Morning Briefing
Summaries of health policy coverage from major news organizations
CVS Wants Pharma To Stop Pointing Fingers At The Middlemen When It Comes To High Drug Prices
Reuters: CVS Health Beats Profit Estimates, Defends PBM Business
CVS Health Corp beat analysts' estimates for quarterly profit on Wednesday and the drugstore operator defended its pharmacy benefits management business in the face of the Trump administration's move to clamp down on escalating drug costs. Shares of CVS Health, which agreed to buy health insurer Aetna for $69 billion in December, rose 3.6 percent to $67.76. (Banerjee, 8/8)
The Wall Street Journal: CVS Chief: Don’t Blame Us For Higher Drug Prices
CVS Health Corp. Chief Executive Larry Merlo said Wednesday that industry middlemen aren’t responsible for increasing U.S. drug prices, noting that prices are rising faster for medicines with smaller manufacturer rebates. CVS owns Caremark, one of the biggest pharmacy-benefit managers, which process prescriptions for insurers or companies that pay for medicines and use their size to negotiate with drugmakers and pharmacies. Mr. Merlo said CVS expects 3%, or about $300 million, of its 2018 earnings to come from rebates it pockets. (Thomas, 8/8)
NPR: Ohio Fights CVS Caremark And Optum For Drug Cost Transparency
Several states are questioning the cost of using pharmacy middlemen to manage their prescription drug programs in a movement that could shake up the complex system that manages how pharmaceuticals are priced and paid for. The debate is playing out this week in an Ohio courtroom, as the state fights to release a report detailing what it paid two middlemen, CVS Health and Optum, to manage its Medicaid program's prescription drug plans. (Kodjak, 8/8)
Bloomberg: CVS Rises As Aetna Megadeal Is On Track To Close In A Few Months
CVS Health Corp. said it is working “productively” with U.S. regulators to get its $68 billion acquisition of health insurer Aetna Inc. approved, and the process is moving along as expected. The deal may be approved in the third quarter or early in the fourth quarter, CVS said in its earnings statement on Wednesday. That’s a narrower timeframe than the company had previously provided. The shares jumped as much as 6 percent to $69.39. (Langreth, 8/8)
Reuters: American Medical Association Opposes Merger Of CVS And Aetna
The American Medical Association, which represents U.S. physicians, urged the U.S. Justice Department on Wednesday to stop CVS Health Corp's plan to buy insurance provider Aetna Inc, saying the deal could result in higher prices for prescription medicines. The AMA said that the $69 billion deal, announced in December, would lead to a "substantial reduction" of competition in pharmacy benefit (PBM) services market and the Medicare Part D prescription drug plan for seniors. (Bartz, 8/8)
Modern Healthcare: AMA Warns CVS-Aetna Merger Will Raise Drug Plan, PBM Prices
The AMA analysis is complex, but the conclusions are clear. The CVS-Aetna merger would increase premiums in 30 of the 34 nationwide Medicare Part D regions, the AMA argued, citing research by University of California at Berkeley professor Richard Scheffler. The AMA also said the merger would reduce competition in the already concentrated PBM space, making it difficult for other companies to enter that market and result in higher prices for PBM services. CVS, Express Scripts and OptumRx dominate the PBM industry. Express Scripts is in the midst of a proposed merger with insurer Cigna Corp., and OptumRx is already owned by UnitedHealth Group, which operates the nation's largest health insurer UnitedHealthcare. (Livingston, 8/8)
The Wall Street Journal: Rite Aid, Albertsons Call Off Merger Amid Investor Opposition
In a surprise move, Rite Aid Corp. and Albertsons Cos. called off their planned $24 billion merger on the eve of a shareholder vote in the face of mounting protests from investors. Some of Rite Aid’s biggest shareholders had planned to vote against the pharmacy’s planned merger with privately held grocer Albertsons, unconvinced by the companies’ argument that a deal was necessary to fend off competition from Amazon.com Inc. and others. (Haddon and Lombardo, 8/9)
Bloomberg: Rite Aid, Albertsons Scrap Deal Amid Criticism Ahead Of Vote
Rite Aid Corp. and Albertsons Cos. agreed to scrap a merger that would have helped reshape the U.S. retail and health-care industries, as opposition to the transaction increased before a shareholder vote. “While we believed in the merits of the combination with Albertsons, we have heard the views expressed by our stockholders and are committed to moving forward and executing our strategic plan as a standalone company,” Rite Aid Chief Executive Officer John Standley said in a statement Wednesday. (Langreth, 8/8)
And in other news —
The Wall Street Journal: Online Pharmacy Capsule Looks To Expand Nationwide
Online pharmacy Capsule Corp. is readying to go national as retail and drugstore stalwarts scramble to reinvent the way people get their prescriptions. The venture-funded startup, operating in New York City since 2015, provides same-day delivery of medicines and access to a team of pharmacists via text, email or phone. The company is receiving $50 million in additional funding, from Greenwich, Conn.-based Glade Brook Capital Partners and other existing investors, to expand its model nationally in the next 12 to 18 months. (Terlep, 8/8)
Reuters: Perrigo Board Okays Separation Of Prescription Pharma Business
Perrigo Company Plc said on Thursday its board approved a plan to separate its Prescription Pharmaceuticals (Rx) business after the generic drugmaker completed a review of its strategic portfolio. The board will explore all value-enhancing options, including a possible tax-efficient separation to shareholders, a sale or merger, the company said. The move will enable the management to focus on expanding the company's leading consumer businesses, Chief Executive Uwe Roehrhoff said. (8/9)
