Tuesday, July 04, 2023

Navitus 2022 Drug Trend Report




Its been many years since I posted news of a PBM Drug Trend Report. Once upon a time, PBM drug trend reports contained lots of interesting information. However, over time (in 2021, for example, when reports from the preceding year were published), CVS Caremark published only a bare-bones summary, while Prime Therapeutics, MedImpact, and other large PBMs all completely stopped publishing drug trend reports. The reason is basically because its becoming harder and harder for PBMs to present themselves as saving money when the biggest PBMs aren't saving any entities any money on prescription drugs anymore (I know, that's a lot of "ANY's"!); instead they are now largely stealing money manufacturers intend to be used in order to lower drug prices and instead they keep most of that money for their corporate parents. In 2021, Pembroke Consulting's Adam J. Fein covered a new dearth of information and the decline in drug trend reports at https://www.drugchannels.net/2021/07/pbms-and-drug-spending-in-2020-data.html and that's worth checking out.

That said, there are still a handful of drug trend reports from smaller PBMs such as Navitus Health Solutions. Navitus is a smaller PBM with about 7 million covered lives, of which 2.5 million are commercial lives. Navitus Health Solutions is jointly owned by SSM Health, a not-for-profit health system [which has 65% ownership stake in Navitus], and the retailer Costco Wholesale [which has a 35% ownership stake in Navitus]. Last year's Drug Trend Report from Navitus (see the press release at https://www.businesswire.com/news/home/20230621550631/en/Navitus%E2%80%99-2022-Annual-Drug-Trend-Report-Demonstrates-Effectiveness-of-Model-to-Control-Pharmacy-Costs-for-Plan-Sponsors/ and the report at https://info.navitus.com/dtr2022) nevertheless had a few interesting take-aways.

Among the interesting observations was Navitus reported a Negative Cost Trend for Diabetes Drugs. That's right, PBMs are spending LESS money on diabetes drugs right now, although they are no longer the huge cash cow they once were for the PBM rebate aggregators. Despite market momentum and expanded use of Glucagon-Like Peptide-1 Receptor Agonists (GLP-1s) for Type 2 diabetes, an overall negative cost trend was achieved for the diabetes category "due in part to increased competition within the insulin space", and Navitus also credits its management of "appropriate" prescribing. The latter seems a questionable assertion, with utilization management issues designed to prevent spending on costly drugs like GLP-1 Receptor Agonists with "step therapy" whereby the patient must first fail on one or more preferred drugs before Navitus will even consider covering expensive drugs like Novo Nordisk Ozempic or Wegovy, or alternatively Lilly Trulicity or Mounjaro for Type 2 diabetes. But those drugs are very expensive and they aren't massive rebate generators as insulins once were.

Navitus says in the INSULIN therapeutic class "Key brand manufacturers have announced price cuts upwards of 70% on select list prices in 2024. The impact for Navitus clients is expected to be minimal because:

  • Navitus already passes through rebates that are at, or above, the announced price cuts
  • Biosimilars and "authorized generic" [Note: "authorized generics" are unbranded NDC numbers of branded insulins sold under the generic drug name by the brand-name insulin manufacturers, such as Lilly Insulin Lispro Injection, Novo Nordisk Insulin Aspart, or Winthrop by Sanofi Insulin Glargine] products are currently on the formulary

As part of our commitment to improve medication affordability, Navitus notes that it joined CivicaScriptTM as a founding member (Recall, that Navitus signed an agreement with CivicaScript in July 2022; see https://www.businesswire.com/news/home/20220713005349/en/Navitus-Health-Solutions-Joins-CivicaScriptTM-to-Further-Availability-of-Lower-Cost-Generic-Medications/ for more). CivicaScript is a statutory public benefit company created to bring affordable versions of common but high-priced generic medicines to market. The organization is currently developing generic insulins estimated to launch in late 2024."

