Regulations to watch: Spring 2024

The pharmacy benefit management (PBM) legislation to watch

Optum Rx closely monitors and acts to influence legislation and rulemaking that has the potential to adversely impact pharmacy benefits offered by both fully insured and self-insured clients.

Here is a quick summary of the latest pharmacy benefit legislative and regulatory issues happening this winter:

• Federal PBM reform legislation unlikely in federal funding package
• Centers for Medicare and Medicaid Services releases 2025 Advance Notice and guidance on Medicare prescription payment plan
• 2024 State legislative sessions underway
• New York proposes new PBM regulation
• FDA approves Florida drug importation plan
• Supreme Court to consider abortion drug cases
• What Optum Rx is doing and how your voice can be heard

FEDERAL

Federal legislation pending as funding deadlines extended further  

Congress edges closer to a government shutdown if it is unable to pass legislation to fund the federal government or extend funding beyond the current March deadlines. It is unclear whether any legislative package that passes in March will include PBM reform provisions that the House and the Senate have been discussing and considering for the past 12 months. Senate proposals would require PBMs in Medicare to charge flat services fees that aren’t based on drug list prices, tie patient cost-sharing to net prices for some patients with chronic conditions, require more disclosure by PBMs, and ban spread pricing in Medicaid.  The full House of Representatives passed policies mostly focused on increasing transparency. Among various provisions, the House bill would ban PBMs from using spread pricing in Medicaid arrangements and would codify Trump-era rules that require commercial insurers to publicly post negotiated drug prices.

If there is no action on PBM legislation as part of a government funding package in March, additional health deadlines will be coming up later this year, and delayed action on PBM legislation is likely to happen post-election (November). Optum Rx, through UHG External Affairs and Pharmaceutical Care Management Association (PCMA), continues to vigorously advocate against inclusion of PBM reform provisions in federal legislation.

Centers for Medicare and Medicaid Services (CMS) regulatory updates

Notice of Benefit Payment Parameters for 2025

As of Feb. 16, CMS submitted final Notice of Benefit Payment Parameters for 2025 to the White House’s Office of Management and Budget. This is the final step of regulatory rulemaking before publication in the Federal Registrar.

In recent years, NBPP has been published mid- to late-April. NBPP is a set of rules and guidelines issued annually by CMS that sets forth the policies and standards for health insurance plans and issuers, primarily focusing on the Health Insurance Marketplace under the Affordable Care Act. Among the proposed rules for 2025 are 2 pharmacy benefit changes: 

• First, CMS proposes to revise the membership standards for pharmacy and therapeutics (P&T) committees to include a consumer representative.     
• Second, CMS proposes to codify its current policy that prescription drugs in excess of those covered by a state’s essential health benefits (EHB)-benchmark plan are considered EHBs such that they are subject to EHB protections, including the annual limitation on cost sharing and the restriction on annual and lifetime dollar limits. 

Medicare Prescription Payment Plan Part Two

On Feb. 15, CMS released Part Two of its draft guidance on the Medicare Prescription Payment Plan (M3P) to implement requirements for the monthly out-of-pocket cap enacted by the Inflation Reduction Act.

This draft guidance is the second of a two-part guidance framework for the M3P. Part One (released in August 2023) focused on technical aspects of the M3P while Part Two focuses on Part D sponsor obligations related to outreach and education, pharmacy processes, and operational considerations for the M3P. Comments on Part Two draft guidance deadline is March 16.

2025 Medicare Advantage and Part D Advance Notice

On Jan. 31, CMS released the 2025 Medicare Advantage (MA) and Part D Advance Notice. The Advance Notice discloses CMS’ planned changes in the MA capitation rate methodology and risk adjustment methodology applied under Medicare Part C for CY 2025. Also included with this notice is a discussion of the annual adjustments for CY 2025 to the Medicare Part D benefit parameters for the defined standard benefit, including those required by the Inflation Reduction Act. Comments for the 2025 MA and Part D Advance Notice were due March 1. CMS intends to publish the 2025 Final Rate Notice by the statutory deadline on April 1.

STATE

2024 state sessions underway 

Numerous PBM-related bills have been introduced in the 46 states holding legislative sessions during 2024. As of February 26, over 491 PBM bills are in play. Among the bills that have been introduced are comprehensive anti-PBM bills in Alaska, California, Idaho, Illinois, Kentucky, Missouri, Pennsylvania, Rhode Island, and Vermont. While provisions vary from one bill to the next, many of these bills contain anti-steering, pharmacy reimbursement, spread pricing, and any willing pharmacy provisions.  Stand-alone bills focused on a single issue are also of concern.  There are several of these bills being considered on the topics of point of sale rebates, white bagging, copay coupon accumulator programs, and prior authorization and step therapy programs.

Although it is still relatively early in many state sessions, we are starting to see legislatures pass or defeat proposed legislation with the passage of a New Mexico step therapy and prior authorization bill, Senate Bill 135, by both chambers that, as of February 27, is awaiting action by the State’s governor and the defeat of a comprehensive anti-PBM bill, Wisconsin Senate Bill 737, and Utah House Bill 425, which included provisions on spread pricing, pharmacy fees, point of sale rebates and out-of-network pharmacies.

