It's a Red-Letter Day for Geeky-But-Important Research Reports

This should teach me to write political process stories. The big House vote, including some PBM stuff, that I hyped yesterday didn’t happen. STAT said the Democrats weren’t on board. Politico said maybe Republican support wasn’t entirely solid. So maybe I need a breather from the sausage-making.

Oh, and I screwed up a link yesterday. The AP-NORC poll is here.

This is going to sound hyperbolic, but you’re a pretty geeky group, so I think you’ll see where I’m coming from: this is probably the most important and interesting piece of research on PBMs to have been published all year.

The work is from Nephron, and researchers there talked to pharmaceutical companies in an effort to quantify exactly how much pharma companies are paying PBM in fees. PBM fees generally don’t get talked about much, especially in comparison to rebates, where so much of the attention has been over the past decade or so.

But the reality -- as outlined in the Nephron research -- is that fees are now a bigger contributor to PBM profits than rebates. Nephron’s assessment shows that fees have doubled in the past five years, and the trajectory doesn’t appear to be leveling off.

Some of those charges have been around for a long time, and they’re just continuing to grow. Such as “administrative fees.” But the group also documented some brand-new fees -- think those goofy add-ons that seem to mysteriously appear on your phone bill like mushrooms after a rain -- such as “entity vendor” fees and data fees, the latter of which has grow from essentially zero in 2018 to almost a billion dollars last year.

This isn’t just academic sniping about cash flows: fees are generally linked to the list price of medicines, and the Nephron paper found that nearly all pharma companies felt pressure from PBMs to keep list prices high for that reason.

The research was funded by PhRMA (PhRMA CEO Steve Ubl has a good overview of the research on the group’s blog). Even though this is a clip-and-save kind of report, not a breaking-news bombshell, there was (by geekery standards) some decent media pickup, including Bloomberg Law and Pink Sheet.

I suspect the report might have hit the PBM industry in a soft spot: the PBM response to the report, via Bloomberg Law, emphasized that most rebate dollars are passed back to health plans and don’t accrue as profits, which is … not remotely the accusation the Nephron report was making.

There’s been a flood of amicus briefs in the Merck IRA case, all opposing Merck’s position, notably:

• Fourteen senators are on the record, making the point that “The Court should respect the policy decisions Congress made here and turn away Merck’s meritless efforts to nullify them.”

• Here is AARP’s take.

• And here’s a brief from a group of high-profile economists, from Harvard’s Aaron Kesselheim to BU’s Rena Conti to Harvard’s David Cutler, asking the court to throw out the case.

• Here’s one from some membership organization (American Public Health Association, the American College of Physicians, etc.)

• A group of health policy experts -- including former CMS administrators Don Berwick and Bruce Vladeck. I’ll flag a link to that when it’s live.

I feel a little bad that I used the “this is really geeky but super-important” argument to encourage you all to look at the PBM research above, because it’s awkward for me to turn around and say this 3 Axis Advisors report -- Unraveling the Drug Pricing Blame Game -- is ALSO really geeky but super-important.

Antonio Ciaccia (who moonlights as the 46Brooklyn guy) and his team put together a comprehensive look at how drugs are priced in reality, showing convincingly that the “list price” of medicines -- like, the wholesale price that pharmacies pay -- is set by PBMs and is wildly variable.

It’s a dense but illuminating read.

Elsewhere:

• A bill has been introduced to fix one of the IRA’s more glaring failures: the fact that orphan medicines, nominally exempt from price controls, lose the exemption if they gain a second orphan-drug designation. BIO is celebrating the legislation.

• This Axios story about employers pushing back on payers can be boiled down to a single line: “Employers need to ask some hard questions about their PBM contracts.”

• So many hearings this week. As we speak, there’s a House Oversight session on PBMs. Tomorrow, a House Oversight subcommittee will go at issues with the IRA.

• The Tradeoffs podcast looked at tactics used to extend patents. Not sure there’s a ton new there, but they frame the story around obesity meds, so that should be good for clicks.