Industry Trends

Perspectives on CVS Bid to Lower Drug Launch Prices

November 1, 2018

In an effort to pressure drug manufacturers to temper their launch prices for new drugs, CVS Health Corp. is rolling out a program in which drugs that have a price exceeding a certain cost-effectiveness threshold will be excluded from coverage, AIS Health reported.

CVS will let clients refuse to cover drugs that have a price tag of more than $100,000 per quality-adjusted life year (QALY), provided they are not designated as “breakthrough”

In an effort to pressure drug manufacturers to temper their launch prices for new drugs, CVS Health Corp. is rolling out a program in which drugs that have a price exceeding a certain cost-effectiveness threshold will be excluded from coverage, AIS Health reported.

CVS will let clients refuse to cover drugs that have a price tag of more than $100,000 per quality-adjusted life year (QALY), provided they are not designated as “breakthrough” therapies by the FDA.

What’s unique about CVS’s move is where that cost-effectiveness threshold comes from: the QALY ratio is based on publicly available analyses from the Institute for Clinical and Economic Review (ICER), a nonprofit organization that conducts comparative-effectiveness research. Experts say it’s the first instance they’re aware of in which ICER is playing a formal role in a PBM or payer’s coverage decisions.

“In theory, I think it’s a great idea,” says Art Shinn, Pharm.D., president of Managed Pharmacy Consultants, LLC. “I think their quality of work is good,” he says of ICER. “From what I have seen of their studies, I think they’re nonpartial.”

However, in a letter sent Sept. 12 to CVS Health Corp. CEO Larry Merlo, nearly 100 patient groups urged him to reconsider the company’s new policy, saying that coverage decisions based on cost-effectiveness “ignore important differences among patients and instead rely on a single, one-size-fits-all assessment.” They also say that ICER’s cost-effectiveness analyses discriminate against the chronically ill, the elderly and people with disabilities by “using algorithms that calculate their lives as ‘worth less’ than people who are younger or non-disabled.”

CVS is not alone in taking steps to push back against high launch prices for prescription drugs. Express Scripts Holding Co., one of CVS Caremark’s chief rivals, “was actually the first to market last year with a more comprehensive and flexible program through our National Preferred Formulary called Exclude at Launch, which helps protect payers from high-priced drug launches,” a spokesperson wrote in an email to AIS Health.

Jayson Slotnik, a partner at Health Policy Strategies, LLC, says CVS’s move may be an attempt to compete with Express Scripts, as the two companies are “racing for market share” in order to demonstrate growth to investors.

Radar On Market Access: Express Scripts Exec Urges Smarter Treatment of HIV

November 1, 2018

At the annual Medicaid Health Plans of America conference, Express Scripts Holding Co. Senior Vice President and Chief Medical Officer Steve Miller, M.D., had a simple message for health plan leaders: “You have to think long term if you’re going to have better outcomes,” AIS Health reported.

One area in which Medicaid is not heeding that call, Miller said, is how it approaches treating and preventing HIV.

While the number of HIV patients is decreasing,

At the annual Medicaid Health Plans of America conference, Express Scripts Holding Co. Senior Vice President and Chief Medical Officer Steve Miller, M.D., had a simple message for health plan leaders: “You have to think long term if you’re going to have better outcomes,” AIS Health reported.

One area in which Medicaid is not heeding that call, Miller said, is how it approaches treating and preventing HIV.

While the number of HIV patients is decreasing, the amount spent on treating HIV has risen in recent years — and the culprit is rising drug costs, Miller said. Thus, Medicaid programs and plans are often choosing to cover the least expensive medications, which tend to be multi-tablet regimens, rather than pricier single-tablet therapies, he said.

While that approach may cost less in the near term, patients treated this way are less likely to be adherent to their treatment plans than those who get a single-tablet therapy.

According to Miller, that link between medication adherence and simplified treatment regimens is key, as medication non-adherence can lead to complications that ultimately make patients more expensive to treat.

Commercial health plans, which have less of an issue with finances than Medicaid, almost always choose single-tablet regimens for patients, according to Miller. Medicaid beneficiaries with HIV, on the other hand, are getting single-tablet regimens less than 60% of the time.