Optum Rx is closely monitoring activity in state legislatures and, through UHG External Affairs and Pharmaceutical Care Management Association (PCMA), advocating against legislation that could have negative impacts on Optum Rx or Optum Rx clients.

New York PBM proposed regulation

On Feb. 6, the New York State Department of Financial Services (DFS) posted a proposed PBM Market Conduct regulation that includes provisions impactful to plan design. This is the first follow-up DFS has released since their withdrawal of the previous PBM Market Conduct proposed regulation in October 2023. The new proposed regulation includes several provisions that may be impactful to clients, including:

PBMs must reimburse an in-network pharmacy an amount that is less than what an affiliated pharmacy that is within the same network is reimbursed for providing the same covered services. However, this requirement shall not limit the ability of a health plan to maintain multiple networks in which reimbursements are different for providing different services, including specialty or mail-order networks.

• PBMs cannot retroactively deny or reduce any reimbursement for a claim after adjudicating a claim and returning a paid claim response unless certain limited criteria are met.
• PBMs shall not provide incentives to a covered individual to use an affiliated pharmacy when unaffiliated pharmacies are available within the same network.
• PBMs cannot require a covered individual to purchase prescription drugs exclusively through a mail-order pharmacy or refer a covered individual to a mail-order pharmacy or an affiliated pharmacy unless contractually required to do so by the health plan.
• PBMs cannot penalize a covered individual for using an in-network unaffiliated pharmacy, including by requiring a covered individual to pay the full cost for a prescription. This requirement shall not be construed to prohibit a health plan’s election to use a network that only includes affiliated pharmacies.
• PBMs cannot prohibit or limit any covered individual from selecting an in-network pharmacy of the individual’s choice unless specifically required by the health plan for a particular covered individual.

This is not an exhaustive list of all provisions in the proposed regulation that might have client impact. The proposed rule had a “pre-proposal” comment deadline of Feb. 16.

FDA approves Florida’s drug importation program

In January, the U.S. Food and Drug Administration (FDA) authorized Florida’s Agency for Health Care Administration’s drug importation program under section 804 of the Federal Food, Drug, and Cosmetic Act. Through this pathway, the FDA may authorize section 804 importation program (SIP) proposals from states or Indian tribes to import certain prescription drugs from Canada if the SIP will significantly reduce the cost to the American consumer without imposing additional risk to public health and safety.

There are additional steps that Florida must complete before any importation may begin. Florida's Agency for Health Care Administration is required to submit additional drug-specific information for FDA review and approval, ensure the drugs Florida seeks to import have been tested for authenticity and are compliant with the specifications and standards for FDA-approved drugs, and relabel the drugs to be consistent with FDA-approved labeling. Other obligations Florida will need to meet include ensuring supply chain integrity, monitoring and submitting adverse event reports, and complying with drug recall procedures.

The Florida program is limited in scope and is not expected to have direct impact on Optum Rx or Optum Rx clients or members. The program includes a limited number of drug classes, including medications for asthma, chronic obstructive pulmonary disease, diabetes, HIV and AIDS, and mental illness. The medications would be only for certain people, including foster children, inmates, certain elderly patients and, eventually, Medicaid recipients. 

Supreme Court will review a ruling on the mifepristone case

The U.S. Supreme Court will be hearing two related cases in the next few months that will determine the accessibility of mifepristone, a drug used for medication abortions. The cases will be heard together on appeal from the U.S. Court of Appeals for the Fifth Circuit, and a decision is expected from the Supreme Court this summer. 

The Fifth Circuit Court of Appeals ruled that the medication remain legal, but with considerable restrictions on patients’ access, including prohibiting patients from receiving the medication via mail order or by telemedicine. The Supreme Court made clear that it will not weigh in on the validity of the FDA’s initial approval of the drug in 2000. Rather, they will consider the lower court’s ruling regarding changes to the conditions on the use of the drug. The Supreme Court earlier granted a request to maintain the status quo on accessibility of the drug until the dispute is resolved.   

Help us advocate for you in an evolving regulatory landscape

Both as Optum Rx and through our External Affairs team, we continue to advocate to congressional leaders and their staff to protect the pharmacy benefit tools that matter most to clients. In 2023, Optum Rx executives met with over 150 state and federal policy makers to help shape this challenging legislative and regulatory climate.

Our overall advocacy objectives include:

• Improving affordability and access for patients
• Preserving client choice and value
• Lowering the total cost of care for clients
• Driving innovation and better health outcomes

In addition to our efforts, we also advocate through our trade association, PCMA, and use both social media and paid advertising through the Coalition for Affordable Prescription Drugs.

We highly encourage clients to get involved with efforts to protect against legislation that will increase your costs. We know clients’ voices have influence with legislators, and we want to help you be heard. If you’d like to be involved in our advocacy, please contact your Optum Rx account management team.