Industry Trends

Trends That Matter for Medicare Part D Costs

August 15, 2019

A recently published study in Health Affairs shines a light on a peculiar quirk of the Medicare Part D benefit structure: For some high-priced specialty medications, seniors might pay less out-of-pocket for brand-name drugs than their generic counterparts.

A recently published study in Health Affairs shines a light on a peculiar quirk of the Medicare Part D benefit structure: For some high-priced specialty medications, seniors might pay less out-of-pocket for brand-name drugs than their generic counterparts.

The study found that, assuming a 61% discount between brand-name and generic drugs, Part D beneficiaries with prescriptions costing between $22,000 and $80,000 per year would have lower out-of-pocket spending if they use brand-name drugs over a generic, AIS Health reported.

The graphics below show the annual out-of-pocket savings associated with generic drugs and the median-point-of-sale price differences of brand-name drugs and their generic counterparts.

Radar On Market Access: More Than 1,000 RM/AT Products Are in Pipeline

August 15, 2019

This past quarter saw two new gene therapies: Novartis AG subsidiary AveXis, Inc.’s Zolgensma (onasemnogene abeparvovec-xioi) received FDA approval May 24 for the treatment of spinal muscular atrophy, and bluebird bio’s Zynteglo (autologous CD34+ cells encoding βA-T87Q- globin gene) received conditional marketing authorization from the European Commission for transfusion-dependent beta thalassemia.

This past quarter saw two new gene therapies: Novartis AG subsidiary AveXis, Inc.’s Zolgensma (onasemnogene abeparvovec-xioi) received FDA approval May 24 for the treatment of spinal muscular atrophy, and bluebird bio’s Zynteglo (autologous CD34+ cells encoding βA-T87Q- globin gene) received conditional marketing authorization from the European Commission for transfusion-dependent beta thalassemia.

While only a handful of therapies in the broader regenerative medicine/advanced therapy (RM/AT) space are available globally, a new report shows that is likely to change, as there are more than 1,000 products in the pipeline, AIS Health reported.

The Alliance for Regenerative Medicine published the report, titled Quarterly Global Regenerative Medicine Sector Report: Q2 2019, on Aug. 1. It shows there are 1,069 clinical trials using specific RM/AT technologies, which include gene therapy, gene-modified cell therapy, cell therapy and tissue engineering. Ninety-four of those products are in Phase III trials.

While Zolgensma’s $2.125 million price for a one-time infusion makes it the costliest drug on the planet, many other newer RM/AT products are certainly not cheap. Though many manufacturers are offering various reimbursement schemes, including rebates if a therapy doesn’t work, other outcomes-based deals and multiyear pay-over-time payment options, experts note that many barriers exist in the execution of these strategies.

“In principle, spreading the cost over a five-year period and putting the cost installments at risk based upon efficacy is a good approach,” says Winston Wong, Pharm.D., president of W-Squared Group, about Zolgensma. “However, the devil is in the details. Do we have the systems in place that have the capability to administer a five-year contract?”

According to Wong, “From the manufacturer perspective, a value-based contract implies that no payment would be made if the patient relapses or passes on. Systems are not in place to have the ability to track the patient once therapy is administered.”

Radar On Market Access: Trump’s Drug Importation Plan Faces Significant Hurdles

August 13, 2019

Amid an ongoing outcry against rising drug costs, the Trump administration recently introduced two importation pathways to reduce what U.S. residents pay for drugs, AIS Health reported.

Amid an ongoing outcry against rising drug costs, the Trump administration recently introduced two importation pathways to reduce what U.S. residents pay for drugs, AIS Health reported.

Under the Safe Importation Action Plan, the first pathway would allow states, wholesalers and pharmacists to propose to HHS demonstration projects for importing certain drugs from Canada. Under the second pathway, drug manufacturers could import non-U.S. countries’ versions of their drugs into the United States.

What do health plan executives need to worry about with these two pathways? Not much, at least not in the next couple of years, according to Jigar Thakkar, Pharm.D., a managing director at FTI Consulting.

“There are so many hurdles that this isn’t something that’s going to happen tomorrow or in the next year or two,” Thakkar says. The hurdles include passage of legislation to allow biologics such as insulin to be imported and the ability of drugs imported from other countries to be tracked via FDA-TRACK, the FDA’s agency-wide performance system that monitors drugs during their journey from manufacturer to distributors to pharmacies.

Another significant hurdle is pushback from interest groups in Canada. Bloomberg News reported that the Canadian Medical Association and 14 other groups sent a letter to Canada Health Minister Ginette Petitpas Taylor protesting the Trump administration’s moves.

Deb Devereaux, senior vice president of pharmacy at Gorman Health Group, isn’t optimistic about the success of the first pathway where drugs would be imported to the United States from Canada. “The bottom line is the Canadian drug supply would be exhausted in 16 months with all the U.S. states trying to avail themselves of Canadian drugs,” she says.

Perspectives on Electronic Real-Time Benefit Tool

August 8, 2019

CMS in a final Medicare Advantage and Part D drug pricing rule posted in May finalized the requirement that Part D sponsors implement an electronic Real-Time Benefit Tool (RTBT). While the tool offers the potential to accelerate electronic prescribing, improve formulary adherence and lower prescription drug spending, it may pose a heavy information technology burden for some plans and require effort on the part of plans to encourage prescriber adoption, AIS Health reported.

CMS in a final Medicare Advantage and Part D drug pricing rule posted in May finalized the requirement that Part D sponsors implement an electronic Real-Time Benefit Tool (RTBT). While the tool offers the potential to accelerate electronic prescribing, improve formulary adherence and lower prescription drug spending, it may pose a heavy information technology burden for some plans and require effort on the part of plans to encourage prescriber adoption, AIS Health reported.

