FTC Targets Pharmacy Benefit Managers’ Roles in Healthcare Conglomerates

By David Raths - The Federal Trade Commission recently published an interim report on the impact that pharmacy benefit managers (PBMs) have on the accessibility and affordability of prescription drugs. The Wall Street Journal reported that the FTC is preparing to sue the three largest PBMs — CVS Caremark, Express Scripts and OptumRx — over their tactics for negotiating prices for drugs. The FTC has conducted a two-year investigation into whether the PBMs steer patients away from less-expensive drugs. Read Full Article…

HVBA Article Summary

1. Vertical Integration and Market Concentration: The FTC's interim report reveals that the six largest pharmacy benefit managers (PBMs) control nearly 95% of all prescriptions filled in the U.S. This high level of vertical integration and market concentration allows these PBMs to profit at the expense of patients and independent pharmacists. They wield significant power over the pharmaceutical supply chain, influencing drug availability and pricing, which has led to increased drug costs and limited access for many Americans.

2. Impact on Patients and Independent Pharmacies: According to FTC Chair Lina M. Khan, the report details how dominant PBMs can raise drug costs, including overcharging for critical medications like cancer drugs. This market dominance also enables PBMs to impose unfair contractual terms on independent pharmacies, which can harm their ability to stay in business and serve their communities. Nearly 30% of Americans surveyed reported rationing or skipping doses of their prescribed medicines due to high costs.

3. FTC's Regulatory Actions and Findings: The FTC's investigation, initiated under Section 6(b) of the FTC Act, targeted the largest PBMs and their associated rebate aggregating entities. The report highlights how PBMs' consolidation and vertical integration have allowed them to prioritize their affiliated businesses, creating conflicts of interest that disadvantage smaller, unaffiliated pharmacies. The FTC has demanded that PBMs comply with their information requests and has indicated that non-compliance may lead to legal actions to enforce accountability and ensure affordable healthcare access.

No Surprises Act audit finds inaccurate calculations by Aetna of Texas

By Noah Tong - The Centers for Medicare & Medicaid Services (CMS) released an audit showing Aetna Health of Texas miscalculated a key metric and was not following federal guidelines as set out by the No Surprises Act. Read Full Article…

HVBA Article Summary

1. Audit Highlights Noncompliance Issues: The audit revealed that health plans, specifically Aetna Health of Texas, were not adhering to significant reimbursement rules under the No Surprises Act. Key findings include failure to provide necessary contact information during negotiations and incorrect calculations of the qualifying payment amount (QPA), which were not based on contracted rates but on actual paid claims amounts. This miscalculation affected both payers and providers, highlighting a lack of clarity in the QPA determination process.

2. Impact on Providers and Independent Dispute Resolution (IDR) Process: The audit findings confirmed the suspicions of providers regarding payer noncompliance, validating their experiences despite not being ambulance providers. The QPA, crucial for determining patient cost-sharing during the IDR process, showed significant variability, with offers sometimes being 300% to 400% of the QPA. This inconsistency underscores the complexities and challenges within the IDR process, leading to calls for more robust enforcement and assurance that health plans fulfill their payment obligations post-settlement.

3. Future Implications and Regulatory Response: While the audit focused on Aetna Health of Texas, it raised broader concerns about ongoing noncompliance among health plans. Despite Aetna's statement of addressing the audit's findings, there is skepticism about whether compliance has improved. A CMS rule to enhance the IDR process has been delayed, with expected operational improvements now pushed to mid-2025. Further clarity from CMS regarding air ambulance services is anticipated in March, and Aetna of Texas may face additional audits in the future.

Change Healthcare cyberhack fallout ripples to consumers

By Tina Reed - The Change Healthcare cyberattack shook U.S. health care to its core for months and exposed major cyber vulnerabilities. But the likely ripple effects on individuals are only now becoming apparent. Read Full Article…

HVBA Article Summary

1. Impact on Consumers: The breach has potentially compromised the personal information of up to one-third of Americans, with data possibly being sold on the dark web. This puts individuals at risk of identity theft, tax fraud, insurance fraud, and mortgage fraud. Experts highlight that many affected people may be unaware of their vulnerability, emphasizing the need for vigilance and use of free credit monitoring services.

