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A Judge Strikes a Blow Against Copay Accumulators

Plus thinking about the connection between jet fuel and obesity meds

Egg on my face: yesterday, I suggested that an ICER white paper, prepared for CMS as a part of the price-setting process for Eliquis and Xarelto, showed that those two drugs could be cost-effectively priced much higher than their existing list price.

But I made a boneheaded math error, and the reality is ICER is suggesting a discount to the list price of both of those medicines. Whether that discount is larger than the discounts already being offered is an open question, which -- in some ways -- makes the report even more interesting than I’d thought. Expect a lot of discussion about net prices over the next 11 months.

I regret the error.

Insurance companies no longer have the option of excluding patient assistance from beneficiary deductibles and out-of-pocket maxes after a federal judge ruled that the policy allowing the CMS practice, known as copay accumulators, was “arbitrary and capricious.”

It’s a big win for pretty much everyone except the payers. Advocates and patients (who are the ones who brought the suit) hated accumulators because they effectively steal patient assistance money. The pharmaceutical industry (which filed a brief in favor of the patients and advocates) hated them because it undermined the whole idea of assistance.

There are some asterisks, some of which are addressed in this STAT story. The policy doesn’t apply to policies allowing for accumulators in cases where there is a generic on the market. And it doesn’t appear to touch maximizers, which are another form of payer black magic. (Adam Fein has a good primer on maximizers here.)

the arc

If you want obesity-drug news, you have an endless supply of stories to pick from. If you’re reading for pure amusement, coverage of the idea that obesity meds will save airlines a ton of money on jet fuel would be a good choice.

I don’t think the idea that the American populace will collectively lose 10 pounds per capita is particularly realistic, but it’s fun math, I guess, if you’re a Wall Street analyst.

There is a long history of slightly silly weight-related calculus when it comes to jet fuel consumption. I learned, for instance, that airlines would save $100 million a year if we all just used the restroom before boarding. And that United saved $300,000 when it started printing its in-flight magazine using thinner, lighter paper.

But if you’re serious about understanding the economics and policy implications of weight loss meds, there are two white papers out in the last week that should probably be required reading.

The first is this effort from the think tankers at AEI that used SSR Health and coupon data to paint a picture of what the net costs of the existing GLP-1-based medicines are. The upshot is that, on a net-price basis, Novo Nordisk is getting about $290 per script for Ozempic, which has a list price of around $936. Wegovy’s net is $701, from a $1,349 list. And Mounjaro is $215 a month, net, and $1,023 list.

Those are the numbers that should be informing the debate about whether obesity meds will truly cause the sky to fall. That’s not to say that list prices aren’t important (AEI includes some post-coupon prices to better get at the cash-pay market), but balancing everything against the net prices is critical in really understanding the big picture.

Of course, one of the groups that unquestionably gets screwed in all of this -- the group that really is subject to the list price, without the possibility of assistance from a coupon program -- is Medicare beneficiaries. Medicare won’t, by law, pay for weight-loss drugs, and those in Medicare aren’t allowed to use coupons.

So there are a ton of Americans who are really out in the cold when it comes to these meds.

That’s what makes this paper so interesting: the folks at Manatt have floated a theory that Congress barred Medicare from covering weight-loss drugs. Not obesity drugs. Following the logic, “obesity” is a different beast than “weight loss” -- obesity involves a range of medical issues that go beyond pounds -- and therefore Medicare can, with some magic-wand-waving, cover obesity meds.

I’m not an administrative law expert, so I have no idea what to make of the argument. But I award the authors points for creativity. And in a world where Congress is not particularly functional, it’s hard not to believe this is a possible path forward. (The paper was commissioned by Pfizer and the Obesity Action Coalition and The Obesity Society contributed.)

quick turns

HHS is out with a release crowing that every manufacturer whose medicine was selected for “negotiations” is participating in the process. That’s neither news nor a surprise.

What is interesting is that HHS Secretary Xavier Becerra, in the canned quote, emphasizes the similarities between the IRA negotiations, which industry quite obviously loathes, and negotiations with the VA, which industry is OK with. The goal is to make biopharma companies seem like hypocrites for going to mattresses over price controls.

It’s a fairly weak case, on the merits, but the VA comparison is clearly now an important talking point for IRA defenders. For industry types who want to bone up on the counterargument, check out this blog post from PhRMA’s general counsel.

Elsewhere: 

  • I liked this overview of the IRA’s price-control provisions by IQVIA’s Luke Greenwalt. He stuffs an awful lot of issues and details into the post, and it’s a great read if you want to make sure you’re caught up. It’s the first in a series, so stay tuned.

  • Boehringer Ingelheim already has a Humira biosimilar that’s priced pretty close to the price of actual Humira, which allows the copycat version to compete with the brand based on how ginormous each company can make its rebate. But now BI will also selling a low-price version, aping several of its competitors in selling their med at two different prices. It’s hard to think of a place where the broken nature of rebateworld is more obvious than Humira biosimilars. It’s not clear that manufacturers want to play this game, and it sure as heck hurts patients. And yet here we are.

  • While I’m apologizing for stuff, yesterday, I flagged a worthwhile paper on brown/white bagging, not realizing that it formed part of the foundation for this excellent Adam Fein look at the practice last month. Hard to wake up early enough to beat Adam to the punch.:

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