Localities hit PBMs, pharma on insulin

Delivered every Tuesday and Friday by 12 p.m., Prescription Pulse examines the latest pharmaceutical news and policy.

Oct 16, 2024 View in browser   By Lauren Gardner and David Lim Driving The Day An expanding legal battle is unfolding in federal court as numerous groups challenge the business practices of PBMs and insulin producers. | John Locher/AP INSULIN LITIGATION DEEP-DIVE — As Congress weighs legislation to rein in pharmacy benefit managers, a lawsuit accusing PBMs and insulin makers of racketeering and unfair trade practices is growing in federal court. Eighty states, cities, counties, school boards and unions have joined litigation consolidated in a New Jersey district court against the three major pharmacy middlemen — CVS Caremark, Express Scripts and OptumRx — and three insulin manufacturers. Since Oct. 1, at least four counties and two school boards have signed on, and more are expected in the coming weeks. Plaintiffs have been divided into three groups — state attorneys general, self-funded payers like local governments and third-party payers — to manage the proceedings. Most recently, unsealed filings paint a clearer picture of the counties’ arguments and the industry’s response. Payers’ problem: The complaint focuses on the web of payments PBMs extract from manufacturers to list their products on formularies and from payers for their services. County payers claim it’s a “multibillion-dollar price-fixing scheme” that was “borne from the coincidence of both groups’ unchecked power” and led to them being allegedly overcharged for insulin, which millions of Americans with diabetes use. The counties say their contracts require that rebates the PBMs negotiate with manufacturers must “pass through” to them, which payers can use to either lower other costs or pass on to their employees. But as they’ve bartered those guarantees, they claim PBMs “began to relabel rebates as ‘discounts,’ ‘credits,’ and ‘fees’” — payments that don’t flow to payers and fall beyond the scope of what payers can audit under their contracts. “The counties knew that the Manufacturers paid rebates, creating a gap between list and net prices, but believed that all rebates would be passed to them,” they wrote in a reply brief to the drugmakers’ motion to dismiss. The industry responds: The PBMs responded that counties knew they had bargained for other payments from drugmakers. “The purported ‘scheme’ is a direct attack on the Counties’ own contracting decisions from ten years ago,” they wrote. The three insulin makers, Eli Lilly, Novo Nordisk and Sanofi, suggested that the counties are pursuing a “new theory” in the suit — essentially a “breach of contract claim” — after acknowledging they knew about the rebate system. “It has nothing to do with insulin’s list prices, with the alleged impact of those prices on consumers, or with Manufacturers at all, who were not parties to — and have never seen — Payers’ contracts with PBMs,” they said in a filing. What’s next: Discovery is ongoing across the three tracks. It’s unclear when a judge will rule on the motions to dismiss, which have been fully briefed. IT’S WEDNESDAY. WELCOME BACK TO PRESCRIPTION PULSE. Neither of your morning hosts cares about postseason baseball anymore. Send tips and 2025 baseball hype to David Lim (dlim@politico.com or @davidalim) and Lauren Gardner (lgardner@politico.com or @Gardner_LM). Eye on the FDA The FDA’s decision to pause enforcement against large compounders of Eli Lilly’s diabetes and weight-loss drugs has created uncertainty for small compounders. | Darron Cummings/AP GLP-1 DRAMA CONTINUES — Outsourcing facilities making compounded versions of Eli Lilly’s diabetes and weight-loss drugs won a reprieve in court last week from FDA enforcement of production restrictions. But retail outfits still await a response from the agency about whether they’ll get similar leeway. A federal judge in Texas granted an FDA request late Friday to stay a compounding group’s lawsuit challenging its decision to pull the GLP-1 tirzepatide from its shortage list while it reconsiders, Lauren reports. In the meantime, the agency won’t enforce the law holding large-scale compounders to a 60-day window to wind down operations once a drug comes off the list. The FDA and the Outsourcing Facilities Association must file a joint status report by Nov. 21. Small compounder asks: The Alliance for Pharmacy Compounding, which represents smaller compounding pharmacies known as 503As, asked Commissioner Robert Califf over the weekend to clarify whether