Record 340B Spending Powered by High-Cost Meds and Looming Cuts, Federal Employee Plan Audit Reveals Anthem's Self-Dealing, and PBM Reform Theater Continues With New Branding

Hey all,

Happy Monday! The rundown returns from its hiatus last week with the money keeps flowing to the same places, just through increasingly creative channels. 340B purchases hit $81.4 billion as covered entities ramp up operations ahead of Medicaid cuts, Anthem generated a 62% profit margin on federal employee health benefits by billing its own subsidiary as a third-party vendor, and PBMs are announcing "transparent" pricing reforms while maintaining the same profit mechanisms through different fee structures. The pattern is consistent—when one revenue stream gets scrutinized, simply reroute it through a subsidiary, rebrand it as something else. Reform is coming, apparently, just as soon as everyone finishes maximizing the current arrangement.

Enjoy the rundown!

Jacob Brody, (Co-Founder and CEO of ZorroRX)

(340B Report) 340B Drug Purchases in 2024

Total 340B drug purchases surged to a record $81.4 billion in 2024—a 23% increase from 2023—driven by rising drug prices, greater healthcare utilization, and a growing reliance on high-cost specialty medications. Ten drugs accounted for about one-third of all 340B spending, led by Merck’s Keytruda ($8.2B), Gilead’s Biktarvy ($4.2B), Bristol Myers Squibb’s Eliquis ($3.6B), Regeneron’s Eylea ($3.2B), Vertex’s Trikafta ($2.8B), Merck’s Lagevrio ($2.4B), AbbVie’s Mavyret ($2.3B), Johnson & Johnson’s Tremfya ($1.6B), Gilead’s Descovy ($1.6B), and Pfizer’s Ibrance ($1.5B). But hey, with looming Medicaid cuts and the expiration of ACA subsidies in 2026, many covered entities are ramping up their 340B operations—so this number’s only going one direction. Full Article

(Health Care Un-covered) Anthem’s 62% Profit Margin in Federal Health Plan Audit

A federal audit revealed that Anthem, operating under Elevance Health, exploited its role in the Federal Employees Health Benefits Program (FEHBP) to generate a 62% profit margin by channeling subrogation work to its own subsidiary, Carelon, and billing the government as if it were a third-party vendor. This maneuver allowed Anthem to bypass administrative cost limits by disguising profit as medical claims—raising serious concerns about systemic oversight failures in a $70 billion federal program serving over 8 million people. Anthem’s open defiance, refusal to provide documentation, and dismissive tone throughout the audit process almost gives the impression they feel invincible and unaccountable—but surely that couldn’t be the case. Full Article

(WSJ) Drug Pricing Reform in the PBM Industry

A push for simpler drug pricing by companies like Cigna and CVS is being framed as transformative, but the underlying system—dominated by opaque middlemen known as pharmacy benefit managers (PBMs)—remains largely unchanged. While some new models promise upfront discounts and rebate-free pricing, many of the same profit mechanisms persist through hidden manufacturer fees and complex arrangements that still disadvantage patients. As scrutiny from regulators, media, and disruptive competitors mounts, big PBMs are tweaking practices to stay ahead—but don’t worry, they’ll still find a way to get paid handsomely for “helping” keep costs down. Full Article.