2. Legal and Regulatory Response: Attorneys general from several states, including Indiana, Massachusetts, Minnesota, and Pennsylvania, have urged consumers to monitor for suspicious financial and healthcare activities. They criticized Change Healthcare and its parent company, UnitedHealth Group, for not having adequate security measures in place and for the lack of communication with affected individuals. The breach's legal and financial implications for UnitedHealth Group are significant, with potential for increased regulatory scrutiny and penalties.

3. Cybersecurity and Fraud Concerns: Cybersecurity experts describe the compromised data as "bone-chilling" due to its completeness, which includes medical records, billing information, and potentially passwords and credit card numbers. This data could be used in various fraudulent schemes, from phishing attacks to health care fraud and even blackmail of high-profile individuals. The delay in notifying affected individuals compounds the problem, leaving them in the dark about the extent of their risk and how to protect themselves.
   

8 updates on GLP-1s

By Paige Twenter - Citing high costs, payers are favoring bariatric surgeries over Wegovy and similar medications, according to an NYU Langone expert. It's unclear if insurers' policies can quell the booming popularity of GLP-1 weight loss drugs, though. Read Full Article…

HVBA Article Summary

1. Comparison of Weight Loss Surgery and GLP-1 Costs and Effectiveness: Weight loss surgeries range in cost from $15,000 to $23,000, while GLP-1 medications can cost around $1,000 per month. Bariatric procedures typically result in a weight loss of 20% to 30%, according to Dr. Anita Courcoulas of UPMC. However, despite the substantial data on surgical outcomes, patient demand for GLP-1 medications remains high. Novo Nordisk's four-year study on Wegovy users showed a sustained 10% weight loss, but consensus on long-term GLP-1 effectiveness is lacking, with mixed results from various studies.

2. Impact on Healthcare Services and Insurance Policies: The rise in GLP-1 medication demand led the Norman Regional Health System to close its weight loss clinic and discontinue bariatric services, noting a 30% decrease in surgeries in one year. National trends also show a decline in weight loss procedures. Insurance companies, however, are steering patients toward bariatric surgeries. Dr. Christine Ren-Fielding of NYU Langone highlights that insurers are removing barriers for surgical coverage while imposing more restrictions on GLP-1 coverage. Adherence to GLP-1 regimens is low, with only 14.8% of patients continuing the treatment over two years, prompting a debate on the long-term effectiveness and affordability of these medications.

3. Developments and Challenges in GLP-1 Medications: Recent advancements include the FDA's approval of a generic GLP-1 medication, liraglutide, branded as Saxenda and Victoza by Novo Nordisk, though it may not significantly reduce demand for brand-name drugs. Research from Case Western Reserve University indicates that GLP-1 medications may lower the risk of certain cancers compared to insulin. However, safety concerns have arisen, with a study linking semaglutide to potential eye conditions, though more research is needed. The usage of GLP-1 medications among adolescents and young adults has surged by 594.4% from 2020 to 2023. Studies show varying weight loss results between different GLP-1 drugs, such as Mounjaro and Ozempic, with Mounjaro showing greater effectiveness. Concerns about hunger rebound after discontinuation of GLP-1 medications and the political debate over high drug prices further complicate the landscape.

Will the Inflation Reduction Act change the way agents choose coverage for clients?

By Chelsea Smith - The Inflation Reduction Act gave Medicare beneficiaries a new avenue to save on health insurance and prescription drug costs when it was signed into law in 2022. Some provisions, such as the $35 insulin cost cap, have been around for more than a year. But other provisions, such as prescription drug price negotiations, have some time to crescendo. Although the drugs on the list of negotiated prices were announced in September 2023, the fruits of the first negotiation’s labor will not be ready until 2026. Read Full Article…

HVBA Article Summary

1. Understanding the Drug Price Negotiation Process: Each year from 2023 to 2026, the Centers for Medicare and Medicaid Services (CMS) will select a list of drugs for price negotiations based on factors like lack of generic competition, cost, intended treatment, and market duration. The negotiation process aims to reduce costs for these drugs on Medicare formularies, with new prices being announced each September and taking effect the following January.

