Editor’s Note: This month, we offer commentary on three topics: how states are influencing drug pricing and access, specialty pharmacies evolution to accommodate cell and gene therapies, and Walgreens entering the CGT arena. If you have questions on any of the content found in this or previous market updates, please reach out to your IntegriChain Consulting Lead or consulting@integrichain.com. We would be happy to talk you through it.

States Driving a Complex Pharmaceutical Landscape & Influencing Drug Pricing & Access

The United States is not very united in the pharmaceutical industry. For years, Medicaid has been divided at the state level with different processes, formularies, and even separate supplemental contracts. Recently, we are seeing more divisive trends by states that result in manufacturers trying to better understand how the changes will impact their business. The following are a few areas that appear to be top of mind for manufacturers today:

• South Carolina rules on 340B patient definition in Genesis case
• States creating prescription drug advisory boards to help manage drug prescription prices (PDABs)
• States looking to pass bills banning step therapy patient requirements

States Influence on 340B

South Carolina’s court ruled on November 3, 2023, that the interpretation of who qualifies as a “patient” under the 340B program, which HRSA sought to enforce against Genesis HealthCare, Inc., is contrary to the plain meaning of the statute. The court’s decision threatens to significantly expand who qualifies as a patient eligible for a 340B drug (i.e., clarifying the “patient” definition), with potentially broad implications beyond the immediate impact to Genesis itself. HRSA’s original intent of the term “patient” narrowed the definition to restricting patients to the 340B eligible clinic or hospital that they are being consistently seen or treated at versus allowing the patient to be seen at any 340B hospital/clinic as required.

Another example of states weighing in on 340B is a DC court ruling in favor of manufacturer's imposing 340B restrictions. A judge ruled that “pharma can impose conditions on distribution of 340B drugs.” On May 21, 2024, the US Court of Appeals for the DC Circuit ruled that the underlying law for the 340B Drug Discount Program does not prohibit drug manufacturers from limiting the number of contract pharmacies that can distribute discounted drugs to covered entities.

340B utilization is growing rapidly for the pharmaceutical industry and the patient definition is a critical issue which will continue to expand the 340B utilization for manufacturers. Manufacturers need to start considering how this may start to impact their GTN forecasts and any other implications it may have on government pricing.

States Creating Prescription Drug Advisory Boards

Colorado became the first state in August 2023 to select drugs for an affordability review. In February 2024, Colorado also became the first state to formally begin efforts to set an Upper Payment Limit (UPL) for a drug.

The Colorado PDAB voted to declare that Enbrel is unaffordable and start the process of setting an UPL for the drug. Several states have set up similar drug affordability boards, but advocates believe this is the first time a state has moved to step in and formally set a price cap on a medicine.

Amgen is challenging this vote and called the board's determination an “unconstitutional” violation of due process and federal law. All eyes are on this Colorado/Amgen lawsuit as its outcome will have a sweeping impact on all PDABs in multiple states.

Other States Establishing PDABs:

• Colorado
• Maine
• Maryland
• Massachusetts
• Minnesota
• New Hampshire
• New Jersey
• New York
• Ohio
• Oregon
• Washington

States Weighing in to Ban Step Therapy

Illinois passed a bill on April 19, 2024, that would ban step therapy, when an insurance company requires a patient to try and fail alternative medications before covering medications their doctor recommends.

Lawmakers in 36 states have passed laws that attempt to solve the issues they see with step therapy. While the new laws may help some patients, they don't fully eliminate “fail first” requirements. If states are successful in getting bills passed, this may be advantageous to manufacturers whose drug does not currently allow for first line treatment.

States are taking liberties to drive and influence pharmaceutical regulations. Manufacturers should stay abreast of the various state “hot topics” and trends in order to assess the impact to their product(s)’ business model.

Specialty Pharmacies Evolve to Accommodate Cell & Gene Therapies

More than 20 cell and gene therapies (CGT) are projected to have been approved by the end of 2025. This creates an increased need for facilities with capability and capacity to handle these advanced therapies. CGT therapies require special handling and in many cases, require ultra-cold storage through their journey from manufacturer to patient administration.

Specialty pharmacies are addressing the unique challenges associated with CGT products while manufacturers of CGTs and other rare disease therapies are looking for specialty pharmacies with these specialized capabilities.

Functions of specialty pharmacy providing support for cell and gene therapy include the following:

Infrastructure & Facilities - Specialty pharmacies invest in facilities equipped to handle CGT’s unique storage and preparation requirements as required by the various regulatory agencies. They have a specialized infrastructure, including temperature-controlled storage units and dedicated spaces for preparation.

Advanced Training & Education - Specialty pharmacies provide extensive training to the pharmacists to manage the complexities of cell and gene therapy. This includes understanding administration protocols, potential adverse effects, and patient monitoring.

Technology Integration - Specialty pharmacies implement advanced technology systems for inventory management, patient data tracking, and communication with healthcare providers to ensure seamless operations.

Collaborative Partnerships - Specialty pharmacies establish strong working relationships with treatment centers, healthcare providers, and pharmaceutical manufacturers.

Reimbursement & Financial Strategies - Due to the high cost of these therapies, specialty pharmacies need to navigate reimbursement challenges, assist patients with financial assistance programs, and help ensure a clear path to payment.

Walgreens Enters Cell & Gene Therapy Arena

On April 24, 2024, Walgreens Boots Alliance Inc. revealed that it will launch Walgreens Specialty Pharmacy on August 1, 2024. In addition to traditional specialty pharmacy facilities across the US, Walgreens is opening a dedicated cell and gene services pharmacy in Pittsburgh including specially-trained pharmacists and patient advocacy support staff. Other familiar retail, wholesaler, and specialty pharmacy firms such as CVS, McKesson, and Orsini are also entering in this important CGT therapy space.

Sources

MedCity News, “How Will Walgreens’ Expansion into Specialty Pharmacy Affect the Industry?” (Apr. 2024).

CNBC, “Walgreens to help bring cell and gene therapies to patients as it expands specialty pharmacy services” (Apr. 2024).

About IntegriChain

IntegriChain delivers biopharma’s only comprehensive data-driven commercialization platform from strategy to operational execution, connecting the commercial, financial, and operational dimensions of drug access and profitability. Our ICyte® platform integrates technology, data, consulting, and managed services to unify critical workflows replacing manual processes with integrated analytics and precision controls.

Biopharma relies on IntegriChain to optimize patient access and net revenue performance, reduce leakage, and strengthen compliance, ensuring every life-changing therapy reaches patients with speed, affordability, and sustainability. Backed by Nordic Capital, a leading sector-specialized private equity investor with a broad portfolio in healthcare and technology.

IntegriChain is headquartered in Philadelphia, PA, with a location in Pune, India.

If you have any questions, please reach out to consulting@integrichain.com or contact your Advisory Lead.