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Judge skeptical in hearing of CVS' defense of Aetna merger's effect on pharmacy benefit managers - HIV care at risk????
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Michael Wohlfeiler, chief medical officer for the AIDS Healthcare Foundation, a nonprofit that provides medical care to patients with HIV and AIDS, said he was worried a merger would lead to less reliable delivery and more expensive anti-retroviral drugs. Properly and consistently taken, he said, such drugs can not only virtually eliminate the virus but they can keep the virus so suppressed that it cannot be transmitted to another person. All that is endangered, he said, if the system of delivering such medications suffers.
He said that a prior merger between United Healthcare and OptumRx forced patients to use a mail-order prescription program that often left patients waiting for a drug. Patients with HIV must take the drug regularly or it is no longer effective.
The foundation has its own set of pharmacies. Wohlfeiler said he worries those pharmacies - key to the treatment of the foundation's patients - will be at risk if the merger goes through.
"I'm concerned we're going to see our model imperiled by this behemoth merger," he said, adding, "What PBMs do is add another layer of bureaucracy between the provider and the patient."
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Judge skeptical in hearing of CVS' defense of Aetna merger's effect on pharmacy benefit managers
https://www.dispatch.com/news/20190605/judge-skeptical-in-hearing-of-cvs-defense-of-aetna-mergers-effect-on-pharmacy-benefit-managers
WASHINGTON - The role of CVS' pharmacy benefit manager business again emerged as a key concern Wednesday during a federal court hearing on a possible merger between the pharmaceutical giant and health insurer Aetna.
During the second and final day of what was slated to be a three-day hearing on the proposed merger, witnesses called by CVS and by the Department of Justice, which supports the merger, argued that CVS Caremark has ample competition from other PBMs, and they dismissed the idea that gaining Aetna's 22 million customers would give CVS an unfair advantage.
But U.S. District Court Judge Richard Leon seemed openly skeptical of that argument, at one point raising his voice at a witness who contended that CVS' PBM business would not necessarily stand to gain from the merger.
"Are you being straight with me?" Leon demanded of Dr. Alan Lotvin, executive vice president and chief transformation officer for CVS Health.
But Leon countered that the "big difference" was that with the merger, CVS "owned (Aetna's) 19 million clients now outright." He asked representatives to send him information on whether CVS' PBM has benefited from the early days of the merger.
CVS Caremark handles Aetna's prescriptions under a 12-year contract the two companies signed in 2011. Leon argued that CVS' acquisition of Aetna will in effect keep the insurer from using another PBM in 2023, when the contract is set to expire.
"It's different now," he said. "If they merge, they own it."
Pharmacy benefit managers, or PBMs, serve as a middleman between drug companies and pharmacies, and also between managed care organizations and pharmacies. CVS, Optum and ExpressScripts account for about 70 percent of the nation's PBM market.
Leon called for the hearing under a 1974 federal law that requires courts to review agreements in which the government approves corporate mergers. That law, known as the Tunney Act, requires courts to ensure that the deals serve the public interest and to protect against monopolies.
At the conclusion of Wednesday's testimony, the judge said he will schedule oral arguments on the issue, probably in mid-July.
Through more than 100 stories in its Side Effects series, The Dispatch has reported for the past 15 months on why prescription drug prices are so high, focusing in part on how CVS has used its PBM business to benefit its retail side, which critics say helps drive competitors out of business.
During the first day of the hearing, merger opponents charged that CVS Caremark gives preferential treatment to CVS retail, offering their consumers far lower prices than those of competitors who also use the CVS PBM. Lotvin said reimbursements to independent Ohio pharmacies are higher than those for CVS outlets. What he didn't say, however, was that part of an Ohio Medicaid report the company has gone to court to keep secret shows that CVS reimbursed some of its prime retail competitors at far lower rates.
Lotvin said the merger will ultimately help provide innovative new treatments for chronic conditions. By merging Aetna's data with CVS' services in its MinuteClinics and pharmacies, he said, the company hopes to help the chronically ill better treat diseases, sometimes by changing the trajectory of behavior that leads to such diseases.
