Blue Shield of CA Is Embarking on a Grand Experiment Around the Worth of PBMs

Damn, this is interesting.

Blue Shield of California is going to do away with their PBM relationship with CVS Caremark and instead manage their drug benefit with a coalition of partners that ranges from Amazon to Mark Cuban to … Caremark and Prime Therapeutics. (Yes, the latter two are PBMs.)

Blue Shield’s logic is that they can save $500 million a year by (kind of, sort of) cutting out the middleman, which is money they say they will, in turn, plow back into their 5 million beneficiaries.

If the experiment is successful, it will be a huge blow for the idea that -- yup -- PBMs really are siphoning off a boatload of money from the health care system. But there are reasons to be skeptical. Adam Fein told the Wall Street Journal that, “They are trading the black box for a collection of competing interests. They may be biting off more than they can chew.”

And even if Blue Shield is successful, it’s not clear how replicable their effort will be. After all, most of the big health insurers already own a PBM, so “savings” is just a matter of moving money around. And you probably need to be a pretty big health insurer to even consider taking on the mammoth organizational task of recreating the whole suite of PBM services. So it’s not like this model is going to take the world by storm.

But it’s still important as a symbolic move, and even more important as an experiment. There is the potential to learn an awful lot about what PBM services really are critical, and which ones can be safely and cheaply shifted elsewhere.

Fun times ahead.

Yesterday was the one-year anniversary of the Inflation Reduction Act, and there was some not-very-illuminating coverage, because anniversaries are not particularly newsworthy.

But the White House understands that this was a keystone legislative accomplishment, so they pushed out a release and a report to talk up the awesomeness of the law.

In some ways, that’s not very illuminating, either, but looking at what the administration chose to emphasize -- and what was relegated to a footnote -- says a lot about the strategy for promoting the IRA over the election season to come.

It’s clear that the White House has decided to focus on the parts of the law that are in force today: $35 insulin for Medicare patients, Medicare vaccine coverage, tax credits for Affordable Care Act marketplace plans.

But those are all sideshows, really. Just changes at the margins of the health care system. Tax credits don’t get anyone’s heart racing. “A shingles vaccine in every shoulder” doesn’t have the zing of “a chicken in every pot.”

What’s missing from the Biden push is any real emphasis on the price-control element of the bill. Even though that’s where the ink is being spilled elsewhere, I’m wondering if Medicare “negotiations” are too complex or too remote for John and Jane Heartland. That concept comes up only after about 750 words of the administration’s 900-word press release. And inflation penalties? They don’t even make the cut.

That’s clearly not by accident … the White House attracts smart communications people, so it’s well worth reading into those omissions.

My take? The administration can’t win explaining the process in any real detail, so they’re just punting on those elements until they can make hay around actual prices.

I don’t know if that’s good news or a danger sign for industry, but it does suggest that there may be some white space to define the issue. There’s no question that HHS will make a big deal with the list of medicines to be price controlled comes out on (or before!) Sept. 1, but yesterday’s second-billing makes me wonder if their heart will really be in it.

• We seem to already be at the point where the six-way legal wrangling over the IRA has faded into the background. Janssen and BMS both filed their briefs yesterday, and -- other than this Bloomberg Law piece -- no one seems to have noticed or cared. In fairness, these briefs are basically just recapitulations of the original lawsuits, but there is a sense that lawsuit fatigue is setting in. Every. Single. National. Outlet covered the first lawsuit announcement (Merck), so it’s noteworthy that this is not a story with momentum.

• Polls by wildly biased organizations (on all sides!) should be read with great care, so keep that in mind when looking at the latest from the Campaign for Sustainable Rx Pricing. Their new poll says that everyone hates pharma (probably true) and everyone blames them for high drug prices (also probably true). The pro-pharma spin here would be that this proves not that pharma is a villain but that the average American knows jack-all squat about how the drug supply chain actually works.

• The Interfaith Center on Corporate Responsibility is trying to get signatories to a letter telling drug companies to knock it off with their IRA lawsuits. Because the ICCR is a savvy organization, they plan to release the letter and the signatories ahead of the Sept. 1 HHS announcement of the medicines selected for price controls.

• Speaking of the Sept. 1 announcement, it seems clear that no one knows anything about anything when it comes to the medicines that will be on the list. While some are slam-dunks, hazy IP and some general misunderstanding of the law seem to be making it hard to handicap the final 10. The Pink Sheet is out with a list of 13, but I think some of them are plainly excluded, so I guess that Sept. 1 will have some drama, no matter what.

• This relatively dull op-ed in the LA Times is a reminder that the market for anti-pharma sentiment is infinite.