Data & Analytics

Radar on Market Access: Milliman Report Shows Health Care Costs Fell in 2020

June 10, 2021

An annual report on the cost of health care prepared by Milliman, Inc. found that, for the first time in years, health care costs for the average American family fell in 2020. However, experts tell AIS Health that is unlikely to happen again any time soon, as the COVID-19 pandemic caused a steep decline in health care utilization.

The report, the 2021 Milliman Medical Index, found that the cost of health care for an average American family of four covered by an employer-sponsored PPO health plan was $26,078, down from $27,233 in 2019, a decrease of 4.2%. Milliman projects costs will increase to $28,256 in 2021.

An annual report on the cost of health care prepared by Milliman, Inc. found that, for the first time in years, health care costs for the average American family fell in 2020. However, experts tell AIS Health that is unlikely to happen again any time soon, as the COVID-19 pandemic caused a steep decline in health care utilization.

The report, the 2021 Milliman Medical Index, found that the cost of health care for an average American family of four covered by an employer-sponsored PPO health plan was $26,078, down from $27,233 in 2019, a decrease of 4.2%. Milliman projects costs will increase to $28,256 in 2021.

Annie Man, Ph.D., a principal and consulting actuary at Milliman and one of the authors of the report, explains that “the decrease was driven mostly by health care utilization,” which dropped off sharply in the second quarter of 2020.

“The COVID pandemic actually added health care costs to the pool — COVID-related testing, treatment and vaccination costs,” Man says. However, that was offset as “elective care was put on hold for many people…as people put off going to the doctor due to the public emergency orders” from state and local officials, which barred patients from going to the hospital for nonemergent procedures.

Trevis Parson, chief actuary for North America health and benefits at Willis Towers Watson, says his firm also expects the cost of care to rebound this year.

“We fully expect that to snap back to where it was, if you look at where people were budgeting for 2020,” Parson says. “By the end of the year, we were already seeing recovery of claims on a monthly basis. So in many ways, the impact of the pandemic has been significantly smaller than it was in Q2 of 2020.”

According to the Milliman report, utilization was down across all categories of care — with the exception of prescription drugs. But the authors project future care to exceed 2019 levels going forward.

However, pharmacy costs continued to rise. Pharmacy expenses grew by 7.2% from 2019 to 2020, and Milliman expects that they will increase by 4.3% from 2020 to 2021.

by Peter Johnson

 

Radar on Market Access: Telehealth Visits, Health Plan Member Satisfaction Rise in 2020

June 8, 2021

More than one-third of privately insured health plan members in the U.S. accessed telehealth services in 2020, up from just 9% a year ago. The increased use of telemedicine and other digital tools and services is correlated with a jump in overall member satisfaction, a study from J.D. Power shows.

The numbers, contained in the J.D. Power 2021 U.S. Commercial Member Health Plan Study, can’t prove the increase in telehealth caused by the pandemic has a causal relationship to improved member satisfaction. But James Beem, managing director for global health care intelligence at the firm, tells AIS Health the study shows “that health plans are becoming more customer-driven and that they came through for member responses” during the COVID-19 pandemic.

More than one-third of privately insured health plan members in the U.S. accessed telehealth services in 2020, up from just 9% a year ago. The increased use of telemedicine and other digital tools and services is correlated with a jump in overall member satisfaction, a study from J.D. Power shows.

The numbers, contained in the J.D. Power 2021 U.S. Commercial Member Health Plan Study, can’t prove the increase in telehealth caused by the pandemic has a causal relationship to improved member satisfaction. But James Beem, managing director for global health care intelligence at the firm, tells AIS Health the study shows “that health plans are becoming more customer-driven and that they came through for member responses” during the COVID-19 pandemic.

“We are only stating that digital contact and telehealth adoption increased since last year,” Beem says. “However, greater engagement among health plan members generally ties to an increase in satisfaction. Digital channels — website, app, text — are less utilized than phone, but associated with higher satisfaction regardless of” member age.

The survey found that telehealth utilization increased by 27% in 2020, with 36% of U.S. health plan members saying they had accessed services. Digital contact with insurers also increased, with 32% of members saying they connected with their health plans via web, mobile app or text message in the last year.

Overall satisfaction improved 10 points year over year on a 1,000-point scale, up from a 6-point increase in 2020, the study found. According to J.D. Power, the rise in satisfaction was driven largely by health plans scoring significantly higher in the categories of cost, information and communication.

