Data & Analytics

Trends That Matter for Biosimilar Medications Cost Savings

May 7, 2020

Biosimilar medications can offer meaningful cost savings for payers, but market and regulatory barriers are still preventing them from realizing their full economic potential, according to a March 31 Johns Hopkins University study funded by the ERISA Industry Committee.

Biosimilar medications can offer meaningful cost savings for payers, but market and regulatory barriers are still preventing them from realizing their full economic potential, according to a March 31 Johns Hopkins University study funded by the ERISA Industry Committee.

“We could see and empirically prove that patients…tended to be better off if they were on the biosimilar,” Mariana Socal, a physician and researcher at the Johns Hopkins Bloomberg School of Public Health and one of the study’s authors, tells AIS Health. “They had lower out-of-pocket costs when they were on the biosimilar.”

While 16 biosimilars have earned FDA approval, according to the report, most of those drugs are the only biosimilar in their category, creating a duopoly price structure rather than robust market competition with at least three drugs.

Per the report, multiple biosimilars have entered the market for only two drugs, Remicade (infliximab) and Neupogen (filgrastim). The report concludes that, in those categories, biosimilar competition has generated remarkable cost savings and has the potential to generate much more through increased biosimilar use.

For infliximab, the reference biologic Remicade currently has the most covered lives among commercial formularies, while for filgrastim, Zarxio (a biosimilar for Neupogen) is the leader in market access, according to MMIT data.

Radar On Market Access: Anthem, Cigna Brace for Recession-Induced Enrollment Shift

May 7, 2020

Anthem, Inc., and Cigna Corp. both reported slightly better-than-expected medical loss ratios (MLRs) as part of their first-quarter 2020 earnings, in part due to delays in elective procedures resulting from the COVID-19 pandemic. Both insurers also reaffirmed their overall earnings-per-share (EPS) guidance for 2020, AIS Health reported.

Anthem, Inc., and Cigna Corp. both reported slightly better-than-expected medical loss ratios (MLRs) as part of their first-quarter 2020 earnings, in part due to delays in elective procedures resulting from the COVID-19 pandemic. Both insurers also reaffirmed their overall earnings-per-share (EPS) guidance for 2020, AIS Health reported.

But the insurers warned that MLRs may tick up later this year. In addition, they predicted that the impact of COVID-19 may lead to significant shifts in enrollment, as workers who are laid off shift to Medicaid or to the Affordable Care Act exchanges.

Anthem posted a first-quarter MLR of 84.2%, slightly better than the consensus estimate of 84.3%, “likely aided to a limited degree by COVID-19 toward the latter part of the quarter,” Citi analyst Ralph Giacobbe pointed out in an investor note.

Anthem’s second-quarter MLR “should be historically low” due to delayed procedures, but that will be offset by a rebound in volumes, buyback suspension and low net interest/investment income during the second half of the year, Jefferies equities analyst David Windley wrote in an investor note.

Anthem management indicated that 40% to 50% of disenrolled commercial lives will move to Medicaid, while 30% will move into individual health insurance, Windley wrote. “However, this creates an unfavorable mix,” with lower per-member per-month payments, especially in Medicaid, and a move to lower-margin products, he noted.

Meanwhile, Cigna reported an MLR of 78.3%, compared with analysts’ consensus estimate of 79.3%, Giacobbe pointed out in an investor note. Cigna is maintaining its 2020 guidance for EPS and revenue, while dropping its outlooks for MLR and other specific financial metrics.

“The impact of COVID-19 is still developing,” Cigna President and CEO David Cordani said April 30. “We clearly see headwinds driven by the recession that it’s causing, including, for example, disenrollment within our commercial customers, both in our integrated medical business [and] our health service business, as well as some pressure in our group disability business.”

However, Cigna expects “the strength of our first quarter to drive us to another strong year for revenue, earnings and free cash flow,” he added.

Radar On Market Access: Humana, Centene Maintain 2020 Earnings Outlook Amid COVID-19 Pandemic

May 5, 2020

Humana Inc. and Centene Corp. are both maintaining their 2020 earnings outlook despite the emergence of the COVID-19 pandemic and economic contraction at the end of the first quarter, AIS Health reported.

