prescription drugs, which have been one of the fastest-rising health expenses (Mint Images/Getty Images).

The Federal Trade Commission this week announced it added massive drug-purchasers to an investigation into the practices of powerful drug middlemen.

Critics have described those businesses, created since 2019, as another layer of opacity in the already obscure world of drug pricing.

The FTC — the federal agency tasked with policing monopolistic practices — was already investigating one tier of drug middlemen when it made Wednesday’s announcement. It said the agency had sent “compulsory orders” for information to a second tier of middlemen created and run by two of the three biggest first-tier middlemen.

Known as “pharmacy benefit managers,” the primary drug middlemen have long been accused of playing a major role in the increasing cost of prescription drugs, which have been one of the fastest-rising health expenses.

PBMs contract with insurers to handle prescription benefits. Since they determine which drugs are covered, they can — and do —  leverage huge rebates from drugmakers to put their products on those lists.

Because the businesses aren’t transparent about how they handle those rebates, the PBMs are suspected of pocketing a substantial portion of them instead of passing them along to consumers. There are also concerns about the market dominance of the three biggest — CVS Caremark, ExpressScripts and OptumRx — which combined are estimated to handle more than 80% of the prescription claims in the United States.

Also, each has combined with a top-10 health insurer since 2014 into massive corporations that themselves sell drugs and some of which are buying up doctors’ offices. Under the same corporate roof, those businesses could be cutting special deals to one another, and one might wonder if controlling costs would be their first priority.

Amid investigations into the PBM industry and growing calls for a government crackdown, the FTC last June voted unanimously to mount a formal “Section 6(b)” investigation into six PBMs, including the big three.

On Wednesday, it said it was adding Zinc Health Services and Ascent Health Services to the probe into PBMs’ “impact on the accessibility and affordability of prescription drugs.”

In 2021, the Ohio Capital Journal reported on the rise of the companies. ExpressScripts launched Switzerland-based Ascent in 2019. CVS launched Zinc domestically in 2020. And it hasn’t been added to the FTC probe, but OptumRx launched Ireland-based Emisar Pharmacy Solutions in 2021.

Going by names like “purchasing organizations,” “rebate aggregators” and “contracting entities,” the new businesses are taking over the business of  negotiating manufacturer rebates on behalf of the big-three PBMs and smaller ones that sign up with them.

An industry group said the combination would create even more savings for customers. But skeptics said feared would create another layer of smoke — especially operating in foreign countries like Switzerland, which has some of the strictest bank-secrecy laws in the world.

“From our perspective, we definitely have questions about adding an entity into the mix in the supply chain. Is that going to make it that much harder for us to track where these rebates are actually going?” James Gelfand, senior vice president of the ERISA Industry Committee, asked in a 2021 interview with the Capital Journal. The group has 120 member companies, which purchase insurance for 10 million people.

In announcing a state antitrust suit filed in March against ExpressScripts, Ascent and other companies, Ohio Attorney General Dave Yost had more pointed words about the rise of the middlemen’s middlemen.

“Ascent was, (its PBM owners) realized, the perfect vehicle to harmonize and fix drug prices, rebates and fees and retail pharmacy reimbursements,” the suit said.

This story was originally published by the Ohio Capital Journal, a States Newsroom affiliate. 

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Centene to pay $215 million to settle allegations it ripped off California Medicaid https://missouriindependent.com/briefs/health-care-giant-centene-settles-with-another-state-california/ Wed, 15 Feb 2023 15:14:15 +0000 https://missouriindependent.com/?post_type=briefs&p=14159

Centene Corp. headquarters in Clayton (photo from Google Maps).

Medicaid managed-care giant Centene Corp. has agreed to pay California $215 million to settle a drug-pricing scandal.

In a press release last week, California Attorney General Rob Bonta said that two Centene-owned managed-care plans, California Health & Wellness and Health Net, ripped off the state’s Medicaid system. They overcharged the system “by falsely reporting higher prescription drug costs incurred by two of its managed care plans,” the statement said.

Between 2017 and 2018, Clayton-based Centene “leveraged advantages in its pharmacy benefit manager (PBM) contracts to save its managed care plans $2.70 per prescription drug claim over the two-year period. (The California Department of Justice) alleges that Centene and its PBM failed to disclose or pass on these discounted fees to Medi-Cal, which inflated fees and drug costs reported to California,” the statement said.

Ohio is the only state to sue Centene over such allegations. In March 2021, Attorney General Dave Yost accused the company of funneling money through two pharmacy benefit managers — drug middlemen — and hiding discounts it had received.

Centene admitted no wrongdoing, but it agreed to settle with Ohio for $88.3 million just three months after the suit was filed. It also announced that it was setting aside more than $1 billion to settle similar claims with other states. California is at least the 13th state to settle with the company.

The Ohio suit followed reporting in 2018 by The Columbus Dispatch that a pharmacy middleman owned by Centene might have overbilled taxpayers $20 million for services. Centene denied wrongdoing, but an independent analysis showed that Centene’s Buckeye Health Plan billed the state Medicaid program almost twice as much per prescription as the state’s other four managed care plans.

Even though Centene agreed to pay the state scores of millions over claims of misconduct in its dealings with the Medicaid program, the Ohio Department of Medicaid awarded the company another contract worth billions just six months later.

This story was originally published by the Ohio Capital Journal, a States Newsroom affiliate. 

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Centene agrees to pay Iowa $44 million to settle Medicaid fraud claims https://missouriindependent.com/briefs/centene-pays-iowa-44m-to-settle-fraud-claims/ Wed, 21 Dec 2022 18:25:52 +0000 https://missouriindependent.com/?post_type=briefs&p=13521

Centene Corp. headquarters in Clayton (Photo from Google Maps).

Missouri-based Centene Corp. has agreed to pay Iowa $44.4 million to settle claims that it defrauded the state’s Medicaid system.

That makes it the latest state to settle claims that were originally raised in Ohio in 2021.

Centene, the nation’s largest Medicaid managed-care company, agreed to pay the money over claims that its subsidiary, Iowa Total Care, overbilled taxpayers for prescription drugs in transactions handled by a Centene-owned drug middleman, Envolve.

Medicaid managed-care companies such as Iowa Total Care contract with state Medicaid agencies to sign up patients and create networks of providers such as doctors and dentists to care for them. Pharmacy benefit managers such as Envolve contract with such managed-care organizations to create lists of covered drugs, contract with pharmacies and reimburse them for the drugs they dispense.

In March 2021, Ohio Attorney General Dave Yost sued his state’s Medicaid managed-care provider, Buckeye Health Plan. That suit accused the company of working through Envolve and another Centene-owned pharmacy middlemen to overcharge taxpayers by millions of dollars for prescription drugs.

The investigation followed reporting in 2018 by The Columbus Dispatch showing that a year earlier, Buckeye charged the state $20 million for services provided by its drug middleman. But those same services appeared to have been rendered by a separate company — CVS — that was also paid, the story said. Both Centene and CVS denied that they were double-dipping.

In June 2021, just three months after the suit was filed, Yost and Centene announced a settlement agreement that would pay Ohio $88.3 million. Centene also announced that it was setting aside more than $1 billion to settle similar claims with as many as 20 more states.

In August 2021 — just six months after the Ohio attorney general accused Centene of massive fraud against Ohio taxpayers — the Ohio Department of Medicaid signed a new contract worth billions with the company. The department justified the move by saying that it would no longer use the company for pharmacy benefit management services.

Other states settling similar claims with Centene include Arkansas, Illinois, Kansas, Mississippi, New Hampshire, New Mexico, Texas, Oregon, Massachusetts and Washington. It’s unclear whether any of those states cut ties with the company over allegations of fraud.

For its part, Centene has emphasized that in entering into the settlements, it wasn’t admitting wrongdoing.

“We respect the deep and critically important relationships we have with our state partners,” Iowa Public Radio quoted a Centene statement as saying. “This no-fault agreement reflects the significance we place on addressing their concerns and our ongoing commitment to making the delivery of health care local, simple and transparent. Importantly, this allows us to continue our relentless focus on delivering high-quality outcomes to our members.

This story was originally published by the Ohio Capital Journal, a States Newsroom affiliate. 

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Another state settles Medicaid fraud allegations with Centene https://missouriindependent.com/briefs/another-state-settles-medicaid-fraud-allegations-with-centene/ Mon, 12 Dec 2022 20:41:51 +0000 https://missouriindependent.com/?p=13397

Centene Corp. headquarters in Clayton (photo from Google Maps).

Oregon last week became the latest state to settle fraud claims with Medicaid managed-care giant Centene.

The Clayton-based company, the largest Medicaid managed-care provider in the United States, agreed to pay Oregon $17 million, according to a statement from the state’s attorney general and its insurance commissioner. Centene has emphasized that it admits to no wrongdoing in a series of such settlements, while the Oregon statement said its “investigation focused on whether Centene failed to provide certain pharmacy discounts in Oregon, resulting in inflated fees paid to Centene.”

The announcement makes Oregon at least the 13th state to settle with Centene over similar fraud claims.

The dispute started in Ohio when Attorney General Dave Yost sued the company in March of 2021. That suit accused Centene subsidiary Buckeye Health Plan of working through two Centene-owned pharmacy middlemen to overcharge taxpayers by millions of dollars for prescription drugs.

The investigation followed reporting in 2018 by The Columbus Dispatch showing that a year earlier, Buckeye charged the state $20 million for services provided by its drug middleman. But those same services appeared to have been rendered by a separate company — CVS — that was also paid, the story said.