Ashraf Shehata, national sector leader for health care and life sciences at KPMG, says that he’s seen similar trends across the industry on client satisfaction and access during the pandemic.

Virtual care has improved engagement with younger members during the pandemic, which could have significant second-order effects, Shehata explains: “I think the more that health plans can engage the younger individuals in their membership to actually use the resources other than sick care, I think we’re going to see a really positive influence.”

Benefit design is key in engaging members in both the younger and older populations and directing them toward the correct digital channel, particularly in cohorts with higher utilization, Shehata says.

by Jane Anderson

 

Trends That Matter for Atopic Dermatitis Medications

June 3, 2021

Dupixent (dupilumab), the first biologic approved for atopic dermatitis (AD), hasn’t shaken up treatment of the condition completely even as it steadily gains market share, since the bulk of plans still require patients to try mostly generic topical drugs first. But more competition could be coming to this category, with the FDA set to consider four new products for AD, including three Janus kinase (JAK) inhibitors, AIS Health reported.

The FDA extended the review period to early in the third quarter of 2021 for Pfizer Inc.’s abrocitinib for the treatment of adults and adolescents with moderate to severe AD. The agency also extended review to the third quarter of Eli Lilly and Co.’s and Incyte’s supplemental New Drug Application for Olumiant (baricitinib) for the treatment of adults with moderate to severe AD, saying it wants to gather additional cost-benefit and safety data.

Dupixent (dupilumab), the first biologic approved for atopic dermatitis (AD), hasn’t shaken up treatment of the condition completely even as it steadily gains market share, since the bulk of plans still require patients to try mostly generic topical drugs first. But more competition could be coming to this category, with the FDA set to consider four new products for AD, including three Janus kinase (JAK) inhibitors, AIS Health reported.

The FDA extended the review period to early in the third quarter of 2021 for Pfizer Inc.’s abrocitinib for the treatment of adults and adolescents with moderate to severe AD. The agency also extended review to the third quarter of Eli Lilly and Co.’s and Incyte’s supplemental New Drug Application for Olumiant (baricitinib) for the treatment of adults with moderate to severe AD, saying it wants to gather additional cost-benefit and safety data.

Meanwhile, the FDA requested additional data on LEO Pharma A/S’s biologic tralokinumab, intended for adults with moderate to severe AD, but only on a device component, not on efficacy or safety, the company said in April. Tralokinumab would offer a novel mechanism of action for AD, noted the latest quarterly Drug Pipeline Insights Report from UnitedHealth Group’s OptumRx, although it also pointed out that “efficacy appears more modest than competing existing treatment options like Dupixent.”

Finally, a topical JAK inhibitor, Incyte’s ruxolitinib, was accepted for FDA priority review in February, with a target FDA action date in late June.

“The new oral and injectable therapies may bring new formulary options compared to Dupixent,” says Mesfin Tegenu, CEO and chairman at RxParadigm. “Depending upon how these new products are priced, market forces may play a role to bring down the annual cost for Dupixent. However, for any responsible prescriber there’s an abundance of generic topical corticosteroids available for treatment.”

At Prime Therapeutics, Dupixent is preferred on the PBM’s standard formulary as a specialty medication, says April Kunze, Pharm.D., senior director of clinical program development. It is subject to utilization management, Kunze says, adding, “there has been more awareness to this category, and biologics such as Dupixent have been approved with good efficacy results.”

Meanwhile, Eucrisa (crisaborole), a steroid-free topical treatment from Anacor Pharmaceuticals, Inc., is preferred on Prime’s standard A-Series NetResults formulary with no utilization management in place, Kunze adds.

The newer agents are unlikely to shake up treatment of most patients, according to Tegenu. “Treatment starts with the more conventional options, as there is much more data available and cost is significantly lower,” he says.

by Jane Anderson

 

Radar on Market Access: GoodRx Acquisition Shows Strong 1Q Performance, May Disrupt PBM Business

June 3, 2021

Prescription drug shopping app GoodRx, Inc.’s 2021 is off to a good start, with strong growth in its first publicly traded quarter yielding enough liquidity for the startup to purchase one of its competitors, RxSaver, for $50 million in cash. Experts say the deal and the company’s strong results are proof that it is here to stay, regardless of how retail giants like CVS Health Corp. and Amazon.com Inc. try to shake up the prescription drug market, AIS Health reported.