Humana Inc. and Centene Corp. are both maintaining their 2020 earnings outlook despite the emergence of the COVID-19 pandemic and economic contraction at the end of the first quarter, AIS Health reported.

Humana’s revenues increased to $18.9 billion, and it reported $5.40 in adjusted earnings per share (EPS), beating the Wall Street consensus of $4.66 adjusted EPS. Centene’s first quarter revenues increased 41% year-over-year to $26 billion, and it reported an adjusted EPS of $0.86. Centene fell short of the consensus with $0.99 adjusted EPS. Both insurers affirmed their projections for the end of the year, with Humana forecasting adjusted EPS of $18.25 to $18.75 and Centene $4.56 to $4.76.

But both companies warned that the pandemic and recession presented substantial risk, and noted that utilization could spike in the latter half of 2020 due to pent-up demand. They also reported that utilization dropped toward the end of the first quarter, and anticipated the same result for the second.

Analysts were cautiously optimistic about both firms’ outlook for the rest of the year. “We believe that Humana boasts a compelling growth opportunity in the increasingly appealing [Medicare Advantage] market. Furthermore, the company also has an opportunity to drive margins given a potentially more favorable reimbursement environment and the maturation of its high-growth member base,” Oppenheimer’s Michael Wiederhorn wrote in an April 29 note.

Despite Centene’s seemingly less impressive results, analysts were positive or neutral about the firm’s first-quarter performance.

Windley wrote in an April 28 note regarding Centene that “we aren’t expecting ridiculously low 2Q [medical loss ratios] as management guards against an increase in utilization and claims severity. That said, the delay in procedures and incremental revenue from higher Medicaid/[health exchange] membership helps absorb new headwinds such as slower WellCare synergy capture, COVID-19 treatment costs, and adverse impacts on investment income/interest expense.”

Though Centene’s results were less robust than Humana’s, the company indicated it is in a strong position for the remainder of the year. The company has a large Medicaid managed care book, and Medicaid enrollment is certain to spike due to layoffs caused by the COVID-19 pandemic.

Radar On Market Access: Oncology Drugs Drive Price Growth in Medical-Benefit Spend

April 30, 2020

Spending on prescription drugs that are covered under the medical benefit increased by 65% between 2014 and 2018 for commercial insurers and 40% for Medicare, according to Magellan Rx Management’s annual Medical Pharmacy Trend Report.

Spending on prescription drugs that are covered under the medical benefit increased by 65% between 2014 and 2018 for commercial insurers and 40% for Medicare, according to Magellan Rx Management’s annual Medical Pharmacy Trend Report.

“The increase in medical pharmacy spend seems to largely be driven by inflation,” Kristen Reimers, Magellan’s senior vice president of specialty clinical solutions, tells AIS Health. “This can be a combination of two things, increasing costs of existing drugs and providers utilizing newer more expensive drugs. The pipeline was extremely robust and new therapies to market are contributing to inflation, driving the trend.”

According to the report, new oncology therapies are both emblematic and a primary driver of growth in drug prices. A new generation of highly effective, biologic oncology drugs have emerged in the last decade. However, these pioneering drugs are expensive. According to the report, oncology drugs and the drugs needed to support them accounted for 43% of per-patient per-month medical pharmacy spending for commercial carriers.

Like other biologic drugs, most biologic oncology drugs have yet to see significant biosimilar competition due to barriers in the biosimilar market and development pipeline.

“The most exciting biosimilars are those currently in the oncology space. Herceptin, Avastin and Rituxan have been the top five drugs in terms of spend for the last 10 years,” says Reimers. “Rituxan and Avastin now have two biosimilars on the market, and Herceptin has five marketed products. There will be competition, which will help to flatten the trend for these products, although there is still expected to be growth.”

Emerging competition could bolster the already-improving price outlook for more established biologic drugs. However, growth in oncology spending is not likely to stop any time soon. In some ways, this is good news for patients: according to Reimers and the Magellan report, promising new, targeted therapies for hard-to-treat cancers will account for much of the increased spending in coming years.