He argued that beyond the "firewall" the company instituted to keep different parts of the business from sharing data about competitors, CVS has no interest in driving other companies that use its PBM out of business. He said the company wants every one of its sectors to grow, regardless of whether
"It would be economic suicide to do something different," he said.
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PBMs become potent symbol in federal court hearing over CVS-Aetna merger
https://www.dispatch.com/news/20190604/pbms-become-potent-symbol-in-federal-court-hearing-over-cvs-aetna-merger
Jun 5, 2019 at 6:31 AM
WASHINGTON - U.S. District Court Judge Richard Leon was near the end of his first day in what is scheduled to be a three-day hearing on the proposed merger of CVS and Aetna when he began marveling over the power that CVS' pharmacy benefit manager has.
"I'd never heard of it," Leon confessed. "Now I know it's a major, major player in this entity ... I don't think the average person knows what a PBM is. They have no idea."
Leon had called the hearing primarily to determine whether a plan for Aetna to sell off its Medicare prescription drug program to a third entity was sufficient to settle concerns about a possibly near-monopoly created by the Aetna-CVS merger. But as the day progressed, it became clear that pharmacy benefit managers - the middlemen that negotiate prices between drug companies and pharmacies - are a potent symbol of the largesse that critics fear will overtake the industry if the CVS-Aetna merger goes through.
Critics have charged that CVS's PBM gives preferential treatment to CVS' retail operation, offering them far lower prices compared to competitors using the same PBM, CVS Caremark. They worry, similarly, that a merger will give CVS yet another advantage that it can use to drive rival pharmacies out of the market, gobbling up a customer base that would include the 22 million who subscribe to Aetna's medical plan.
As part of its Side Effects series, The Dispatch has reported for the past 15 months on why prescription drug prices are so high, focusing in particular on how CVS has used its PBM to benefit its own business in specialty drugs and other areas, sometimes driving competitors out of the market in the process. CVS, along with Optum and ExpressScripts, account for about 70 percent of the PBM market.
Leon is conducting the hearing pursuant to a 1974 law that requires courts to review agreements in which the government approves corporate mergers. That law, known as the Tunney Act, requires courts to take a second look to make sure that the deals serve the public interest and protect against monopolies. Three witnesses defending the merger will testify Wednesday.
Witnesses during the first day of the hearing on the $70 billion proposed Department of Justice-approved merger found little upside to the idea of CVS Health, the seventh-largest U.S. corporation joining forces with Aetna, the 49th largest, according to Fortune, arguing Aetna's decision to divest itself of its prescription drug program did little to settle concerns that the deal undermines competition.
Neeraj Sood, a professor and vice dean for research at the University of Southern California Price School of Public Policy, said Aetna's decision to sell that program to Wellcare did not negate the effects of the diminished competition created by the merger.
He cited three separate studies with different methodologies that concluded the same thing: "Mergers lead to an increase in market concentration and an increase in premiums."
Others pointed to the CVS PBM program as evidence that the customer would be hurt by the merger.
Michael Wohlfeiler, chief medical officer for the AIDS Healthcare Foundation, a nonprofit that provides medical care to patients with HIV and AIDS, said he was worried a merger would lead to less reliable delivery and more expensive anti-retroviral drugs. Properly and consistently taken, he said, such drugs can not only virtually eliminate the virus but they can keep the virus so suppressed that it cannot be transmitted to another person. All that is endangered, he said, if the system of delivering such medications suffers.
He said that a prior merger between United Healthcare and OptumRx forced patients to use a mail-order prescription program that often left patients waiting for a drug. Patients with HIV must take the drug regularly or it is no longer effective.
The foundation has its own set of pharmacies. Wohlfeiler said he worries those pharmacies - key to the treatment of the foundation's patients - will be at risk if the merger goes through.
"I'm concerned we're going to see our model imperiled by this behemoth merger," he said, adding, "What PBMs do is add another layer of bureaucracy between the provider and the patient."
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