CVS Health, Cigna Make the Case for Greater PBM-Insurer Integration

November 25, 2019

Cigna Corp. and CVS Health Corp. — organizations that both recently combined a PBM and a health insurance business — are striving to prove to investors that they’re seeing valuable benefits from such vertical consolidation.

Executives from CVS, which purchased Aetna Inc. in late 2018, during the company’s third-quarter 2019 earnings call on Nov. 6 said that having such a diversified enterprise is helping it win over PBM clients for its Caremark division.

Cigna Corp. and CVS Health Corp. — organizations that both recently combined a PBM and a health insurance business — are striving to prove to investors that they’re seeing valuable benefits from such vertical consolidation.

Executives from CVS, which purchased Aetna Inc. in late 2018, during the company’s third-quarter 2019 earnings call on Nov. 6 said that having such a diversified enterprise is helping it win over PBM clients for its Caremark division.

For the 2020 PBM selling season — which runs from March to July — “our focus was to go to market with a more integrated medical-pharmacy offering,” said Karen Lynch, CVS Health executive vice president and Aetna president, according to a transcript of the call from Thomson Reuters. To that end, she noted that Caremark saw “increased traction in overall pharmacy penetration” for its employer-sponsored business during the 2020 selling season, particularly among Aetna’s existing medical-benefits clients.

While CVS has won $4.9 billion in gross new business during the 2020 PBM selling season — up from the $3.8 billion that it previously projected — “net new business is projected to be down -$6.4B overall (vs. -$7.4B previously),” due to the loss of Centene Corp.’s business and other non-renewals, Citi Research analyst Ralph Giacobbe wrote in a Nov. 6 note to investors.

Looking ahead to the 2021 selling season, “I think we’re seeing a fair amount of activity and pipeline build,” Lynch said.

Caremark President and CVS Health Executive Vice President Derica Rice said Caremark is introducing its HealthHUBs to both its health plan and employer clients, and it is seeing a lot of interest. In fact, two of the PBM’s health plan clients are now working with CVS on pilots related to its HealthHUBs. In response to a follow-up inquiry from AIS Health, CVS declined to reveal which health plans are involved in the pilots.

Meanwhile, “in the pharmacy space, we’re excited about what our pharmacists are doing in partnership with data coming to us from the Aetna business unit,” which helps the company identify patients who need the most help managing chronic conditions, Kevin Hourican, executive vice president of CVS Health and president of CVS Pharmacy, said during the call.

CVS’s PBM segment generated total revenues of $36.01 billion in the third quarter, a 6.4% year-over-year increase that also beat the Wall Street consensus estimate of $34.85 billion, Giacobbe noted. “Top-line growth was driven by brand drug price inflation as well as increased total pharmacy claims volume, but was partially offset by continued price compression and an increased generic dispensing rate,” he wrote.

Express Scripts Boosts Cigna Earnings

Cigna, which purchased Express Scripts Holding Co. in 2018, said a major driver of its better-than-expected quarterly financial results was the performance of its health services segment, which includes its PBM business. That book of business reported pretax operating earnings of $1.4 billion, which beat Wall Street’s consensus of $1.36 billion and far surpassed the $67 million it earned in the third quarter of 2018 — before Cigna’s purchase of Express Scripts closed.

In its earnings release, Cigna said the segment’s third-quarter 2019 results were thanks to “organic growth in adjusted pharmacy script volumes, strong performance in specialty pharmacy care and effective execution of supply chain initiatives.” On an adjusted basis, Cigna’s health services division fulfilled 312 million prescriptions in the third quarter, up from 294 million in the prior quarter, and the firm now expects its adjusted pharmacy prescription volume to grow by 25 million to 35 million in 2020.

On the specialty pharmacy front, Cigna is “quite pleased” with the positioning, ongoing innovation and strength of Express Scripts’ Accredo business, CEO David Cordani said during the company’s Oct. 31 earnings call, according to a transcript from Seeking Alpha. The impact of drug launches this year as well as the increasing use of existing therapies that Accredo manages have helped drive the growth of the specialty business, added Cigna Chief Financial Officer Eric Palmer.

Cordani also highlighted new programs launched by the combined Cigna/Express Scripts, such as the Embarc benefit protection program, which allows clients to pay a per-month fee to help finance two costly gene therapies if a member ever needs them.

ESI Deal Still Spells Uncertainty

Wall Street still holds some concerns, however. Giacobbe pointed out that Cigna’s Express Scripts deal still “brings integration risk as well as uncertainty around client retention as well as general headline risk given the focus on drug pricing and evolving PBM model.”

During Cigna’s earnings call, one analyst asked Cordani about how he thinks the PBM legislative and regulatory environment will play out — particularly since the Trump administration abandoned its proposal to remake the prescription drug rebate structure. But Cordani demurred, saying the conversation should be about how the market is seeking more value and affordability when it comes to prescription drugs.

“We expect to continue to see an evolving regulatory environment, but equally or more important, a more accelerated, evolving innovation environment and that is what we are driving towards,” he said.

For its part, Cigna is helping to increase affordability by offering innovations such as its Patient Assurance Program, which allows members in participating plans to pay no more than $25 for a 30-day supply of insulin, Cordani added.

by Leslie Small



Payers Say They Will Use New MS Drugs to Get Better Deals

by Angela Maas

When the FDA approved Biogen Inc. and Alkermes plc’s multiple sclerosis (MS) capsule, Vumerity (diroximel fumarate), in late October, it joined a crowded therapeutic class. According to a Zitter Insights survey, most payers will use newer oral and generic products to obtain larger discounts for intravenous (IV) and subcutaneous (SC) MS agents.

Vumerity is indicated for the treatment of relapsing forms of MS, including clinically isolated syndrome, relapsing-remitting disease and active secondary progressive disease. The FDA approved the treatment through a new drug application under the 505(b)(2) pathway, with reference drug Tecfidera (dimethyl fumarate) from Biogen. It is the third MS drug approved this year following the March approvals of Novartis Pharmaceuticals Corp.’s Mayzent (siponimod) and Mavenclad (cladribine) from EMD Serono, a unit of Merck KGaA. Both are tablets.

The class also has multiple generic versions of Copaxone (glatiramer acetate) from Teva Pharmaceutical Industries Ltd. The pipeline also includes generics of Novartis’ Gilenya (fingolimod) and Biogen’s Tecfidera (dimethyl fumarate).

For the Managed Care Biologics and Injectables Index: Q1 2019, Zitter surveyed pharmacy and therapeutics (P&T) committee members who work for 50 commercial payers with 174.1 million covered lives between Feb. 22, 2019, and April 5, 2019. When asked how their plans expected to respond to the availability of new oral and generic MS therapies, 72% of respondents said they were more likely than unlikely or significantly likely to use the new products as leverage to get better discounts and rebates from manufacturers for IV and SC drugs (see chart below).

In addition, 17% said they were more likely than unlikely or significantly likely to put the oral products in a separate market basket to be managed differently than the other treatments. Of the payers citing this response, the preferred oral therapies included Aubagio (teriflunomide) from Sanofi Genzyme, a Genzyme Corp. unit; Gilenya; Mavenclad; and Tecfidera, with one payer mentioning Vumerity.

Asked whether they would create three market baskets, splitting up oral, IV and SC therapies, 41% of respondents said they were more unlikely than likely or not at all likely to do this.


Reality Check: Uveitis



Pharmacy Benefit

Under the pharmacy benefit, almost 45% of the lives under commercial formularies are covered with utilization management restrictions. Around 24% and 33% of the lives under commercial and health exchange formularies, respectively, are not covered for at least one of the drugs.

Medical Benefit

Under the medical benefit, about 19% of the lives under commercial policies are covered with utilization management restrictions. More than 45% of the lives under Medicare policies have access to the medications without restrictions.



Trends From AIS Health

FDA Grants Orphan Drug Designation

In June 2019, the FDA granted orphan drug designation to Palatin Technologies, Inc.’s PL-8177 for the treatment of noninfectious intermediate, posterior, pan and chronic anterior uveitis. Palatin has conducted a single and multiple ascending-dose Phase I study with PL-8177 for ulcerative colitis under an investigational new drug (IND) application. The company says it plans to file an IND application for noninfectious uveitis with the FDA in 2019.

Via PR Newswire

Actemra Shows Efficacy

Intravenous Actemra (tocilizumab) showed efficacy in noninfectious uveitis, according to data from the STOP-Uveitis study presented at the 2019 American Academy of Ophthalmology meeting. The researchers randomly assigned patients with noninfectious uveitis to receive 4 mg/ kg or 8 mg/kg of IV tocilizumab every four weeks for six months. The study shows that 83.8% of the eyes they studied demonstrated a positive response.

Via Healio

Biologics Are Becoming First-Line Choice

Biologic medications are becoming the first-line choice for treating non-infectious uveitis, while they were originally considered second- or third-line choices, according to David K. Scales, M.D., who practices at Retina and Uveitis Consultants of Texas. There is also a need for immunomodulating drugs in the management of this class, he adds.