“The pipeline for oncology is extremely robust, with over 700 drugs being studied for a variety of different cancer types,” Reimers says.

Radar On Market Access: PBMs Say Use of Mental Health Meds Surges Amid COVID-19

April 28, 2020

Newly released data from Express Scripts shows that the number of prescriptions filled per week for antidepressants, anti-anxiety and anti-insomnia medications combined jumped 21% between mid-February and mid-March — reaching a zenith during the week ending March 15, when the COVID-19 outbreak officially reached pandemic status. And analytics from UnitedHealth Group’s OptumRx showed prescription increases of 15% for anti-anxiety medications, 14% for antidepressants and 5% for anti-insomnia medications during the month of March.

Newly released data from Express Scripts shows that the number of prescriptions filled per week for antidepressants, anti-anxiety and anti-insomnia medications combined jumped 21% between mid-February and mid-March — reaching a zenith during the week ending March 15, when the COVID-19 outbreak officially reached pandemic status. And analytics from UnitedHealth Group’s OptumRx showed prescription increases of 15% for anti-anxiety medications, 14% for antidepressants and 5% for anti-insomnia medications during the month of March.

Industry consultants tell AIS Health that they’re not at all surprised that the use of such medications is spiking. And they say that situation creates an urgent opportunity for companies that combine a health insurer with a PBM — like Express Scripts parent company Cigna Corp. and its peers — to leverage their unique insights into members’ health.

“Pharmacies are often the most utilized part of the benefit compared to medical or behavioral, but now, an increase in some pharmacy utilization can actually signal a need to use more of the behavioral benefit,” Peter Manoogian, principal at the health care consulting firm ZS Associates, tells AIS Health.

Rita Numerof, Ph.D., president and founder of the consulting firm Numerof & Associates, says health care organizations should conduct generalized outreach to members that stresses non-pharmaceutical coping mechanisms when appropriate. “Practical guidance, and not looking at this as a mental illness or a mental health issue, in the face of this kind of crisis, is really important,” she tells AIS Health.

For its part, UnitedHealth opened up an emotional support help line and is offering a free on-demand emotional support mobile app called Sanvello to help people “cope with stress, anxiety and depression during the COVID-19 pandemic,” according to a company spokesperson.

Express Scripts, meanwhile, is offering a “digital mental health platform” to its clients at no cost, which “enables members to build resilience and develop skills to better manage stress and sleep issues,” according to Rochelle Henderson, Ph.D., vice president of health services research at the PBM.

Trends That Matter for Bipolar Disorder Medications

April 23, 2020

A recently approved brand drug for bipolar disorder will have little impact on how health plans cover these medications, experts tell AIS Health. Health plans will continue to encourage the use of less expensive generic bipolar drugs.

A recently approved brand drug for bipolar disorder will have little impact on how health plans cover these medications, experts tell AIS Health. Health plans will continue to encourage the use of less expensive generic bipolar drugs.

The brand drug, Allergan plc’s Vraylar (cariprazine), was approved by the FDA to treat depressive episodes associated with bipolar 1 disorder in adults. It is an oral, once-daily atypical antipsychotic.

Health plans employ several utilization management techniques for bipolar drugs, according to Mesfin Tegenu, R.Ph., president of PerformRx. Some examples include prior authorization, duplicate therapy edits, age restrictions and step therapy.

For Vraylar, health plans will use prior authorization or steps to encourage the use of a generic bipolar drug first, Michael Schneider, a principal at Avalere Health, tells AIS Health. There also could be some higher out-of-pocket costs for Vraylar even when compared to some of the other branded antipsychotic drugs.

Vraylar is in a protected drug class on the Medicare side, Schneider says. Because it is the first brand drug of a particular chemical entity, plans have to cover it. In some Medicare plans, Vraylar is disadvantaged because even through it is in a protected class, there are still utilization management techniques placed on the product, as well as higher cost sharing, he says.

In Medicaid, many states require all the antipsychotic bipolar drugs to be on the formulary with no utilization management, Schneider adds.

The graphic below show how bipolar disorder medications are covered among commercial health plans, health exchange programs, Medicare and Medicaid programs under the pharmacy benefit.