GoodRx reported 20% revenue growth year over year for the first quarter of 2021 and 9% growth in prescription volume. It acquired health and wellness video production company HealthiNation in April.

GoodRx gives consumers more transparency and notable savings in point-of-sale drug prices, but critics have pointed out that the company’s model doesn’t address the ballooning list price of prescription drugs by allowing consumers to circumvent the rebate system — and may even contribute to list price growth in the long run.

Prescription drug shopping app GoodRx, Inc.’s 2021 is off to a good start, with strong growth in its first publicly traded quarter yielding enough liquidity for the startup to purchase one of its competitors, RxSaver, for $50 million in cash. Experts say the deal and the company’s strong results are proof that it is here to stay, regardless of how retail giants like CVS Health Corp. and Amazon.com Inc. try to shake up the prescription drug market, AIS Health reported.

GoodRx reported 20% revenue growth year over year for the first quarter of 2021 and 9% growth in prescription volume. It acquired health and wellness video production company HealthiNation in April.

GoodRx gives consumers more transparency and notable savings in point-of-sale drug prices, but critics have pointed out that the company’s model doesn’t address the ballooning list price of prescription drugs by allowing consumers to circumvent the rebate system — and may even contribute to list price growth in the long run.

Ge Bai, Ph.D., an associate professor at Johns Hopkins University’s Carey Business School and Bloomberg School of Public Health, says the RxSaver deal is evidence that GoodRx has promising prospects.

“This is a sweet deal,” Bai says. “They’re crushing their competitors.”

She observes that RxSaver is “very affordable” for a firm of GoodRx’s size, and says that the deal seems to be a play by GoodRx to further expand its market share.

Ashraf Shehata, national sector leader for health care and life sciences at KPMG, says he expects GoodRx will disrupt PBM rebating as it consolidates its position.

He adds GoodRx could expand its contracting reach to disrupt the PBM business itself by going direct to consumers — not just operating at the outer margins of the drug channel.

Shehata can see a future where GoodRx “is more like a PBM model, where they’re going to offer kind of extended, membership-like services. One of them is going to be a point-of-care model. Some of them are literally sold right there at the pharmacist on the front end. And then this web front end. So to me, it’s now going to be a combination of all of these things. I think you’re going to see more of these kind of direct-to-consumer pharmaceutical products that are not directly a PBM infrastructure, but more of a program where you can afford direct-to-consumer rebating.”

by Peter Johnson

 

Radar on Market Access: Smaller PBMs Have Higher Satisfaction Ratings, Survey Finds

June 1, 2021

While client-filed lawsuits against PBMs and regulatory scrutiny of their business models continue to make headlines, a newly released survey finds that plan sponsors’ overall satisfaction with their PBMs is relatively high. But Pharmaceutical Strategies Group’s 2020 Pharmacy Benefit Manager Customer Satisfaction Report also reveals that customer satisfaction of PBMs varies depending on the firms’ size and the type of client being served, AIS Health reported.

“The size of the PBM does make a difference, often in the services that are provided because of scale. It also makes a difference in the types of customers who choose a PBM — so many customers are looking to middle-market, midsized PBMs for more flexibility, where others look to the larger PBMs for perhaps deeper discounts,” Sharon Phares, Ph.D., senior vice president of research and data innovation at PSG, said during a May 25 webinar.

While client-filed lawsuits against PBMs and regulatory scrutiny of their business models continue to make headlines, a newly released survey finds that plan sponsors’ overall satisfaction with their PBMs is relatively high. But Pharmaceutical Strategies Group’s 2020 Pharmacy Benefit Manager Customer Satisfaction Report also reveals that customer satisfaction of PBMs varies depending on the firms’ size and the type of client being served, AIS Health reported.

“The size of the PBM does make a difference, often in the services that are provided because of scale. It also makes a difference in the types of customers who choose a PBM — so many customers are looking to middle-market, midsized PBMs for more flexibility, where others look to the larger PBMs for perhaps deeper discounts,” Sharon Phares, Ph.D., senior vice president of research and data innovation at PSG, said during a May 25 webinar.