Via Healio


Key Findings

Market Events Drive Changes

In June 2019, the FDA granted orphan drug designation to Palatin Technologies, Inc.’s PL-8177 for the treatment of noninfectious intermediate, posterior, pan and chronic anterior uveitis. New biosimilars for Johnson & Johnson unit Janssen Biotech, Inc.’s Remicade (infliximab) were launched in 2016 and 2017, but will not have this indication because the biosimilars take on only the FDAlabeled indications of the reference product.

Competitive Landscape

The uveitis market is characterized by a small selection of marketed drug options: corticosteroid therapies, immunosuppressive therapies and biologics. Historically, corticosteroid therapies have made up the bulk of the market. Currently, only one targeted therapy is approved for this use: AbbVie Inc.’s Humira (adalimumab). The late-stage uveitis pipeline is composed of Santen Pharmaceutical Co., Ltd.’s Opsiria (sirolimus) and Clearside Biomedical, Inc.’s CLS-TA, which are expected to address some unmet needs. These new drugs will expand the options available to treat uveitis patients and contribute to overall treatment options by offering novel treatment mechanisms, including new drug delivery routes and novel, noncorticosteroid drug molecules.

Medical and Pharmacy Benefit Implications

Most drugs process through the medical benefit, but some payers push the products through specialty pharmacies. Some treatments are now available in self-injectable form and can be obtained via the pharmacy benefit. Triesence may process through the pharmacy benefit.



As Step Therapy Use Increases, Federal and State Bills Are Taking Aim at Payer Strategy

November 18, 2019

Step therapy has long been a go-to utilization management strategy for payers, as it is often applied to specialty pharmaceuticals. But as more and more costly drugs come onto the U.S. market, the practice has become nearly ubiquitous, prompting some pushback from various stakeholders, including providers, patients and manufacturers. Spurred by the blowback, many states — as well as the federal government — are taking a variety of steps to address the process with an eye on helping patients access drugs in a timely fashion.

Step therapy has long been a go-to utilization management strategy for payers, as it is often applied to specialty pharmaceuticals. But as more and more costly drugs come onto the U.S. market, the practice has become nearly ubiquitous, prompting some pushback from various stakeholders, including providers, patients and manufacturers. Spurred by the blowback, many states — as well as the federal government — are taking a variety of steps to address the process with an eye on helping patients access drugs in a timely fashion.

Twenty-five states have passed legislation around step therapy, and legislators in both houses of Congress introduced bills this year that target step therapy. Many of their aspects are similar, including bringing more transparency to payers’ appeals process, as well as providing specific instances when patients and providers can circumvent the step-therapy process, which can be a polarizing tactic.

Opinions are all across the board on the strategy’s usefulness. “Step therapy can be a very good method of ensuring that patients always get the treatment that is clinically best for them,” states Lisa Kennedy, Ph.D., chief economist and managing principal at Innopiphany LLC. “In theory it should ensure that they consistently receive the safest, most effective and best tolerated treatment — this could be a biosimilar or an originator product. If you look at many clinical guidelines, they essentially are based around a step-therapy approach, and payer step therapy could theoretically reinforce this.”

Use of step therapy among Prime Therapeutics LLC clients “varies by every plan/payer according to their needs, and there’s an ever-growing number of drugs,” says David Lassen, Pharm.D., chief clinical officer at the PBM, which is collectively owned by 18 Blues plans, subsidiaries or affiliates of those plans. “Step therapy is really only used when there are multiple drugs in a category that treat the same condition and work relatively the same. It’s this competition among equally safe and effective drugs that then allows for examination of savings opportunities for the plan and member.”

According to F. Randy Vogenberg, Ph.D., principal at the Institute for Integrated Healthcare, step therapy “has been used to augment prior approval (PA) processes as a method to control utilization and costs of pharmacotherapy by managed care/third party administrators (TPAs). PA remains the best way to not pay or contain rising costs from a managed care perspective.”

“Health insurers have the responsibility to institute programs that limit health care spending,” points out Kim Diehl-Boyd, vice president of industry relations and government affairs at CoverMyMeds. “Step therapy has long been used by insurers, and supported by regulation, as a means by the plan to ensure that the most cost-effective, clinically appropriate medication is being utilized by the patient at the onset of a diagnosis.”

Larry Kocot, the national leader of KPMG’s Center for Healthcare Regulatory Insight, tells AIS Health that “when used effectively, step therapy can help prevent the use of more costly, unnecessary medications, thereby helping to control overall prescription costs and ensuring that patients receive the most economical and effective treatment for them. Patient affordability is an important aspect of meaningful access, requiring health plans to achieve a careful balance between cost and access when instituting step-therapy policies.”

Indeed, when the current administration reversed a longstanding rule and began allowing Medicare Advantage (MA) plans to use step therapy for Medicare Part B medications as of Jan. 1, 2019 (SMA 9/18, p. 13), CMS cited its reasoning as “introduce[ing] much-needed competition and negotiation into the market for physician-administered and other Part B medications that will result in better deals and lower drug costs for patients.” MA plans that also offer prescription drug coverage may deploy step therapy to have a beneficiary use a drug under Part D before stepping to one under Part B. The policy change applies to new prescriptions only.

Underscoring that declaration is a study by consulting group Visante Inc. that was commissioned by the Pharmaceutical Care Management Association (PCMA) and released in January 2019. Its analysis found that prior authorization can produce savings of up to 50% for certain drugs and therapeutic classes, with step therapy resulting in savings of more than 10% for targeted categories. PCMA is a PBM advocacy group.

“These tools are becoming increasingly important in managing the rapidly growing use of high-cost specialty pharmaceuticals, so the lost savings associated with restrictions on PA and ST [i.e., step therapy] would become greater as specialty drug expenditures grow,” according to the report. “The loss of savings from PA and ST would increase projected drug expenditures by an estimated 4.6% over the next 10 years.” The report also notes that patients and physicians can appeal a prior-authorization or step-therapy requirement, which “safeguards against the use of PA and ST being too restrictive.”

Numerous challenges, however, exist with step therapy, maintain many industry experts. Kocot says there is “some evidence that although step therapy often results in reduced prescription drug spending, outpatient services spending can increase.” He also points out that “exceptions often rely upon clear clinical evidence such as patients’ prescription history.” But with different patient responses to therapies and “unique underlying health factors, granting exceptions can rely in part on physicians’ attestation of those facts. These attestations can sometimes involve subjective assessments of what is best for the patient without underlying data to support the decision.”

One criticism of step therapy is that it gets in the way of physician prescribing, as well as causes administrative burdens for practices. “Step therapy, like other prior-authorization requirements, complicates prescriber decision making and reduces prescriber and office efficiency,” says Elan Rubinstein, Pharm.D., principal at EB Rubinstein Associates. Kocot adds that while the clinical evidence used to establish step-therapy protocols “may be applicable to most patients, it is possible that certain individuals may not have typical responses or protocols.”

Rubinstein points out that generics are typically the first step patients must take, “but when a branded drug is required, one payer’s step-therapy policies may differ from another’s with respect to the branded drugs that must be tried first and failed. Because physicians treat patients covered by many different payers, it is challenging for physicians to efficiently manage different step-therapy requirements, beyond the first commonly agreed generic step.”

“The problem arises when step therapy is applied for cost reasons in the absence of clinical rationale and even worse when there is a financial rebate for drugs on a formulary, requiring patients to step through treatments not because of clinical reasons but because a payer or PBM receives a financial rebate for this (e.g., in commercial plans),” Kennedy says. “Also, a lot of legislation has put thought into only applying this to new patients and equally reducing the amount of time required for a patient to remain on a drug — as these two areas can be very problematic for patients.”

For example, many payers are specifying the duration of each step required for anti-inflammatory biologics (SMA 4/15/19, p. 1). “It’s a growing restriction that we see in immunology,” says an industry expert who asks not to be identified. “There is a hierarchy in immunology, especially in plaque psoriasis, with so many products that are available. There is a pecking order.…You’ve got to go through this and then that and then one of these other things. But that doesn’t get to the question about how long you need to be there.” The source tells AIS Health that a couple of years ago, the practice of “some brands…contracting specifically for step duration to be a certain amount of length” started becoming fairly widespread.

Critics point out that step therapy could delay much-needed care for patients. “In cases of rare diseases, conditions of high acuity and time-critical treatment,…step therapy can complicate or delay a patient’s rapid access to the right treatment,” says Kennedy. “If a patient is subject to stepping through treatments, and this delays getting the correct treatment on time, this can have a monumental impact on outcomes and is a perfect example of where misapplied, step therapy can result in sicker patients who suffer more and are placed at greater risk of death.”

Diehl-Boyd notes that “programs like CoverMyMeds that make this process electronic address this challenge, in many instances resulting in same-day determinations, but there is still room for improvement.”

Another challenge, says Vogenberg, relates “to biologics and specialty drugs and the use of copay and coupon programs by manufacturers.” He points to a study he did that “showed limited value from an employer/plan sponsor perspective when taking all plan management factors into account. As the determination of advantages/disadvantages as value swings more to the plan sponsor versus TPA, the value is minimized compared with traditional studies and PBM reports that only take into account their scope of coverage, even before taking outcomes into account. For manufacturer programs to offset step [therapy] and PA by managed care if [drugmakers] are disadvantaged, it’s more of a game that doesn’t really benefit anyone — especially the patient who everyone says they are looking out for. Over time, the base price of drugs coupled with increases in price…reduce the value of those therapies along with affordability by the patient. In addition, this game around management and drug pricing has not helped manufacturers while enriching TPAs/PBMs for no added value to the patient or plan sponsor.”

