House Republicans vote to ban certain pricing metrics in federal programs

By Noah Tong - In a party line vote, House Republicans voted to ban certain pricing metrics in federal health programs such as Medicaid, Medicare Advantage and VA Health Care. Read Full Article…

VBA Article Summary

1. The Protecting Health Care for All Patients Act aims to eliminate the use of quality-adjusted life years (QALY) and similar metrics in federal health programs, arguing they are discriminatory towards individuals with disabilities or chronic diseases. Republicans, including Rep. Cathy McMorris Rodgers, advocate for the bill, citing the need to protect patients like her son with Down syndrome from decisions based on cost-effectiveness rather than individual care needs. The bill passed the House with a narrow margin but faces skepticism in the Democrat-led Senate.

2. Critics of the bill, including Rep. Frank Pallone, label it a "Trojan horse" that could undermine efforts to lower drug prices, suggesting it is backed by the pharmaceutical industry to prevent the use of any value measures in drug cost negotiations. The Congressional Budget Office estimates the bill could increase spending on prescription drugs by $1.1 billion over ten years, raising concerns about its potential impact on drug pricing and the affordability of healthcare.

3. The Biden administration opposes the bill, highlighting concerns about its implications for the Affordable Care Act, particularly the potential gutting of the Prevention and Public Health Fund. The administration's stance reflects broader debates over healthcare policy, balancing cost containment with equitable access to care for all individuals, regardless of their health status or disabilities.

Johnson & Johnson Case Signals Employee Drug Price Suits to Come

By Sara Hansard - A novel lawsuit from an employee suing Johnson & Johnson Inc. for allegedly mismanaging drug benefits appears a harbinger of litigation to come against companies, especially those that rely on pharmaceutical industry middlemen to negotiate pricing and rebates. Read Full Article…

VBA Article Summary

1. Filing of Class Action Lawsuit by Johnson & Johnson Employee: Ann Lewandowski, a health-care policy and advocacy director at Johnson & Johnson, filed a class action lawsuit on February 5 in the US District Court for the District of New Jersey. The lawsuit alleges that Johnson & Johnson mismanaged its employee health plan by paying inflated prices for generic specialty drugs through its pharmacy benefit manager, Express Scripts Inc., resulting in significantly higher costs for employees. This mismanagement is claimed to have led to millions of dollars in excess payments for drugs, higher premiums, deductibles, coinsurance, copays, and negatively impacted wages or wage growth for employees.

2. Trend of Legal Challenges and Employer Liability: The lawsuit reflects a broader trend of employees and employers challenging health plan administrators over fiduciary breaches under the Employee Retirement Income Security Act (ERISA). This trend is partly driven by new laws and regulations that make pricing information for health care services more accessible, allowing potential plaintiffs to scrutinize the financial management of health plans. Similar to past lawsuits against companies for excessive fees or mismanagement of 401(k) plans, this case signals a growing scrutiny of how employers manage health benefits and the legal vulnerabilities they face when hiring third-party contractors for health plan administration.

3. Implications and Responses to the Lawsuit: Johnson & Johnson has dismissed the allegations as meritless, planning to seek dismissal of the complaint. However, the case highlights the necessity for employers to diligently select and monitor their health plan service providers to mitigate liability risks. It also underscores the growing demand for transparency in drug pricing and health plan management, especially regarding the practices of pharmacy benefit managers like Express Scripts. The lawsuit could prompt employers to consider more transparent and accountable alternatives to traditional PBMs to ensure they are fulfilling their fiduciary duties and managing employee health plans prudently.

Senators ask CEOs why their drugs cost so much more in the U.S.

By Sydney Lupkin - Sparks flew on Capitol Hill Thursday as the CEOs of three drug companies faced questions from the Senate Committee on Health, Education, Labor and Pensions about why drug prices are so much higher in the United States than they are in the rest of the world. Read Full Article…

VBA Article Summary

1. Executives from Top Pharmaceutical Companies Testify on Pricing Practices: Executives from Bristol Myers Squibb, Johnson & Johnson, and Merck faced questioning for nearly three hours by a committee led by Senator Bernie Sanders. The discussion focused on their pricing practices and financial priorities, particularly highlighting the stark differences in drug prices between the U.S. and other countries. For example, Merck's Keytruda costs $100,000 more in the U.S. than in France, and similar disparities exist for other drugs like Bristol Myers Squibb's Eliquis and Johnson & Johnson's Stelara.

2. Debate Over U.S. Drug Pricing and Access: The executives defended their pricing by arguing that the U.S. benefits from faster access to new drugs and shifted some blame to pharmaceutical benefit managers (PBMs) for the high list prices. However, this stance was challenged by the committee, which pointed out that despite the delayed market introduction of drugs in countries like Japan and Canada, these countries enjoy higher life expectancies than the U.S. Additionally, the tragic reliance of patients on crowdfunding platforms like GoFundMe to afford treatments was highlighted, with Senator Sanders sharing a poignant story of a woman who could not afford her cancer treatment.

