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In brief: FTC tackles PBMs, AAH surveys impact, Encore measures management  

In brief: FTC tackles PBMs, AAH surveys impact, Encore measures management  

WASHINGTON – The Federal Trade Commission has published an interim report that underscores the negative impact pharmacy benefit managers have on accessibility and affordability of prescription drugs. 

The FTC’s report, which is part of an ongoing inquiry launched in 2022, details how increasing vertical integration and concentration has enabled the six largest PBMs to manage nearly 95% of all prescriptions filled in the United States. This market structure has allowed PBMs to profit at the expense of patients and independent pharmacists, according to the report. 

“The FTC’s interim report lays out how dominant pharmacy benefit managers can hike the cost of drugs—including overcharging patients for cancer drugs,” said FTC Chair Lina M. Khan. “The report also details how PBMs can squeeze independent pharmacies that many Americans—especially those in rural communities—depend on for essential care. The FTC will continue to use all our tools and authorities to scrutinize dominant players across health care markets and ensure that Americans can access affordable health care.”   

The FTC launched an inquiry into the prescription drug middleman industry in 2022. 

The report highlights several key insights gathered from documents and data obtained from the FTC’s orders to Caremark Rx; Express Scripts; OptumRx; Humana Pharmacy Solutions; Prime Therapeutics; MedImpact Healthcare Systems, Zinc Health Services, Ascent Health Services and Emisar Pharma Services, as well as from publicly available information: 

  • Concentration and vertical integration: The market for PBMs has become highly concentrated, and the largest PBMs are now also vertically integrated with the nation’s largest health insurers and specialty and retail pharmacies. The top three PBMs processed nearly 80% of the approximately 6.6 billion prescriptions dispensed by U.S. pharmacies in 2023, while the top six PBMs processed more than 90%. Pharmacies affiliated with the three largest PBMs now account for nearly 70% of all specialty drug revenue. 

  • Significant power and influence: As a result of this high degree of consolidation and vertical integration, the leading PBMs now exercise significant power over Americans’ ability to access and afford their prescription drugs. The largest PBMs often exercise significant control over what drugs are available and at what price, and which pharmacies patients can use to access their prescribed medications. PBMs oversee these critical decisions about access to and affordability of life-saving medications, without transparency or accountability to the public. 

  • Self-preferencing: Vertically integrated PBMs appear to have the ability and incentive to prefer their own affiliated businesses, creating conflicts of interest that can disadvantage unaffiliated pharmacies and increase prescription drug costs. PBMs may be steering patients to their affiliated pharmacies and away from smaller, independent pharmacies. These practices have allowed pharmacies affiliated with the three largest PBMs to retain high levels of dispensing revenue in excess of their estimated drug acquisition costs, including nearly $1.6 billion in excess revenue on just two cancer drugs in under three years. 

  • Unfair contract terms: Evidence suggests that increased concentration gives the leading PBMs leverage to enter contractual relationships that disadvantage smaller, unaffiliated pharmacies. The rates in PBM contracts with independent pharmacies often do not clearly reflect the ultimate total payment amounts, making it difficult or impossible for pharmacists to ascertain how much they will be compensated. 

  • Efforts to limit access to low-cost competitors: PBMs and brand drug manufacturers negotiate prescription drug rebates some of which are expressly conditioned on limiting access to potentially lower-cost generic and biosimilar competitors. Evidence suggests that PBMs and brand pharmaceutical manufacturers sometimes enter agreements to exclude lower-cost competitor drugs from the PBM’s formulary in exchange for increased rebates from manufacturers. 

The report notes that several of the PBMs that were issued orders have not been forthcoming and timely in their responses, and they still have not completed their required submissions, which has hindered the FTC’s ability to perform its statutory mission. The commission's staff have demanded that the companies finalize their productions required by the 6(b) orders promptly. If, however, any of the companies fail to fully comply with the 6(b) orders or engage in further delay tactics, the FTC can take them to district court to compel compliance. 