Bills Have Bipartisan Support

As step therapy becomes more common, legislators on both sides of the aisle are trying to bring some transparency to the process. On April 10, Reps. Raul Ruiz (D-Calif.) and Brad Wenstrup (R-Ohio) introduced H.R. 2279, known as the Safe Step Act. The bill, which had 109 additional co-sponsors as of Oct. 31, has been referred to the Committee on Education and Labor. And on Sept. 25, eight senators, including Sen. Lisa Murkowski (R-Alaska), introduced S. 2546, a companion bill also known as the Safe Step Act. The legislation had two additional co-sponsors as of Oct. 22. It has been referred to the Committee on Health, Education, Labor and Pensions.

Both bills seek to amend the Employee Retirement Income Security Act (ERISA) of 1974 “to require a group health plan (or health insurance coverage offered in connection with such a plan) to provide an exceptions process for any medication step therapy protocol, and for other purposes.” They call for plans to “implement a clear process” for requesting an exception and a maximum of 72 hours for insurers to respond to exception requests. For situations where step therapy “may seriously jeopardize the life, health, or ability to regain maximum function of the participant or beneficiary,” those requests must be granted within 24 hours. They list multiple circumstances that would authorize coverage for a drug without adhering to a step-therapy process.

Those exceptions include:

✦ When the drug or another from the same class has been ineffective,

✦ When a treatment delay “would lead to severe or irreversible consequences” and the treatment is “reasonably expected to be ineffective,”

✦ When required treatments are contraindicated or likely to cause an adverse reaction,

✦ When required therapies are likely to prevent people from performing their job or daily activities, and

✦ When people are stable on current drugs and have received previous approval for them “by any group health plan or health insurance issuer.”

The bills also allow for additional circumstances for exceptions.

According to the National Psoriasis Foundation, 18 states have laws in effect targeting step therapy, and another seven have passed legislation that has not yet taken effect. The laws differ from state to state, but many of them include some of the same components of the federal legislation. For example, many states require insurers to respond to exception requests within 72 hours or 24 hours in the case of an urgent situation. If they fail to do so, the exception is automatically granted. Texas requires plans to notify members of any modifications to step-therapy requirements at least 60 days before they are effective. Some legislation applies specifically to Medicaid. And almost all the states include at least one of the exceptions listed in the federal bills. In addition, many laws targeting electronic prior authorization (ePA) also are in effect, which could accelerate patients’ access to drugs with step-therapy requirements.

Many health plans have language in their pharmacy and medical benefit policies around step therapy that outline their process but only in the absence of a state mandate. “I don’t think that this is at all an uncommon practice,” Kennedy tells AIS Health, adding that this language likely is seen most with payers administering plans for self-insured employers “and to a certain degree Part D drugs, especially for tightly managed therapeutic areas (e.g., diabetes).”

Vogenberg agrees. “Most [payers] all use the same or similar strategies and use many of the same consultants to advise them on clinical pharmacy programs. There has been little to no innovation in this area since biologic and specialty drugs have hit the market, which is part of the problem in running PA/step-therapy tactics designed for earlier generation mass-market drugs.”

However, that’s not to say that the laws’ implementation has been seamless. According to the American College of Rheumatology (ACR), “the ad hoc approach some states take creates barriers to additional reforms.…Practitioners in states that do not have a comprehensive step therapy law often report that there has been no improvement in step therapy override processes or the paperwork associated with getting an override approved. California is perhaps the best example of this phenomenon. The ACR has had substantial feedback from California physicians indicating the paperwork required for step therapy override requests has not been reduced. The enforcement mechanism to punish violators of the statute is also inadequate. California is not alone in problematic approaches to step therapy.”

So to whom does enforcement of the laws fall?

As far as the federal legislation, the Department of Labor (DOL) is responsible for oversight of ERISA, Kocot tells AIS Health. “Although DOL has historically focused oversight primarily on retirement plans, such as 401(k) plans, health plans’ audits have increased as a result of requirements in the Affordable Care Act. DOL investigations and plans’ audits most often occur as a result of beneficiary complaints, rather than through random audits; thus, enforcement traditionally has been primarily reactive, rather than proactive.”

Continues Kocot, “enforcement of state laws may differ significantly depending on how those statutes are written and which state agencies or bodies have jurisdiction. However, in general, beneficiary appeals oversight in the private market is less robust than in Medicare and Medicaid managed care. Providers are the first step in the process for determining whether a patient may be eligible for an exception, although their judgment may rely upon a combination of clinical evidence and other more subjective factors. Collection of evidence to support the health plan’s ultimate decision about acceptance or denial of an exception rests with other members of the care team, including administrative support. Generally only a patient or legal representative or the patient’s physician can formally appeal a benefit coverage decision. At the same time, employers, who are accountable to both investors and markets, are expecting health plans to effectively manage the trade-offs between ensuring appropriate access to medications and controlling costs through benefit designs that prevent unnecessary utilization.”

According to Diehl-Boyd, “adherence to the legislative or regulatory mandates outlined in the various state utilization management rules fall to the plan to ensure adherence. Oversight of compliance to states’ utilization management lies typically within the department of health or department of insurance. However, the provider and patient can play a significant role in ensuring that the regulations are followed by the plans as each state and CMS provide means in which a provider or patient can seek appeals or register a complaint against an insurer if they feel the insurer is not performing in accordance with utilization management laws, including step therapy or other prior-authorization provisions.”

“Providers are caught in the middle while also sometimes contributing to the problem in order to maximize their own revenue stream,” Vogenberg tells AIS Health. “The system as a whole around reimbursement and value across HCP stakeholders needs alignment to the care outcomes being sought by plan sponsors and patients as purchasers of care.”

With payers doing business in several states, some of which may have legislation enacted and some of which may not, how do they make sure they’re complying with the law?

Prime Therapeutics, Lassen tells AIS Health, has “a dedicated team that tracks laws.”

Payers may take a variety of approaches, says Kocot, but “for ease of administration and risk management, some may enact plan policies across all states that comply with the requirements of the state with the most restrictive policies. However, in practice much of the benefit coverage determination process plays out in appeals processes that are not particularly transparent. Payers and providers may have legitimately different views on what constitutes compliance.”

“Payers are brilliant at this — they already have to navigate state-specific laws and requirements, so they’ll just add this to the pile of regulations,” says Kennedy. “Also, unlike some other regulations, this probably is less onerous in that it is simply extending to a new group of patients something that they already apply.”

Diehl-Boyd tells AIS Health that “all states have prior-authorization or utilization management laws that govern how a plan must comply with the variances found within the multiple jurisdictions. Health insurers put significant resources into their compliance programs to ensure they are following the various mandates. Many have codes of ethics that they make readily available on their website.” And for payers in states where laws have passed but not yet taken effect, “along with their compliance and legal departments, plans will coordinate with their vendor partners to ensure timely implementation of any legislative or regulatory mandate related to utilization management,” she says.

“By not addressing these issues, it will leave TPAs/payers in a very problematic situation of their own making,” observes Vogenberg. “This may further hurt consumers through increased costs of doing business and consolidation among TPA/payer entities.”

According to Diehl-Boyd, these utilization management strategies aren’t going away any time soon. “Because specialty drugs and the utilization thereof account for a large and growing percentage of care and the high cost attached to many of the therapies, you can anticipate that the use of step therapy (i.e., prior authorization) will continue as well.”

However, she continues, “there are significant inroads being made in the industry via innovative and technological advances that we can expect the time frames in which a patient has to wait to begin therapy for the specialty medication, even when step therapy is required, will begin to diminish over time.” She cites AMP: Access for More Patients, a technology-driven program from CoverMyMeds and RxCrossroads by McKesson that “fundamentally changes the way patient support for specialty therapies is provided.”

“Utilization management programs are important because they can protect the patient from harm and also save the member money,” maintains Lassen. “However, the traditional processes are not necessarily easy for anyone in the system to use. Prime is making critical investments in technology enhancements to automate the process and work upstream at the point of care so the physician will have all the information about a patient’s benefits and can prescribe them the best medicine for their situation while they’re still in the clinic. This will greatly improve patient experience, and it will take the member out of the middle.”

View information on step-therapy legislation by state at

Contact Diehl-Boyd via Angela Masciarelli at, Kennedy at, Kocot via Bill Borden at, Lassen through Karen Lyons at, Rubinstein at and Vogenberg at

by Angela Maas


ICER Releases Report on Drug Price Hikes; Opinions Vary on Its Usefulness, Impact

As the spotlight continues to focus on drug prices and companies’ pricing strategies, an industry watchdog group has published the first of many planned reports on the topics. The Institute for Clinical and Economic Review (ICER) released the inaugural edition of the series last month, offering fodder to critics of the pharmaceutical industry. But others question the findings. Still, the report should give some momentum to the various drug pricing efforts, industry experts tell AIS Health.