Both Centene and CVS denied that they were double-dipping.

Centene to pay $166 million to Texas in Medicaid drug pricing settlement

In June of 2021, just three months after the suit was filed, Yost and Centene announced a settlement agreement that would pay Ohio $88.3 million. Centene also announced that it was setting aside more than $1 billion to settle similar claims with as many as 20 more states.

In August of 2021 — just six months after the Ohio attorney general accused Centene of massive fraud against Ohio taxpayers — the Ohio Department of Medicaid signed a new contract worth billions with the company. The department justified the move by saying that it would no longer use the company for pharmacy benefit management services.

As a managed care provider, Centene’s Buckeye contracts with the Medicaid department to sign up patients and create networks of providers such as doctors and dentists to care for them. Pharmacy benefit managers, on the other hand, contract with such managed care organizations to create lists of covered drugs, contract with pharmacies and reimburse them for the drugs they dispense.

In the wake of the Ohio settlement, Centene in November 2021 announced that it was exiting the pharmacy benefit management business altogether.

In the Oregon settlement, officials emphasized that they were protecting the poor and vulnerable, but they were silent on whether the state would continue doing business with Centene. The Oregon Health Authority’s website indicates that the state continues to do business with Centene’s Trillium Health Plan.

“This pharmacy partnership with Centene was meant to help some of our most vulnerable, but this company took advantage of Oregon,” Attorney General Ellen Rosenblum said in a statement. “This settlement is one more way we can help reign in the price of prescription drugs.”

This story was originally published by the Ohio Capital Journal, a States Newsroom affiliate. 

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Groups hopeful Congress will sign off on federal farm worker bill https://missouriindependent.com/briefs/congress-farm-worker-bill/ Tue, 06 Dec 2022 21:13:50 +0000 https://missouriindependent.com/?post_type=briefs&p=13346

Already passed by the U.S. House, the Farm Workforce Modernization Act of 2021, could reach the floor of the U.S. Senate any day (Scott Olson/Getty Images).

It’s vital to pass federal legislation reforming migrant worker visas to bring down food costs and to limit devastating levels of food waste, groups advocating for farmers and agricultural workers said last week.

Already passed by the U.S. House, the Farm Workforce Modernization Act of 2021, could reach the floor of the U.S. Senate any day.

The bill would create “certified agricultural worker” status for certain foreign farm employees, allowing them to stay in the United States for 5.5 years and could be extended. After meeting certain requirements those workers would be able to apply for permanent resident status.

The bill also would adjust minimum wages for such “H-2A” workers and specify a minimum number of hours they need to work. And it would allow some to work year-round agricultural jobs, such as dairy farming.

Farmers have said that it needs to be easier for non-citizen agricultural workers to come to the United States because it’s too difficult and expensive for them to get their products out of the field and to market. They say the vast majority of natural-born Americans aren’t interested in such work.

In an October press conference, Erie County vegetable grower Bob Jones noted that the U.S. now imports more food than it exports.

“We are either going to import workers or we’re going to import food,” he said then. “The choice is really that simple.”

With food inflation as high as it’s been since 1979, this might seem a good time to find policies that make production cheaper. Last week, American Business Immigration Coalition Action released state-by-state estimates of how the wage caps in the Farm Workforce Modernization Act would do that.

The group said that without the caps, farm wages are poised to jump sharply, exacerbating already high food inflation. In a statement, James O’Neill, the group’s outreach director, said the bill before the Senate “would improve upon the House-passed Farm Workforce Modernization Act (FWMA), which would freeze H-2A guest worker wages for one year, then cap wages at 3.25% so that farmers can keep their doors open — and have the transparency and predictability they need to budget for labor.”

In the corn-belt states of Ohio, Indiana and Illinois, for example, the bill would save $2,830 a year for farms with one worker on an H-2A guest worker visa, according to estimates by the business immigration coalition. That amount would rise to $25,oo0 for farms with 10 such workers, $62,000 for farms with 25 such workers and $123,000 for farms with 50, the estimates said.

The wage concessions were part of a deal brokered with the United Farm Workers and other farm groups, said Rebecca Shi, executive director of American Business Immigration Coalition Action.

“Farmworkers gave up future wage increases in exchange for legalization and a path to citizenship. Everybody gave up something and everybody got something important in return,” she said in an email.

Then Shi prodded members of the Senate’s GOP caucus to support the bill.

“The real question here is why are Republican senators willing to sacrifice farmers and farm communities from their home states rather than pursue solutions?” she asked.

Arturo Castellanos-Canales, a senior policy and advocacy associate at the National Immigration Forum, said that passing the Farm Workforce Modernization Act will also reduce food costs for reasons other than controlling wages.

Food inflation in global markets has been driven by the coronavirus pandemic, climate change, and because Vladimir Putin’s war in Ukraine has made grain, fertilizer, and energy more expensive. But in an interview, Castellanos-Canales said there are also causes closer to home.

“The United States is the largest exporter of food, so it has a significant role to play with food prices,” he said. “One thing we’re seeing at the National Immigration Forum is that a simple fix is to tackle the agricultural labor shortage.”

He explained that, “The labor shortage is producing food waste.”

Because of difficulty getting crops out of the field, “One third of edible produce is unharvested in the United States,” Castellanos-Canales said, adding that such “wasteful food processes not only raise prices, they also exacerbate food insecurity.”

The way to address that, he said, is to create a process by which more foreign farm workers can legally work American fields.

“Higher admissions of immigrant workers are directly related to lower prices for meat, poultry, eggs, fruits, vegetables,” Castellanos-Canales. “That’s the end we’re focusing on advocating for.”

This story was originally published by the Ohio Capital Journal, a States Newsroom affiliate. 

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Government programs mostly responsible for record low child poverty, report says https://missouriindependent.com/briefs/government-programs-mostly-responsible-for-record-lows-in-child-poverty-uninsured-report-says/ Fri, 16 Sep 2022 17:37:06 +0000 https://missouriindependent.com/?post_type=briefs&p=12457

The Child Tax Credit expired at the beginning of the year and Sen. Joe Manchin, D-W.V., torpedoed legislation that would have, among other things, extended it (Maja Hitij/Getty Images).

Despite all the economic dislocation caused by the coronavirus pandemic, child poverty and uninsurance were at record lows last year, U.S. Census data show.

And those lows are largely the result of large government interventions, the Center on Budget and Policy Priorities said in a statement that was published Tuesday.

The percentage of Americans lacking health insurance fell from 17.2% in 2020 to a record-low 8.3% in 2021. And when accounting for taxes and non-cash benefits, child poverty fell to 5.2% in 2021.

The Center on Budget and Policy Priorities, a non-partisan, anti-poverty organization, concluded that it was the lowest level of child poverty in 55 years. It also concluded that government programs aimed at fighting covid were largely responsible.

“In both 2020 and 2021, the federal government provided large-scale assistance to families and individuals in the face of an unprecedented crisis,” said the statement by the organization’s president, Sharon Parrott. “Strengthened economic and health security policies coupled with a recovering economy and rising employment resulted in historic declines in poverty and boosted health coverage, despite the economic and health crises caused by the pandemic.”

Among those policies was continuous coverage protection for those enrolled in Medicaid, the federal-state insurance program for the poor. It’s a vital program in Ohio, where it covers 29% of the overall population and more than half of the births in the state.

As part of the federal government’s covid-relief measures, states received additional money not to kick people off of Medicaid as long as a federal health emergency is in place.

Health and Human Services Secretary Javier Becerra on July 15 renewed the emergency for another three months. And some in Ohio worry that if it’s allowed to expire next month, thousands of Ohioans could be improperly hustled off of the program.

Another factor cited for declining rates of uninsurance was expanded subsidies for people buying health insurance on marketplaces created by the Affordable Care Act.

The U.S. Centers for Medicare and Medicaid Services reported that enrollments in the Obamacare marketplaces jumped by 21% between 2021 and 2022. In Ohio, they climbed by a whopping 29%, to 260,000, or nearly 3% of the state’s under-65 population.

The rate of uninsured Americans has continued to drop since hitting a record low last year, reaching  8% in the first quarter of this year, the U.S. Department of Health and Human Services reported.

With expanded subsidies written into the Inflation Reduction Act signed in August by President Joe Biden, they’ll last through 2025 and benefit more than 160,000 Ohioans.

If anything, the impact of the federal government’s anti-covid measures on child poverty was even more stark. One such measure was a child tax credit that provided families up to $300 a month per child during the last six months of 2021.

“The Child Tax Credit expansion drove the large reduction in child poverty between 2020 and 2021, Census data show,” said the statement by the Center on Budget and Policy Priorities. “In the absence of the expansion, child poverty would have fallen to 8.1%, rather than 5.2%, and some 2.1 million more children would have lived in families with incomes below the poverty line.”

However, the credit expired at the beginning of the year and Sen. Joe Manchin, D-W.V., torpedoed legislation that would have, among other things, extended it.

Now some Democrats, led by Sen. Sherrod Brown, D-Ohio, are trying to revive those credits by requiring them in exchange for extending an expiring part of the 2017 Trump tax cuts that allows corporations to write off claimed research expenses.

“I cannot imagine the Senate will give big tax breaks to big companies and to wealthy people without taking care of kids first,” Brown, chairman of the Senate Banking Committee, told Business Insider last week.

This story was originally published by the Ohio Capital Journal, a States Newsroom affiliate. 

