MMIT brings transparency and guidence to pharmacy and medical benefit information

CMS on Nov. 26 issued a proposed rule making changes to the Medicare Advantage and Part D programs that would take effect in 2020. Key provisions in CMS’s latest drug pricing rule include a proposal to extend new flexibility to plan sponsors in the area of so-called six “protected” drug classes and the required implementation of a new electronic real-time benefit tool (RTBT), AIS Health reported.

CMS on Nov. 26 issued a proposed rule making changes to the Medicare Advantage and Part D programs that would take effect in 2020. Key provisions in CMS’s latest drug pricing rule include a proposal to extend new flexibility to plan sponsors in the area of so-called six “protected” drug classes and the required implementation of a new electronic real-time benefit tool (RTBT), AIS Health reported.

Under CMS’s Contract Year 2020 Medicare Advantage and Part D Drug Pricing Proposed Rule, plans would be able to:

Implement broader use of prior authorization and step therapy for protected class drugs;
Exclude a protected class drug from a formulary if the drug represents only a new formulation of an existing single-source drug or biological product, regardless of whether the older formulation remains on the market; and
Exclude a protected class drug from a formulary if the price of the drug increased beyond a certain threshold over a specified look-back period.
“I think being able to exclude [certain] protected class drugs from the formulary is going to be very significant for plans….And it is going to force the pharmaceutical companies to work more within the formulary managed care communication,” remarks Michael Strazzella at Buchanan, Ingersoll & Rooney PC.

CMS in the proposed rule extended the opportunity given to plans for 2019 to implement appropriate utilization management tools for managing Part B drugs. The new rule included a proposal to modify Part D adjudication time periods for organization determinations and appeals involving Part B drugs to make sure that enrollees maintain access to all medically necessary Part B covered therapies.

“This Part B and Part D comingling will be easier for MA-PD [Medicare Advantage prescription drug] plans that already have a Pharmacy & Therapeutics Committee in place,” says Heidi Harmon at Gorman Health Group. “MA-only plans will now need to develop and utilize a P&T Committee.”

The recent rule also proposed a new requirement that each plan adopt an RTBT by Jan. 1, 2020. This tool would allow prescribers to have a “complete view of the beneficiary’s prescription benefit information.” Plans are encouraged to “promote full drug cost transparency by showing each drug’s full negotiated price.”

“I think it’s going to be very interesting if they decide to try and forward with the tool,” says Strazzella. “Information doesn’t hurt decisions, but whether it gets utilized or not is unclear to me. And if medical decisions are going to be totally based on pricing, that’s a dangerous way to go.” And it would require “constant monitoring” and additional education to providers, which could be challenging, he adds.

According to CVS Health Corp., its acquisition of Aetna Inc. closed on Nov. 28 after receiving the last required approval from a state regulator. But a federal judge appears to have other ideas.

According to CVS Health Corp., its acquisition of Aetna Inc. closed on Nov. 28 after receiving the last required approval from a state regulator. But a federal judge appears to have other ideas.

In a hearing on Dec. 3, Judge Richard Leon of the U.S. District Court for the District of Columbia said he might halt CVS and Aetna’s integration efforts while he reviews the $69 billion deal, according to The Wall Street Journal.

Though the Department of Justice approved the transaction in October — contingent upon Aetna selling off its stand-alone Medicare Part D assets — Leon has the authority to review that settlement, through a statute known as the Tunney Act, to ensure that the proposed remedy for any antitrust issue is in the public interest.

Following a Dec. 3 hearing in which he expressed skepticism about the DOJ’s settlement, Leon ordered the parties involved in the case to “show cause why I should not order CVS to hold its acquired Aetna business as a separate entity and to insulate the management of the CVS business from the management of the Aetna business, and vice versa, until I have made my determination as to whether to enter final judgment in this case,” according to court documents. Written arguments are due by Dec. 14, and Leon plans to hold a hearing on Dec. 18.

So can a federal judge actually halt an acquisition that the DOJ has already approved?

“I don’t believe the Tunney Act extends that far,” antitrust attorney James Burns of Akerman LLP tells AIS Health via email. “The reason why I say that is because, under the Tunney Act, the issue before him is the sufficiency of the remedy that the parties have agreed to, and whether it serves the public interest, not whether the merger itself should be enjoined.”

Thus, Burns says he’s confident that Leon will ultimately approve the CVS/Aetna transaction, as he’s not aware of any case where a federal judge, in the end, rejected a merger settlement that the DOJ proposed.

Just days before CVS Health Corp. said it closed its $69 billion acquisition of Aetna Inc., reports emerged that another retail pharmacy giant and health insurer— Walgreen Co. and Humana Inc. — are in preliminary talks to take equity stakes in each other.

Just days before CVS Health Corp. said it closed its $69 billion acquisition of Aetna Inc., reports emerged that another retail pharmacy giant and health insurer— Walgreen Co. and Humana Inc. — are in preliminary talks to take equity stakes in each other.

Walgreens and Humana are already collaborating on a pilot project in which the insurer opened senior- focused primary care clinics in two Walgreens stores in the Kansas City, Mo., region. Now the companies are in “wide-ranging” talks about either expanding that venture or taking stakes in each other, according to The Wall Street Journal.

If Humana and Walgreens do decide to establish cross-holdings in each other, it would be “a very interesting and shrewd play,” Rita Numerof, Ph.D., president and founder of Numerof & Associates, tells AIS Health.

“We know that a lot of outright M&A doesn’t deliver value at the end of the day,” she says. But taking equity stakes in each other isn’t a true acquisition, “so you don’t have all of the risks and costs associated with bringing [a] business under the umbrella of one that’s very, very different.”

In an note to investors, Leerink analyst Ana Gupte pointed to the upside for Humana. “Equity stakes are a way for the two companies to share economics across the different economic pools across clinical, MA distribution and associated retail pharmacy fills and front store sales, which can drive several hundred million dollars of value for [Humana] annually in EBIT [earnings before interest and taxes].”

But Jefferies analysts wondered if perhaps Walgreens might be the bigger winner, since the pharmacy business model “is under more direct attack from disruptive players than are health plans” and “partnering with [Humana] helps [Walgreens] drive market share.”

Jay Godla, a partner at PwC’s Strategy&, says that there could certainly be synergies produced by Humana and Walgreens buying stakes in each other. But any arrangements that are less than a full merger or acquisition can include issues around commitment, agility, not-so-well aligned goals and objectives, and inability to make quick decisions, he notes.

The talks reportedly going on between Humana and Walgreens “could be a starting point for a long-term future merger,” Godla adds.