The Unsupported Price Increases Report, unveiled Oct. 8, evaluated a list of the 100 drugs with the most U.S. sales revenue during 2018. The data was provided by SSR Health, LLC, a division of independent investment company SSR, LLC. ICER withdrew 23 drugs from the mix that did not have a wholesale acquisition cost (WAC) increase greater than twice the increase in medical consumer price index (CPI) from fourth-quarter 2016 through fourth-quarter 2018.

“For the remaining 77 drugs, we determined, where possible, the increase in spending on these drugs in the US during 2017-18 that was due to increases in net price,” which is the WAC net of discounts, rebates and other price concessions, according to the report. That data was estimated by SSR Health combining “available data on unit sales with data published in manufacturers’ earnings reports on US sales revenue for each drug.”

ICER selected the top 10 drugs. It deleted two — Biogen’s Avonex (interferon beta-1a) and Amgen Inc.’s Enbrel (etanercept) — based on manufacturer-submitted information and added one, Celgene Corp.’s Revlimid (lenalidomide), based on public input.

“The goal of these assessments was to determine whether there was new clinical evidence in the prior three years (2016 through 2018) for the drugs under review,” said the group. “Based either on submissions from manufacturers or an ICER systematic review, ICER reviewed randomized clinical trials, high quality comparative observational studies, and, for low frequency harms, large uncontrolled studies. For drugs with multiple indications, evidence was sought for indications responsible for at least 10% of a drug’s utilization.”

ICER used the system known as GRADE (Grading of Recommendations, Assessment, Development and Evaluations) to evaluate new evidence. That framework rates evidence as very low, low, moderate or high quality. Price increases for products with moderate- or high-quality new evidence were considered increases “with new clinical evidence.” Two drugs — Gilead Sciences, Inc.’s Genvoya (elvitegravir/cobicistat/emtricitabine/tenofovir alafenamide) and Revlimid — fell into this category.

The drugs that ICER found to have price increases that were not supported by new clinical evidence were:

✦ Humira (adalimumab) from AbbVie, Inc., which had a 19.1% increase in WAC and a 15.9% increase in net price.

✦ Rituxan (rituximab) from Biogen and Genentech USA, Inc., a Roche Group unit, which had a 17% boost in WAC and 23.6% in net price.

✦ Lyrica (pregabalin) from Pfizer Inc., which had a 28.3% WAC hike and 22.2% net price rise.

✦ Truvada (emtricitabine/tenofovir disoproxil fumarate) from Gilead, which had a 14.3% increase in WAC and 23.1% increase in net price.

✦ Neulasta (pegfilgrastim) from Amgen, which had a WAC that rose 14.6% and a net price that increased 13.4%.

✦ Cialis (tadalafil) from Eli Lilly and Co., which had a 26.2% WAC increase and 32.5% rise in its net price.

✦ Tecfidera (dimethyl fumarate) from Biogen, which had a 16.7% WAC boost and a 9.8% net price increase.

Of the two excluded drugs, Genvoya’s WAC rose 14.3% and its net price increased 21.7%, while Revlimid’s WAC rose 25.8%. No net price change was included for Revlimid in the report, which said, “because of lack of face validity, we do not show the change in drug spending for 14 drugs that had a net price higher than WAC price in at least one of the eight quarters in which data were captured.”

Per the report, the increase in net prices for the seven top drugs resulted in a rise of more than $5.1 billion in total U.S. drug spending from 2017 to 2018. Humira accounted for more than $1.9 billion of that total.

ICER acknowledged that it “does not have the capacity to perform full economic analyses on the nine therapies evaluated in this report, nor would the time needed to develop full ICER reports (at least eight months) provide information in a useful timeframe for the public and policymakers. Therefore, this UPI report cannot determine whether the price increases for the two drugs that had new clinical evidence are justified or meet an ICER value-based price benchmark. Instead, the analyses focused on whether substantial new evidence existed that could justify a price increase. By identifying whether there is, or is not, new evidence of improved safety or effectiveness for drugs with substantial price increases we hope we have taken an important first step in providing the public and policymakers with information they can use to advance the public debate on drug price increases.”

Payers increasingly are putting more stock into ICER assessments.

For the Managed Care Biologics and Injectables Index: Q2 2019, Zitter Insights surveyed pharmacy and therapeutics (P&T) committee members who work for 49 commercial payers with 173.7 million covered lives between May 30, 2019, and July 20, 2019. Respondents indicated that they expected an increase in their organizations’ looking to ICER as influential or highly influential in their decision making over the next three years (see chart).

AIS Health and Zitter are both owned by MMIT.

P&T member respondents from 29 commercial payers with 69.1 million covered lives and from 21 Medicare payers with 21.1 million covered lives cited supporting risk- or value-based contracting as the main action they used ICER reports for over the last one to three years (see chart, p. 3).

Report Prompts Array of Reactions

Still, ICER has been an organization on which industry experts have a wide array of opinions, and this report was no different.

“If anything, this propelled the list price versus net price issue further into the public eye — most people weren’t aware of this, and so this helped highlight this issue,” says Lisa Kennedy, Ph.D., chief economist and managing principal at Innopiphany LLC. “Also, most products on the list were at the end of their length of exclusivity, so their budget impact had greater impact versus their price rise — and this would be a budget impact that is an empirical reflection of the product’s value.”

“This list of drugs and their net cost impact over two years adds fuel to the fire of Congressional concern with out-of-control drug prices,” says Elan Rubinstein, Pharm.D., principal at EB Rubinstein Associates (SMA 10/7/19, p. 1). “This issue isn’t going to go away … pressure will continue to build as drug prices continue to increase, both at launch and over time, individually and in the aggregate, compared to what other industrialized nations pay.”

He points to an opinion piece in the Nov. 2 New York Times penned by its editorial board that examines the Lower Drug Costs Now Act (H.R. 3) and the savings it could provide: $345 billion in federal spending over seven years and $158 billion in out-of-pocket costs over 10 years. But to realize these savings, “Americans will need to accept a trade-off that other advanced nations have long since come around to: Slightly fewer new drugs will come to market, in exchange for better prices on the medications that already exist.”

This “sobering view…that, because drug prices have become unaffordable for many, reduced innovation may be a price worth paying” is, Rubinstein says, the “first time I’ve heard this opinion expressed in a widely distributed mainstream credible publication.”

Fein: This Is ‘Name-and-Shame Exercise’

However, others doubted the usefulness of the report. Adam Fein, Ph.D., CEO of Pembroke Consulting, Inc.’s Drug Channels Institute and author of the Drug Channels blog, told STAT that “this is another meaningless name-and-shame exercise that tells us nothing about true drivers of health care spending. Some of the data appear to contradict publicly available information about net drug price changes. And I think ICER is being arbitrary in saying that any increase in a drug price must be tied to new clinical evidence. There is no medical product or service in the U.S. for which that is the rule. The cost of things goes up.”

The methodology that ICER used, Kennedy tells AIS Health, “has a few issues in that net price may not have increased at all yet a manufacturer could still end up on the list — that’s a real problem.” However, responds Rubinstein, “yes and no on whether a real problem, because some manufacturers raise WAC and deepen discount, leaving net alone — but the result of doing that is more money in rebates that go into PBM/insurer/employer pockets. It is unfortunately the case that a higher WAC paired with a higher rebate is attractive to these payers.”

Payers May Put Drugs on Radar

Asked what payers can do with the information in the report, Rubinstein says payers may choose to give the listed drugs further analysis and attention. Kennedy points out that “I suspect that many of these treatments are so old with such entrenched contracts with payers that it won’t do much.”

In addition, she says, “I think that price divorced from value is a futile exercise — what we need is a better understanding of the value for money that these products bring.”

According to Rubinstein, “ICER’s objective and the explicit way in which it met that objective is the key takeaway from this report — that is, by calling out particular drugs and dollars, the ICER report turned up the heat on those manufacturers, a shot over the bow to other manufacturers and grist for the mill for the overall pricing debate — at a time when there are many bills pending to address drug prices in the Congress.” The bottom line, he says, echoes the New York Times editorial: “Drugs are becoming unaffordable, and this [editorial] represents initial stirrings for discussion of whether the price that may be paid to ratchet back cost in terms of lower innovation may be worth paying. In my view, this is a debate that we need to have, because the cost of health care in this country, including pharmaceuticals, is multiples of what any other country pays and, depending on your point of view, is not supportable or is not worth supporting.”

What Are Americans Willing to Accept?

So, he continues, “are Americans ready to accept a centralized and powerful (in the sense of being empowered to say that X drug is not payable) system such as U.K.’s NICE [i.e., the National Institute for Health and Care Excellence] to assess acceptable price in context of a particular drug versus its therapeutic competitor value? Or are we willing to skirt the issue of directly doing this analysis, by linking our acceptable drug prices to the prices paid in a market basket of advanced economies,” as seen in the International Pricing Index floated by the federal government and proposed in H.R. 3.

“Since the U.S. drug market dwarfs all others worldwide, this international reference pricing approach would be a bit like an elephant thumbing a ride on the back of a horse,” says Rubinstein. “But the horse is likely to realize that this ride is for the long haul, that it has consequences (e.g., manufacturers aren’t likely to give those referenced countries steep price breaks knowing that those breaks boomerang back to U.S. prices) and decides it doesn’t like it much.”

