January 2025 Clinical Recap

Jake Goll, PharmD (jake.goll@theprismhealthgroup.com) serves as the clinical consultant at Prism Health Group, where he provides end-to-end oversight of clinical strategy through in-depth data analysis, proactive consultation, and subject matter expertise. Gene Therapy: Big Talk, Slow Uptake

 

FTC’s Second Interim Report on PBMs

On January 14th, the FTC released a second interim report on PBMs, accusing the Big 3 of intentionally marking up prices of specialty generic medications. This report is a continuation of the FTCs investigation, expanding upon the original interim report published in July 2024. The FTC unanimously approved the release of this report with a 5-0 vote. In contrast, the initial report released in July was approved by a 4-1 vote, with Commissioner Holyoak dissenting.

Key Findings:

1. Significant Markups by PBMs: The Big 3 PBMs (Caremark, Express Scripts, OptumRx) marked up specialty generic drugs by hundreds to thousands of percent. 63% of analyzed specialty generic drugs were reimbursed at more than 100% markup over acquisition costs, and 22% exceeded 1,000% markups. PBM-affiliated pharmacies were reimbursed at higher rates than unaffiliated pharmacies for many of the analyzed drugs.
2. Steering to Affiliated Pharmacies: PBM-affiliated pharmacies dispensed a disproportionate share of the most profitable specialty generic drugs. For commercial claims, 72% of prescriptions with markups over $1,000 were filled by affiliated pharmacies.
3. High Revenue from Specialty Generics: PBM-affiliated pharmacies generated $7.3 billion in dispensing revenue in excess of acquisition costs from 2017 to 2021. Revenue growth was driven by new specialty drugs, increased dispensing volumes, and higher margins due to declining acquisition costs outpaced by reimbursement rates.
4. Impact on Plan Sponsors and Patients: Plan sponsor expenditures and patient cost-sharing increased at double-digit annual growth rates for both commercial and Medicare Part D claims during the study period. Specialty generics accounted for a significant share of operating income for PBM-affiliated parent companies, demonstrating the financial importance of these drugs.
5. Disparities in Medicare Part D: While PBM-affiliated pharmacies dominate commercial claims, their role in Medicare Part D is smaller due to regulatory constraints like the “any willing pharmacy” rules.

 

Implications for Plan Sponsors:

• Financial Oversight: Plan sponsors may not fully understand the extent of markups and associated costs. Increased transparency and scrutiny of PBM practices could mitigate unnecessary expenditures.
• Contract Structuring: Reassess PBM contracts to include clauses preventing excessive markups and leveraging alternative pharmacy networks.
• Cost Mitigation Strategies: Explore non-affiliated specialty pharmacy networks for potentially lower reimbursement rates. Use data analytics to monitor drug markups and reimbursement trends.
• Regulatory Engagement: Advocate for policies that ensure fair pricing practices and address steering behaviors that disadvantage unaffiliated pharmacies.

 

This report highlights the critical need for plan sponsors to demand transparency, leverage competitive bidding for PBM services, and closely monitor pharmacy reimbursement practices to safeguard financial and member interests.

SGLT-2 Antidiabetics: Class Review

While SGLT-2 inhibitors (sodium-glucose cotransporter-2 inhibitors) don’t generate the same buzz as GLP-1 receptor agonists, they remain a frequent cost driver for plan sponsors in the antidiabetic category. SGLT-2s are a class of oral medications initially FDA-approved to treat type 2 diabetes but have since had their indications expanded to include heart failure and chronic kidney disease. By inhibiting SGLT-2, excess glucose is excreted in the urine, leading to lower blood glucose levels, reduced body weight (though not as significant as GLP-1s), and lower blood pressure. Due to their effectiveness in lowering A1C and providing additional cardiovascular and renal-protective benefits, these drugs are a popular choice for treating type 2 diabetes.

Currently, SGLT-2 inhibitors are still dominated by brand-only products, with Brenzavvy being the only “generic” option available. The annual net cost of treatment with these medications is approximately $3,000 per patient. While Brenzavvy is available through Mark Cuban Cost Plus Drugs at a roughly 85% discount, its less effective A1C-lowering ability and lack of FDA-approved indications outside of type 2 diabetes make it an unpopular choice.

With comparable A1C-lowering effects at maximum doses between Farxiga, Invokana, and Jardiance, the next consideration in selecting the best product for type 2 diabetes is: which product offers the most benefit for secondary disease states? A January 2025 study published in JAMA Internal Medicine found that Farxiga, Invokana, and Jardiance demonstrated comparable cardiovascular effectiveness and safety in a review of real-world claims data. Based on these findings, the study recommends directing patients to the lowest-cost SGLT-2 option based on formulary coverage, as there is no distinct clinical advantage.