So, interestingly, from Navitus' perspective, the PBM is forecasting that Civica biosimilar insulins are "estimated to launch in late 2024". We can expect those (also sold under the CalRx label) to appear later next year. They ought to know. Note that CivicaScript is unique in that has a Unilateral Pricing Policy ("UPP") that sets a Maximum Retail Price (MaxRP) for all CivicaScript products which is printed on all packages which patients can see clearly. Violations or refusal to participate in CivicaScript's UPP could result in loss of ability to purchase CivicaScript products (see https://civicascript.com/upp/ for more).

At the same time, Navitus is still kind of crying about GLP-1 inhibitors for Type 2 diabetes and obesity without Type 2 diabetes because the prices of those drugs are so high. The rebate contracting model promoted by the largest Pharmacy Benefit Managers (PBMs) is byzantine, not-at-all transparent, and it artificially-inflates retail Rx drug prices due to what the PBM industry euphemistically describes as "misaligned incentives" so the mere fact that Navitus continues using rebating remains questionable. And, as I have covered in my own analysis of Costco Pharmacy (see https://blog.sstrumello.com/2023/01/costco-pharmacy-what-is-its-pharmacy.html for my coverage), Costco Pharmacy does not always have the lowest prices. Sometimes they do, and the company welcomes selling without involving insurance PBMs, but that leaves their prices higher on certain generic drugs as I discovered with the generic rosuvastatin calcium 10 mg tablets.

Still, I think Navitus' decision to carry Civica insulin biosimilars was a key reason Lilly, Novo Nordisk and Sanofi decided to slash list prices of patent-expired insulins and opt-out of the PBM rebate contracting model. Still, it does leave a genuine risk that Lilly, Novo Nordisk and Sanofi may decide to stop manufacturing new insulin varieties. Some Phase 1 clinical trials in glucose responsive insulin ended in failure (catch my coverage at https://blog.sstrumello.com/2023/03/the-business-of-diabetes-2023-update-on.html for more). Now, Novo Nordisk is trying with a third attempt at a "Lantus killer" with a once-weekly dosed basal insulin, although as I blogged about when I covered South Korea's UndBio Co. Ltd. pursuit of a once-weekly dosed basal insulin in the U.S. as well (catch my coverage at https://blog.sstrumello.com/2023/04/south-korea-based-undbio-co-ltd.html for more), so even if Novo Nordisk's "insulin icodec" succeeds scientifically, it still won't enjoy lengthy market exclusivity. But with big insulin opting out of the PBM rebate contracting model, there's also a risk to PBMs that the manufacturers will cut the PBMs out of the transaction for all new insulins. Its cheaper to discount patient prices than it is to pay huge, legally-exempted rebate kickbacks to PBMs, plus the insulins sell themselves, so manufacturers don't need PBMs to do anything.

As for Navitus, like its co-owner Costco Wholesale (which uses Navitus to go thru its PBM contracts line-by-line with rival PBMs including Caremark, Express Scripts and OptumRx to get the best retailer contract conceivably possible from a PBM), but that doesn't mean it will always get the lowest prices. Navitus is unique in that it offers a "100% pass-through business model" and claims to have a lowest-net-cost philosophy of sharing all rebates and discounts. However, rebate aggregation is nevertheless a core part of it, and we know that "sharing" doesn't mean Navitus earns nothing from rebates paid. But, compared to CVS Health/Caremark/Aetna, Cigna Evernorth-Express Scripts, and United Healthcare/OptumRx, Navitus is not quite as entrenched in theft of discounts intended to reduce patient costs as those entities. Still, Navitus buys into the bogus classification of necessity to operate a "specialty pharmacy" which is basically a way to force patients to buy costly drugs for things like cancer from pharmacies the PBM owns and operates. But "specialty drug" is a made-up term by the PBM industry. The reality is that ANY licensed pharmacy can dispense a specialty drug as long as the product can be purchased from a manufacturer or through an authorized wholesale distribution channel. Instead, the designation as a "specialty pharmacy" reflects a pharmacy's business decision, rather than any regulatory reality.

In the end, while Navitus still publishes a drug trend report (however slim it may be compared to the old drug trend reports that used to be chapters and chapters long), as Adam J. Fein says: "These reports are full of interesting numbers, but they're primarily marketing documents, not peer-reviewed research studies."

Enough said!

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