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Experts say drug measures in inflation bill are good for seniors, but there are downsides https://missouriindependent.com/2022/08/12/democrats-prescription-drugs-experts/ Fri, 12 Aug 2022 13:39:50 +0000 https://missouriindependent.com/?p=12085

One of the ways the bill seeks to ease drug costs is by capping out-of-pocket drug costs for seniors in Medicare Part D at $2,000 a year starting in 2025(Getty Images).

The sweeping Inflation Reduction Act passed by Democrats in the U.S. Senate on Sunday takes on an issue that Americans have been screaming about for years: The high cost of prescription drugs.

But while it will bring immediate relief to millions of seniors, several experts have said it may dampen development of new drugs and new uses for existing ones. And, they say, it fails altogether in addressing one of the fundamental drivers of increasing drug costs for all Americans — the massive, non-transparent system of rebates charged by huge drug middlemen.

“I would broadly characterize the package as a mixed bag with a lot of missed opportunities,” said Antonio Ciaccia, CEO of 46brooklyn Research, an Ohio-based drug-pricing data firm.

Along with its provisions to address climate change and policies targeting wealthy tax cheats, the bill seeks to ease drug costs for patients enrolled in Medicare, the federal health program that primarily benefits Americans over 65.

One of the most powerful ways it would do that is by capping out-of-pocket drug costs for seniors in Medicare Part D at $2,000 a year starting in 2025, the Kaiser Family Foundation reported.

“That out-of-pocket cap is amazing,” Ciaccia said. “You can’t imagine the number of seniors who are rationing their care, having family members who are having to pony up for treatment, sometimes forgoing it, taking out of their retirement in order to do it. So let’s be very clear. I think that policy is unbelievably good and necessary.”

The bill also would also ease seniors’ burden by eliminating all out-of-pocket costs for vaccines starting next year. And it would eliminate the 5% copayment for seniors in the “catastrophic tier” of Part D starting in 2024.

Medicare recipients enter that tier after their putative out-of-pocket costs reach $7,050 (in 2022). But Medicare counts much of what drugmakers and others also pay while patients are in the so-called “coverage gap” toward their out-of-pocket expenses.

In addition, the Senate bill would employ several mechanisms to control drug prices — but only for Medicare patients.

Starting next year, it would require manufacturers to pay a refund if their price increases exceed the rate of inflation. That provision would apply to all medicines costing more than $100 per year.

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In 2026, the bill also would start targeting certain, high-cost drugs.

The system is a little complicated. But in a nutshell, it breaks drugs down into two categories — “small-molecule” drugs — think most of the traditional pills you take — and “biologics,” medicines consisting of more elaborate molecules that often have to be administered by injection or infusion.

Based on their classification, the government would give makers of certain expensive drugs different periods of time after they receive FDA approval to sell their products at whatever prices they want. But after nine years, makers of some expensive small-molecule drugs would have to start selling them at progressive, steep discounts. Makers of some pricey biologics would have to start doing so after 13 years.

Supporters of the Inflation Reduction Act describe what would happen after those exclusivity periods as “negotiation,” but drugmakers might not have much of a choice. As explained by KFF, the discounts are laid out in the bill, as are hefty fines for drugmakers who refuse to participate.

But an industry group representing drug manufacturers isn’t happy with it.

“Once the government can set prices for life saving medicines, it will demand even more control over the health care of American patients and the collateral damage from this bill will only grow,” Stephen Ubl, president and CEO of the Pharmaceutical Research and Manufacturers Association, said in an Aug. 7 statement. “There is still time to reject this partisan bill and work on bipartisan reforms that lower costs at the pharmacy and protect the hope patients have for new treatments. We urge the House to do what’s needed to stop this dangerous bill and deliver the kind of meaningful patient-centered reforms the American people are counting on.”

That might be a self-interested argument. But some independent experts also raised concerns that the discounts spelled out in the bill would dampen investors’ enthusiasm for plowing money into pharmaceutical research.

Craig Garthwaite, director of the Program on Healthcare at Northwestern University’s Kellogg School of Management, wrote that in their first stages of development, ideas for new drugs often migrate from university laboratories to small companies. Those companies then try to attract venture capital from investors who know that such projects are often a bust, but some offer huge rewards, Garthwaite wrote late last month in the health publication STAT News.

Only after these technologies prove promising are they bought by larger drugmakers who have the resources to conduct clinical trials, facilitate government approval, then mass produce and market the drugs, he wrote. Garthwaite argued that by limiting the ultimate profitability of some drugs, the new rule would limit the venture capital needed to fund innovation in its earliest stages.

“So the new legislative carve-out won’t save anyone,” he wrote. “Subsequent price controls will still erode startup valuations and therefore investment. Venture capital companies could no longer count on exiting their investments with the same level of returns because any future buyer would be staring down the price-control barrel.”

However, others have argued that the scope of those controls would be limited. The legislation passed on Sunday calls for controls to be placed on 10 drugs in 2026, 15 in each of the two years after that and 20 in 2029 and each year after that.

In its analysis, the Congressional Budget Office also said the bill’s impact on innovation would be minuscule, reducing the number of new drugs introduced over the next 30 years by just over 1%.

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But when the Inflation Reduction Act become law, it will take away what some experts see as a much more powerful tool to curb drug inflation. It would preserve protections huge drug middlemen enjoy from federal anti-kickback laws.

The biggest three middlemen, known as pharmacy benefit managers, are all combined with major insurance companies and each corporation is among the 25 largest corporations in the United States. In Medicare, Medicaid and in the private insurance market, they decide which drugs are covered and they extract huge rebates from drugmakers in exchange for putting their products on lists of covered drugs, or formularies.

The transactions are non-transparent so it’s not known how much of those rebates the pharmacy benefit managers are passing along or how much they’re putting in their pockets. However, research has shown that inflating rebates have led to even greater inflation in the list prices.

Those are the prices you pay if you don’t have insurance. They’re also often what your copayments, coinsurance and deductibles are based on. And that’s not just for people on Medicare, that’s for everybody.

The Trump administration proposed and then delayed a rule that would have effectively prohibited pharmacy benefit managers from extracting rebates from drugmakers in exchange for covering their drugs. After the Biden administration also delayed the rule, the bill passed by the Senate on Sunday would eliminate it altogether.

Former FDA Commissioner Scott Gottlieb said that the big disparity between list prices and net prices for drugs was already a big problem and several provisions in the Senate bill likely will make it worse.

“Because rebates often flow to insurers and not patients, this phenomenon partly unwinds the effects of community rating by requiring generally sicker patients taking expensive medications to pay more,” he wrote with Benedic N. Ippolito, a senior fellow at the American Enterprise Institute. “If anything, policymakers should be looking for ways to attenuate the large divergence between high list prices of drugs and lower post-rebate, ‘net’ prices.”

Ciaccia, the Ohio drug pricing analyst, said the system in the United States has become so screwed up that it’s inevitable that the fixes for Medicare patients in the Inflation Reduction Act would come with costs elsewhere.

“Let me ask you this: Why do we need these caps in the first place?” he said. “It’s because some of these medications are so over-inflated it’s ridiculous. It’s not realistic for (seniors) to obtain them without some sort of collateral damage due to our pricing system.”

The story was originally published by the Ohio Capital Journal, a States Newsroom affiliate. 

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Arrest confirms Indiana abortion for 10-year-old rape survivor from Ohio https://missouriindependent.com/briefs/arrest-confirms-indiana-abortion-for-ohio-10-year-old/ Wed, 13 Jul 2022 18:37:07 +0000 https://missouriindependent.com/?post_type=briefs&p=11679

Hundreds of demonstrators gather at the Planned Parenthood clinic in St. Louis on June 24, 2022 in the wake of the U.S. Supreme Court's decision overturning Roe v. Wade (Tessa Weinberg/Missouri Independent).

Columbus, Ohio, police have arrested a 27-year-old on charges of raping 10-year-old who traveled to Indiana late last month for an abortion, The Columbus Dispatch reported Wednesday.

Ohio Republican leaders, who passed and implemented a law making rape victims ineligible for abortions after six weeks, have been trying to raise doubts about the girl’s existence. The Dispatch reported police as saying they arrested Gershon Fuentes, 27, after he confessed to raping the girl on at least two occasions. He’s charged with rape, the paper said.

The Indianapolis Star on July 6 first reported on the girl, who is said to be homeless.

Caitlin Bernard, an Indianapolis OB-GYN, told the paper she’d gotten a call two days earlier from an Ohio colleague saying that a pregnant 10-year-old was just beyond Ohio’s six-week limit for abortions and needed help. The girl was soon on her way to Indianapolis, the story said.

Ten-year-olds who become pregnant are by definition rape victims. But Ohio’s abortion law — which took effect hours after the U.S. Supreme Court overturned Roe v Wade on June 24 — doesn’t make exceptions for rape and incest.

The Ohio girl’s mother reported her abuse to Franklin County Children’s Services on June 22 — just two days before the new restrictions took effect, The Dispatch reported. She received an abortion in Indianapolis on June 30, the paper said.

Indiana is widely expected to pass its own abortion restrictions that would close off that option for future Ohio children who become pregnant.

Ohio Gov. Mike DeWine, who signed the state’s abortion law in 2019, wouldn’t comment last week on whether 10-year-old rape victims should be forced to have their rapist’s babies. Instead, he decried child rape and stressed that all he knew about the case was from media reports.

