From record-high drug shortages to the explosive popularity of GLP-1 medications and the intensifying battle over the 340B drug discount program, many of the biggest healthcare stories of 2024 centered on pharmacy issues.
Attorneys for both big pharma and the federal government will be busy in 2025. Regulators will have their work cut out for them under a new administration that has expressed an anti-regulatory preference. Republicans next year will control the White House, Senate and House. What will it all mean for pharmacy leaders? Let’s review.
The rise of GLP-1 medications
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Amid a national obesity epidemic, it’s little surprise that GLP-1 agonist medications continue to climb in popularity, with one report predicting they would surpass PD-1 inhibitors in 2024 to become the top-selling drug class.
That explosive popularity has landed medications like Eli Lilly’s Mounjaro and Zepbound on the FDA’s drug shortage list, spurring a robust market for compounded versions of GLP-1s from brands like Weight Watchers and Hims & Hers. The FDA removed the brand-name medications from the shortage list in October and barred compounding pharmacies from making their versions of the medications, which tend to be far less expensive. But the agency later reversed course, resulting in an ongoing standoff between the FDA, compounding pharmacies and the drug manufacturers who want to restore their exclusivity.
The bigger issue centers on the high costs. Brand-name GLP-1 medications can exceed $11,000 for an annual supply and have been used by an estimated 12% of Americans, according to a poll from the Kaiser Family Foundation. Commercial insurers and employers have been slow to cover GLP-1 medications, but that may be coming to a head.
The Biden administration has proposed a rule to allow Medicare and Medicaid to cover weight-loss medications, making GLP-1s available to an estimated 7.4 million beneficiaries should the Trump administration allow it to take effect. The president-elect’s pick to lead the FDA, Dr. Marty Makary, is CMO of a telehealth weight-loss company that sells compounded GLP-1 medications.
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Self-injectable GLP-1 agonists are getting all the attention now, but there are plenty of other high-priced medications coming through the pipeline. In a few years, we may be talking about them instead of Ozempic or Wegovy — meaning debates over coverage for high cost medications will continue.
Insurance coverage of GLP-1 medications is likely to remain a hot topic, as is the strain on retail pharmacies due to losses associated with these medications.
The battle over 340B
In August, Johnson & Johnson opened up a new front in the drug industry’s assault on the 340B discount drug program with its plan to switch from traditional upfront 340B discounts to a rebate model for Stelara and Xarelto, two of its best-selling medications. Then the Health Resources and Services Administration threatened to revoke its access to Medicaid and Medicare, and J&J backed down.
Now, J&J is among four drugmakers suing the government for blocking their 340B rebate proposals, joining Eli Lilly, Bristol Myers Squibb and Sanofi.
The dispute adds to an ongoing battle over the role of contract pharmacies in the 340B program, where a decision is still pending from a federal circuit court involving Eli Lilly after courts in two similar cases ruled largely against the government. The pharmaceutical industry is also contesting a growing number of state laws that prohibit restrictions on 340B contract pharmacies.
In both cases, drugmakers argue they need stronger protections, in the form of reams of pharmacy claims data, to prevent paying duplicate 340B and Medicaid discounts on the same prescription. However, the federal government has permitted 340B rebates only once, for the AIDS Drug Assistance Program, in 1998.
There is a grudging sense among many 340B stakeholders that rebates may be inevitable. If so, it could pose major challenges to covered entities, many of whom lack the cash flow to pay the list price for medications while hoping for rebates down the line. It could also drive many 340B providers to consider clinically appropriate alternatives for popular brand medications affected by rebate policies.
For now, covered entities are urging continued advocacy and outreach to elected leaders for help defeating these proposals. Safety net clinics and hospitals have traditionally relied on elected leaders to help defend the program as a critical financial lifeline — as when 189 Republicans and Democrats co-signed a letter urging the government to block J&J’s proposal.
Now that the issue has largely moved to the courts, will these efforts continue? And will they matter?
Meanwhile, the failure of a bipartisan “gang of six” Senate workgroup to introduce major 340B legislation it promised in 2024 does not bode well for the chances of comprehensive reform in 2025.
IRA and 340B
Another reason drug manufacturers are proposing rebates has to do with how the Inflation Reduction Act, the Biden administration’s signature achievement, affects Medicare Part D.
Under the law’s drug-price negotiation provision, manufacturers must offer covered entities the lower of 340B ceiling pricing or newly negotiated maximum fair price (MFP) when they go into effect starting in 2026. Separately, the law requires drug companies to issue rebates when the prices of their products rise faster than the rate of inflation.
The government has yet to clarify how to resolve two key issues for manufacturers, safety net hospitals and 340B pharmacies alike:
How to exclude 340B claims from calculating the Part D inflation rebates
How MFP will work with 340B, keeping the two separate, so manufacturers avoid paying duplicate discounts, covered entities aren’t burdened with additional claims submission or other burdensome administrative requirements, and contract pharmacies are made whole
These issues are incredibly complicated and have generated plenty of confusion among stakeholders. Many believe manufacturers are pursuing 340B rebates as a way to avoid duplicate discounts under the MFP provision — and snuff out 340B pharmacies altogether.
The government has a year before both provisions take effect. Given the changing guard in Washington D.C. and the challenges of implementing new data systems, many worry a fix may not arrive in time.
PBM crackdown?
Last but not least, pharmacy benefit managers have come under bipartisan condemnation.
In July, the Federal Trade Commission released a scathing interim report alleging that PBMs used their market power to hurt small independent pharmacies and drive up prices.
Then in September, the agency sued CVS Caremark, Express Scripts and OptumRx, the three largest PBMs, alleging collusion to drive up the prices of insulin. The three companies have also countersued to block the administrative proceedings.
It’s tempting to believe that regulators and the incoming Republican-controlled Congress will rein in PBMs — and in fact, a bipartisan bill has already been introduced to do just that. But it’s hard to be optimistic. PBMs are deeply embedded in U.S. healthcare. With their strong lobbying, the anti-regulatory stance of the Trump administration and the difficulty of unwinding their business practices, transformative change remains a steep uphill climb.
Other predictions
With the evolution of pharmacy beyond traditional retail pharmacies and inpatient services to specialty pharmacies, centralized operations and home infusion services, we’ll see a broader recognition of pharmacy’s role in contributing to the financial health of hospitals and health systems. As drug prices continue to climb, responsibly run pharmacy programs that generate a positive margin will secure their seat at the executive leadership table.
