Sign up for our daily briefing

Make your busy days simpler with Axios AM/PM. Catch up on what's new and why it matters in just 5 minutes.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on the day's biggest business stories

Subscribe to Axios Closer for insights into the day’s business news and trends and why they matter

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Stay on top of the latest market trends

Subscribe to Axios Markets for the latest market trends and economic insights. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Sports news worthy of your time

Binge on the stats and stories that drive the sports world with Axios Sports. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tech news worthy of your time

Get our smart take on technology from the Valley and D.C. with Axios Login. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Get the inside stories

Get an insider's guide to the new White House with Axios Sneak Peek. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Denver news?

Get a daily digest of the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Des Moines news?

Get a daily digest of the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Twin Cities news?

Get a daily digest of the most important stories affecting your hometown with Axios Twin Cities

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Tampa Bay news?

Get a daily digest of the most important stories affecting your hometown with Axios Tampa Bay

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Charlotte news?

Get a daily digest of the most important stories affecting your hometown with Axios Charlotte

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Pharmacy benefit managers approve and pay for prescriptions. Photo: Brendan Smialowski/AFP via Getty Images

Last year, New Jersey awarded pharmacy benefit manager OptumRx a $6.7 billion contract to oversee prescription drug benefits for the state's 835,000 public employees, retirees and dependents. But now New Jersey has to redo the process after a court said OptumRx "improperly hedged" its contract.

The big picture: There's reason to believe this type of financial hedging exists in most contracts involving the big PBMs.

Driving the news: The New Jersey court faulted OptumRx for inserting a clause that would have guaranteed the PBM's profits by giving it the right to "modify financial contracted terms" if the state tinkered with drug benefits — for example, if the state altered how specialty medications are covered.

  • The judge said the language gave OptumRx, which is part of UnitedHealth Group, "a clear competitive advantage."
  • CVS Caremark, Express Scripts and OptumRx — the three PBMs that bid on the New Jersey contract — did not respond to questions about the court's ruling, their proposals or the state's rebid.

Between the lines: This is like saying you'll sell your house for $200,000, but that price could go up if certain events happen. No buyer would agree to that.

  • Yet "virtually all PBM-client contracts contain language allowing the PBM to change pricing terms and guarantees unilaterally," said Linda Cahn, an attorney who consults with employers on their drug contracts.

Go deeper: According to a contract template Axios obtained earlier this year, Express Scripts has the right to change "rates, administrative fees and/or rebates, solely as necessary to return (Express Scripts) to its contracted economic position" if the following events with their employer clients occur:

  • "A material change in: (i) the conditions or assumptions stated in this agreement; or (ii) the size, demographics or gender distribution of sponsor's membership compared to data provided by sponsor."
  • "Sponsor changes its formulary, benefit designs...or otherwise takes an action that has the effect of lowering the amount of rebates earned."
  • "Sponsor elects to use on-site clinics or pharmacies to dispense prescription drugs to members which materially reduces rebates and/or the number of covered drug claims submitted online."
  • "More than 5% of claims are incurred in Massachusetts, Hawaii, Alaska, or Puerto Rico."
  • "Rebate revenue is materially decreased because brand drugs move off-patent to generic status or due to a change in law."

Translation: Express Scripts could potentially overhaul its drug pricing contracts if employers recruit too many women, or if rebate dollars decrease unexpectedly.

The bottom line: These are large, complicated drug contracts. Dominant PBMs craft the deals in ways that will always be in their interests.

Go deeper

Biden: Disappointing jobs report shows recovery is "a sprint, not a marathon"

President Biden said Friday that the disappointing April jobs report, which showed the U.S. economy added just 266,000 jobs last month, underscores the importance of the COVID-19 relief package and his other proposed spending plans.

Why it matters: Economists had expected a gain of around 1 million jobs last month, making this the biggest payrolls miss, relative to expectations, in decades.

30 mins ago - Health

WHO authorizes China's Sinopharm COVID-19 vaccine for emergency use

A medical worker administering a coronavirus vaccine in Nanjing, China, on May 7, 2021. Photo: Costfoto/Barcroft Media via Getty Images

The World Health Organization authorized China’s Sinopharm’s COVID-19 vaccine for emergency use on Friday, making it the sixth vaccine to receive clearance from the global health agency.

Why it matters: The authorization will allow COVAX, the WHO's initiative to equitably develop and distribute coronavirus vaccines, to purchase Sinopharm's vaccine and bolster its supply, according to the New York Times.

Updated 1 hour ago - Politics & Policy

Coronavirus dashboard

Illustration: Rae Cook/Axios

  1. Health: Coronavirus cases hit a seven-month low — Majority back vaccine proof requirements for travel, schools and work — The race to avoid a possible "monster" COVID variant.
  2. Politics: Why Biden's latest vaccine goal is his hardest yet.
  3. Vaccines: Pfizer begins application for full FDA approval of COVID-19 vaccine — Moderna says its COVID booster shot shows promise against variants.
  4. Economy: U.S. adds just 266,000 jobs in April, far below expectations — Americans' return to the skies could benefit smaller airlines.
  5. World: Amazon postpones Prime Day sales in India and Canada over coronavirus surge — Mixed response in Europe to Biden's vaccine patents bombshell — True COVID-19 death toll is double the official numbers, study finds.
  6. Variant tracker: Where different strains are spreading.