View the ICER report at For more information on the Zitter data, contact Jill Brown at Contact Kennedy at and Rubinstein at

by Angela Maas

This story was reprinted from AIS Health’s monthly publication RADAR on Specialty Pharmacy. Visit


Reality Check: Narcolepsy


Our Point of View

First-line treatment for narcolepsy generally involves stimulant medications such as methylphenidate, amphetamines or modafinil/armodafinil, says Mesfin Tegenu, R.Ph., president of PerformRx. Some stimulants are available in generic form, and “many plans may require trial(s) of an available generic product prior to payment of a brand-only formulation, or trial of less costly alternatives to higherpriced generic items if there’s a significant price difference,” he says. April Kunze, Pharm.D., senior director, clinical formulary development and trend management strategy at Prime Therapeutics LLC, says that “plans can choose to implement a step-through-generics program for narcolepsy medications to ensure generics are used first line. Additionally, some plans may choose to exclude higher-cost products in favor of the generics.”




Under the pharmacy benefit, more than 66% of the covered lives in commercial formularies have utilization management restrictions. Across all drugs, more than half of the lives under Medicare pharmacy benefit formularies are not covered for at least one of the drugs.


For 75% of the  covered lives, payer pharmacy benefit formularies do not require step therapy (ST). Of the lives that require ST, 41% require multiple steps. More than 67% of payer-controlled pharmacy benefit covered lives require prior authorization, with 16% consisting of policies that are restrictive as compared with a product’s FDA-approved label.


AIS Health’s View

The older medications for the condition, which affects around one in every 2,000 people in the U.S., don’t always work, and tend to lose their effectiveness over time even if they were successful at first. But two newly approved narcolepsy medications offer novel, possibly more effective options to people for whom older drugs aren’t working well: The FDA in March approved Jazz Pharmaceuticals’ Sunosi (solriamfetol), the first dual-acting dopamine and norepinephrine reuptake inhibitor, for adults with narcolepsy or obstructive sleep apnea. In August, the agency approved Harmony Biosciences, LLC’s Wakix (pitolisant), a selective histamine 3 receptor antagonist/inverse agonist that works to increase histamine in the brain. Sunosi was launched in July, and Wakix is expected to be launched later this year.


Trends From AIS Health

Health Plans Wait for More Data on New Narcolepsy Medicines

Two newly approved narcolepsy medications offer novel, possibly more effective options to people for whom older medications aren’t working well, but most plans are requiring patients and providers to try generic alternatives first. The older medications for narcolepsy, a condition that affects around one in every 2,000 people in the U.S., don’t always work, and tend to lose their effectiveness over time even if they were successful at first.

Subscribers to AIS’s RADAR on Drug Benefits may read the in-depth article online

Datapoint: New Narcolepsy Drug to Compete With Xyrem

Harmony Biosciences last week won its first-ever FDA approval for its narcolepsy drug Wakix. The drug will be a direct competitor to Jazz Pharmaceuticals’ Xyrem, which currently holds preferred status in the pharmacy benefit for 11% of covered lives, growing to 23% with prior authorization and/or step therapy.

Via AIS Health

FDA Approves Harmony’s Wakix

The FDA approved Harmony Biosciences, LLC’s Wakix (pitolisant) for the treatment of excessive daytime sleepiness in adults with narcolepsy. The product is a first-in-class medicine, a selective histamine 3 (H3) receptor antagonist/inverse agonist. The company says Wakix will be available in fourth-quarter 2019.

Subscribers to AIS’s RADAR on Specialty Pharmacy may read the in-depth article online


Key Findings

Market Events Drive Changes

Multiple agents in the pipeline include several Phase III agents, one of which is a once-daily product that is the same chemical as Xyrem.

Pharmacy Benefit Implications

Nearly all products are covered but almost exclusively restricted by prior-authorization policies. The pharmacy benefit is dominant, and Xyrem provides the largest coverage variance with its Risk Evaluation and Mitigation Strategies program. Analeptics (Nuvigil/Provigil) are first line in the treatment pathway as they are available generically. Following that, generic immediate-release central nervous system stimulants are often second line, with Xyrem reserved for third line due to costs and safety.


AIS Health’s View

Treatment guidelines for narcolepsy generally call for both pharmaceutical and non-pharmaceutical approaches to be used together. For example, proper sleep hygiene at night — with a regular sleep schedule and around 7.5 to eight hours of sleep per night — may help patients avoid falling asleep during the day. Some patients also benefit from scheduled naps, and physicians urge an exercise program for patients, particularly young patients. Still, Tegenu says he doesn’t know of plans that encourage or require non-pharmacologic approaches to narcolepsy prior to or in addition to drug treatment as part of drug utilization management.


Plans Stick With Parkinson’s Generics, Eye New Gene Therapies in the Pipeline

November 11, 2019

Although three new drugs for Parkinson’s disease have been approved over the last year, plans generally are sticking with the drugs they’ve included on formularies for several years, most of which are generic, experts say.

That may change in the long term as new gene therapies that currently are in development are approved and come online (see box, p. 4). But none of those potential new treatments are close to market right now,

Although three new drugs for Parkinson’s disease have been approved over the last year, plans generally are sticking with the drugs they’ve included on formularies for several years, most of which are generic, experts say.

That may change in the long term as new gene therapies that currently are in development are approved and come online (see box, p. 4). But none of those potential new treatments are close to market right now, says Mesfin Tegenu, R.Ph., president of PerformRx.

“Many commonly used therapies for Parkinson’s disease — carbidopa-levodopa, MAO-Bs, dopamine agonists — have available generics, which on most plans would be considered formulary options, or one generic product within each class would be selected as formulary,” Tegenu tells AIS Health.

The FDA in August approved Kyowa Kirin, Inc.’s Nourianz (istradefylline) tablets as an add-on treatment to levodopa/carbidopa in adult patients with Parkinson’s disease experiencing motor fluctuations, known as “off” episodes. In February, the FDA approved Osmotica Pharmaceutical US LLC’s Osmolex ER (amantadine) for the treatment of Parkinson’s disease. And in late December, the FDA approved Accorda Therapeutics’ Inbrija (levodopa inhalation powder) for intermittent treatment of off episodes in people with Parkinson’s disease taking carbidopa/levodopa.

Still, plans are stocking their formularies (see graphic below) with less expensive generic medications, of which there are numerous options. Parkinson’s disease treatment generally progresses through drugs that have a moderate effect but fewer side effects to drugs that are more effective, but have more significant side effects, Tegenu says.

“Choice of which pharmacotherapy to use initially is individualized based on the characteristics of the patient, the disease and the drugs,” he says. “There is no single preferred therapy, and trade-offs are common. Optimal care requires a flexible trial- and-error approach. Further treatment additions and changes are based on patient symptoms and response.”

Tegenu says there are four main classes of agents for Parkinson’s disease:

✦ Monoamine oxidase-B (MAO-B) inhibitors, which include selegiline and the brand name product Zelapar (selegiline hydrochloride; formulated to dissolve by mouth for people who can’t swallow pills). These drugs block an enzyme that breaks down levodopa. According to Tegenu, they have modest effects but are well tolerated and convenient. “They’re limited to use in patients with mild symptoms,” he says.

✦ Amantadine, which may cause the brain to release more dopamine. This drug also has modest effects, Tegenu says, but is well tolerated. It’s typically used in early Parkinson’s.

✦ Dopamine agonists such as pramipexole and ropinirole. These have “immediate potency for improving motor symptoms [and] lower risk of motor complications than levodopa,” Tegenu says, but they also carry a higher risk of somnolence, hallucinations and impulse control disorders. They’re not well-tolerated in older adults and those with cognitive dysfunction, he says.

✦ Levodopa, which is “the most effective agent for control of motor symptoms, but is less convenient and requires more frequent dosing,” Tegenu says. It also carries the highest risk for motor complications, he says.

April Kunze, Pharm.D., senior director, clinical formulary development and trend management strategy at Prime Therapeutics LLC, notes that a fifth class of drugs — anticholinergics — is used to control tremor in Parkinson’s patients.

“All of these drug classes have medications that are available generically,” Kunze tells AIS Health. “In general, the choice of treatment of Parkinson’s disease depends on the patient and their disease state. Each drug has its trade-off.”


MMIT’s Take: Parkinson’s Disease

“The treatment for Parkinson’s Disease is based on the patient’s specific symptoms,” Tracy Bilardo, a client success lead at MMIT, tells AIS Health. “Treatment regimen typically involves levodopa [a dopamine promoter] in combination with other agents to treat ‘off’ episodes,” motor fluctuations that occur in patients between levodopa doses. Bilardo says the Parkinson’s market is largely dominated by generic drugs, as many of the disease’s therapeutic options are long-tenured.

However, she adds that “multiple new branded options have become available in recent years with differing modes of administration,” and notes that the market has a full pipeline, so market dynamics could shift in the near future.

“Branded treatment options are primarily covered on the pharmacy benefit, with Apokyn and Duopa straddling both pharmacy and medical benefits,” Bilardo says, adding that Medicare is an exception, with most Medicare plans driving US WorldMeds’ Apokyn pen to the pharmacy benefit. “Apokyn and Neupro achieve the best preferred access across all lines of business. The Medicare channel provides multiple modes of administration on preferred tiers with Rytary, Apokyn and Neupro.” Bilardo adds that oral medications dominate physician prescribing patterns despite evidence that injectables, such as Apokyn, and transdermal patches, such as UCB’s Neupro, show certain advantages. “Physician behavior and coverage are slower to adopt compared to oral agents,” she says.

