Eli Lilly’s direct drug sales alone may not upend the industry, but others could follow suit

VBA Article Summary

By Annika Kim Constantino - Eli Lilly is shaking up the pharmaceutical industry with a new website offering telehealth prescriptions and direct home delivery of certain drugs, including its red-hot weight loss treatment Zepbound, to expand patient access. Read Full Article…

1. Eli Lilly's Direct-to-Consumer Initiative: Eli Lilly's new platform, LillyDirect, is a groundbreaking move for a major drugmaker, aiming to streamline the distribution of medications for chronic diseases, such as their highly demanded weight loss drugs. This direct-to-consumer approach could potentially disrupt the traditional pharmaceutical supply chain, which is often criticized for leading to higher drug prices and limited patient choices. While LillyDirect alone may not significantly alter the existing system, it eliminates the need for patients to visit a doctor or pharmacy for certain prescriptions, thereby addressing friction points in drug accessibility.

2. Potential Industry-Wide Impact: The launch of LillyDirect might inspire other pharmaceutical companies to adopt similar direct-to-consumer models, especially for high-selling drugs. This could add pressure on the current U.S. system of drug distribution, pricing, and prescribing, which involves multiple layers including manufacturers, pharmacies, and pharmacy benefit managers (PBMs). However, analysts like BMO Capital Markets' Evan Seigerman believe that while such models can solve specific distribution challenges, they are unlikely to completely replace the existing infrastructure.

3. Policy and Pricing Changes: The move by Eli Lilly comes amid growing political pressure to reduce drug prices and increase pricing transparency. New legislation targeting drug supply chain middlemen and initiatives by the Biden administration, such as allowing Medicare to negotiate drug prices, are also influencing the industry. Eli Lilly's approach, which includes a savings-card program offering substantial discounts, is seen as a response to these pressures. However, analysts note that even with direct-to-consumer platforms, PBMs will still play a role in the process if health insurance is used for purchases.

Insulin $35 cap price now in effect, lowering costs for many Americans with diabetes

By Sarah Al-Arshani and Ken Alltucker - A price cap on insulin from one of the three major manufacturers took effect on New Year's Day, giving more Americans with diabetes more affordable treatments. Read Full Article…

VBA Article Summary

1. Major Price Cuts by Leading Insulin Manufacturers: In March, Sanofi joined Novo Nordisk and Eli Lilly in significantly reducing insulin prices in the United States. Sanofi announced a 78% price cut for Lantus and a 70% reduction for Apidra, effective January 1, 2024. These reductions followed Novo Nordisk and Eli Lilly Co.'s price slashes of up to 75% and 70%, respectively, making insulin more affordable for many patients.

2. Impact on Patients and Insurance Programs: The new pricing policies aim to limit the cost of insulin to $35 for most patients, either through price caps or savings programs. Sanofi had previously implemented a copay assistance program that allowed most privately insured patients to pay $15 or less. Additionally, their program for uninsured individuals offers a 30-day supply for $35. These changes come amidst growing criticism from analysts, politicians, and patient advocates over the high costs of insulin.

3. Factors Influencing the Reduction in Insulin Prices: Several factors have contributed to the recent price drops. The Inflation Reduction Act capped insulin costs at $35 a month for Medicare enrollees, and there is a push to extend this cap to younger Americans with private health insurance. Many states have also enacted cost-sharing limits for insulin purchases. Another influential factor is the elimination of the rebate cap under Medicaid, starting next year, which could impose significant financial penalties on drug companies for significant price increases over time. This policy change is seen as a key driver in the decision by drugmakers to lower insulin list prices.

FDA authorizes Florida to import drugs from Canada

By Jonathan Gardner and Neg Pagliarulo - For the first time, the Food and Drug Administration has authorized a U.S. state to import prescription drugs from Canada, granting Florida preliminary clearance to bulk purchase medicines from wholesalers there. Read Full Article…

VBA Article Summary

1. Major Shift in FDA Policy on Drug Importation: The U.S. Food and Drug Administration (FDA) has made a significant policy change by considering drug importation proposals, a move it had long resisted due to concerns over safety and supply of medicines from abroad. FDA Commissioner Robert Califf emphasized that importation programs must prove their ability to offer significant cost savings without compromising drug safety and effectiveness. Florida's importation plan, estimated to save taxpayers $150 million annually, is under review, though the practicality of such savings is uncertain due to Canada's measures to prevent drug shortages and its smaller population size.