The Commission voted 4-1 to allow staff to issue the interim report, with Commissioner Melissa Holyoak voting no. Chair Lina M. Khan issued a statement joined by Commissioners Rebecca Kelly Slaughter and Alvaro Bedoya. Commissioners Andrew N. Ferguson and Melissa Holyoak each issued separate statements.   

AAH seeks data on impact of reimbursement cut 

WASHINGTON – AAHomecare has launched a nationwide survey on the impact of the expired 75/25 blended Medicare reimbursement rates in non-bid/non-rural areas on the HME industry and patient access to home medical equipment. 

The association encourages all providers serving patients in these areas to take the survey by July 19. 

“AAHomecare and other HME stakeholders continue to push for legislation to restore the 75/25 blended rates suppliers in non-bid, non-rural areas, and we want to strengthen our advocacy with state-specific data,” said Tom Ryan, the association’s president & CEO. “Your responses will help us share a clearer picture on how the Jan. 1 cuts are challenging HME suppliers and threatening access to care.” 

The 75/25 blended reimbursement rates expired on Jan. 1, 2024. 

AAHomecare says state-specific data on the impact of the expired reimbursement, which has been requested by Capitol Hill, will bolster efforts to include relief as part of a health care or omnibus legislative package later this year. 

The association says it will only share data in aggregate as state and national figures. It will keep company specific or identifiable information strictly confidential. 

  • What’s in play: The DMEPOS Relief Act of 2023 (H.R. 5555 and S. 1294) would provide a 90/10 blended Medicare reimbursement rate for most home medical equipment products in competitive bidding areas for all of 2024 and extend the current 75/25 blended rate currently in effect in rural/non-CBA areas through 2024.    

Encore publishes data on impact of Nexus on COPD patients 

LIVINGSTON, Tenn. – Home-based COPD management programs led by respiratory therapists using AI-driven software with plan of care goals can have a significant impact on admissions, quality of care metrics and overall cost of care, according to an abstract developed by Encore Healthcare and published by the American Thoracic Society.  

HME providers using Encore’s Nexus software for patients using non-invasive ventilation produced the following results: 

  • Enrollees who reported at least one hospitalization in the 12-month prior to enrollment experienced 65% fewer admissions post-enrollment 

  • It total, patients experienced 34,029 fewer hospitalizations while enrolled in the program vs. the prior year 

  • Using a standard DRG-related reimbursement of $7,500 for a COPD-related hospital stay, the program has resulted in an estimated total U.S. health care cost savings of more than $225 million 

The results are based on 17,394 home-based COPD patients managed from January 2018 to October 2023. 

In another abstract, HME providers using Encore’s Nexus software for patients using home oxygen therapy produced the following results: 

  • Calculated as a per patient per month rate, enrolled patients experienced 94% fewer admissions vs. their 12-month prior history 

  • In total, patients experienced 1,156 fewer hospitalizations while enrolled in the program vs. the prior year 

  • Using a standard DRG-related reimbursement of $7,500 for a COPD-related hospital stay, the program has resulted in an estimated total U.S. Health care cost savings of more than $8.6 million 

These results are based on 30,950 COPD and chronic lung supplemental oxygen patients managed from May 2021 to October 2023. 

NCPA launches nat’l ad 

ALEXANDRIA, Va. – The National Community Pharmacists Association has released a new TV ad as part of its ongoing campaign to push lawmakers to enact pharmacy benefit manager reform. The ad, titled PBM Career Day, shows a PBM executive struggling to explain his job to curious children. The executive shares that he doesn’t make, prescribe or provide drugs, but he does decide what drugs patients receive and what he pays for them. "PBMs and the massive health insurance companies that they’re affiliated with extract billions in profits from patients and pharmacies worsening pharmacy deserts for consumers and snuffing out small businesses,” said NCPA CEO B. Douglas Hoey, pharmacist, MBA. “Our campaign is designed to shed light on these practices, mobilize the public to demand change, and push policymakers to finish the fight for PBM payment reforms. It is time for transparency and accountability in the health care system." The ad will run nationally on CNN. 