3. Financial Priorities and Public Health Impact: A report released by the HELP Committee revealed that Bristol Myers Squibb, Johnson & Johnson, and Merck spend more on executive compensation, stock buybacks, and dividends than on research and development. This finding raises questions about the companies' commitment to innovation versus shareholder profits. The report also documented the significant revenue these companies generate from U.S. drug sales compared to the rest of the world, amidst rising drug prices domestically contrasted with stable or decreasing prices in other countries.

How one company managed to cut its health spending by almost half

By Tina Reed - In an era of rising health costs, it almost sounds too good to be true: A midsized Montana-based company managed to nearly halve its per-person health spending in just five years, without dropping benefits. Read Full Article…

VBA Article Summary

1. Innovative Cost-Cutting Through Data Analysis and Negotiation: Pacific Steel & Recycling undertook a comprehensive review of its health care spending, discovering it was paying significantly more than Medicare rates for similar services. By adopting a reference-based pricing model, setting rates at 160% to 220% of Medicare prices, and negotiating directly with providers outside traditional networks, the company significantly reduced its health care costs. This approach required a shift away from major insurers to smaller administrators for better cost transparency and engaging in direct contracting with over 5,000 medical providers, emphasizing the potential for significant savings through active management and negotiation of health care costs.

2. Employee Engagement and Education: The company's strategy placed a new responsibility on employees, pushing them to become informed health care consumers. This meant navigating billing disputes and learning to choose providers based on cost and quality, a challenging adjustment from the traditional expectation that insurance would cover all expenses. Pacific Steel supported its employees through this transition by providing contacts for experts who could assist with bill negotiations or appeals, demonstrating the importance of employee support and education in implementing cost-saving health care strategies.

3. Sustainable Savings and Future Challenges: Pacific Steel's efforts led to a substantial reduction in monthly health care spending per employee, from $812 to $442, achieving annual savings of more than $6.5 million. However, the initiative also highlighted the ongoing challenges in managing health care costs, such as the rising prices of specialty prescription drugs, underscoring the need for continuous innovation and vigilance in health care cost management. This case study illustrates the potential for employers to significantly impact health care costs through strategic changes, but also the complexities and ongoing efforts required to sustain such savings.

AHA calls for more payer oversight in No Surprises dispute resolution

By Emily Olsen - The nation's largest payers have filed their fourth-quarter earnings reports, revealing which recorded the largest profits in 2023. Read Full Article…

VBA Article Summary

1. Need for Increased Transparency and Fair Calculation: The American Hospital Association (AHA) emphasized the necessity for greater transparency from insurers on how they calculate the qualifying payment amount, which is the median contracted rate for a service. The AHA insists that this information should be accessible to both providers and independent dispute resolution (IDR) entities to ensure fairness in the surprise billing dispute resolution process.

2. Concerns Over Payer Compliance and Oversight: The AHA raised concerns about the lack of clear oversight mechanisms for issues such as health plans not making payments following an IDR determination. This points to a broader issue of insurers potentially disregarding surprise billing decisions or not compensating providers fully, highlighting the need for more robust regulatory oversight to ensure compliance.

3. Proposed Rule Enhancements and Limitations: While acknowledging that the proposed rule introduces measures to streamline the dispute resolution process and addresses some concerns of hospitals and health systems (e.g., batching claims, requiring payers to share more information), the AHA pointed out limitations and areas needing improvement. These include objections to the cap on batched claims, suggestions for batching self-insured coverage claims at the employer level, and concerns about high administrative fees. The AHA also stressed that despite these proposals, payer oversight remains insufficient, underlining the need for further rulemaking to address these issues.
   

Big payers ranked by 2023 profit

By Jakob Emerson - The nation's largest payers have filed their fourth-quarter earnings reports, revealing which recorded the largest profits in 2023. Read Full Article…

VBA Article Summary

1. UnitedHealth Group led the pack with significant growth: In 2023, UnitedHealth Group recorded total net earnings of $22.4 billion, marking an 11.2% increase from the previous year. The earnings from operations for its UnitedHealthcare division saw a notable rise of 14.2%, reaching $16.4 billion.

2. Notable Increases in Net Income Across Several Companies: CVS Health and Elevance Health both reported significant increases in their net income for 2023. CVS Health's net income doubled to $8.3 billion from $4.3 billion in 2022, with Aetna's adjusted operating income nearly reaching $5.6 billion. Elevance Health's net income grew modestly by 1.6% to nearly $6 billion, with its insurance division seeing a 14.4% increase in operating gain to $6.9 billion.

3. Mixed Financial Performance Among Insurers: While companies like Centene and Humana showed varied financial results, Cigna Group experienced a downturn. Centene's net income skyrocketed by 124% to $2.7 billion, contrasting with Humana's 11.3% decrease to nearly $2.5 billion. Cigna Group's total net income fell by 23% to nearly $5.2 billion, despite Cigna Healthcare's operating income of $4.2 billion in 2023.