“So the reality is we’re sub-optimizing that care, and therefore we’re actually going to cost ourselves a lot more in the long run,” he added.

Radar On Market Access: Proposed Part D Change Might Not Be “Catastrophic”

October 30, 2018

If the Trump administration gets its way, Medicare Part D plan sponsors may at some point be on the hook for a greater share of costs once beneficiaries reach the catastrophic phase of coverage for prescription drugs. While America’s Health Insurance Plans (AHIP) is opposed to the idea, experts tell AIS Health that the time may be ripe for such a change.

Beneficiaries enter the catastrophic coverage phase when, as of 2018,

If the Trump administration gets its way, Medicare Part D plan sponsors may at some point be on the hook for a greater share of costs once beneficiaries reach the catastrophic phase of coverage for prescription drugs. While America’s Health Insurance Plans (AHIP) is opposed to the idea, experts tell AIS Health that the time may be ripe for such a change.

Beneficiaries enter the catastrophic coverage phase when, as of 2018, their “true out-of-pocket costs” exceed $5,000. Once in that phase, beneficiaries pay no more than 5% of the total cost for their drugs, while the federal government pays 80% and the Part D plan pays 15%.

In its fiscal year 2019 budget proposal, the Trump administration suggests increasing plans’ share of costs for catastrophic coverage from 15% to 80% and shifting Medicare’s share from 80% to 20%. More recently, CMS Administrator Seema Verma said during an Oct. 18 event that the change is one area in which Part D could be “updated and modernized.”

Sean Creighton, a vice president in Avalere Health’s policy practice, says the change is probably needed because health plans will soon bear very little risk in the upper end of the Part D benefit.

AHIP, however, says it “strongly disagrees with the basic premise of this proposal — that incentives alone will produce such cost reductions.” It argues that “plans are already fully incentivized to negotiate vigorously for lower costs” and “drug companies are incentivized to provide price concessions only when leverage exists.”

Creighton says it is possible that shifting more risk to plans could result in higher premiums. But as long as the beneficiary cost-sharing in the catastrophic phase remains the same, the proposed policy change is likely to be “sort of invisible” to members, he adds.

On the other hand, increasing plans’ risk will likely cause them to step up some of their price-negotiation practices, such as excluding drugs from formularies, changing tier placement of drugs, and using prior authorization and step therapy. “So it may lead to a situation where access to particular drugs may become more restricted as the plans seek to contain costs,” Creighton says.

Radar On Market Access: UnitedHealth Bolsters OptumRx With Genoa Buy

October 23, 2018

UnitedHealth Group’s acquisition of Genoa Healthcare — the fifth largest pharmacy chain in the country — gives OptumRx an edge in a competitive PBM space where companies are racing to innovate, one expert tells AIS Health.

Ashraf Shehata, a principal in KPMG’s health care and life sciences advisory practice, says not only does the purchase add to UnitedHealth’s ever-growing size — “and bigger is always better” — but it also helps give the company a boost in a highly competitive environment where the CVS Health Corp./Aetna Inc.

UnitedHealth Group’s acquisition of Genoa Healthcare — the fifth largest pharmacy chain in the country — gives OptumRx an edge in a competitive PBM space where companies are racing to innovate, one expert tells AIS Health.

Ashraf Shehata, a principal in KPMG’s health care and life sciences advisory practice, says not only does the purchase add to UnitedHealth’s ever-growing size — “and bigger is always better” — but it also helps give the company a boost in a highly competitive environment where the CVS Health Corp./Aetna Inc. and Cigna Corp./Express Scripts Holding Co. deals are changing the game.

More broadly, Shehata says the acquisition allows UnitedHealth to further expand its capabilities beyond the traditional health plan and PBM space.

By focusing on behavioral health care, Genoa Healthcare picked a niche that historically has not been one of the more glamorous — or highly reimbursed — focus areas, he points out. However, “what’s nice is that niche now is becoming quite important,” as the opioid epidemic continues to roil the nation and affect both the commercially and publicly insured. “So I think the time is right….This asset is really something that’s very interesting for really a broad swath of the industry now,” Shehata adds.

Shehata says the purchase of Genoa Healthcare lends itself best to OptumRx defining itself as a payer-owned PBM model, rather than a retail-focused PBM or “the ultimate hybrid” of health plan, retailer and PBM — like what the CVS/Aetna combination will create.

