Building upon prior issues and summarizing activity from July through September, the Fall 2024 PBM Update highlights federal legislative activity and oversight, state legislative activity and oversight, and other noteworthy events and trends affecting the PBM industry.

On November 12, 2024, the drug manufacturer Johnson & Johnson (J&J) filed a lawsuit against the Health Resources and Services Administration (HRSA) in the U.S. District Court for the District of Columbia. The lawsuit relates to J&J’s proposal to require certain 340B covered entities – specifically, disproportionate share hospitals (DSH) – that purchase J&J’s drugs Stelara and Xarelto under the 340B Drug Pricing Program to do so under a rebate model. J&J is challenging HRSA’s threatened enforcement action against the drug maker.

On September 26, 2024, the Centers for Medicare & Medicaid Services (CMS) released a final rule implementing changes to the Medicaid Drug Rebate Program (MDRP). While not the focus of the agency’s rulemaking, stakeholders used the opportunity to comment on the proposed rule to air concerns and grievances related to the 340B Drug Pricing Program (340B Program). Although CMS acknowledged the flood of 340B Program comments, the agency ultimately punted on responding to stakeholders because the comments were outside the scope of the rulemaking. The response from CMS is understandable, but the numerous comments from stakeholders add to the growing calls for additional guidance and improvements to the 340B Program.

On August 15, 2024, CMS announced the results of the first round of the negotiated prices between CMS and participating drug manufacturers for the 10 selected drugs under the Inflation Reduction Act’s (IRA) Medicare Drug Price Negotiation Program (MPN or Program). In all, reactions to the MPN results varied: Reuters reported that executives from four of the manufacturers selected in the first round of negotiations stated that they do not expect the negotiated prices to significantly impact their businesses; meanwhile, in its press release announcing the maximum fair prices (MFPs), CMS touted an estimated $1.5 billion in Medicare prescription drug out-of-pocket cost savings for Medicare beneficiaries when the negotiated prices go into effect in 2026. 

In ‘Third Edition: Q2 2024’ of the Mintz IRA Update, we cover updates to the Medicare Drug Price Negotiation Program being considered by CMS, developments in litigation challenging the program, the consequences and costs of redesigning the Part D program, opposition to the use of march-in rights to lower drug prices, and the growing use of state prescription drug affordability boards.

In the Proposed Medicare Advantage and Part D Rules for 2025, the Centers for Medicare & Medicaid Services (CMS) proposed significant changes to how Medicare Advantage organizations (MAOs) are allowed to contract with and compensate entities that provide agent/broker and enrollment services.  The proposed rules were heavily disfavored by entities that provide such services, but were not widely commented on by MAOs or Part D sponsors (PDP Sponsors), which are the entities to which the rules actually apply.

Mintz is pleased to present its quarterly publication, PBM Policy and Legislative Update. This edition builds upon prior issues and summarizes activity from October through December 2023 that affects the PBM industry and will specifically highlight (i) federal legislative and enforcement updates, (ii) state legislative updates and litigation, (iii) other industry news, and (iv) Inflation Reduction Act (IRA) updates.

Lawyers for Good Government, in partnership with the American College of Obstetricians and Gynecologists, initiated a vital project known as The Policy Resource Hub in 2022.