he’ll also apply enforcement discretion to those facilities. Until the FDA responds, Brunner is urging his members not to compound tirzepatide. “It would be unusual and weird, frankly, for the judge to apply that [relief] only to the plaintiffs,” given only a few outsourcing facilities are making the drug,” APC CEO Scott Brunner told Lauren. Brunner said his group hasn’t yet considered taking legal action against the FDA. “What we really risk is interruption of patient therapies, and that’s what concerns us,” he said. “That’s the part of this that we think FDA has not managed very well.” Lilly responds: Meanwhile, a Lilly spokesperson said the lawsuit hasn’t changed the FDA declaring the shortage “resolved,” noting the agency’s previous statements warning that compounded versions of the drug don’t undergo FDA review. “All doses of Lilly’s FDA-approved medicines are available and it is important that patients not be exposed to the risks in taking untested, unapproved knockoffs,” the spokesperson said in a statement. “The best way to ensure that patients can access safe and effective FDA-approved tirzepatide medicines is for employers, insurers, and the government to recognize that obesity is a chronic disease and to increase coverage of medicines to treat it.” According to Lilly, a pharmacy must store 12 boxes in refrigeration to stock Mounjaro and Zepbound at all available doses, which can affect how many and which doses a local pharmacy has on hand at a given time. And that’s not accounting for competitor Novo Nordisk’s brands Ozempic and Wegovy. The FDA hasn’t commented on the litigation or APC’s requests. 2024 ELECTION HARRIS’ PHARMACY PLAN — The National Community Pharmacists Association is touting a new policy proposal from Vice President Kamala Harris that aims to boost the number of independent pharmacies by 3,000. “A Harris-Walz Administration will set a goal of enabling 23,000 independent pharmacies to either launch or stay open by working to enact legislation that would prevent pharmaceutical middlemen known as pharmacy benefit managers from shortchanging rural independent pharmacies and steering orders of the most profitable drugs away from independent rural pharmacies and to chains,” the campaign said in a press release Tuesday. NCPA CEO B. Douglas Hoey said his group is “very encouraged” by the proposals. “We would urge them to work with Republicans and Democrats to prevent PBMs and insurance plans from driving more independent pharmacies out of business,” Hoey said. Industry Intel PHARMACISTS’ REIMBURSEMENT ALARM — A group of pharmacists caution that many independent pharmacies might not choose to sell drugs whose prices are being negotiated by Medicare because of reimbursement and cash flow challenges. At issue is what the NCPA describes as “underwater reimbursements from pharmacy benefit managers.” The group sent surveys to 4,135 independent pharmacy owners and managers between Sept. 24 and Oct. 11. Of the approximately 465 respondents, 51 percent said they are “strongly considering not stocking the drugs,” and 40 percent “say they are somewhat considering not stocking the medications.” “NCPA estimates pharmacies that dispense drugs in the program will have to tie up $27,000 of their own money every month to stock the drugs and then wait a month or more for manufacturer refunds to make the pharmacy whole,” NCPA said in a press release. Pharma Moves President Joe Biden appointed Kimberly Stegmaier to the National Cancer Advisory Board. She is a professor of pediatrics at Harvard Medical School. Document Drawer FDA and NIH leaders are calling for more smoking-cessation treatment development and long-term health outcome and toxicology studies on e-cigarettes in the Annals of Internal Medicine. The FDA is holding a workshop on Nov. 15 to discuss nonprescription pain and fever treatments for children ages 2 to 11. The agency also plans to consider whether additional nonprescription oral medicines are needed for pain or fever. The FDA’s drug center released its annual report on its Accelerating Rare disease Cures Program. The FDA launched a webpage detailing how the agency’s drug center manages drug shortages. WHAT WE'RE READING Reformulated inhalers that don’t rely on planet-warming hydrofluorocarbons to deliver medication to the lungs could complicate Biden administration efforts to cap the out-of-pocket price of inhalers at $35, E&E News’ Ariel Wittenberg reports.   Follow us on Twitter David Lim @davidalim Lauren Gardner @Gardner_LM   Follow us

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