Amazon cuts hundreds of One Medical, Amazon Pharmacy jobs

By Susanna Vogel - The internal memo was sent after reporting from Business Insider preempted the company’s planned announcement about job cuts. Read Full Article…

VBA Article Summary

1. Job Cuts at Amazon Health Divisions: Amazon has confirmed the reduction of hundreds of jobs across One Medical and Amazon Pharmacy as part of a strategy to realign resources to better achieve the divisions' goals, as stated by Neil Lindsay, SVP of Amazon Health Services, in a staff email. This decision aims at optimizing operations to meet the objectives of both units without specifying the exact number of affected employees or the roles they occupied.

2. Support for Affected Employees: Those impacted by the job cuts are promised financial assistance, continuation of benefits, and the chance to apply for new positions within Amazon. Despite the layoffs, Amazon continues to recruit, particularly providers and employees for One Medical and Amazon Pharmacy, indicating that the company is not enforcing a hiring freeze but is instead adjusting its workforce composition to align with its strategic goals.

3. Amazon's Commitment to Health Services Expansion: The layoffs come amidst Amazon's ongoing efforts to enhance its health service offerings, including the acquisition of One Medical for $3.9 billion and the introduction of discounted memberships for Amazon Prime users. CEO Andy Jassy has expressed optimism about the growth and momentum of Amazon Pharmacy, highlighting initiatives such as generic drug subscriptions and manufacturer coupons for medications, signaling Amazon's ambition to strengthen its position in the healthcare market despite recent job cuts.

Obesity drug mania takes over Amgen’s earnings call

By Ned Pagliarulo - Amgen is a global pharmaceutical company worth more than $160 billion. Nine of its marketed medicines are blockbuster products by annual sales. Read Full Article…

VBA Article Summary

1. Intense Analyst Focus on AMG 133 Amid Amgen Earnings Call: During a conference call to discuss Amgen's fourth-quarter earnings, Wall Street analysts primarily concentrated their attention on AMG 133, an experimental obesity treatment. Despite the drug only completing the first stage of human testing, more than half of the questions from analysts were about its potential, highlighting its significance as a possible competitor to established weight loss medications from Novo Nordisk and Eli Lilly. This focus underscores the high interest in innovative obesity treatments, especially given the promising market size for GLP-1 drugs.

2. Promising Results and Market Potential of AMG 133: AMG 133, which targets the GLP-1 hormone implicated in insulin secretion and satiety, showed up to 15% body weight reduction in a Phase 1 trial, as reported in Nature Metabolism. These results come amid soaring estimates for the GLP-1 drug market, potentially reaching $100 billion, driven by significant weight loss and health benefits demonstrated by drugs like Wegovy and Zepbound. Amgen's entry into this competitive field, despite challenges such as side effects and the need for differentiation from existing treatments, illustrates the company's commitment to capturing a share of this lucrative market.

3. Strategic Positioning and Future Prospects of AMG 133: Amgen's strategy with AMG 133 involves not only targeting GLP-1 but also inhibiting another hormone receptor, GIP, a mechanism that differs from competitors' approaches. With genetics data supporting this method for potentially greater weight reduction, Amgen is positioned to offer a unique alternative in the obesity drug market. However, the company faces the challenge of differentiating its product from those of Eli Lilly and Novo Nordisk, which are already well-established. Upcoming results from a Phase 2 study of AMG 133 are highly anticipated and could be pivotal in determining Amgen's success in this space.

State of Montana reopening bids for employee health insurance plan

By Jonathon Ambarian - Last month, the Montana Department of Administration announced it was reopening a bid for companies wanting to manage health insurance for thousands of state employees. It’s an unusual move that leaders said came about because of questions over whether all the bidders had the same understanding of the requirements. Read Full Article…

VBA Article Summary

1. Contract Termination and New Bid Process: The Department of Administration (DOA) of Montana initially contracted Blue Cross Blue Shield of Montana (BCBS) to administer the state health plan, which covers approximately 28,000 members, including state workers, their families, retirees, and legislators, with an expectation to save $28 million over three years. However, due to concerns about the fairness and clarity of the Request for Proposals (RFP) process, the DOA decided to terminate BCBS's contract a year early and announced a new bidding process for a contract starting in 2025, aiming for a more equitable bidding environment for all vendors.

2. Protest by Allegiance Benefit Plan Management: After BCBS was selected for the health plan administration, Allegiance Benefit Plan Management, the company that had been managing the plan since 2016, protested the decision. Allegiance alleged inconsistencies in the evaluation process and changes to bid requirements that, in their view, warranted a new RFP. Although the DOA initially denied these protests, the decision to rebid the contract was influenced by procedural concerns raised through the protest process, emphasizing the need for a clear and fair bidding environment for all participants.

3. Adjustments and Clarifications in the Bidding Process: The bidding process saw several adjustments and clarifications, particularly regarding the reimbursement rates for medical services under the state health plan. The DOA sought to ensure that the reimbursement rates for healthcare facilities and providers were competitive and aligned with Medicare rates, aiming for efficiency and cost-effectiveness. These adjustments were part of the efforts to refine the specifications for the health plan administration, with the DOA inviting final offers from Allegiance and BCBS before ultimately selecting BCBS, who had submitted the highest-scoring bid based on their innovative strategy and commitment to improving health outcomes and lowering costs.