Bilardo says step therapy is rare in the treatment of Parkinson’s, and restrictive management strategies are unusual. “Since Parkinson’s treatment revolves around patient symptoms and ‘off’ episodes, many payers are reluctant to implement strict utilization management tactics such as step therapy to limit utilization of branded agents,” she says. “When a step is implemented it is through a generic [or generics].”

Bilardo adds that prior authorization use requires diagnosis and clinical documentation. “Commercial and Medicaid business lines are more likely to implement a step through a generic, [while] Medicare relies more on copay differentials to drive utilization away from branded agents.”


All three Parkinson’s drugs approved in the last year —Nourianz, Osmolex ER and Inbrija — are used to treat the motor complications that are a known effect of levodopa treatment, Kunze says. Another drug, Xadago (safinamide), which Newron Pharmaceuticals SpA licensed to US WorldMeds, LLC, was approved in 2017, and is also used to treat off episodes.

Of those four drugs, only Osmolex ER and Xadago are for sale currently in the U.S. For Osmolex ER, 30 tablets cost between $453 and $490, depending on the pharmacy’s discount. Xadago typically sells for a discounted price of around $781.

Inbrija, meanwhile, is expected to cost around $1,000 for a supply of 60 inhalation capsules. Kyowa Kirin hasn’t yet announced a price for Nourianz.

Plans generally aren’t covering Xadago and they aren’t expected to cover Inbrija, Tegenu says. “Members would be able to request an exception through the prior authorization process for these products,” he adds.

For example, Blue Cross Blue Shield of Arizona states in its pharmacy coverage guidelines that it will cover Xadago only if the patient first has trialed drugs from three different classes: pramipexole or ropinirole; selegiline or rasagiline mesylate; and entacapone or tolcapone. Xadago can only be used as an adjunctive treatment to levodopa and carbidopa, according to the coverage document.

UnitedHealthcare, meanwhile, states that Xadago will be approved to treat off episodes based on a history of failure, contraindication or intolerance to both rasagiline and selegiline.

For Osmolex ER, plans generally require failure on trials of immediate-release amantadine.

For example, Centene Corp. subsidiary Health Net states in a clinical policy document for its commercial and Medicaid members that it will consider Osmolex ER in patients with a diagnosis of dyskinesia who are receiving levodopa-based therapy, and who fail a two-week trial of immediate release amantadine, or whose physicians can provide medical justification that supports the inability to continue use of immediate-release amantadine, such as contradictions to excipients.

Gene Therapies in the Pipeline

Both Tegenu and Kunze say gene therapies eventually may change the way Parkinson’s disease is treated. Gene therapies that would alter the disease paradigm are several years from approval right now, although Kunze notes that four potential therapies are in Phase II trials.

They are:

✦ Voyager Therapeutics’ VY-AADC-01, which is designed to put the AADC enzyme into brain cells where it can convert levodopa to dopamine. A Phase III trial (RESTORE-2) is expected in the first half of 2020, Kunze says.

✦ MeiraGTx Holdings plc’s AAV-GAD therapy, in which glutamic acid decarboxylase (GAD) is delivered into the subthalamic nucleus. AAV-GAD has completed a Phase II trial.

✦ Axovant Gene Therapies, Ltd.’s AXO-Lenti-PD, which is designed to deliver three genes via a single lentiviral vector to encode a set of critical enzymes needed for dopamine synthesis. In June, Axovant reported six-month data from a Phase I/II trial.

✦ Prevail Therapeutics’ PR001, a single-dose gene therapy for Parkinson’s patients who have GBA1 mutations and neuronopathic Gaucher Disease. Prevail said Sept. 10 that it was in the process of activating clinical sites for its Phase I/II trial and expects to begin dosing patients later this year.

“Although it may be a couple of years before approval from the FDA, gene therapy for Parkinson’s disease is being researched,” Kunze says.

by Jane Anderson


Walgreens Joins Centene in Pact With Cloud-Based PBM RxAdvance

A recently announced partnership between Centene Corp., Walgreen Co. and the technology-focused PBM RxAdvance promises “an innovative model for pharmacy management that aims to increase transparency, enhance customer experience and ultimately result in better health outcomes at lower costs.”

While retail pharmacy-PBM-insurer combinations are “going to be par for the course” now, what makes this move unique is the fact that Centene is taking that model beyond the commercial space and into Medicaid, says Ashraf Shehata, a principal in KPMG’s health care life sciences advisory practice and the firm’s Global Healthcare Center of Excellence.

Indeed, the partnership between Centene, RxAdvance and Walgreens “addresses the growing need for innovative approaches to pharmacy benefits management, particularly in Medicaid,” Centene Chairman and CEO Michael Neidorff said during the insurer’s third-quarter earnings call on Oct. 22.

Neidorff said his company chose to deepen its existing partnership with Walgreens because its business niche aligns well with Centene’s.

“There are various outlets in pharmacy, and Walgreens has done a particularly good job in urban areas and is recognized for it in the inner cities, where we have a large population,” he said. “So working closely with them is an added plus while still maintaining relationships with the other large retail outlets.”

For its part, Walgreens expects that the partnership will “empower our pharmacists to make critical decisions at the point of sale to help improve adherence and also to reduce avoidable medical costs,” Stefano Pessina, executive vice chairman and CEO of Walgreens Boots Alliance, Inc., said in a press release.

Platform ‘Key’ to Patient-Centered Care

In Shehata’s view, the cloud-based PBM platform that all three organizations will use is key to the alliance, since it eventually will allow advanced point-of-care capabilities for pharmacists.

“The idea would be to use that platform to evolve it even further,” he notes. “This is an area where we’re going to start to see more and more technological enhancements,” he says, which is key to “getting to a patient-centered, member-centered design.”

The new partnership builds on Centene’s initial investment in RxAdvance back in 2018. The insurer has now increased its stake in RxAdvance, and Walgreens has “made a small investment” in the firm, which touts a cloud-based PBM platform aimed at promoting transparency, reducing costs and improving customer experience and health outcomes.

PBM platform aimed at promoting transparency, reducing costs and improving customer experience and health outcomes.

During Centene’s Oct. 22 earnings call, Jeffrey Schwaneke, executive vice president and chief financial officer, declined to say exactly how much the insurer increased its stake in RxAdvance.

“When we had made the RxAdvance investment initially, we had contemplated a few different steps along the way, so I think this is really kind of the one-year step,” he said. “Without getting into a lot of the specifics, we increased the nominal amount, but I think it’s representative of momentum and the trajectory of the work we’re doing together.”

While the companies’ press release offers few details about what exactly the new partnership will entail, RxAdvance’s overall business strategy is to streamline and integrate the often-fragmented platforms that PBMs use to process pharmacy, medical, laboratory and other data, the PBM’s CEO, Ravi Ika, previously told AIS Health.

The companies do say that they’ve already identified initial markets in which to deploy the model and that they plan to offer it to “other large payers.”

Asked which payers might be interested in such a model, Shehata points to Blue Cross Blue Shield plans that don’t contract with the Blues-owned PBM Prime Therapeutics, LLC. The products emerging from the partnership also could be of interest to provider-owned health plans, he notes.

Still, real-time integrated capabilities between the pharmacist, plan and PBM ultimately are “something you’re going to see at every PBM,” he says. The partnership between Centene, Walgreens and RxAdvance places the alliance at “parity” when compared to other major PBMs, he adds.

During Centene’s earnings call, one analyst inquired how states’ moves to change their relationship with PBMs might impact the insurer’s business and its RxAdvance partnership. Some states, like Michigan, are aiming to move the management of Medicaid enrollees’ pharmacy benefits from managed care back to the state, while states such as Ohio have been pushing PBMs to move to a more transparent pricing model.

“The states want transparency, and we agree with that,” Neidorff said. “I think RxAdvance will only enhance that opportunity — and some of the systems they have and some of that information moves us in that direction at an accelerated rate.”

by Leslie Small


Precision Medicine Hits N of 1 Milestone but Still Faces Many Cost, Regulatory Obstacles

November 4, 2019

Truly personalized or precision medicine — the idea that every treatment is matched to a patient’s unique genetic characteristics — moved closer to reality recently as researchers announced the first custom drug created to treat a genetic disease: milasen, named after its sole patient Mila Makovec, who suffers from a rapidly progressing deadly neurological disorder called Batten’s disease.

But Mila’s so-called “N of 1” success story, detailed last month in the New England Journal of Medicine and covered in various other publications,

Truly personalized or precision medicine — the idea that every treatment is matched to a patient’s unique genetic characteristics — moved closer to reality recently as researchers announced the first custom drug created to treat a genetic disease: milasen, named after its sole patient Mila Makovec, who suffers from a rapidly progressing deadly neurological disorder called Batten’s disease.