2. Requirements and Opposition to Florida's Importation Plan: The FDA's approval for Florida to import drugs from Canada is conditional, requiring detailed information on the drugs, compliance with FDA standards, and appropriate relabeling. Despite this development being described as a "first step" by the FDA, the pharmaceutical industry strongly opposes the plan. The industry lobby PhRMA has expressed concerns about the decision's impact on patient safety and is considering legal action to prevent the policy's implementation.

3. Historical Context and Regulatory Evolution: The concept of importing cheaper drugs from Canada has been a subject of debate since the 1990s, intended to help those struggling with high medication costs. The FDA's recent move follows a law signed by former President Bill Clinton in 2000 permitting reimportation, but regulations were not finalized until 2020 under the Trump administration. These regulations require stringent safety assurances, including laboratory testing and detailed inspection histories. Several states besides Florida, such as Colorado, New Hampshire, Texas, and Wisconsin, are exploring drug importation, with varying degrees of progress in seeking FDA approval.

FDA looking into reports of hair loss, suicidal thoughts in people using popular drugs for diabetes and weight loss

By Katherine Dillinger - The US Food and Drug Administration is evaluating reports of side effects such as hair loss and suicidal thoughts in people taking medications like Ozempic, Mounjaro and Wegovy. Read Full Article…

VBA Article Summary

1. Overview of GLP-1 Receptor Agonists: GLP-1 receptor agonists, including semaglutide (Ozempic, Rybelsus, Wegovy), liraglutide (Saxenda, Victoza), and tirzepatide (Mounjaro, Zepbound), are drugs initially approved for treating diabetes or weight loss. These drugs imitate GLP-1, a natural hormone in the body, and have roles like slowing down food movement through the stomach. Ozempic, for instance, has seen increased demand for its weight loss benefits, leading to shortages.

2. FDA Evaluation and Potential Risks: The FDA's Adverse Event Reporting System has received reports linking these medications to serious side effects, including hair loss, aspiration, and suicidal thoughts. However, the appearance of these drugs on the FDA list does not confirm a causal relationship with these risks. The FDA continues to monitor drug safety post-approval and may require changes like labeling updates or risk mitigation strategies. Research has also indicated a connection between these drugs and serious digestive issues, although these are considered rare.

3. Guidelines and Ongoing Investigations: The American Society of Anesthesiologists advises stopping GLP-1 agonists a week before surgery due to risks like nausea and delayed gastric emptying, which can lead to complications during anesthesia. European regulators are investigating the potential link between these drugs and suicidal thoughts. Manufacturers Novo Nordisk and Eli Lilly emphasize their commitment to patient safety and collaboration with the FDA in monitoring these drugs.

6 ways to offer the right benefits to today’s multigenerational workforce

By Craig Stephens - As the global workforce continues to evolve, one of the most significant and obvious changes has been the increase in the number of generations working side by side. Read Full Article…

VBA Article Summary

1. Understanding Multigenerational Workforce Dynamics: The article emphasizes the importance of recognizing the diversity in perspectives, experiences, needs, and expectations among the different generations in the workforce: Baby Boomers, Generation X, Millennials, and Generation Z. Each generation has unique characteristics shaped by their era and life experiences, influencing their expectations around employee benefits. Understanding these generational differences is crucial for HR and benefits leaders to create inclusive and effective benefits programs, which can drive operational effectiveness, increase competitiveness, widen appeal to diverse customers and job prospects, build resilience in company culture, reduce turnover, and improve collaboration.

2. Customizing Benefits for Each Generation: The article suggests using data to understand employee demographics and preferences, enabling HR leaders to tailor benefits packages to each generation's specific needs. This includes using focus groups or listening tours for direct input, ensuring core benefits address both older and younger employees, and using effective communication strategies suited to each generation. The importance of soliciting ongoing feedback and acting on it is highlighted to ensure that the benefits package remains relevant and effective for all generations.

3. Implementing Practical Strategies and Leveraging HR Data: Six strategies are outlined to help HR professionals provide multigenerational employee benefits effectively. These include using HR data for workforce analysis, employing focus groups for targeted feedback, ensuring core benefits cater to all age groups, communicating effectively across generational lines, soliciting continuous feedback, and measuring benefits utilization for ongoing adjustments. These strategies aim to cater to the distinct needs of each generation, thereby enhancing job satisfaction, engagement, and productivity across the entire workforce.

