The Blue Shield Deal Whomps CVS Shares, But PBMs Are Still in the Game

I guess we’re just not doing an August slowdown. Sorry.

The Blue Cross of California move to boot CVS Caremark as its PBM of record has to be the lead story again. After the WSJ scoop and the press release that I flagged yesterday, there was a ton more coverage.

A lot of the news was driven by the fact that CVS shares got hammered, as did Cigna’s. (UnitedHealth Group was down, but more modestly.) CVS took the step of filing an 8-K with the SEC in which they reassured investors that the Blue Shield move would have “have an immaterial impact on our longer-term outlook,” which doesn’t seem to have magically restored investor confidence.

But there was some eye-rolling backlash to the backlash. “As we’ve seen countless times before when the stocks have knee-jerk sold off on the ‘Amazon effect,’ the [managed care] / PBM models have still proven long-term resilient,” wrote Scott Fidel, an analyst at Stephens, in a note that was quoted by STAT.

The STAT story is actually the best piece from yesterday, because Bob Herman gets to the most fascinating part of the story: what’s the deal with the two PBMs that Blue Shield will still be working with? Despite the headlines about PBMs being kneecapped, Caremark is still a part of the Blue Shield team, focused on specialty pharmacy. And Prime Therapeutics, another PBM (one with links to Cigna’s Express Scripts, no less), will also be engaged with Blue Shield around negotiations.

Bob doesn’t get good answers, but he’s asking the right questions.

There’s a fun debate over the list vs. net price of obesity medicines going on.

KFF pushed out a report that showed a comparison of the price of various GLP-1 based diabetes/obesity medicines in different countries. As one would expect, the United States looks way more expensive on a list price basis, which generated a lot of headlines.

But -- naturally -- that’s not remotely the story, so Northwestern’s Craig Garthwaite pushed back on Twitter, telling KFF’s Cynthia Cox (and a few others that rushed to her defense) that they should know better to conflate list and net prices.

“I would hope researchers would approach this issue with a desire for more accuracy,” he wrote, calling the report “clickbait.” The whole thread is a good time.

The KFF response on Twitter was twofold: First, they mention that they do make clear, low in the story, that the list price ain’t what most patients pay. And, second, they argue that list price is not unimportant because poor insurance coverage could mean a lot of cash-paying customers exposed to the list price.

But even those cash-paying customers are getting big discounts. Novo is offering a coupon for $500 off a month for patients whose insurance doesn’t cover. Lilly’s Mounjaro coupon is worth $575 a month (caveat: Mounjaro isn’t yet approved for obesity). Lilly’s CEO, David Ricks, has been explicit that the net price for obesity meds is likely to be close to $400 … or about what’s paid in Europe right now. (That link, from a June interview, is paywalled, but Ricks drops the $400 number twice.)

All of this math emphasizes the ridiculousness of the rebate system, which I won’t bother trying to defend. But also indefensible is any attempt to make cross-border comparisons without a good-faith effort to account for rebates, coupons and the like.

There a fair amount out this morning on the Inflation Reduction Act, which I expect to be the case every morning for, like, the next month. Unfortunately, there won’t be actual news -- with the exception of the select drop list dropping on or around Sept. 1 -- so the coverage is not going to be filling.

Nonetheless:

• You can read this Washington Post piece for the nugget that AARP is going to file an amicus brief in the Chamber of Commerce lawsuit and the prediction by a Chamber official that more suits may be in the wings.

• You can read this Georgetown Law analysis of the Fifth Amendment due process arguments, keeping in mind that the authors have a pretty low opinion of the industry to start with.

• You can read this Bloomberg Law article simply because it introduces a couple of legal voices that I don’t think I’ve seen (or seen much of). They also quote the usual suspects.

Other quick ones:

• Ipsen’s Sohonos, a treatment for a horrifying rare disease, has a price: around $624,000 a year. There are only about 400 Americans with the condition.

• Deloitte has a worthwhile overview of what the future of market access ought to look like. The important, if not radically novel, conclusion: planning around market access should start a lot sooner. I’m down with that. I think that communications around market access should start sooner, too. And I am here to help!

• There is a Neurology study -- picked up by NBC -- that suggests that the market for Leqembi in Alzheimer’s might be pretty narrow if the medicine is restricted to the kind of patients in the clinical trial. I’m having a hard time being surprised here: the drug’s manufacturer, Eisai, has been pretty explicit that they don’t think there will be a huge bolus of patients. So this is, perhaps, more evidence that the budgetary apocalypse predicted by some may not come to pass.

• A federal court has handed PBMs a win in a dispute over an Oklahoma law that would have restricted the ability of PBMs to create pharmacy networks.

• TheracosBio, the small biopharma running a big experiment to see if they can create a cash-pay market for their new diabetes medicine, Brenzavvy, is partnering with an upstart PBM -- SmithRx -- to get the medicine more widely covered. The big caveat here is that SmithRx isn’t that big, and the play is still to work through Mark Cuban’s pharmacy. Still, the evolution of a shadow pharmacy-benefits approach, even at a small scale, is worth watching.