Navigating 2024: Three topics shaping the pharmacy benefit
As we reflect on the developments of 2023 and set our sights on 2024, the pharmacy benefit landscape is undergoing significant transformations. With pharmacy benefit managers in the public spotlight, plan sponsors are eager to understand the changes that lie ahead. As your trusted partner in managing employee prescription drug plans, ClearScript proactively monitors the evolving pharmacy landscape to stay ahead of changes that impact the pharmacy benefit.
Three significant topics that are in our sights for 2024
1. Federal Government Scrutiny of the Drug Industry
Legislative changes introduced through the 2021 American Rescue Plan Act and the Inflation Reduction Act (IRA) of 2022 aimed to control drug prices and/or boost pharmaceutical competition in the Medicare Part D space. While the legislation did not directly address commercial plans, plan sponsors will feel the impact either through the legislation itself or the pharmaceutical industry’s response.
- Insulin price caps for 2023. Major drug manufacturers have re-evaluated insulin pricing strategies after introducing price caps in 2023. Commercial plans and their members have already begun seeing a reduction in insulin costs in 2023, with further changes anticipated in early 2024. ClearScript clients are expected to enjoy lower net spend on insulins, albeit with the loss of some insulin rebates starting in 2024.
- Medicare Price Negotiations. This new policy allows Medicare to negotiate pricing on the costliest single-source brand drugs that have been on the market for at least nine years. The first list of ten drugs for 2026 was released in August 2023. While the legislation addresses Medicare price negotiations, Commercial plans may also experience an impact. Plan sponsors may see accelerated shifts to generic/biosimilar competition for brands subject to price negotiations. Conversely, as drug manufacturers evaluate profit potential, we may see less innovation and investment in pharmaceutical development for conditions prevalent in the Medicare population.
- Medicare rebate cap removal for 2024. The removal of the rebate cap means that when certain drugs experience large price increases exceeding inflation, manufacturers are no longer capped in the rebates they pay to Medicare. Sometimes, that could mean selling at a loss. As manufacturers shift to more profitable products or adjust their product portfolio due to the rebate cap removal, the overall population may experience product discontinuations, such as brand Flovent for 2024.
2. Humira Biosimilars Ramp Up
While several new Humira biosimilars were approved in 2023, brand Humira has not yet experienced significant market share erosion. This is primarily due to the launch of only low-concentration biosimilars, representing just 20% of current Humira utilization.
However, the launch of the more utilized high-concentration (and potentially interchangeable) formulations of formulary Amjevita, Cyltezo, and Hyrimoz is expected in 2024, which poses more potential cost savings for plan sponsors. This is good news for plans whose biggest pharmacy spend contributor has been in the anti-inflammatory class for many years.
ClearScript will closely monitor market activity and adjust our formulary strategy to optimize utilization of the most cost-effective products.
3. Evolution of the GLP-1 RA class
Spend on glucagon-like peptide 1 receptor agonists (GLP-1 RAs) such as Ozempic and Mounjaro has surged in recent years due to their use in treating type 2 diabetes as well as off-label for weight loss. In response to rapidly escalating costs, ClearScript has implemented tighter utilization management and plan design strategies in 2024. Plans commonly opt for a weight loss drug exclusion from coverage to help limit trend growth for this class.
Potential new indications. The GLP-1 RA class may see new and expanded indications beyond diabetes and weight loss, such as cardiovascular disease. With national shortages easing and the possibility of additional FDA approvals, this class remains dynamic and warrants close monitoring.
ClearScript remains committed to monitoring these trends and others that impact the pharmacy benefit. We will continue to keep our clients informed of upcoming market changes and program enhancements to effectively manage plan spend while always prioritizing member health.
ClearScript and our clients will move forward together in navigating the evolving pharmacy landscape of 2024.