Researchers develop new CPAP design 

CINCINNATI – Researchers at the University of Cincinnati are developing a PAP machine that uses vortex airflow technology, a mechanism commonly used in aerospace engineering applications, to eliminate the need for a tight seal. As a result, the VortexPAP is able to use a mask that is designed to barely touch the patient’s face, increasing comfort, researchers say. “Despite the clinical efficacy for CPAP in controlling OSA, patient compliance with the therapy remains a major cause of treatment failure,” said Liran Oren, PhD, research associate professor in the Department of Otolaryngology, Head and Neck Survey, at the UC College of Medicine. “The vast majority of complaints from patients in CPAP therapy revolve around improving the comfort of the mask. However, regardless of design, they all require a tight seal over the face, so that the airway can be pressurized. This design requirement for a tight seal is the main limitation for making CPAP therapy more comfortable.” The project is a collaboration between Oren; Roy Kulick, MD, UC entrepreneur-in-residence; Ephraim Gutmark, PhD, distinguished professor, Ohio Eminent Scholar in the UC Department of Aerospace Engineering; and Ann Romaker, MD, director of the UC Sleep Medicine Center and professor in the UC Department of Internal Medicine. The group's goal is to eventually commercialize the VortexPAP in the U.S., with strong support from the UC Venture Lab.  

Inogen names Kevin Smith general counsel, EVP 

GOLETA, Calif. - Inogen has appointed Kevin P. Smith as general counsel and executive vice president of business development, effective July 22. He joins Inogen from Sirtex Medical, where he served as general counsel and executive vice president, business development, since 2018. “Kevin will be an invaluable addition to our leadership team at Inogen,” said Kevin Smith, president and CEO. “His extensive experience in the medical device and securities field will play an important role in strengthening our legal team and ensuring Inogen remains an organization based on integrity and compliance.” Prior to joining Sirtex, Smith served as vice president and associate general counsel at Flexion Therapeutics, focusing on securities requirements, business development and intellectual property. Previously, he was general counsel for the Danaher Life Sciences Platform. He has also held senior legal leadership positions within Novartis Pharmaceuticals. Before moving in-house, Smith worked for multinational law firms in New York, Silicon Valley and London. 

Strive Medical expands into CGM through acquisition 

IRVING, Texas – Strive Medical, a portfolio company of NMS Capital, has acquired ProMed DME, a Stuart, Fla.-based provider specializing in diabetes, urology and wound care supplies. The deal allows Strive Medical, a provider of direct-to-patient urological, wound care and other disposable medical supplies, to expand into the CGM market. “This transaction is a crucial milestone in Strive Medical’s dedication to investing in growth markets and delivering our unique offerings to patients in rapidly expanding disease areas,” said Todd Philbrick, CEO of Strive. “We are excited to collaborate with the ProMed team, known for their patient-first approach, and to enhance our commercial reach. This next chapter for Strive broadens our presence in the health care ecosystem. Strive Medical plans to operate ProMed DME as a Diabetes Center of Excellence, continuing to support the patients who rely on us.” NMS is a private equity firm managing assets of more than $1.5 billion. “The combined scale and reach will further solidify Strive’s position as a leading independent, specialty distributor of medical supplies, which now includes CGM products,” said Luis Gonzalez, senior partner at NMS. 

sovaSage promotes Caputo 

PITTSBURGH – sovaSage, a company specializing in AI-based software and services for the management of obstructive sleep apnea, has promoted Jamie Caputo to vice president of sales. Caputo has played a key role in driving the roll out of two products: an AI-based software platform designed to select and fit the best CPAP mask for patients; and TherapistAssist Jeanie, a virtual sleep coach and compliance management platform that’s augmented with live support sleep coaches and respiratory therapists. “Jamie’s extensive experience in PAP compliance management and resupply, his over 25 years in HME and his well-established relationships from previously leading the Philips PAMS and medSage programs have proven invaluable,” said William Kaigler, co-founder and CEO. “I am excited to have Jamie take on this new leadership role and help our customers continue to improve the lives of their patients.” In his new role, Caputo will be responsible for overseeing all sales activities across all products and markets. Previously, he served as the company’s vice president of strategic business development.  


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