On Wednesday, DeWine’s spokesman, Dan Tierney, again refused to comment on whether child rape victims should be forced to carry their pregnancies to term.

“Our office does not have new comments,” he said in an email. “As we previously stated, Gov. DeWine views this crime as a horrific tragedy, and he has said that if the evidence supports, the rapist should spend the rest of his life in prison.”

Ohio Attorney General Dave Yost rushed to court in the wake of the Supreme Court ruling to clear the way for enforcement of Ohio’s restrictive 2019 law.

In the wake of reporting about the 10-year-old, Yost went on Fox News Monday to raise doubts about her existence. He said he works closely with law enforcement authorities and he’d gotten “not a whisper” about the case.

“Something maybe even more telling,” he said, “is my office runs the state crime lab. Any case like this, you’re going to have a rape kit, you’re going to have biological evidence and you would be looking for DNA analysis… There is no case request for analysis that looks anything like this.”

That argument ignores the fact that rape kits are only useful on young rape victims if they’re conducted within 72 hours of the incident. And the state’s own manual says children might not tell their abuse and rape stories until well after the incidents happen. That can result in adult denial that attacks happened at all, it adds.

Yost’s office didn’t immediately respond when asked whether he believed child rape victims should have to have those babies, or whether it was important to believe stories about sexual violence.

He did, however did put out a statement.

“My heart aches for the pain suffered by this young child. I am grateful for the diligent work of the Columbus Police Department in securing a confession and getting a rapist off the street,” it said. “Justice must be served and (the Bureau of Criminal Investigation) stands ready to support law enforcement across Ohio putting these criminals behind bars.”

In 2021, there were 6,717 were sexual abuse cases involving someone under 18-years-old, the Ohio Network of Children’s Advocacy Centers reported.  In 2020, there were 52 girls aged 14 and younger who received abortions in Ohio, the state department of health reported.

This story was originally published by the Ohio Capital Journal, a States Newsroom affiliate. 

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Deep inside the gun bill: A break for prescription drug middlemen https://missouriindependent.com/2022/06/23/deep-inside-the-gun-bill-a-break-for-prescription-drug-middlemen/ Thu, 23 Jun 2022 13:38:17 +0000 https://missouriindependent.com/?p=11415

The St. Louis County office of Express Scripts, one of the nation's largest pharmacy benefit managers (Google Maps).

Many Americans across the political spectrum are clamoring for federal action on guns in the wake of a mass shooting at an Uvalde, Texas, elementary schoola Buffalo, N.Y., grocery store and hundreds of other places.

But buried in a bipartisan compromise hashed out by the U.S. Senate on Tuesday is an unrelated provision they might not be so happy about.

The gun bill would enhance the exemption drug middlemen working with Medicare have from the federal “Anti-Kickback Statute.”

That means, in this era of soaring costs, Senate negotiators decided to further insulate the nation’s largest health care companies from a federal law against accepting “any kickback, bribe or rebate.”

The offices of the two lead negotiators, Sens. John Cornyn, R-Texas, and Chris Murphy, D-Conn., didn’t immediately respond to requests for comment.

Drug costs have become an increasingly pressing issue in the United States, with Gallup last year estimating that 18 million Americans couldn’t pay for at least one of their prescription medications. Meanwhile, a poll by the Pew Research Center last month indicated that the cost of health care was the No. 2 issue for Americans, ranking only behind inflation.

Yet the gun bill negotiated in the Senate would protect some of the biggest players in prescription drugs and in health care more generally.

The three biggest drug middlemen, or pharmacy benefit managers, in the United States control more than 70% of the marketplace and they have great leverage over how that business is transacted. They work on behalf of insurers (and they’re increasingly owned by the same companies) to create networks of pharmacies, determine reimbursements and facilitate transactions.

But it’s in their dealings with big drugmakers where the kickback statute comes in.

The big three PBMs — CVS Caremark, Express Scripts and OptumRx — create formularies: Lists of drugs that are covered and with what copayment. And because those PBMs represent more than seven-tenths of all insured Americans, drugmakers have a big motivation to get their products on their formularies.

“To gain more favorable formulary placement, drug manufacturers will offer discounts to PBMs in the form of ‘rebates’ that the manufacturer pays to the PBM, who then pays the insurance company,” the American Liberties Project, an anti-monopoly organization, wrote in a report that was released Wednesday. “Yet because PBMs are exempt from an anti-kickback statute under Medicare, they are allowed to take a cut of the rebate. The larger a rebate for a drug is, the more the PBM can profit. If not for the exemption, kickbacks like this are normally a felony offense.”

How did it get in the gun bill? 

That exemption is addressed on page 55 of the gun bill. It would extend it from Jan. 1, 2026 to Jan. 1, 2027.

It’s unclear how an extension got slipped into unrelated legislation. A spokesman for a PBM industry group couldn’t immediately be reached for comment.

Matthew Lloyd, a spokesman for another senator who supports the gun bill, Rob Portman, R-Ohio, didn’t answer directly when asked how the kickback protections made it into the gun bill. But he pointed out that the Biden administration had already extended them for a year and last year’s bipartisan infrastructure bill extended them for another three.

In the latter case, Portman advocated the delay because the federal government collects a portion of rebates under the Medicare program. The Congressional Budget Office estimated that keeping the rebate rule will net the government about $180 billion over a decade — thus freeing up money to spend on things like infrastructure.

Lloyd also noted that the U.S. Department of Health and Human Services estimates that Medicare premiums would increase by 25% if PBMs are no longer allowed to take kickbacks. That ignores, however, other expenses faced by Medicare recipients and the public in general.

Rebates linked to rising prescription drug costs

Drug rebates are thought to be a major culprit when it comes to the rising cost of prescription medication. A 2020 study by the University of Southern California’s Schaeffer Center found that every $1 increase in rebates correlated to a $1.17 increase in list prices for drugs.

Medicaid recipients would feel those increases when their co-payments are based on them — and when their costs are based on list prices when they enter the infamous “donut hole.”

“Because (Medicare) Part D sponsors generally base enrollee prescription cost sharing on list prices, higher prices can increase beneficiary out-of-pocket costs,” said a report last month by the Congressional Research Service.

Then, earlier this month, the Federal Trade Commission announced that it would investigate the system of manufacturers providing rebates and other fees in exchange for favorable treatment on PMBs’ formularies.

Community pharmacists have been complaining for years that unfair practices by the PBMs — which own pharmacies of their own — are driving them out of business. A spokeswoman for the National Community Pharmacists Association on Wednesday said extending kickback protections in the gun bill is shady.

”This is objectionable on two levels: First, giving the PBMs an extension on one of their biggest scams harms patients and prevents real transparency in drug prices,” she said. “Second, hiding it in an unrelated gun bill is slippery and prevents real debate.”

This story was originally published by the Ohio Capital Journal, a States Newsroom affiliate. 

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Federal regulators launch investigation into drug rebates said to drive up prescription costs https://missouriindependent.com/2022/06/21/feds-to-probe-drug-rebates/ Tue, 21 Jun 2022 12:51:36 +0000 https://missouriindependent.com/?p=11388

The three largest drug middlemen, CVS Caremark, OptumRx and Express Scripts, together control more than 70% of the marketplace (Getty Images).

The Federal Trade Commission last week announced what some believe could be a game-changer when it comes to the rising cost of prescription drugs.

The agency — which is meant to protect fair competition — said it would look into the murky practice by which drugmakers grant rebates and other fees to insurer-owned pharmacy middlemen in exchange for better treatment of their products. The FTC wants to know whether that system is encouraging insurers and their middlemen to unfairly exclude cheaper drugs based on secret benefits they’re getting from drugmakers.

“American families and businesses should never pay higher prices for medicine due to unlawful business practices,” the commission said in a policy statement. “For this reason, challenging healthcare industry conduct that may raise prices and stifle innovation is a top priority for the Federal Trade Commission… and the commission will use its full authority under the FTC Act to do so.”

There’s some evidence that the system of rebates and discounts raises drug costs.

The three largest drug middlemen, CVS Caremark, OptumRx and Express Scripts, together control more than 70% of the marketplace. Known as “pharmacy benefit managers” or PBMs, they contract with insurers, create pharmacy networks, determine reimbursements and facilitate transactions.

Crucially, they also negotiate big rebates and other fees with drugmakers in exchange for favorable placement on the PBMs’ “formularies” — lists of which drugs are covered and which of those will have the lowest copayments.

In other words, if a drugmaker wants its product to be covered by a PBM and be most attractive to consumers, it has to provide big rebates and other fees to do so. PBMs often boast that they pass rebates on to their customers, but the deals are often non-transparent and it’s hard to know whether some of the funds they used to call “rebates” have simply been reclassified as “fees.”

In fact, the PBMs enjoy an exemption from federal anti-kickback law that allows them to engage in the practice of extracting rebates and fees. The Trump administration proposed ending the exemption, but never acted on it.

Granting ever larger rebates and fees appears to be driving up list prices of drugs. A 2020 paper published by the University of Southern California’s Schaeffer Center found that each $1 increase in rebates correlated with a $1.17 increase in list prices.

And while insurer-affiliated PBMs aren’t paying those list prices, others, such as the uninsured, are. Also, deductibles and payments by Medicare recipients in the coverage gap pay can be based on those inflated list prices. In addition, if the PBMs and their affiliated insurers are quietly pocketing a portion of the rebates and fees they’re getting, those paying for coverage would seem to face higher prices as well.

