HHS OIG releases report on vertical integration and Part D

The Department of Health and Human Services (HHS) Office of the Inspector General (OIG) recently issued a report analyzing the impact of vertical integration in Medicare Part D, finding that overall net drug costs were similar between vertically integrated plans and non-integrated plans. According to the findings, vertically integrated plans typically paid higher amounts to pharmacies at the point of sale but recouped more through rebates, fees, and other price concessions, while non-integrated plans paid less upfront and recovered less through back-end adjustments.

The report also found that integrated sponsors paid their own pharmacies slightly less than unaffiliated pharmacies, though data limitations prevented OIG from assessing net payments after adjustments. OIG also noted that it is conducting additional work on this topic, including an audit of contract arrangements between integrated entities and pharmacies in 2023 and 2024.