The most common SGLT-2 formulary setup includes coverage of Jardiance and Farxiga, as costs are similar, and this combination provides the most comprehensive disease state coverage (see chart above). Farxiga generics are expected to hit the market as early as Q3 2025, and analysts predict that the price of the generic could drop quickly to 70–90% off WAC, offering a significant savings opportunity. This development will prompt a thorough re-evaluation of the SGLT-2 class, with the potential to position generic Farxiga (dapagliflozin) as the preferred SGLT-2 inhibitor.

New FDA Rule on OTC Medications

The FDA has issued a final rule, effective January 27th, 2025, establishing guidelines for nonprescription drugs with Additional Conditions for Nonprescription Use (ACNU). This rule allows certain drugs, previously available only by prescription, to be marketed as over the counter (OTC) with specific conditions to ensure safe and appropriate use without the supervision of a healthcare provider. The purpose of this initiative is to expand access to safe and effective medications for chronic and acute conditions, enabling more drugs to transition from prescription to OTC status while ensuring that consumers can use them safely. Examples of ACNU tools include consumer questionnaires or other measures that facilitate safe self-selection and appropriate drug use. Patients will be directed to this questionnaire on the back of a drug’s label, which will inform them whether the drug is safe to take, based on their answers to the ACNU questions.

Applicants seeking OTC status with ACNU must submit separate applications, including data from label comprehension studies and evidence demonstrating the effectiveness of ACNU tools. According to the FDA, the economic impact of this rule could save consumers approximately $33.62 per purchase in access-related expenses. Additionally, the increased availability of OTC drugs could decrease claims and long-term medical costs for insurers.

To maintain safety standards, the FDA will rigorously evaluate ACNU tools to address drug-specific risks such as side effects or interactions. Future applications of this rule could include transitioning medications for chronic conditions to OTC status, assuming adequate safeguards are in place. This rule represents a significant step forward in enhancing OTC drug availability while maintaining safety and efficacy standards, broadening treatment options for common conditions. Currently, there are no drugs with ACNU status or currently pursuing ACNU status.

CMS Announces Second Round of Drug Price Negotiations

The Medicare Drug Price Negotiation Program, established under the Inflation Reduction Act of 2022, has announced the second round of 15 drugs that will be subject to negotiated maximum fair prices between CMS and manufacturers. This follows the initial list of 10 drugs, with their negotiated prices announced in August 2024 and set to take effect in January 2026. The negotiated prices for the second list of 15 drugs will be announced by November 30, 2025, and will take effect in January 2027.

Some notable points regarding these drugs:

• Breo Ellipta had a single authorized generic released in 2022; however, the brand product has a lower net cost after rebates. Since Breo Ellipta is an authorized generic and produced by the same company as the brand, it is classified as a single source drug and is therefore not considered independent generic competition.
• Four (4)products are scheduled to lose exclusivity and likely face generic competition prior to the MFP for these drugs taking place in 2027: Tradjenta in 2025 and Pomalyst, Ofev, and Janumet/Janumet XR in 2026. Medicare has stated that the availability and “bona fide” marketing of a generic for any strength or dosage form of a drug product will eliminate that drug from consideration as a qualifying single source drug. These four aforementioned products therefore may fall off the list before the MFPs are implemented.
• Semaglutide products (Ozempic, Rybelsus, and Wegovy) will be particularly interesting to monitor due to their high costs and popularity, especially as Medicare considers adding weight loss drugs to coverage.

The Medicare Drug Price Negotiation program remains controversial, with critics arguing that government intervention could disrupt market dynamics, potentially stifling innovation and leading to drug shortages or reduced quality. The long-term impact, especially on non-Medicare commercial drug prices, remains uncertain, making it essential for PBMs and plan sponsors to closely monitor this evolving landscape. Short term impacts are already being realized, as the National Community Pharmacists Association (NCPA) announced that a survey of independent pharmacies showed more than 90% of pharmacists may not sell the drugs (51% saying they are strongly considering not stocking, 40% saying they are somewhat considering not stocking) for which the Medicare Part D program is trying to negotiate lower prices. NCPA argues that the Centers for Medicare and Medicaid Services (CMS) has not provided adequate guidance or a timely reimbursement model, which could deter independent pharmacies from participating.

The insights and guidance provided herein is not legal guidance or counsel and is of the expressed independent vies of the The Prism Health Group.