Industry groups representing insurers and drug manufacturers didn’t immediately respond to requests for comment.

But there’s at least limited evidence that the current system can crowd out cheaper alternatives.

An analysis last year concluded that over a three-month period, the biggest Medicare Part D managed-care plans were forcing 60% of patients needing the multiple sclerosis drug dimethyl fumarate to buy the most-expensive, brand-name version if they wanted their insurance to cover it. Almost all of the rest had to make higher copayments if they wanted an alternative, the report by 46brooklyn Research said.

The branded drug, Tecfidera, carries a list price of more than $8,000 a month, while generic versions can list for less than $900 a month. The drug also could cost as little as $40 a month when purchased at pharmacies operating completely outside the insurance/PBM system.

Perhaps not coincidentally, all of those big insurers — which cover 85% of Part D recipients — are affiliated with PBMs. CVS, UnitedHealth and Cigna are owned by the same corporations that own the top-three PBMs, while Anthem, Centene, Humana and Kaiser had affiliated PBMs of their own, often contracting part of their business out to one of the big three.

The FTC said it intends to determine whether the health care giants are using such “vertical integration” to stymie competition and drive up costs.

“For many years, the Commission has received complaints about rebates and fees paid by drug manufacturers to pharmacy benefit managers (PBMs) and other intermediaries to favor high-cost drugs that generate large rebates and fees that are not always shared with patients,” the agency’s policy statement said. “These rebates and fees may shift costs and misalign incentives in a way that ultimately increases patients’ costs and stifles competition from lower-cost drugs, especially when generics and biosimilars are excluded or disfavored on formularies.”

This story was originally published by the Ohio Capital Journal, a States Newsroom affiliate. 

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Expert: Hard to know if COVID variant will surge in U.S. or how badly https://missouriindependent.com/2022/03/25/expert-hard-to-know-if-covid-variant-will-surge-in-u-s-or-how-badly/ Fri, 25 Mar 2022 16:00:12 +0000 https://missouriindependent.com/?p=10362

The deaths data, which the department calls “probable” COVID-19 fatalities, is being added eight months after the department began reporting antigen-identified infections in its daily report (image courtesy of CDC).

The last thing people want to hear right now is that the coronavirus might have mutated yet again into yet another deadly variant, extending the pain, death and inconvenience of a pandemic that we long hoped would be over.

However, whether the subvariant of omicron known as BA.2 will hit the United States as hard as it’s hitting other parts of the world is hard to say at this point, an expert at modeling the disease said Wednesday.

The pandemic has been full of unpleasant surprises and BA.2 is no exception. Scientists estimate that it’s one-and-a-half times as transmissible as the original omicron strain, BA.1, and is overtaking it.

Europe, and particularly the United Kingdom, have seen an increase in the new variant in recent months, but that hasn’t been the case everywhere, said Stephen Kissler, a research fellow in the Department of Immunology and Infectious Diseases of Harvard University’s T.H. Chan School of Public Health.

“The question of if and when a surge is coming and how large is very open,” Kissler said in a Zoom conference with reporters. “I know that we’ve seen surges that are dominated by BA.2 across much of Europe. But in contrast, for example, in South Africa we saw a major BA.1 wave — that’s where we saw the omicron wave first — and now there’s a lot of circulation of BA.2, but it hasn’t really caused an increase in cases so much that it’s lengthened the decline and given the epidemic a very long tail.”

Kissler explained that vaccination rates in the U.S. are lower than those in Europe, but higher than those in South Africa. That could mean that more Americans have developed antibodies against the omicron variants than have Europeans.

“To the extent that that gives us protection against BA.2 we might see dynamics that are more similar to what happened in South Africa,” he said.

Seasonality and other factors likely will play a role, Kissler said, with spring in the United States being a season of relatively low spread and fall a season of relatively high spread.

So if there is a surge here of the new variant, how will it affect Americans of varying ages?

“In many ways it will likely resemble our experience with COVID-19 up to this point,” Kissler said.

And past experience has shown one factor to be hugely important: vaccination. 

Kissler said that being vaccinated, along with a booster dose, “really goes a long way toward helping to protect you from symptomatic disease and especially severe disease. The biggest delineation I imagine seeing is that people who are boosted will probably fare better than people who are unboosted.”

Another important factor is age, with the elderly having less natural resistance to all variants of the coronavirus than the young. Vaccines and boosters, though, can be a great equalizer.

“A vaccinated and boosted person over the age of 75, their risk is probably on the order of — if not lower than — an unvaccinated 20-year-old,” Kissler said.

COVID eventually will go from being a pandemic disease that spikes rapidly and overwhelms resources to an endemic one where a background level is present, sickening and even killing people, but in semi-predictable ways. Sadly, however, hopes that it will disappear altogether are small.

Looking forward, one simple public-health measure might be most effective, Kissler said.

“In many ways, one of the best things we can do to manage outbreaks is to just to continue to keep informing people how much COVID is circulating in their communities and make it just as accessible as a weather report,” he said. “A lot of data suggest that people tend to adjust their behavior accordingly.”

He said that probably won’t be enough to quell future waves of COVID, or be adequate in the face of major new variants.

“But as we continue to deal with COVID and we think about this permanent circulation of COVID-19 in the population — recognizing that there’s going to be different dynamics in different places, different patterns across the year — making it clear what’s happening in any given community at any given time through passive surveillance is probably the best thing we can do right now,” he said.

This article was originally published by the Ohio Capital Journal.

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St. Louis-based Medicaid giant Centene settles fraud allegations with Kansas for $27.6M https://missouriindependent.com/2021/12/08/st-louis-based-medicaid-giant-centene-settles-fraud-allegations-with-kansas-for-27-6m/ Wed, 08 Dec 2021 15:52:55 +0000 https://missouriindependent.com/?p=9010

Kansas Attorney General Derek Schmidt on Monday announced the state had reached a $27.6 million settlement with Centene as part of an investigation into pharmacy benefit managers. (Joe Raedle/Getty Images)

St. Louis-based Centene, the nation’s largest Medicaid managed care provider, has settled fraud allegations with a fifth state, Kansas Attorney General Derek Schmidt announced Monday.

The $27.6 million Kansas settlement comes after Mississippi, Illinois and Arkansas announced settlements totaling $154 million. All of those follow a settlement with Ohio — the only state to sue the company — of $88.3 million.

At the time it announced the Ohio settlement, Centene said it was setting aside $1.1 billion to settle such claims with 22 states.

In a statement, the Kansas Attorney General’s office said Centene shirked its duty to protect taxpayers.

“In general, Schmidt accused the company of failing to satisfy its obligation to represent the state’s best interests in negotiations with other companies that supply drugs to the state Medicaid program,” the statement said.

It added that Schmidt’s office started investigating pharmacy middlemen known as pharmacy benefit managers, or PBMs, after investigations by Ohio Attorney General Dave Yost became public in 2019. Yost has been investigating the middlemen on several fronts and currently is suing two — Express Scripts and OptumRx — on allegations they defrauded the Ohio Highway Patrol Retirement System and the Ohio Bureau of Workers Compensation, respectively.

“We take seriously our role of protecting Kansas taxpayers and finding and stopping fraud and overpayments in the state Medicaid program,” Schmidt said. “Today’s settlement involving PBM practices is the first of its sort in Kansas, and other investigations continue.”

Among their duties, PBMs reimburse pharmacies for drugs, and Yost’s lawsuits accuse the companies of not living up to such contractual obligations as passing along discounts as well as overcharging in other ways.

Centene’s main business is as a managed care provider, meaning that it acts as an insurance company on behalf of such government programs as Medicaid, which serves the poor and disabled, and Medicare, which serves Americans over 65. But it also has PBMs of its own.

Yost’s Ohio investigation of Centene was announced after The Columbus Dispatch in 2018 revealed that Centene’s managed-care plan used its own PBM in conjunction with CVS Caremark and appeared to bill taxpayers $20 million for duplicate services in 2017. CVS initially said it provided the services Centene’s PBM supposedly was providing, but later said it and Centene provided distinct services that fell into the same categories.

On June 16 — two days after announcing settlements with Ohio and Mississippi — Centene held a virtual investor day. During it, Michael Neidorff, the company’s $25 million-a-year CEO, stressed that the company admitted no wrongdoing and he added that his No. 1 and No. 2 priorities were to grow profits.

Discussing what he hoped investors would take away from the event, Neidorff said, “First, our absolute priority moving forward is margin expansion to 4% pre-tax and no less than 3.3% adjusted net income on a sustainable basis. Secondly, margin expansion.”

In response to news coverage, the company later issued a statement attempting to walk that statement back.

“It is not accurate to say that Michael Neidorff indicated that profits are a higher priority than providing quality care to the members we serve and being a good steward of taxpayer dollars,” it said.

Centene didn’t immediately respond Tuesday when asked why, if it did nothing wrong, the company was prepared to pay out more than $1 billion to settle fraud claims. The company also didn’t respond when asked, if Centene was unwilling to be transparent about that issue, it should be trusted with billions of taxpayer dollars.

At least among Ohio Medicaid officials, Centene retains that trust. The company was one of six to be awarded part of $22 worth of managed-care business starting next year. Also receiving a contract was a UnitedHealth subsidiary even though that company’s PBM is still being sued by Yost.

In court, Medicaid officials conceded that the procurement didn’t consider past allegations of wrongdoing against the applicants.

