Moving targets: Rx legislative activity to watch in 2024 

Moving targets: Rx legislative activity to watch in 2024
December 07, 2023

Most everyone agrees that rising prescription drug (Rx) costs are a concern at the White House, on Capitol Hill and in statehouses. Not everyone agrees on how to solve the problem. Ongoing debate is sure to continue next year among manufacturers, pharmacy benefit managers (PBMs), pharmacies, plan sponsors, participants, and other stakeholders. 

Spotlight is on PBMs, transparency

Watch for more PBM reforms. Areas of focus will be increased transparency (particularly at the federal level) and restrictions on several standard PBM practices like spread pricing, rebate allocation, preferred networks, mail-order steerage and copay accumulator programs. On the federal front, the continuing resolution stopping a November government shutdown pushes any reforms to the first quarter of next year at the earliest. The upcoming election year may provide limited opportunities to pass meaningful legislation. 

More states will likely look to include self-funded ERISA plans within the scope of legislation, testing the boundaries of recent judicial precedent on ERISA preemption. These laws tend to focus on PBM activities, broadly defining what a PBM is; Florida’s Prescription Drug Reform Act (enacted last May) is a good example. Specifically, it will be interesting to see the reach of this year’s Pharm. Care Mgmt. Ass’n v. Mulready decision, which struck down four provisions of an Oklahoma law on ERISA preemption grounds.  

Blue Shield of California’s announcement that it will diversify Rx benefit administration could change the PBM landscape nationally. The states of Hawaii and Kentucky have filed lawsuits against PBMs. 

The next prescription drug data collection reporting deadline (June 1, 2024) will be here before you know it. Updated guidance and instructions should come in early 2024. By law, the Department of Health and Human Services (HHS) must publish a report within 18 months of the first report due date, presumably June 27, 2024, and every two years thereafter. This report hopefully will supply useful data for plan sponsors.  

A recent tri-agency FAQ alerted plan sponsors to include Rx information in the self-service tool and machine-readable files (MRFs) under transparency-in-coverage rules. Look for technical schema and an implementation tool. Once Rx is added to MRFs, one result may be enhanced Rx data analysis. 

Other trends to watch

  1. Weight-loss Rx. Glucagon-like peptide 1 (GLP-1) drugs are an Rx class aiding weight loss. GLP-1 drugs Ozempic and Wegovy hold the hope of significantly addressing our country’s weight and obesity problem. However, plan sponsors will need to grapple with how and when to provide these drugs (thereby potentially reducing other health risks) while controlling Rx costs through prior authorization and other plan limitations. 
  2. Insulin cost-sharing caps and related issues. Montana and Nebraska passed insulin cost-sharing limits for fully insured plans this year. In California, a similar bill was vetoed. Other states — like Minnesota, Montana and New Mexico — enacted laws addressing diabetes-management issues. More states may add insulin caps in 2024. 
  3. Federal Trade Commission (FTC) activity. The agency rescinded prior pro-PBM guidance and expanded its investigation to include three PBM-affiliated group purchasing organizations. Look for a preliminary report or other update in the coming year. 
  4. Rx-related litigation. Other legal issues bear watching besides ERISA preemption. The Medicare Rx negotiations in the Inflation Reduction Act — due to take effect in 2026 — have generated multiple lawsuits. The cost impact on employer-sponsored coverage is unclear, but plan sponsors should continue to monitor. The HIV and Hepatitis Policy Inst. v. Dep’t of Health and Human Servs. decision vacated a regulation allowing (but not requiring) group health plans to disregard drug manufacturers’ copay assistance (typically coupons) from accumulating to a plan’s deductible and OOPM. The court directed the departments of Labor, Treasury and HHS to rewrite the regulation. These agencies have appealed the ruling. In late November, HHS filed a motion to clarify, indicating that it does not intend to take any enforcement action on this issue until the agencies issue a new final rule. Keep an eye out for this guidance, especially if you sponsor an HSA-eligible high-deductible plan.  

The importance of staying current

Keeping in the loop is critical when it comes to Rx and PBM issues because of the potential for cost increases, plan design changes and participant disruption. This monitoring should involve regular discussions with your benefits advisors, PBMs, insurers, third-party administrators and other vendors.  

For more information about prescription drug and PBM trends, see our GRIST: Top 10 health, leave benefit compliance and policy issues in 2024

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