PBM Reform Targets Medicare Profits (Commercial Plans Will Wait), FTC Forces Express Scripts to Stop Hiding Rebates, and ICHRAs Struggle to Fund a Burning ACA Market

Hey all,

Happy Thursday! It seems the healthcare industry has finally decided to swap its "smoke and mirrors" routine for a slightly more transparent brand of chaos. While regulators are busy prying the PBMs' fingers off the Medicare cookie jar and forcing Express Scripts to admit that "net price" is a real concept, the poor souls pushed into ICHRAs are discovering that a shiny employer voucher doesn't go very far when the individual market is burning down. In short, we are witnessing a bold new era of reform where the middlemen are being asked to act like adults just as the actual insurance plans become too expensive for anyone to actually use.

Enjoy the rundown. 

Jacob Brody, co-founder and CEO of ZorroRX. 

[HEALTH CARE un-covered] PBM Reform and Future Legislative Targets

The recent government spending package signed by President Trump implements significant reforms to pharmacy benefit managers (PBMs) by "delinking" their compensation from drug rebates and list prices within the Medicare Part D program. While these changes aim to reduce perverse incentives that inflate drug costs for seniors, they currently do not apply to the commercial market, prompting the Department of Labor to propose new transparency rules that would require PBMs to disclose hidden fees and rebate structures to employer-sponsored plans. This legislative step is a lovely little down payment on progress, though it essentially tells the PBM industry that they can keep their hands in employers’ pockets—at least until Congress finishes its job.

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[Drug Channels] The FTC’s Landmark Settlement with Express Scripts and the Shift to Net Pricing

The Federal Trade Commission has secured a monumental settlement with Express Scripts that fundamentally dismantles the traditional pharmacy benefit manager business model by requiring a shift toward net-price transparency and the elimination of distorted rebate incentives. Under the new terms, Express Scripts must base patient out-of-pocket costs on net prices rather than list prices and implement cost-plus reimbursement for retail pharmacies. This regulatory action signals the arrival of the "Net Pricing Drug Channel" era, which effectively means the industry's favorite game of "hide the rebate" is finally ending, much to the dismay of PBM executives who now have to find a more honest way to make a buck.

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[Modern Healthcare] ICHRA push hampered by sky-high ACA premiums

The growth of Individual Coverage Health Reimbursement Arrangements (ICHRAs) is facing significant headwinds as rising premiums and the expiration of federal subsidies destabilize the underlying Affordable Care Act individual marketplaces. While some vendors remain optimistic about employer interest in cost-saving alternatives, analysts warn that shrinking risk pools and high utilization costs are making these voucher-based plans less affordable and less competitive compared to traditional group coverage. Ultimately, ICHRAs are a bit like a "luxury" voucher for a store that’s currently on fire: they look great in a brochure, but once you step onto the exchange, you realize you're paying a premium price for a plan that’s somehow both more expensive and less useful.

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