There may have been some consequence of the actions by the attorneys general, however. It’s unclear whether the move is related to this year’s settlements, but Centene — the nation’s 24th largest corporation by revenue — in late October announced that it was getting out of the PBM business.

Meanwhile, investigations into the practices of pharmacy middlemen are ongoing.

Yost, the Ohio AG, has a team dedicated to investigating such companies. Schmidt, his Kansas counterpart, is doing something similar.

“We take seriously our role of protecting Kansas taxpayers and finding and stopping fraud and overpayments in the state Medicaid program,” he said in a statement. “Today’s settlement involving PBM practices is the first of its sort in Kansas, and other investigations continue.”

This article was originally published by the Kansas Reflector.

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CVS sometimes forces people to use its pharmacies. Now the Supreme Court will weigh in https://missouriindependent.com/2021/11/08/cvs-sometimes-forces-people-to-use-its-pharmacies-now-the-supreme-court-will-weigh-in/ Mon, 08 Nov 2021 15:41:52 +0000 https://missouriindependent.com/?p=8675

The St. Louis County office of Express Scripts, one of the nation's largest pharmacy benefit managers (Google Maps).

CVS Health and other massive corporations often use their pharmacy middleman subsidiaries to force people to get the most expensive class of drugs from the businesses’ own mail-order pharmacies.

Some call the practice “patient steering.”

CVS and companies such as UnitedHealth and ExpressScripts/Cigna say the arrangements save patients money. But some patients, oncologists and other health providers say it threatens lives.

Now the U.S. Supreme Court is poised to weigh in. In a little more than a month, it will hear arguments in a California case in which AIDS patients are claiming the practice discriminates against them.

Known as “pharmacy benefit managers” or PBMs, the middlemen work with insurance companies or government programs like Medicare and Medicaid to facilitate prescription-drug transactions. They negotiate rebates with drugmakers, decide what drugs are covered and they determine how much to reimburse pharmacies that dispense drugs as part of their health plans.

But the function that’s in dispute in the California case is how PBMs structure their pharmacy networks.

Each of the big three PBMs is affiliated with a major insurer and each is part of a corporation that is among the 13 largest in the United States. And the combined PBMs are estimated to control well over 70% of the pharmacy-middleman marketplace.

They’re also frequently in direct competition with the retail pharmacies whose reimbursements they control. CVS owns the nation’s largest retail chain and each of the big three owns a mail-order pharmacy for “specialty drugs” — the most expensive class of medicines, which can cost upward of $100,000 a year.

Increasingly, the big-three PBMs have been saying they won’t cover super-expensive specialty drugs if patients get them at their oncology centers or their AIDS clinics. It’s increasingly the case that the only way PBMs will cover them is if patients get them through the mail from a PBM-owned pharmacy.

Critics say the point is to pad profits, but the PBMs maintain that they do this to help their customers.

“To keep costs down, plan designs offered by pharmacy benefit managers often impose the most restrictions on ‘specialty’ drugs,” CVS said in its petition asking the Supreme Court to take up the case. “These medications have special shipping, administration, or storage requirements; treat rare conditions; or are very expensive.”

It added, “Pharmacy benefit managers often control the disproportionate costs and complexities of specialty drugs by contracting with specialty pharmacies that have expertise in the ‘unique handling, storage, and dispensing’ requirements of these medications. Increasingly, pharmacy benefit managers rely on specialty pharmacies that deliver by mail.”

Cancer, HIV patients say mail-order service doesn’t work

However, many patients complain that especially when they have complex conditions that require equally complex drug regimens, mail-order service is vastly inferior to the services they get in-person from pharmacy professionals.

In 2018, Elvin Weir, a now-deceased cancer patient, described to The Columbus (Ohio) Dispatch how late or improperly filled mail-order cancer prescriptions had often delayed the rest of his treatment as his disease worsened. And officials at oncology centers said the arrangement disrupts the collaboration between their pharmacists and oncologists treating conditions that can be not only complex, but also change rapidly.

The plaintiffs in the original California case made much the same argument.

“For people living with HIV/AIDS, strict lifetime adherence to antiretroviral therapies (ART), consisting of complex combinations of pharmaceuticals consumed daily, is vitally important, and can be literally a life-or-death matter,” the AIDS Healthcare Foundation wrote in a friend-of-the-court brief. 

“For people living with HIV/AIDS, so-called specialty pharmacies and pharmacists that focus on HIV/AIDS and in-person treatment provide demonstrably superior care than do mail-order pharmacies and retail pharmacies,” it added. “Coercing people living with HIV/AIDS into using only mail-order pharmacies is thus guaranteeing inferior care and worse health outcomes, and is disability discrimination by both intent and impact.”

A panel of the 9th U.S. Court of Appeals last December said that among its mistakes, the lower court in the CVS case didn’t acknowledge that face-to-face interactions with pharmacists were part of the benefits to which plan members are entitled.

The Ninth Circuit ruled that CVS’s mail-order policy might discriminate against the disabled because it “burdens HIV/AIDS patients differently because of their unique pharmaceutical needs. Specifically, they claim that changes in medication to treat the continual mutation of the virus requires pharmacists to review all of an HIV/AIDS patient’s medications for side effects and adverse drug interactions, a benefit they no longer receive under the program.”

CVS argues policies don’t intentionally discriminate

In its appeal to the Supreme Court, CVS is disputing the plaintiffs’ legal argument that the mail-order policy violates the law because it has a “disparate impact.”

In other words, the AIDS-afflicted plaintiffs are saying that even if on its face the policy applies equally to everybody, it’s still illegal discrimination if it has a discriminatory effect against part of a protected group: the disabled. CVS, on the other hand, is arguing that so long as its policies aren’t intentionally discriminatory, they’re OK.

The law puts “federal-funding recipients on notice that intentional discrimination is illegal,” its petition says. “Schools cannot discipline students with attention-deficit disorder more harshly on that basis. Towns cannot target group homes for individuals with disabilities with uniquely onerous zoning requirements. Employers cannot refuse to hire someone solely because she is in a wheelchair. And health plans and anyone else subject to (federal health care laws) cannot facially exclude patients with disabilities simply because they have disabilities.”

“Courts do not need to rewrite (the law) and insert a nonexistent disparate-impact standard to accomplish Congress’ goals,” CVS argued.

The health care company noted that appellate courts have issued differing opinions in the matter. That, presumably, is the dispute the Supreme Court hopes to settle by taking up the case.

Oral arguments are slated for Dec. 7.

This story was originally published by Ohio Capital Journal, an affiliate of States Newsroom.

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In court, drug middlemen fight to limit pharmacies insured patients can use https://missouriindependent.com/2021/09/08/in-court-drug-middlemen-fight-to-limit-pharmacies-insured-patients-can-use/ Wed, 08 Sep 2021 13:29:12 +0000 http://missouriindependent.com/?p=7950

The St. Louis County office of Express Scripts, one of the nation's largest pharmacy benefit managers (Google Maps).

In the first test of a 2020 U.S. Supreme Court ruling, drug middlemen last week argued that federal law gives them a right to limit which pharmacies patients with health insurance can use — or at least make it more expensive if patients get their medicine at a shop that isn’t preferred by the corporations.

A lawyer for an industry group argued that the right to limit pharmacy networks is important to ensure quality. But he failed to note that the three biggest middlemen are owned by health care corporations that own pharmacies themselves.

The argument is likely to add grist for those who claim that the Fortune 15 corporations are engaged in practices that are driving up costs and driving out competitors.

The industry group, the Pharmaceutical Care Management Association, made the arguments last Wednesday before the 8th U.S. Circuit Court of Appeals in St. Louis. It was a rehearing of a 2020 ruling that struck down North Dakota’s attempts to regulate businesses known as pharmacy benefit managers.

In the earlier ruling, the appellate court held that the federal Employment Income Security Act of 1974 severely limited state governments’ ability to regulate the benefit managers, which are also known as PBMs.

But last year, the U.S. Supreme Court heard a similar case also emanating from the Eighth Circuit and unanimously ruled in October that the federal law applied to health plan design and administration — and didn’t apply to many of the limitations that states were trying to put on the PBMs hired by the plans.

The high court then ordered the Eighth Circuit to rehear the North Dakota case.

Lots of power

Insurers hire pharmacy benefit managers to administer drug benefits. Often, they’re hiring their corporate siblings because since 2014, each of the big three has either bought or been bought by a major insurer.

Among their functions, PBMs control lists of which drugs are covered and whether medicines on them get preferential treatment in the form of lower deductibles or by not needing prior authorization.

The three biggest PBMs — CVS Caremark, OptumRX and Express Scripts — are estimated to represent more than 70% of all insured Americans. So they have great leverage when they negotiate with drug makers for rebates, fees and discounts in exchange for drug makers getting their products covered.

Groups of large employers and pharmacy groups suspect the big PBMs are using a lack of transparency to pocket a healthy slice of the money they’re getting through these transactions. That’s helping to drive up the cost of drug benefits, they say.

The PBMs insist they’re saving money for consumers, but last month they sued to stop a federal rule that would require the industry to report the discounts and fees it gets from drug makers.

In addition, each of the big-three PBMs is standing up a “group-purchasing organization” — two of which are offshore — to handle transactions with drug makers on the PBMs’ behalf. That’s sparked great fear that the industry is introducing yet another curtain between the people who pay for health care and the true cost of the drugs they’re paying for.