In its survey of 269 plan sponsors who provide pharmacy benefits to their employees/members, PSG found that overall satisfaction with PBMs averaged 8.0 on a 1-10 scale in 2020. PBMs with more than 20 million members had a 7.9 average satisfaction rating, while PBMs with 20 million or fewer members scored an 8.6.

Satisfaction levels also varied based on plan sponsor type, with employers averaging an 8.1 out of 10 and labor unions averaging 8.6, while the category comprising health plans, insurance companies and third-party administrators averaged a lower 7.7.

In addition, 84% of respondents indicated that their PBMs were aligned with their goals — with the percentage slightly higher (94%) among clients of small- to midsized PBMs than among clients of large PBMs (82%). Like alignment of goals, another measure — financial transparency — is critical for fostering trust between PBMs and their customers, Tracy Spencer, senior vice president and practice leader for employer groups, labor and health systems at PSG, pointed out during the webinar.

While the percentage of respondents to PSG’s survey who said their financial relationship with their PBM was somewhat or completely transparent was high — 90% — respondents’ overall satisfaction rating with their PBMs’ transparency was only 7.3 out of 10. “Transparent financial relationships typically require that information be as accessible and straightforward as possible…however, there is no standard definition of transparency and if you ask 100 customers how they define it, you’ll get nearly 100 different definitions,” Phares said.

by Leslie Small

 

Perspectives on Alternatives to Traditional PBMs

May 27, 2021

In a sign of pent-up demand as the COVID-19 pandemic winds down, a near-record number of companies likely will consider switching to a new PBM during the 2022 selling season that’s now underway, consultants and observers tell AIS Health.

In addition, generally negative publicity about the PBM industry’s contracts and tactics is leading employers to look at more transparent alternatives to the largest traditional PBMs, says David Dross, national practice leader for managed care pharmacy consulting at Mercer.

“We have seen a tremendous increase in plan sponsors saying they want to look at the big three, but they also want to look at other non-traditional options,” says Dross. “We’ve also had some RFPs [requests for proposals] this year where at the beginning of the RFP, the plan sponsor says they don’t want to go to any of the big three — they only want to go to nontraditional providers.” Cigna Corp.’s Express Scripts, UnitedHealth Group’s OptumRx and CVS Health Corp.’s Caremark comprise the trio of dominant PBMs.

In a sign of pent-up demand as the COVID-19 pandemic winds down, a near-record number of companies likely will consider switching to a new PBM during the 2022 selling season that’s now underway, consultants and observers tell AIS Health.

In addition, generally negative publicity about the PBM industry’s contracts and tactics is leading employers to look at more transparent alternatives to the largest traditional PBMs, says David Dross, national practice leader for managed care pharmacy consulting at Mercer.

“We have seen a tremendous increase in plan sponsors saying they want to look at the big three, but they also want to look at other non-traditional options,” says Dross. “We’ve also had some RFPs [requests for proposals] this year where at the beginning of the RFP, the plan sponsor says they don’t want to go to any of the big three — they only want to go to nontraditional providers.” Cigna Corp.’s Express Scripts, UnitedHealth Group’s OptumRx and CVS Health Corp.’s Caremark comprise the trio of dominant PBMs.

These requests by plan sponsors have nothing to do with the pandemic, Dross says. “It’s a philosophical position on the part of the plan sponsors that they just don’t want to work with one of the big three, because they’re basically opposed to their business model.”

For 2022, the plan sponsors who definitely don’t want to contract with one of the big three PBMs are emphasizing transparency, member experience and customization, Dross says.

Overall, this doesn’t involve enough business right now for the biggest PBM players to “really get worried,” Dross says, but it could pose a threat to them in the future.

“The big three players still do have incredible size and scale compared to the rest of the market — it’s roughly 75% or 80% market share,” Dross says. “But the market dynamic around moving to transparency is real, and it’s definitely something that plan sponsors want.” Dross says he’s seeing “little baby steps around providing additional disclosure around underlying financial structure.”

Peter Manoogian, principal at the consulting firm ZS Associates, says that specialty pharmacy costs are receiving considerable scrutiny from employer groups. “Employers are getting out of the year of hibernation” that occurred as a result of the pandemic, Manoogian says. “It’s shaping up to be a very competitive season from all accounts. Employers are increasingly looking at PBMs’ abilities to manage specialty drug costs proactively as a top decision criteria for selection.”

by Jane Anderson