2. Impact on Medicare Beneficiaries: The first round of selected drugs represents about 20% of overall Medicare Part D spending. However, the direct savings at the pharmacy counter for beneficiaries are uncertain. Beneficiaries may still need to meet their plan's deductible, which is $545 for 2024. Post-deductible savings depend on plan design, with those on coinsurance plans potentially seeing more savings compared to those on fixed copay plans.

3. Coverage Gap and Savings Limitations: Beneficiaries stay in the initial coverage phase until their out-of-pocket spending reaches $5,030 in 2024. Once in the coverage gap, they pay 25% of drug costs. However, average beneficiaries, spending around $4,527 annually, often do not reach the coverage gap. As a result, many may not see significant savings from the negotiated drug prices, particularly those on copay-only plans who may experience minimal direct benefits from these changes.

Voluntary benefits: A snapshot of employees' current views

By Paul Wilson - Today's workforce comprises employees from four different generations, each with distinct views when it comes to their benefits, communication styles and key concerns. As a result, companies are increasingly being challenged to meet their employees' disparate needs and preferences. Read Full Article…

HVBA Article Summary

1. Understanding Generational Concerns: The Multigenerational Workforce Study 2024 reveals that financial stability, future uncertainties, and work-life balance are the top concerns across all generations. However, there are notable differences: Gen Z and millennials are more worried about financial stability, stress, and job security, while Gen X and boomers are more focused on health issues. Tailoring voluntary benefits programs to address these specific concerns can help meet each generation's unique needs.

2. Employee Satisfaction and Cost Concerns: While 69% of employees are satisfied with their current benefits programs, the primary reason for dissatisfaction is high cost, especially among Gen Xers and millennials. Millennials also desire more modern benefits, and Gen Z seeks customizable and user-friendly options. Addressing these generational preferences and cost concerns can enhance overall satisfaction with benefits programs.

3. Communication Preferences and Decision-Making: The survey highlights a digital divide in communication preferences, with younger employees favoring electronic formats and older generations preferring printed materials. Additionally, employees, especially Gen Z, seek advice from family and friends when choosing benefits. Ensuring clear, accessible communication and offering personalized guidance can help employees make informed decisions and feel more supported in their benefits choices.

Digital Health’s Funding Rebound Is Going Well, Market Research Shows

By Katie Adams - The venture capital market seems to be truly normalizing following the highs and lows of the pandemic, which is good news to the thousands of healthcare startups out there vying for funding dollars. Read Full Article…

HVBA Article Summary

1. Global Venture Funding Trends: In the second quarter of 2024, global venture funding reached $65.7 billion, as reported by CB Insights. The data reveals a trend of decreasing deal volume but increasing deal size, with the average venture capital deal size rising 17% to $14.4 million from last year's $12.3 million.

2. Digital Health Venture Funding: Rock Health's report highlights that U.S. digital health startups secured $5.7 billion across 266 deals in the first half of 2024. The sector is on track to surpass the venture funding totals of 2019 ($8.2 billion) and 2023 ($10.7 billion), with early-stage deals (seed, Series A, Series B) comprising 84% of all deals.

3. Shifts in Digital Health Investment Patterns: The report also notes a decline in unlabeled funding rounds, dropping from 44% in 2023 to 40% in the first half of 2024. Additionally, three digital health companies exited the startup market in Q2 2024, signaling a potential return to a "more normal" cadence of labeled raises and exits, according to Rock Health and industry expert Keith Figlioli.

Insurers Continue Effort for Retirement Security Rule Injunction

By Alex Ortolani - A group of insurers seeking to halt the Department of Labor’s Retirement Security Rule from taking effect has responded to a counter-filing by the regulator alleging that “changes” the department made from a 2016 fiduciary proposal are not enough to make the 2024 proposal viable. Read Full Article…

HVBA Article Summary

1. Initial Lawsuit and Arguments: The initial suit, filed in May by nine insurance trade groups, argues that the new proposal on fiduciary status for retirement plan investment faced the same issues as a 2016 proposal struck down by the U.S. 5th Circuit Court of Appeals. The plaintiffs claim the Department of Labor's (DOL) rule is too broad, encompassing all agents and brokers who sell retirement products as fiduciaries, regardless of whether their actions align with common law definitions of fiduciary relationships.