“Now they’re creating #GPOs (really!!!) to further obscure what they’re doing in driving up drug costs,” tweeted Ted Okon, executive director of the Community Oncology Alliance. “The PBM middlemen creating another layer of middlemen.”

Controlling payments

Then before the Eighth Circuit last week, the PBMs argued for the right to control pharmacy networks in ways that would allow them to give advantage to their own companies.

Among their other powers, PBMs create pharmacy networks and determine how much to reimburse them for drugs.

They have that power even though each of the big PBMs is in some fashion operating pharmacies of their own. CVS owns the nation’s largest retail chain and all three own mail-order pharmacies for specialty drugs — the most expensive class.

The PBMs insist they don’t give special treatment to affiliated pharmacies, but apparent evidence to the contrary has emerged.

The Columbus Dispatch in 2019 obtained confidential portions of an Ohio analysis showing that under the Ohio Medicaid program in 2017, CVS reimbursed Walmart and Kroger pharmacies far less than its own. Despite the fact that the information has been publicly reported, CVS has been fighting in court for the last three years to keep an unredacted version of the state report under wraps.

Also, the big three PBMs often tell cancer patients they won’t pay to fill prescriptions that cost thousands of dollars a month at pharmacies housed in oncology clinics where their doctors work. Patients have to instead get cancer medicine from mail-order pharmacies, even though the arrangement has been known to cause treatment delays and other costly foul-ups.

To keep PBMs from giving unfair advantage to their own mail-order PBMs, one of the North Dakota laws the PBM industry group is objecting to would require PBMs to pay licensed pharmacies to operate their own mail-order programs.

PCMA attorney Michael B. Kimberly argued that under the Supreme Court decision, that still violates federal law because it affects health plan design and administration. A lawyer for the state rejected that assertion.

Shrinking choice?

But what might be more striking is Kimberly’s argument that despite state licensure requirements that many regard as strict, it would be good policy to allow PBMs to create their own, much-stricter rules.

“This is an opportunity for a plan to drive more volume to a smaller number of very high quality mail-service pharmacies,” Kimberly said.

He didn’t mention that three of top-10 health plans in the United States are owned by the same corporations that own the big three PBMs — or that each one of those owns at least one mail-order pharmacy.

So it’s conceivable that Cigna, the nation’s eighth-biggest health plan, could write network requirements that only mail-order pharmacies owned by its PBM, Express Scripts, could meet. If that were the case, a single corporation could get all that mail-order business.

The North Dakota law also requires the PBMs to allow any state-licensed pharmacy into their networks.

Saying PBMs are still protected against that by federal law, Kimberly outlined a scheme that implied that state pharmacy regulations are relatively weak and that health plans could create much stricter requirements for brick-and-mortar stores.

In rural places such as North Dakota, having your local pharmacy in your insurance network can be a big deal because it can be a long drive to the next-closest one. For those facing transportation problems, it’s an even bigger challenge.

Under the scheme outlined by the PBM lawyer, people might be able to keep using their preferred pharmacy, but it would be more expensive.

“A plan sponsor may well offer two drug benefits,” Kimberly said. “One drug benefit might offer a very narrow network. This is a network where the plan directs participants to a smaller number of pharmacies that meet much higher requirements for accreditation and higher standards to ensure that they provide drugs in a cost-efficient and effective and safe, high-quality way. This is a less-convenient benefit for a participant because they have fewer pharmacies to go to, but they would pay a smaller premium.”

He added that a health plan “might offer a second prescription drug benefit.. and this benefit might have a much broader network of pharmacies. This network would meet fewer standards for inclusion.

“It would be more convenient because there would be more places where the plan participant could go, but the drugs would be provided in a less efficient way, there would be less leverage with each pharmacy to extract greater discounts and so premiums would go up and maybe copays would go up as well.”

Skeptical reception

Through Kimberly’s presentation, the judges sounded skeptical.

“Aren’t those inefficiencies alone, which are not enough to trigger (the federal benefits law’s) preemption?” one asked. “I’m quoting the Supreme Court.”

Robert Thomas Smith, the lawyer representing North Dakota, noted that 34 states have joined with it in the lawsuit. He said they joined because the PBMs were trying to weaponize federal law regarding health benefits to keep states from regulating the powerful businesses.

He added that the North Dakota laws don’t dictate the designs of health plans or make administrative decisions for them.

“What they do do is prohibit PBMs from imposing arbitrary accreditation standards that essentially prevent patients from receiving drugs at a pharmacy if it’s licensed and authorized to dispense that drug,” he said

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Centene agrees to settle Medicaid fraud claims with Ohio, Mississippi for $143 million https://missouriindependent.com/2021/06/14/centene-agrees-to-settle-medicaid-fraud-claims-with-ohio-mississippi-for-143-million/ Mon, 14 Jun 2021 18:33:21 +0000 http://s37744.p1438.sites.pressdns.com/?p=7043

Centene Corp. headquarters in Clayton (photo from Google Maps).

In what could be a harbinger of more settlements, Medicaid managed-care contractor Centene Corp. on Monday settled potential fraud claims by Ohio and Mississippi for $88.3 million and $55 million, respectively.

Ohio is the only state to file suit so far alleging improper double billing through Centene’s pharmacy middlemen. But Mississippi, Kansas, Arkansas, Georgia, Oklahoma and New Mexico are also reported to be considering such litigation.

In a filing Monday with the U.S. Securities and Exchange Commission, St. Louis-based Centene announced the settlements with Mississippi and Ohio. And it said it had money set aside to settle with other states.

“Additionally, the company announced it is in discussions with a plaintiff’s group led by the law firms of Liston & Deas and Cohen & Milstein in an effort to bring final resolution to these concerns in other affected states,” the filing said. “Consistent with those discussions, Centene has recorded a reserve estimate of $1.1 billion related to this issue, exclusive of the above settlements.”

In announcing the settlement, Ohio Attorney General Dave Yost said that Centene, the largest Medicaid managed-care contractor in the United States, didn’t admit wrongdoing. But he said the amount of the settlement speaks for itself.

“I will accept an apology note that has this many zeros behind it,” he said.

Ohio has been a leader in trying to police middlemen known as pharmacy benefit managers. And Yost said one of the terms of the settlement is that if any other state gets more than $88 million, Ohio will as well.

In a press release, Centene said “the practices described in the settlement focus on the structure and processes of Envolve (a subsidiary), primarily during 2017 and 2018.”

As a managed-care provider, Centene uses state Medicaid money to sign up clients and to manage and pay networks of providers such as doctors to care for them.

To handle the complexity and volume of drug transactions, manage-care providers hire pharmacy benefit managers. They negotiate discounts from manufacturers, create lists of preferred drugs and determine reimbursements to pharmacies.

The PBM industry is highly concentrated and critics argue that the biggest players use a lack of transparency to gouge payers.

The Ohio lawsuit filed against Centene in March accused the company of several kinds of double billing.

It said Centene hired its own PBM, Envolve, which hired another Centene-owned PBM, Health Net Pharmacy Solutions, which hired CVS Caremark, the biggest PBM in the country. Working through that chain of middlemen, the lawsuit said, Centene pocketed $6.7 million a year that was intended to cover pharmacists’ dispensing costs.

The suit also accused Centene’s PBMs of wildly marking up drug prices. During a single week in 2018, that amounted to $400,000, the suit said.

Centene said that starting in 2019, it introduced new rules. 

“Going forward, Envolve will operate as an administrative service provider, not a PBM, on behalf of Centene’s local health plans to further simplify our pharmacy operations,” the statement it released on Monday said.

The company also seemed anxious to reassure states it depends on for billions of dollars worth of business every year.

“We respect the deep and critically important relationships we have with our state partners,” Brent Layton, the company’s president of health plans, markets and products, said in a statement. “These agreements reflect the significance we place on addressing their concerns and our ongoing commitment to making the delivery of healthcare local, simple and transparent. Importantly, putting these issues behind us allows us to continue our relentless focus on delivering high-quality outcomes to our members.”

Pharmacists across the country have for years complained of predatory reimbursement practices by huge pharmacy middlemen. They greeted the news of Monday’s settlement.

“This is just the latest evidence that PBMs have been using their self-infused complexity in prescription-drug pricing to fleece providers and payers for billions,” said Scott Knoer, executive vice president and CEO of the American Pharmacists Association.

Since Medicaid is funded both by state and federal governments the settlement money will be split among those entities, Yost said. Similar arrangements are likely to be made in other states Centene settles with. 

Yost said hoped that Monday’s settlement catches the attention of all big Medicaid contractors.

“I hope that the message is going out to the entire industry across the country,” he said, “that the days of operating behind the curtain as the great Oz are over and that you’re working for the people of these states that hire you to bring value and quality and to do it with integrity.”

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Eleven generic versions of an HIV drug rush onto the market — and list prices go up https://missouriindependent.com/2021/06/02/eleven-generic-versions-of-an-hiv-drug-rush-onto-the-market-and-list-prices-go-up/ Wed, 02 Jun 2021 12:04:09 +0000 http://s37744.p1438.sites.pressdns.com/?p=6936

Kansas Attorney General Derek Schmidt on Monday announced the state had reached a $27.6 million settlement with Centene as part of an investigation into pharmacy benefit managers. (Joe Raedle/Getty Images)

The health care system is supposed to incentivize the development of wonder drugs and then apply market forces to squeeze prices to a minimum. But a new report shows how at least for one drug, incentivizing is working a lot better than price-squeezing.

At least when insurance is involved.