Elevance Health sues feds, challenging changes to MA star ratings methodology

By Paige Minemyer - Elevance Health and its regional subsidiaries have filed suit against the feds, challenging changes to the methodology for Medicare Advantage star ratings that it calls "unlawful." Read Full Article…

VBA Article Summary

1. Significant Changes in CMS Star Ratings Methodology: The Centers for Medicare & Medicaid Services (CMS) introduced major alterations to the methodology used for calculating annual star ratings. These changes have led to notable declines in scores for several payers in 2024. These star ratings are crucial as they are directly linked to key bonus payments made annually by CMS. For instance, Elevance Health is expecting a $500 million reduction in bonus payments due to lower star ratings, despite challenges like subpar consumer survey performance and the impact of the new calculation methods.

2. Mixed Impact on Different Payers and Legal Challenges: While some payers like Humana and Aetna managed to perform well under the new star ratings, others like Elevance Health faced significant issues. Elevance has filed a lawsuit claiming that the changes violate the Administrative Procedure Act of 1946. The lawsuit centers on the Tukey outlier deletion provision, which CMS uses to exclude outlier contracts from calculations. The insurer argues that the implementation of this methodology has been error-prone and ambiguous, leading to industry-wide impacts and making it difficult for contracts to improve or maintain their star ratings.

3. CMS's Regulatory Changes and Industry Response: CMS argues that the Tukey changes are essential to prevent massive shifts in star ratings year-over-year. However, these changes, proposed in 2020 and set for implementation in 2024, have been controversial, leading to their temporary removal in 2022 before being reinstated in 2023. The lawsuit by Elevance also highlights how the use of the Tukey outlier deletion, without incorporating key guardrails, led to significant industry-wide declines in star ratings. Moreover, these changes are part of a broader series of regulatory updates affecting the Medicare program, including overhauls to risk adjustment audits, which have also been legally challenged by other major players like Humana.

Court appears skeptical of NY doctor's challenge to No Surprises Act

By Brendan Pierson - A federal appeals court appeared skeptical of a New York doctor's bid to strike down a federal law banning surprise medical bills from providers outside patients' insurance networks during oral arguments on Wednesday. Read Full Article…

VBA Article Summary

1. Legal Challenge Against the No Surprises Act: Dr. Daniel Haller, represented by lawyer Nicholas Wilder, challenged the No Surprises Act in court, claiming it violated his constitutional rights. The Act, aimed at protecting patients from surprise medical bills, restricts billing practices and introduces an independent dispute resolution process between providers and insurers. Haller's lawsuit asserts that this law infringes on his 7th Amendment right to a jury trial and his 5th Amendment rights by taking his property without proper compensation.

2. Court Proceedings and Arguments: The 2nd U.S. Circuit Court of Appeals in Manhattan reviewed the case, with Circuit Judge Eunice Lee questioning the basis of the alleged injury Haller claimed. The U.S. District Judge Ann Donnelly previously ruled against Haller, stating that the No Surprises Act provided a legitimate process for doctors to recover funds. On appeal, Haller introduced a new argument regarding the common law right to sue insurers, which the U.S. Department of Human Services, represented by Sarah Clark, argued was forfeited as it wasn't raised in the lower court.

3. Judicial Perspectives and Potential Outcomes: The panel, including Judges Park, Lee, and Merriam, considered sending the case back to the lower court for potential amendment with new facts about the law's impact on Haller's practice. Haller's lawsuit, supported by several national surgeons' associations, is among multiple challenges to the No Surprises Act, which is currently facing scrutiny in various courts, including a temporary hold on its dispute resolution process due to other favorable rulings for providers in Texas.

Centene Pays South Carolina $25M to Settle Overcharging Allegations

By Victoria Bailey - Centene Corporation has reached a $25.89 million settlement after allegedly overcharging South Carolina’s Medicaid program for pharmacy services. Read Full Article…

VBA Article Summary

1. Settlement Terms with South Carolina: Centene has agreed to pay South Carolina $25,898,070.69 in two installments as part of a settlement. The first installment is due within 45 days of the settlement execution, and the second one year later. This settlement also includes an acknowledgment from Centene to comply with South Carolina laws regarding managed care pharmacy benefits and services, ensuring transparency in pharmacy benefit claims processing.