2. DOL's Defense: On June 28, the DOL responded in American Council of Life Insurers et al. v. U.S. Department of Labor, defending the rule set to take effect on September 23. The DOL contended that the new proposal was different from the 2016 rule and consistent with the 5th Circuit's ruling. They emphasized that the rule was crafted to align with both statutory text and the court's focus on relationships of trust and confidence, targeting those offering advice on ERISA plan assets rather than merely making sales pitches.

3. Plaintiffs' Continued Opposition: In a reply filed on July 12, the insurers and trade group Finseca argued that the rule's changes were insufficient to rectify its broad redefinition of fiduciary status. They maintained that the rule unjustifiably transforms all insurance agents and brokers into fiduciaries and oversteps the DOL's statutory authority under the major questions doctrine. The plaintiffs called for the court to enjoin the rule and stay its effective date, highlighting ongoing legal challenges, including a similar case filed by the Federation of Americans for Consumer Choice.

FTC probing DaVita, Fresenius Medical Care's noncompetes for dialysis clinic medical directors

By Dave Muoio - The Federal Trade Commission (FTC) has opened a probe into the country’s two largest dialysis care providers and the terms of their contracts with physicians, according to a weekend report that has been confirmed by the companies. Read Full Article…

HVBA Article Summary

1. Ongoing FTC Investigation: The Federal Trade Commission (FTC) is investigating DaVita and Fresenius Medical Care (FMC) regarding the noncompete provisions in contracts with physicians overseeing their clinics. This investigation is in its early stages, and both companies have confirmed their cooperation with the inquiries.

2. Details of the Inquiry: The FTC has issued Civil Investigative Demands (CIDs) to DaVita, requesting information from January 1, 2016, to the present concerning restrictive covenants with physicians. The investigation aligns with the FTC's broader initiative to scrutinize noncompete agreements and other potentially anticompetitive business practices in the healthcare sector.

3. Market Context and Regulatory Background: DaVita and FMC dominate the U.S. renal care market, operating nearly 5,500 dialysis centers combined. The FTC's focus on noncompetes is part of a broader regulatory effort to challenge anticompetitive practices in the healthcare industry, highlighted by recent actions against U.S. Anesthesia Partners and a proposed nationwide noncompete ban. The outcome of the investigation could significantly impact the business practices of these market leaders.

DOL may review ‘derisking’ pension risk transfers, says congressional report

By Doug Bailey - A recent Department of Labor report to Congress reaffirming current fiduciary standards for selecting annuity providers in defined benefit pension plans also includes notice that it may review the increasingly common, and controversial, practice of companies transferring pension risks to life insurers, commonly known as “derisking.” Read Full Article…

HVBA Article Summary

1. EBSA's Report on 1995 Interpretive Bulletin 95-1: The Employee Benefits Security Administration (EBSA), as mandated by the SECURE 2.0 Act of 2022, reviewed its 1995 Interpretive Bulletin 95-1, which outlines fiduciary responsibilities under the Employment Retirement Income Security Act (ERISA). The report concluded that the guidelines for evaluating an annuity provider's creditworthiness and ability to pay claims remain relevant, and no immediate updates are necessary. The Department of Labor (DOL) is also seeking broader public input to explore potential amendments to better protect participants and beneficiaries, ensuring transparency and stakeholder engagement in the decision-making process.

2. Derisking and Pension Risk Transfers: The report acknowledged concerns from stakeholders about the need for EBSA to review issues related to "derisking," including insurers' ownership structures, exposure to risky assets, and the use of affiliated and offshore reinsurers. Legal challenges have arisen from massive pension risk transfers to insurers by companies like AT&T, Alcoa, GE, and Lockheed Martin. Plaintiffs in these cases argue that the companies failed to meet DOL standards for selecting the safest available insurer, thereby eliminating protections such as ERISA and the Pension Benefit Guarantee Corporation.

3. Industry Response and Legal Implications: Insurance companies and trade groups have criticized the lawsuits related to pension risk transfers, claiming that the complaints are baseless and driven by class action attorneys seeking to enrich themselves. Despite these criticisms, studies like the one by NISA Investment Advisors LLC highlight potential harm to participants from lower-quality annuity providers, with significant financial impacts. The debate underscores the ongoing tension between protecting retirees' interests and managing pension obligations within the regulatory framework established by the DOL.