PBM Market Power Is Definitely Concentrated, AMA Report Finds

Y’all are a great audience. My most-clicked link of the month was yesterday’s 52-page missive on the drug-pricing environment written by a couple of academics.

I warned you all that it was a 52-page missive by a couple of academics, and you all clicked anyway. You are all geeks, in the best possible way.

It’s not necessarily surprising, but there is a new analysis out, via the American Medical Association, that found that the top four PBMs -- OptumRx, CVS Caremark, Express Scripts and Prime Therapeutics -- controlled 68% of the PBM market in 2021.

That’s up from 2020, primarily because CVS absorbed Aetna’s PBM when it bought the insurer.

Those numbers, alone, probably don’t say much. Context is everything here.

The fact that nothing is shaking the market position of the big guns is meaningful. That these data are dropping as the Federal Trade Commission is investigating the industry for anti-competitive behavior is also a datapoint. It’s worth noting that there are allegations of collusion leveled at these companies by the state of Ohio as well.

So the 68% number is supportive of all of those other PBM headwinds.

The PBM spin on this -- as reported by Fierce -- is that the AMA data shows that there is indeed healthy competition going on.

(It’s probably worth noting that there are other estimates about PBM market power, most notably Adam Fein’s effort over at Drug Channels, which figures that the three biggest companies have 80% of the market. The AMA report noted that its numbers may differ because it’s looking solely at the commercial market with a couple of additional exceptions.)

There’s been a lot of activity in the court cases trying to get the Inflation Reduction Act tossed, but not a lot of attention. Here’s a catch-up-quick guide:

• The Merck case: The government filed its response to the lawsuit, taking the position that the whole Merck effort rests on a misunderstanding of the law, and that nothing is compelling the industry to take the negotiated prices. I’m sure Merck and others will have plenty to say about that. The HHS brief is here, and Axios covered today.

• The Chamber of Commerce case: The government response hit last Friday to very little fanfare. The initial HHS argument in that case seems to be aimed fairly squarely at the idea that the Chamber doesn’t have standing to bring the case. The brief is here. As a reminder, there will be hearing in that case on Friday.

• (Interestingly, the government alleges that both the Chamber and Merck erred in their filings. HHS said that AbbVie -- the one company where harms are alleged in the Chamber suit -- shouldn’t have been referenced because AbbVie’s Pharmacyclics subsidiary holds the NDA with the FDA. Likely, the government said that, technically, Merck Sharp & Dohme, not Merck & Co., that should be litigating over Januvia. It feels unlikely that the legal case will hinge on corporate structure, but I’m out of my lane here.)

• The PhRMA case: The government, kind of out of left field, moved to dismiss the PhRMA suit, which no one really noticed because it hit the night before the list of price-controlled meds was released. That’s led to something of a shake-up in the schedule, and all the deadlines in that case have been shifted back two weeks to allow for consideration of the new motion. Bloomberg Law characterized this as a win for the government.

By my count, we have a couple of weeks before the next filing is set to drop (in the PhRMA case). We’re still waiting for the AstraZeneca and Novartis suits to get up and rolling. I don’t see that the Novartis case even has a judge yet. I’ll update my consolidated briefing schedule next week.

And, of course, there’s the possibility that existing suits will be amended and that additional lawsuits may be in the offing. I wouldn’t bet against Amgen and Novo getting in the ring.

• Even if you’re a fan of the IRA (that’s probably a minority of the readership here, but …), it’s hard to argue that there aren’t some places where the law’s seams show. One of those is the weird orphan provision that exempts rare-disease drugs from price controls, but only if they have one orphan indication. The heads of BIO and NORD take aim at that hiccup in this STAT op-ed that’s well worth the read.

• The commercial COVID vaccine prices are official: $120 for Pfizer, $129 for Moderna, $130 for Novovax.

• There’s still some question about how, exactly, the uninsured will get vaccinated, and Axios looked at the complexity of that task this morning.

• Democrats in the Michigan State Senate are pushing for a prescription drug affordability board. I’m always wary of covering process stories about state legislatures because it's so hard to handicap, but this one is getting a good amount of local media, so throwing it out there.