2. Allegations and Continuing Operations: The settlement resolves allegations raised by South Carolina Attorney General Alan Wilson. These include overbilling for pharmacy services, misrepresenting pharmacy service costs, failing to disclose discounts, and improper reporting. Despite these allegations and the settlement, Centene continues to provide pharmacy benefits and services in South Carolina, maintaining contracts with entities like the South Carolina Department of Health and Human Services.

3. History of Similar Settlements in Other States: This incident is not isolated. Centene has faced similar allegations in other states, leading to substantial settlements. These include a $215 million settlement with California in 2023 for overcharging Medi-Cal and a $165.6 million settlement with Texas Medicaid in 2022. Additionally, Centene settled for $88.3 million with Ohio in 2021 over overbilling allegations. Despite these settlements, Centene has consistently denied any wrongdoing.

Lawyers target high health plan costs

By Ben Leonard and Chelsea Cirruzzo - That’s what law firms are telling workers for major companies like Target and Lockheed Martin in new advertisements on LinkedIn and other popular sites, Kelly reports. The law firms plan class-action suits against large U.S. companies, which could accuse them of failing to comply with a 2021 law requiring them to find cost-effective health plans that meet their employees’ needs. Read Full Article…

VBA Article Summary

1. Increased Responsibility for Employers: The amendment to the Employee Retirement Income Security Act by Congress three years ago places greater responsibility on employers. They are now more accountable for ensuring that the management of their health benefits programs, often outsourced to consulting firms, is cost-effective. This change was not intended to trigger lawsuits, as stated by Rep. Virginia Foxx, who co-sponsored the 2021 law. The law aimed to empower companies to negotiate better insurance deals.

2. Emerging Legal Investigations: Law firms like Schlichter Bogard and Fairmark Law are beginning to investigate the management of health plans by large employers. These firms are exploring whether these employers are failing to secure cost-effective health benefits for their employees, as seen in the targeted inquiry regarding Lockheed Martin's health benefits. The firms are in the early stages of these investigations, and the potential for widespread litigation is still uncertain.

3. Potential Industry Revolution: If the legal efforts by these law firms prove successful, it could lead to a significant transformation in how companies administer health benefits. This change could place substantial financial liabilities on employers, possibly amounting to tens of millions of dollars. According to Chris Deacon, founder of VerSan Consulting, many companies currently lack a thorough and prudent process for purchasing health benefits, indicating a need for this potential shift in the industry.

Employer Health Plans Fear State PBM Crackdown Preemption Threat

By Sara Hansard - Employers looking ahead to a continued push by state and local governments to more closely regulate pharmacy benefit managers in 2024 are set to back stricter federal law preemption of these measures. Read Full Article…

VBA Article Summary

1. Criticism and Reform of PBMs: Pharmacy Benefit Managers (PBMs), responsible for managing prescription drug plans on behalf of insurers, face criticism for lacking transparency and causing inflated costs. While federal action is lacking, states attempt to legislate PBMs. Employer groups, however, argue these state efforts could conflict with the federal Employee Retirement Income Security Act (ERISA) and advocate for federal-level reforms to ensure consistent standards. The proposed Pharmacy Benefit Manager Reform Act aims to increase transparency and limit certain PBM practices.

2. Concerns Over Erosion of ERISA: Some employer groups express concern about the erosion of ERISA preemption protections amid legislative efforts targeting PBMs. Following the Supreme Court's Rutledge v. Pharmaceutical Care Management Association decision, states have introduced numerous bills to regulate PBMs, seen by some as infringing on ERISA protections. Employer groups warn that undermining ERISA could lead to detrimental effects on both health and retirement plans.

3. State Laws and Legal Challenges: Various states, like Florida and Oklahoma, have enacted laws to regulate PBMs, with measures such as limiting mail-order prescriptions and imposing network adequacy requirements. These state laws face legal challenges, with some being invalidated due to conflicts with ERISA. The Tenth Circuit's recent denial of a rehearing in an Oklahoma case highlights ongoing legal battles, and states are cautious about further legislative or legal actions pending the resolution of these disputes.