But Mila’s so-called “N of 1” success story, detailed last month in the New England Journal of Medicine and covered in various other publications, also spotlights the potential pitfalls in therapies developed in part based on genetics: They’re very expensive, the companion diagnostics needed to make them work also are very expensive, and the groups of patients who might benefit are small. In Mila’s case, the drug — a splice-modulating antisense oligonucleotide drug — is designed to work only for her.

“The cost of development and limited funding are certainly the top challenges facing development of personalized drugs,” says Sudhir Agrawal, D.Phil., visiting professor in the Department of Medicine, University of Massachusetts Medical School, Worcester, Mass., and a founder and former CEO of Idera Pharmaceuticals, which is pursuing nucleic acid-based therapies.

“In addition, clear guidance on regulatory paths and nonclinical safety support are needed to advance the drug candidate,” Agrawal tells AIS Health. He also notes that diagnostic and genetic tests to pinpoint the underlying cause of the disease must be developed.

Still, now that it’s clear the therapies hold potential, they should be pursued, says Art Krieg, M.D., founder and chief scientific officer at Checkmate Pharmaceuticals. Checkmate is developing cancer immunotherapies that would be used to treat large numbers of patients, but Krieg has worked in the oligonucleotide field for more than 20 years, including running oligonucleotide therapies at Pfizer Inc. and serving as chief scientific officer at Sarepta Therapeutics, Inc.

“Mila is the first patient to have received an individualized oligo therapeutic for a unique genetic mutation,” Krieg tells AIS Health. “I believe that there are thousands, and probably tens of thousands, of children like Mila with rare diseases who could potentially benefit from therapy with an individualized oligo. We owe it to these children to do everything that we can to make these drugs available to them, especially when their diseases are likely to be rapidly progressive and fatal.”

Drugs Can Treat One Patient or Many

Although the terms “precision medicine” and “personalized medicine” generally are used interchangeably to mean treatments developed for patients based on genetic, environmental and lifestyle factors, the National Research Council prefers “precision medicine” to the older “personalized medicine.” Still, both terms are in use.

Precision drugs may be developed for just one person — as in Mila’s case — or may be developed for a large subset of patients who share genetic characteristics. Medications range from targeted small molecule drugs such as Novartis International AG’s Gleevec (imatinib), which is used to target a gene in chronic myelogenous leukemia, to monoclonal antibody Herceptin (trastuzumab), from Roche Group unit Genentech USA, Inc., which targets a protein called HER2 that is overexpressed by tumors in around 30% of breast cancer patients.

Agrawal says he also would consider chimeric antigen receptor T-cell (CAR-T) medicines as personalized drugs, even as they’re expanded to a wider patient population. And the antisense oligonucleotide drug used in Mila’s treatment is the ultimate precision drug.

According to the Personalized Medicine Coalition, medicines that include labeling identifying the patients who are most likely to realize outsized benefits or experience fewer side effects have accounted for more than 20% of FDA approvals for the last five years (see chart, p. 10). These personalized medicines set a record in 2018, topping 40% of approvals, according to a report published in February 2019 that credits policies recently advanced by the FDA for “fostering a favorable environment for innovation that has accelerated this trend toward personalized medicine.”

Still, the report says, providers and payers continue to make decisions based on data from population averages, instead of embracing personalized medicine. The group notes that the Trump administration is encouraging Medicare Advantage plans to implement step-therapy policies that require patients to try less expensive treatments before gaining access to more expensive options under Medicare Part B.

This “ignores the documented trend toward therapies that have information in their labels about the populations they will likely benefit,” the coalition said. In fact, it’s counterproductive, the report argues, since by the time a patient who is likely to respond to a personalized therapy first completes a less expensive, one-size-fits-all course of treatment for a disease like cancer, the disease may have progressed so far that the personalized treatment can no longer help.

Better-Fitting Treatments Offered

Personalized drugs have multiple potential benefits, and “it’s hard to choose the top two or three,” says Nadia Atallah Lanman, a research assistant professor in Purdue’s College of Veterinary Medicine who manages the Collaborative Core for Cancer Bioinformatics (C3B), a shared facility between Indiana University Melvin and Bren Simon Cancer Center and Purdue University Center for Cancer Research. “However, if I had to pick, I suppose it would be to be able to better prevent diseases, to enable clinicians to pick the most effective drug or drugs possible to treat the patient with and to improve early disease detection.”

C3B aims to integrate and accelerate cancer discovery, drug discovery, precision medicine and training, Lanman tells AIS Health. Some of the benefits of personalized medicine are being realized already, she says. “For example, there are a number of targeted cancer therapies, and for some types of cancer, genomics can be used to determine whether a patient is a candidate for a particular treatment based on whether they have an appropriate target for the drug. Genetic screening is also often done prior to conception to predict the risk of passing on genetic disorders.”

C3B has worked on 312 projects since its inception and has generated 33 peer-reviewed publications, Lanman says. For example, she says, C3B supported an investigation into Apexian Pharmaceuticals, Inc.’s APX3330, a compound being studied in several different types of solid tumors and in pre-leukemia.

In another project, C3B aims to use pet dogs as a model in which to study cancer, Lanman says, since dogs spontaneously get cancer, present similarly to human patients, and, for some cancers, treatment in dogs mirrors that in humans. “We have a project where we can predict from pre-chemotherapy mRNA levels whether the patient will respond well to chemotherapy or whether they will be resistant,” she says. “We essentially integrated biodynamic imaging data with RNA sequencing data and used this to identify differences between dogs who respond well and dogs who do not respond well to chemotherapy.”

Diagnostic Testing May Be Roadblock

Precision medicine tends to alter the timing of drug development, since researchers need to know more precisely what they’re trying to treat before beginning the process. Of course, pinpointing a disease process down to the molecular or genetic level involves potentially expensive diagnostics. “The diagnostic/genetic test is the key to identifying the underlying disease,” Agrawal says. “Once the proper diagnosis has been made, only then a successful drug could be developed or an approach can be taken.”

Therein lies a potential barrier: Diagnostic testing can cost as much as or more than a dose of the drug, and payers may balk. In oncology, for example, diagnostic and biomarker testing has become integral in drug development and direct patient care, but there frequently are gaps in coverage for these tests.

In the case of personalized medicines designed to treat rare genetic diseases, the companion diagnostic likely is whole genome sequencing — which was what clinicians used in Mila’s case, Krieg says, adding that the cost is “not trivial.”

And it’s not always successful, either. The Harvard University-based Undiagnosed Diseases Network (UDN) has been performing whole genome sequencing for select patients, Krieg says, “and I think that even in that expert network the success rate for identifying a mutation causing a patient’s disease is only around 30%, maybe less. Right now, all the UDN can do is to tell patients they have found a diagnosis. I would guess that the UDN is excited about the potential for personalized medicines to provide real hope for their patients.”

Bill Would Streamline Testing Process

Legislation pending in Congress would streamline the diagnostic process, at least for children on Medicaid. The bipartisan bill, called the Advancing Access to Precision Medicine Act, would establish a pilot program within Medicaid to cover genetic and genomic testing in children with unresolved conditions that have suspected genetic causes. The bill also would fund research into how testing can improve health outcomes, potentially reducing Medicaid spending. Its sponsors, who include Rep. Eric Swalwell (D-Calif.), believe that if the Medicaid pilot program is successful, private insurers would begin to pay for testing.

The diagnosis and drug development process in extremely rare diseases may begin with motivated parents whose child is suffering from an unidentified genetic disease. This then can lead to drug discovery, Agrawal says. “Patients, along with interested researchers and patient foundations, mostly take the lead in conducting the initial work, which allows biotech or pharma to participate, furthering the development,” he says.

Obviously, patients with rare diseases for which there is no current therapy want new drugs that might help them, Krieg says. Therefore, he says, researchers should focus on a more efficient, cost-effective method of targeting these rare conditions, which he believes should involve oligonucleotide therapeutics. Oligos “inherently are closer to a rational drug design,” Krieg says, because they are designed to specific gene sequences like the one Mila has.

“Because the drugs are made of modular components that are ready to assemble by a series of very efficient chemical reactions, the entire drug discovery process can be accelerated to a matter of months and the cost brought down to around $2 million or less, depending on the specific complexities of the target,” he says. This is in contrast to around $20 million before human trials begin for a small molecule, he says, and perhaps $8 million before new biologics, such as antibody therapeutics, can go into the clinic.

The process moves very quickly, Agrawal says. “In the recent case with Mila, genetic analysis pinpointed the defect, the antisense approach was prioritized, the antisense drug was designed and evaluated using patient cells, and treatment was initiated in under one year,” he says.

“The cost of development of a drug is always high,” Agrawal adds. “However, development of personalized drugs should be faster and would have a higher probability of success.

In addition, if the potential benefits are not being observed, further development could be discontinued sooner rather than later. This needs to be communicated by participating parties to the payer.”

Still, oligonucleotides can’t treat all patients, Krieg says, since only certain types of tissues — such as those in the liver or in the central nervous system — will uptake the drugs into cells. The type of genetic defect also matters, of course. “Only certain types of genetic defects can be corrected with oligo therapies, and perhaps less than 10% of patients with [a] rare disease might possibly benefit,” Krieg says. “Or maybe the true percentage is under 1% — nobody really knows right now.”