For example, Blueberry Pharmacy in the Pittsburgh area opted out of the traditional insurance system. It can offer versions of a new generic for $25 a month, while programs connected with middlemen and insurance companies are offering it for $75 in the best instance and often for more than $1,000.

The example illustrates how prices of most generic drugs are wildly inflated in a bewildering system of insurers and the middlemen they use to handle the transactions, Blueberry owner Kyle McCormick said. 

And, he added, they do so when prices for the vast majority of generics are so low that the expense doesn’t need to be insured against the way you would against having to buy a new car or house or to get a heart transplant.

“Most generic medications are less than a bottle of Tylenol,” McCormick said. “We don’t need to pay for insurance to cover a bottle of Tylenol.”

Here’s how the system’s supposed to work: Drugmakers are granted patents so they have exclusive rights to sell new medicines and charge high prices for a period. That way they can recoup their research costs and turn a profit. 

The profits the high prices bring give drugmakers a reason to go looking for the next new drug. And the next.

The way the system’s supposed to work, as patents expire, so does the drugmaker’s exclusive right to produce it. Other manufacturers can swoop in with their own generic versions and ruthlessly undercut one another until the price of the drug is as cheap as possible while still being profitable for a company to make.

But the great majority of those paying for generic Truvada are unlikely to see anything close to those minimum prices even though its patent expired in late 2020 and 11 generic versions subsequently swarmed into the marketplace, 46brooklyn Research, a nonprofit drug analysis firm, wrote in a report that was published Tuesday.

It analyzed Truvada, an antiviral drug that greatly reduces the risk of contracting Human Immunodeficiency Virus — which causes AIDS — and can slow the progress of the disease in those who have contracted it when combined with other medications.

There was keen interest in producing generic versions of brand-name Truvada, with eight companies bringing products to market on the last two days of March alone. Increased competition cut the cost for pharmacies to buy generic Truvada by 90% off of the $1,800 for the brand-name version of the drug, the report said. 

That might seem like the invisible hand of the market doing its stuff.

“However, this announcement, while welcomed, may miss a key point: Will patients actually see these generic savings at the pharmacy counter?” the analysis asked, suggesting that middlemen involved with insurers would ensure they won’t.

There is a tangled web of reasons why most customers at the drug counter won’t see that 90% price drop, according to the report’s authors.

One is that pharmacists working with insurers don’t see it as in their interest to pass the discount along.

Insurance companies that provide prescription benefits hire pharmacy benefit managers to administer them. The middlemen contract with networks of pharmacies, negotiate with drugmakers, decide which drugs are covered and determine how much to reimburse pharmacies for the drugs they dispense.

The pharmacy benefit managers, or PBMs, have enormous leverage over the other players in the drug supply chain. Three — CVS Caremark, OptumRx and Express Scripts — control more than 70% of the market, Ohio Attorney General Dave Yost said recently in a lawsuit

That means that if drugmakers and pharmacies want access to PBMs’ millions of clients, or “covered lives,” they have to do business with those three companies.

Insurers, too, want access to the bargaining power of the big three PBMs, although each now belongs to a corporation that also owns a big insurer. CVS owns Aetna. OptumRx is owned by UnitedHealth. And Express Scripts is owned by Cigna.

The PBMs typically reimburse pharmacies based on the lesser of two, seemingly arbitrary numbers: the “usual and customary” charge — or “cash” price — determined by the pharmacy and the “maximum allowable cost” determined by the PBM.

Ohio community pharmacists have for years been saying that the big PBMs use a non-transparent set of cost lists to cut reimbursements to the bone, in some instances not even covering their cost to dispense a drug. Those low reimbursements give pharmacies an incentive to keep cash prices high in non-insured transactions so they can make up for low PBM reimbursements, the 46brooklyn report said.

So if you go to pharmacies that rely on business with insurers and PBMs and ask for the cash price of generic Truvada, it’s likely to be much, much more than the $25 or so it would cost on the open market, the report said.

What your insurance company and government programs like Medicare and Medicaid are paying is likely to be a lot higher, too.

PBM reimbursement data are confidential, but one window onto how much more might be seen through the aggregator GoodRx. It groups patients not using insurance to cover their drugs and contracts with the PBMs to get pharmacies in their networks to discount their “cash” prices.

When 46brooklyn shopped GoodRx on May 17, the lowest retail pharmacy price it could find for generic Truvada was $112 — more than four times what it would cost a pharmacy working outside the insurance-PBM system to buy and dispense. 

For mail order, the lowest price on GoodRx was $75. That’s about three times the price that Blueberry Pharmacy, which opted completely out of the insurance-PBM system, can sell it for.

The big PBMs have set up their own, GoodRx-like networks and their prices were almost as high as brand-name Truvada: $1,606 for OptumRx’s Optum Perks and $1,105 for Express Scripts’ Inside Rx, the report said.

And Amazon, that great disruptor that’s supposed to be reintroducing market forces to drug pricing? It’s charging $1,566 — or 8,000% — of what Blueberry’s McCormick says he can sell the drug for.

Greg Lopes is a spokesman for the Pharmaceutical Care Management Association, an industry group that represents PBMs. He said the group’s members save consumers money on generics as well as more-expensive brand-name and specialty drugs.

“America’s pharmacy benefit managers, PBMs, have a long history of supporting generic drugs to lower prescription drug costs for patients,” Lopes said in an email. “The key to lowering prescription drug costs is through enhanced competition among brand-name drugs from generic and biosimilar medications.”

However, the 46brooklyn analysis described another way American system of pricing drugs drives costs to consumers up instead of down.

When PBMs negotiate with manufacturers for discounts on generic drugs, they ask for a big cut off of the “average wholesale price” set by the manufacturer. 

These can be discounts in excess of 80%, so that gives manufacturers an incentive to set an inflated average wholesale price. That way, the manufacturer will get 20% of a bigger number.

In the case of generic Truvada, the average wholesale price the 11 manufacturers came up with was indeed inflated. At $2,100, it was more than 15% higher than the cost of brand-name Truvada before the patent expired — and 84 times as much as Blueberry Pharmacy can sell it for.

So much for generic competition bringing down list prices.

“There’s some rent-seeking going on,” McCormick said. “There’s no way you can use insurance and not see prices go up.”

If, as the 46brooklyn report asserts, “cash” and wholesale prices for generics in the insurance-PBM system are artificially and wildly inflated, those prices might seem to be just that: artificial. But with most insured Americans now on high-deductible plans and for 33 million more without any insurance, that inflation can mean much higher generic costs at the pharmacy counter.

As with Pittsburgh’s Blueberry, Columbus-area pharmacist Nate Hux decided to take a big step out of that system, opening Freedom Pharmacy in December. He’s still operating his Pickerington Pharmacy under the PBM-insurance system the same way the vast majority of American pharmacies do.

But he decided that for most generic medications, that system just doesn’t make sense.

“People have been brainwashed for so long to believe that these (insurance) cards bring value, but they really don’t,” he said. “They only make the rich richer and keep everybody else poor.”

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U.S. not using emergency powers to speed production of COVID vaccine https://missouriindependent.com/briefs/u-s-not-using-emergency-powers-to-speed-production-of-covid-vaccine/ Mon, 21 Dec 2020 16:32:23 +0000 https://s37744.p1438.sites.pressdns.com/?post_type=briefs&p=3684

U.S. Surgeon General Jerome Adams receives a COVID-19 vaccine to promote the safety and efficacy of the vaccine at the White House on December, 18, 2020 in Washington, DC. (Photo by Doug Mills-Pool/Getty Images)

U.S. Surgeon Jerome Adams on Saturday said last week during a visit to Ohio that the federal government has invoked the Defense Production Act hundreds of times in the fight against coronavirus. But it is not using it to speed production of two vaccines that now have been approved.

At a press conference during a visit to Columbus, Ohio, Adams sought to assure the public that the two vaccines — one produced by Pfizer and the other by Moderna — are safe and effective, so people should get them when they become available. But it’s hard to know when that will be.

Adams, a member of President Donald Trump’s Coronavirus Task Force, didn’t answer directly when asked if he’d talked to Trump or Pence using the Defense Production Act or some other federal authority to scale up production of the approved vaccines, both of which were more than 90 percent effective in clinical trials.

“These vaccine companies have every interest in the world to make as much vaccine as they can because they want this pandemic to end and the federal government is purchasing these vaccines,” he said. “And I can tell you with every degree of certainty from being on the coronavirus task force that we are doing everything we can to produce these vaccines as quickly as possible.”

Adams noted that the United States was on track to vaccinate 20 million Americans by the end of the year. 

But last summer, before Pfizer’s vaccine received emergency approval, the Trump administration passed on the company’s offer to allow the government to lock in hundreds of millions more doses at no risk. The European Union subsequently locked in 200 million doses of the Pfizer vaccine, meaning that the company might have to fulfill those orders before allocating any more to the United States.

Adams’ statements Saturday come even as the Trump administration and Pfizer have been feuding publicly over whether Pfizer is experiencing production bottlenecks or whether the government itself is hampering Pfizer’s efforts to ship the vaccine.

It might seem that the Defense Production Act is just the mechanism to ensure that the maximum amount of vaccines make it into American arms and bring the pandemic under control as quickly as possible.

But Adams insisted it wasn’t necessary.

“We are leveraging it where we need to use it, but at some point, if they are working at max production and there’s just no more supply to input into the process,” he said, “then saying you’re using the Defense Production Act is literally just saying you’re going to use the Defense Production Act.”

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