Spotlight on Market Access

CVS Health Corp.’s Caremark is the latest big PBM to offer clients new pricing models that the company claims will increase transparency and reduce overhead. Experts say that the new offerings are not as transparent as CVS claims they are, and constitute a response to various pressures including likely federal PBM reforms, scrutiny from plan sponsors and disruptive business trends like the growth of Mark Cuban Cost Plus Drug Co.

Most experts expect that the new CVS offerings, called CostVantage and TrueCost, will only make a marginal difference — if any — in either drug costs or price transparency. Industry observers point to similar product rollouts by the other two of the Big Three PBMs, UnitedHealth Group’s Optum Rx and The Cigna Group’s Express Scripts, neither of which seemed to dampen the firms' PBM earnings. Express Scripts’ ClearCareRx and Optum Rx’s Cost Clarity launched in April and May, respectively. Express Scripts also rolled out a new “cost-plus pharmacy pricing” option, called ClearNetwork, in November.

As of the third quarter of 2023, enrollment in both employer-based plans and Medicare Advantage plans had risen compared to the same period in 2022, according to AIS’s Directory of Health Plans. Managed Medicaid membership dropped year over year by approximately 2.1 million lives and plummeted by nearly 5 million lives from the fourth quarter of 2022, as states starting in April resumed their Medicaid eligibility redeterminations processes. Meanwhile, the Affordable Care Act marketplace scooped up many disenrolled Medicaid beneficiaries, adding more than 3.1 million new members year over year.

In the midst of uncertainty around the U.S. economy, dealmaking in the life sciences industry held steady in the third quarter, with 194 deals unveiled or closed. That’s one of the findings from KPMG’s third-quarter 2023 report on life sciences merger and acquisition (M&A) activity. Dealmaking varied based on the actual sector, but the industry may be poised to ramp up activity as the year comes to a close, according to one industry expert.

Third-quarter 2023 was the fifth in a row that the industry’s major sectors — medical devices, pharmaceutical services, and diagnostic and lab services — remained steady, notes Kristin Pothier, leader of KPMG’s Global and US Healthcare & Life Sciences Deal Advisory & Strategy.

The FDA recently approved the two newest cell and gene therapies, with one of them earning the distinction of being the first of its kind approved by the FDA. As more of these products launch onto the U.S. market — the agency previously predicted that it would be approving 10 to 20 of the treatments by 2025 — payers are taking a variety of approaches to managing the therapies.

Dec. 8 saw the newest approvals, both for the treatment of sickle cell disease in people at least 12 years old: bluebird bio, Inc’s Lyfgenia (lovotibeglogene autotemcel; lovo-cel) and Vertex Pharmaceuticals Inc. and CRISPR Therapeutics’ Casgevy (exagamglogene autotemcel; exa-cel). The latter agent is the first CRISPR/Cas9 genome-edited cell therapy that the FDA has approved. The one-time treatments come with hefty price tags: Lyfgenia is priced at $3.1 million and Casgevy at $2.2 million.

Almost two months after a U.S. district court judge struck down a federal rule allowing health plans to not count copayment assistance against members’ out-of-pocket costs, ruling in favor of patient advocacy groups in a lawsuit against HHS, the agency has signaled that it will not — at least for the time being — take action against plans based on how they treat that assistance. The agency in a recent court filing also said it plans to issue rulemaking in response to the September ruling and requested feedback from the judge on his decision. Shortly thereafter, the plaintiffs appealed the government’s move.

To help patients pay for pricy therapies — usually specialty drugs — pharmaceutical manufacturers offer assistance that can help cover their out-of-pocket costs. Companies claim that the assistance helps improve patient adherence to medications that often treat rare and deadly conditions. But critics of them say such programs incentivize drugmakers to raise prices of these agents.

About 81% of people covered by 35 insurers and PBMs representing 117.8 million lives were enrolled in plans with copay accumulators as of September 2023, compared with 89% in 2022, according to data collected by AIS Health’s parent company, MMIT. About 71% of people were enrolled in plans with copay maximizers, down from 76% in 2022. However, on average, payers anticipated a 30% increase in the number of plan sponsors opting into such programs next year and a 14% increase in member enrollment in plans with copay accumulators and maximizers.

Copay accumulators prevent any monetary assistance that pharmaceutical companies offer commercially insured patients from counting toward their deductible or out-of-pocket maximum. Copay maximizers distribute the total amount of a manufacturer’s copay-offset funds over 12 months, making that amount the new monthly copayment on any given drug over the course of a year.

For years, health plans have turned to the prior authorization (PA) process to help prevent the use of unnecessary medications or medical procedures, improve patient outcomes and reduce costs. But as their use has exploded, physicians have pushed back, calling the restrictions onerous and accusing them of hampering their ability to provide care. Now, following years of complaints about PA, several health plans are cutting back on their use of the tactic, potentially spurring others to do the same.

Payers have used PA for decades to help reduce low-value or unsafe care, in turn protecting patients from ineffective or even harmful care and cutting down on waste and unnecessary costs for patients and plans alike. A Milliman report commissioned by the Blue Cross Blue Shield Association and published March 30, 2023, found that if PA were eliminated in the commercial market, increases in premiums could be between $43 billion and $63 billion annually.

Founded in 2013, Alignment Healthcare, Inc. is one of several tech-enabled startup insurance companies, also known as "insurtechs," that have gone public in recent years. Alignment brings a highly personalized, concierge approach to Medicare Advantage (MA) and also serves Medicare-Medicaid dual eligibles. The company has offered co-branded plans with Rite Aid since 2021 and for 2024 will partner with Walgreens and Instacart on new product offerings. Alignment's traditional and co-branded offerings are enhanced by supplemental benefits such as pre-loaded debit cards, flex allowances for dental, vision and hearing, as well as access to nontraditional medicine such as acupuncture and chiropractic care. While all of the public insurtechs have struggled to become profitable, Alignment's CEO John Kao projects the company will break even in 2024 and start turning a profit in 2025.

Hype of artificial intelligence reached new heights in 2023, and the health care industry was no exception to that trend. Health insurance firms have been among the first organizations to deploy previous generations of big data tools at scale, and in turn, AI is set to proliferate among health insurers in the near future. How AI adoption will actually impact health insurance operations and finances is an open question.

Some insiders, like Moody’s Investors Service analysts, expect health insurers to reap dramatic operational and financial benefits by deploying AI. Other experts disagree, including a group of Stanford University researchers who published a Nov. 16 op-ed in JAMA arguing that due to the extreme complexity of medical administration in the U.S., AI using large language models (LLMs) “might exacerbate billing challenges for physicians” and could lead to additional challenges of filed claims by carriers.

Nearly 4.6 million people have enrolled in Affordable Care Act marketplace coverage since the start of the 2024 open enrollment period on Nov. 1, a 36% increase compared to the same point during the 2023 OEP, according to CMS. This year’s open enrollment season will last from Nov. 1, 2023, to Jan. 15, 2024, in most states and longer in some state-based marketplaces (SBMs).

More than 4 million people have enrolled through HealthCare.gov in the 32 states that use that platform, and another 501,962 have enrolled across 18 states and the District of Columbia, which use their own marketplaces. Most states are seeing significant membership growth in 2024 compared with the same period last year. Mississippi reported a signup surge of almost 114%.