Drug Costs

Analysts: Inflation Reduction Act Will Have Mixed Impact on Health Insurers

With the Inflation Reduction Act (IRA) now signed into law by President Joe Biden, analysts are predicting that some — but not all — of its health care provisions will be a boon for the managed care industry.

In a new report, insurance industry-focused credit rating firm A.M. Best noted that insurers estimated 2 million to 3 million people would drop their Affordable Care Act exchange policies if enhanced subsidies — which were ushered in as part of coronavirus relief legislation — expired in 2023. The IRA prevented that outcome, however, by extending subsidies for three years. The increased financial aid for enrollees both eliminated the subsidy cliff for higher earning individuals and provided access to zero-premium plans for people on the lower end of the income scale, helping drive enrollment to a record high in 2022.

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CMS Spends Billions on Drugs Granted FDA Accelerated Approval With Unproven Clinical Benefits

Through 2020, CMS spent $68 billion on 38 drugs that were granted accelerated approval from the FDA between 2012 and 2017, with spending after conversion to standard approval accounting for 75% of overall spending, according to a JAMA Health Forum study. However, only 34% of these drugs had a confirmatory trial evaluating a clinical outcome as a primary end point and more than $40 billion was spent for drugs evaluated using surrogate end points. Clinical trials for one drug that converted to standard approval (pembrolizumab) and three that remained unconverted (atezolizumab, durvalumab and olaratumab) for their original indications failed to confirm benefit for primary efficacy end points, while these drugs cost CMS $14 billion in total through 2020. The researchers concluded that “persistent evidentiary gaps should prompt payers to limit spending on promising drugs with unproven benefits.

News Briefs: Longtime Centene CEO Neidorff Dies

Former Centene Corp. CEO and Chairman Michael Neidorff died on April 7, just weeks after he ended his 26-year tenure at the helm of the nation’s largest Medicaid and individual market insurer. Neidorff stepped down from his role leading Centene on Feb. 24 for undisclosed medical reasons, and the insurer’s board appointed a prominent Neidorff deputy, former Optum executive Sarah London, as his successor on March 22. During his marathon tenure, Neidorff transformed Centene from a regional carrier into a publicly traded firm ranked No. 25 on 2021’s Fortune 500. Industry insiders also credit Neidorff with being the first executive to see both Medicaid managed care and the Affordable Care Act exchanges as lucrative businesses.

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