That’s because Genoa will bolster OptumRx’s ability to care for populations with complex health needs, he says, which is a function more often associated with a payer-owned PBM.

“A transaction of this kind is really building on the scale and capabilities of the health plan — the ability to really integrate around care management and medical protocols, I think, is going to be critical,” he adds.

Radar On Market Access: Drug Prices Increases Are Expected to Slow

October 18, 2018

Pharmaceuticals are expected to undergo a 4.92% price increase from 2018 to 2019, according to the recently released July-August 2018 Drug Price Forecast from Vizient. That’s actually a slowing from the 7.61% increase for 2018, AIS Health reported.

The company conducted its analysis using price and volume data from hospital and non-acute facilities participating in its Vizient Pharmacy Program. Among Vizient members, therapeutic classes with the highest spend include many with specialty drugs.

Pharmaceuticals are expected to undergo a 4.92% price increase from 2018 to 2019, according to the recently released July-August 2018 Drug Price Forecast from Vizient. That’s actually a slowing from the 7.61% increase for 2018, AIS Health reported.

The company conducted its analysis using price and volume data from hospital and non-acute facilities participating in its Vizient Pharmacy Program. Among Vizient members, therapeutic classes with the highest spend include many with specialty drugs.

Disease-modifying antirheumatic agents lead the way with an estimated 8.57% increase, followed by the immunomodulatory agents for multiple sclerosis, at 7.33%. According to the report, “Based on the total amount of spend across care environments, the types of molecular entities approved by the FDA, and the investigational products in the development pipeline, it is certain that specialty pharmaceuticals will continue to play an increasingly important role in pharmacy budgeting.”

However, a handful of events have occurred that are helping slow drug price increases, including CMS giving biosimilars a unique reimbursement code and pass-through status, as well as the administration’s initiative to bring down drug prices.

Challenges within the system include the fragility of the pharmaceutical supply chain, which is leading to multiple drug shortages, and novel new medications that launch at very high prices.

Perspectives on Indication-Based Formularies in Part D

October 18, 2018

The Trump administration continues to take steps aimed at bringing down drug prices. CMS Administrator Seema Verma said in an Aug. 29 memo to Medicare Part D plan sponsors that they can begin using indication-based formularies in contract year 2020, AIS Health reported.

Starting in 2020, “Part D sponsors may utilize step therapy-like requirements within their [prior authorization] to promote cost-effective drug therapy by requiring the use of one formulary drug for a certain indication prior to authorizing coverage of a second drug for that indication,”

The Trump administration continues to take steps aimed at bringing down drug prices. CMS Administrator Seema Verma said in an Aug. 29 memo to Medicare Part D plan sponsors that they can begin using indication-based formularies in contract year 2020, AIS Health reported.

Starting in 2020, “Part D sponsors may utilize step therapy-like requirements within their [prior authorization] to promote cost-effective drug therapy by requiring the use of one formulary drug for a certain indication prior to authorizing coverage of a second drug for that indication,” explains the memo.

Experts say there are multiple benefits to using indication-based formularies. According to Andrew Cournoyer, R.Ph., vice president at Precision for Value, plan sponsors will have the “ability to negotiate steeper discounts in the specialty space — not tied into a single rate for utilization of a product across multiple indications.”

Plans also will be able “to assign a combination of higher payment and/or lower cost share for a treatment used for a particular indication, where evidence shows that this treatment for that indication is likely to yield a better outcome compared to alternative treatments,” says Elan Rubinstein, Pharm.D., principal at EB Rubinstein Associates. In addition, for uses of a drug in which evidence offers worse outcomes compared with alternatives, plans can “assign a lower payment and/or a higher cost share,” he adds.

The policy, however, has multiple potential downsides and risks. Cournoyer points out that it won’t impact the broader population. And Rubinstein questions “what constitutes sufficient evidence to support preference for one product over another as a matter of policy and benefit design, if there are patient-specific variables such as severity, age, mobility, comorbidities or other matters that should be taken into consideration?”

Rubinstein also suggests that another challenge will be how payers can “verify the correctness of a drug written for a preferred indication.”