According to the rule, each Part D sponsor must implement at least one RTBT capable of integrating with at least one prescriber’s e-prescribing system or electronic health record (EHR) to “provide prescribers who care for its enrollees complete, accurate, timely and clinically appropriate patient-specific real-time formulary and benefit (F&B) information (including cost, formulary alternative and utilization management requirements)” by Jan. 1, 2021.

For proponents of e-prescribing like Point-of-Care Partners, LLC, the new requirement is “really exciting,” says Tony Schueth, CEO and managing partner of the health IT management consulting firm. “We have been trying to include formulary in the e-prescribing process for a long time, and the way we were doing formulary in the past just wasn’t patient-specific enough. So we’re at a really important juncture in the evolution of electronic prescribing and the benefit information being integrated.”

Heidi Harmon, a senior consultant with Gorman Health Group, says pushing back the start date of the RTBT to 2021 was very good news for plans because it will involve a “massive IT undertaking.” CMS had originally proposed that sponsors have the tool ready by Jan. 1, 2020, but pushed back the deadline after hearing from concerned stakeholders, the majority of which suggested delaying the start date until an industry standard becomes available. Harmon also notes that the requirement that a plan have a tool that can work with one prescriber’s system could be interpreted as one prescriber group’s system.

Radar On Market Access: Senate Drug Pricing Legislation Takes Wide-Reaching Approach

August 8, 2019

While there is certainly no shortage of proposals on drug pricing from the administration, a proposed Senate bill is taking a multipronged approach to the issue. The Prescription Drug Pricing Reduction Act (PDPRA) of 2019, introduced by Sens. Chuck Grassley (R-Iowa) and Ron Wyden (D-Ore.), proposes multiple changes to Medicare Part B and Part D, as well as Medicaid. According to a preliminary estimate by the Congressional Budget Office (CBO), 10-year savings to the federal government would total more than $100 billion, AIS Health reported.

While there is certainly no shortage of proposals on drug pricing from the administration, a proposed Senate bill is taking a multipronged approach to the issue. The Prescription Drug Pricing Reduction Act (PDPRA) of 2019, introduced by Sens. Chuck Grassley (R-Iowa) and Ron Wyden (D-Ore.), proposes multiple changes to Medicare Part B and Part D, as well as Medicaid. According to a preliminary estimate by the Congressional Budget Office (CBO), 10-year savings to the federal government would total more than $100 billion, AIS Health reported.

Proposals within the bill include caps on drug price increases in both Part B and Part D, as well as caps on out-of-pocket (OOP) spend for beneficiaries via a complete restructuring of Part D. It also proposes including patient coupons within the average sales price calculation, boosting the add-on payment for a Part B biosimilar from 6% of the reference drug’s ASP to 8% for a five-year period and banning spread pricing in Medicaid.

The CBO’s preliminary estimate shows 10-year savings of $85 billion in Medicare and $15 billion in Medicaid, as well as $32 billion in beneficiary savings.

“Rebates seem to drive a significant amount of savings,” notes Lisa Kennedy, Ph.D., chief economist at Innopiphany, LLC, “but it is hard to see from the CBO analysis if that is from overall price reductions or from the actual rebates that pharmaceutical manufacturers would have to pay.”

“I think what is interesting is the bill managed to capture many of the issues that have been contentious in the public debate recently,” says Jeremy Schafer,

Pharm.D., senior vice president, director, access experience team at Precision for Value. “If you look across the health care marketplace, it seems as though almost everyone is affected in one way or another.”

“The bill presents a huge push towards incentivizing biosimilars in a lot of different ways,” observes Kennedy. She also contends that the OOP cap on Medicare expenditures “is an important patient-centered change.”

Another aspect of the proposal would require PBMs “to become more transparent and share information on the HHS website regarding aggregate discounts,” notes Schafer. “As transparency requirements grow, the PBM business model will be challenged and need to adapt.”

Radar On Market Access: Congress Eyes Measures That Could Affect PBMs

August 6, 2019

Now that the Trump administration has abandoned its bid to overhaul the Medicare Part D drug rebate system, all eyes are on what Congress will do to address the ever-vexing problem of high drug prices, AIS Health reported.

Now that the Trump administration has abandoned its bid to overhaul the Medicare Part D drug rebate system, all eyes are on what Congress will do to address the ever-vexing problem of high drug prices, AIS Health reported.

While some ideas lawmakers are considering could be very problematic for PBMs, industry analysts are dubious about their prospects. Other less-drastic changes, though, could make it into law.

“The bottom line is [that] the most hurtful, the most damaging proposals, at least looking at it from a PBM perspective, we do not think that they will pass,” says Ji Liu, an analyst for the credit rating firm Standard & Poor’s (S&P). Liu and his colleagues recently released a report that analyzes how a handful of health care reform proposals might affect PBMs’ creditworthiness.

One proposal discussed in the report that has since become a more concrete possibility is a package of drug-pricing reforms from the Senate Finance Committee, which includes provisions that put inflation caps on Medicare Part D and Part B prices.

“Depending on how the maximum allowable inflation limit is set, we could see some modest pressure for PBMs,” which generally benefit from higher branded drug inflation because part of their revenue is tied to the list price, S&P’s report says.

In addition to the inflation caps and a slew of other provisions, the Senate Finance Committee’s drug-pricing bill would implement an out-of-pocket spending cap in Part D.

Alex Shekhdar, founder of Sycamore Creek Healthcare Advisors, says it makes sense for Congress to enact a policy that directly affects consumers’ out-of-pocket drug costs.

“Whatever policy comes to pass will focus on changing the price point that the consumer experiences,” he says, adding, “it’s a simpler lift that gets a lot of political gain.”