Elevance’s Part D Exit Abandons 150K Members, CVS Pays $290M For Overcharging Medicare, Congressional Budget Office 340B Study Says Nothing New

Hey all,

Happy Thursday! It appears that when lawmakers decide not to pay for healthcare directly, they end up paying far more through the creative workarounds they've inadvertently incentivized. The Inflation Reduction Act made Medicare Part D so financially unpalatable that Elevance is dumping 150,000 members (with more insurers likely to follow), the ACA's regulatory framework turned vertical integration and 340B expansion into smart business strategies rather than patient care improvements, and CVS's $290 million fine for allegedly gaming Medicare suggests these market distortions create perverse incentives that someone always ends up paying for. It's almost as if trying to avoid budget line items today just creates more expensive, more complicated problems tomorrow—but at least those show up in someone else's spreadsheet.

Enjoy the rundown!

Jacob Brody (Co-Founder & CEO, ZorroRX)

(Fierce Healthcare) Elevance Stock Dips on Medicare Exits

Elevance Health’s shares fell about 4% after the insurer announced it will exit the standalone Medicare Part D market and certain underperforming Medicare Advantage (MA) regions, affecting roughly 150,000 members. The move reflects a broader industry trend—mirroring UnitedHealthcare and others—toward shedding unprofitable plans as elevated costs, regulatory shifts, and competitive pressures reshape Medicare offerings, while Elevance doubles down on Medicare Advantage HMOs and dual-special needs plans (D-SNPs). But really, this is what happens when lawmakers raid healthcare “savings” from Part D to bankroll green energy or other unrelated expenses—patients lose options while politicians pat themselves on the back. Full Article

(Reuters) CVS Whistleblower Ruling

A federal judge ordered CVS Health’s Caremark unit to pay nearly $290 million after overcharging Medicare for prescription drugs, tripling earlier damages under the False Claims Act and adding civil penalties. The ruling highlights the government’s push to hold pharmacy benefit managers accountable for fraudulent billing practices that undermine trust in Medicare, as CVS faces multiple large-scale whistleblower lawsuits and plans to appeal. And yet, I just can’t figure out why independent carriers and employer-sponsored plans keep using BUCAH PBMs when they’re constantly getting nailed for allegedly cheating their own clients. Full Article

(CBO) Growth in the 340B Drug Pricing Program

The Congressional Budget Office reports that spending on drugs purchased through the 340B program grew from $6.6 billion in 2010 to $43.9 billion in 2021, averaging 19% annual growth—far outpacing the broader drug market’s 4% growth. The growth was driven partly by marketwide drug spending and higher shares of costly classes like cancer and anti-infective drugs, but also by hospital-clinic integration, expanded participation under the Affordable Care Act, and wider use of contract pharmacies. CBO notes that while the program enables facilities to expand services and generate revenues, it also encourages behaviors that may increase federal spending. Full Article