Krieg says he expects the development of oligonucleotide therapies to be funded by philanthropic organizations or perhaps by families who are able to build the necessary donor networks and raise significant amounts of money through crowdfunding.

In Mila’s case, Boston Children’s Hospital hired manufacturers to produce supplies of a drug custom- designed to fix the error that causes her form of Batten disease. Her treatment, the cost of which remains undisclosed, was paid for in part by Boston Children’s, in part by research grants and in part by private foundations.

“As we streamline the process of developing these therapies, I hope that we can industrialize this process to the point where it becomes economically feasible for our society to pay for it,” Krieg says. “For example, the cost of care for many children with rare diseases is on the order of $400,000 per year. If the cost of developing an oligo drug to treat that condition is under $2 million, then at some point it becomes cost-effective to have society pay for that development. I hope we will reach that point.”

Beyond Cost, Other Challenges Remain

Cost isn’t the only potential roadblock to the widespread adoption of precision medicine. There also are regulatory issues, plus access issues that are unrelated to the price of the therapy itself.

In fact, regulatory issues abound, Agrawal says. “The FDA or other regulatory agencies have to clearly define the regulatory pathways for the patient population, diseases and stage of diseases to be treated,” he says. “There has to be clear guidance from regulatory authorities of what type of nonclinical safety data package would be acceptable to initiate dosing.”

Study design also is key, he asserts. If personalized drugs are designed to treat one patient or a cohort of patients, “what clinical endpoints would be acceptable if placebo-controlled studies are not being conducted?” Agrawal asks. “For many rare diseases, there are no appropriate preclinical disease models. Regulatory authorities need to provide guidance on what type of preclinical proof of concept data would be acceptable to advance personalized treatment.”

An additional potential concern with precision medicine involves ethical and legal issues, Lanman says. “Patients and participants in research need to have a good understanding of patient data, while still enabling it to be useful to biomedical researchers,” she says. “And in general, managing data and integration of data with electronic health records is challenging. We need to improve platforms for data integration, while protecting patient data.”

Even interpretation of the data can be a challenge, she notes, “so we additionally need to ensure that this data, once integrated, is not misinterpreted. Thus, training and education [are] important to increasing the availability and benefits of precision medicine to patients.” Finally, Lanman points out, it can be challenging in the case of rare diseases to find enough patients to make adequate sample sizes for studies.

Still, cost and access may be the biggest issues. “Access due to geography can be a challenge for individual patients. Treatments can be very expensive, and the interplay of drug manufacturers and insurance companies can lead to patients’ being unable to afford even standard-of-care treatment,” Lanman says.

Of course, she points out that the problem of cost isn’t limited to precision medicine, but she says she believes that manufacturers of precision drugs owe it to the public to keep the cost of diagnostics and treatment as affordable as possible. “Likewise, insurers should work to ensure patients have access to these diagnostics and treatments. I think insurers should aid patients as best as they can, in ways such as accepting copay assistance cards and also facilitating patients in understanding what options for personalized diagnostics and treatment are available.”

Finally, precision drugs can’t do it all, Lanman warns. “It’s important to remember that precision medicine is not just about making new pharmaceuticals,” she says. “It also involves prevention and changing our lifestyles to avoid disease or to perhaps alter the progression [of] disease. Additionally, precision medicine can involve identifying patients who benefit from less invasive procedures.”

And in the case of Mila and patients like her, precision drugs — even the N of 1 oligo drug developed just for her — will not repair damage already done. For Mila, the drug stopped her seizures.

In addition, they won’t cure the genetic diseases, nor will they repair damage already done. “I should point out that if they work, these therapies are expected to block, or at least delay, the progression of disease, but they are very unlikely to heal damage to tissues that has already progressed beyond the point of irreversible damage. The hope would be that as these therapies become established, therapy could be offered at a much earlier stage of the disease, before there is extensive irreversible damage,” Krieg says.

Read the Personalized Medicine Coalition report on genetically targeted therapies at Contact Agrawal at, Krieg at and Lanman at

by Jane Anderson


Health Systems Can Reap Multiple Benefits By Offering Specialty Pharmacy Capabilities

As the specialty pharmacy space continues to grow, more entities within the health care system are boosting their capabilities in this area. Various health systems are implementing some form of a specialty pharmacy, often coordinating this effort through various partnerships. One such example of this is North Memorial Health and Trellis Rx, which began working together in 2018. The two companies spoke with AIS Health about the experience and the outcomes the collaboration has produced.

The Minnesota-based North Memorial Health system includes two hospitals, 26 specialty and primary care clinics, urgent and emergency care offerings and medical transportation services, and has more than 350 care providers and more than 6,000 team members. Trellis Rx, which started in 2016, partners with health systems in order to finance, build and operate specialty pharmacies.

The health system began offering specialty pharmacy services in 2009 though North Memorial Health Cancer Center. A patient advocate was placed in the clinic with a goal of providing support, including financial assistance, to patients requiring intravenous chemotherapy. That focus eventually expanded to include oral oncolytics, explains Paul Krogh, Pharm.D., system director of pharmacy services and infectious diseases at North Memorial Health.

Another person was added in 2015 to help support customers on additional specialty drugs. This expansion, he says, was because “many of our customers struggled to afford these therapies, and our providers spent numerous hours on prior authorizations and other required paperwork. Adding another financial advocate allowed us to provide comprehensive support to patients prescribed IV and oral oncolytics.”

Other specialists began asking for similar support, Krogh tells AIS Health, but “unfortunately, we didn’t have the capacity to extend services to other customers at the time.”

That same year, the health system began serving its employees taking specialty drugs through its retail pharmacies. “We became the preferred specialty pharmacy for our employees in May and captured 72% of these prescriptions within just six months,” he says.

Prior to the partnership, North Memorial Health served its cancer patients and employees via three on-site retail pharmacies, supplementing them with 340B contract pharmacies for limited-distribution drugs.

In November 2018, North Memorial Health unveiled its partnership with Trellis Rx. Initially available within the oncology and infectious disease spaces, the model expanded the existing offering to include “direct, in-clinic access to pharmacists and patient liaisons” to help with the coordination, education and support of people on specialty drugs. It also helps acquire insurance authorization and locate financial assistance.

Trellis Rx provided an experienced team to work in North Memorial Health clinics, including a program manager who oversees day-to-day operations. It also integrated a specialty pharmacy technology solution with the health system’s electronic health record system and “implement[ed] customized strategies to gain access to payer networks and limited-distribution drugs,” says Krogh, which previously had been “a major challenge.” Trellis Rx, he says, helped the system quickly gain access to five limited-distribution drugs. “Their support was also pivotal to us gaining access to Blue Cross Blue Shield of Minnesota this fall.” In addition, Krogh states, Trellis Rx shifted “all financial and operational risk away from us: They offer a 100% performance-based business model that aligns their incentives to ours and greatly reduces our related operating expenses.”

“Partnering with Trellis Rx has allowed us to rapidly extend high-touch, personalized specialty pharmacy services to more customers who require these therapies to manage chronic and complex conditions,” says Krogh. Since its start, the model has expanded to four clinics and added six on-site specialty pharmacy team members. “In our first 10 months, we supported over 600 patients and grew specialty pharmacy revenue by almost 100%,” he says. “Most importantly, we have addressed many barriers to medication access and adherence. As of August, we have connected patients with over $600,000 of financial assistance and reduced turnaround time from around 14 days to just 1.9 days.”

Other outcomes based on data from November 2018 through August 2019 include:

✦ 98% average adherence based on proportion of days covered.

✦ 100% hepatitis C treatment completion rate.

✦ 127% improvement in the Net Promoter Score, which measures people’s willingness to recommend a company’s services, from -62 to +65.

“We attribute these results to Trellis Rx’s fully integrated model,” says Krogh. Critical to the health system’s success, he contends, are the on-site program manager, pharmacists and pharmacy liaisons and Trellis Rx‘s Arbor technology. “Our pharmacists and pharmacy liaisons work as part of our customers’ care teams, just like doctors and nurses, and have access to our customers’ EHRs [i.e., electronic health records]. Being clinic-based makes it easy for them to establish strong trust and easily communicate with both customers and providers. Ultimately, this allows us to offer personalized, proactive care that is needed to improve access and adherence to specialty medications.”

In fact, North Memorial Health is “expanding one of our pharmacies to better accommodate home delivery and cold-chain shipments,” Krogh tells AIS Health, as well as “exploring options to launch a pharmacy specifically for specialty pharmacy and employee mail order within the next two to three years.”

In the management of people taking specialty therapies, pharmacists “are increasingly being recognized as critical care team members — something we’ve always believed,” says Tony Zappa, chief solutions officer at Trellis Rx. With the high costs and adherence issues among specialty drugs, “clinic-based pharmacists add value by helping providers select the most appropriate specialty medications for patients and then monitoring the clinical impact of these therapies over time. If a specialty medication isn’t having the desired clinical impact, pharmacists can flag this for providers sooner and recommend alternative therapies. Pharmacy liaisons also help address the financial toxicity that prevents many patients from accessing these therapies.”

Zappa points out that health systems offering clinic-based specialty pharmacy services is a trend that continues to grow. “This model was primarily used by academic institutions at first, but now we’re seeing community and rural health system like North Memorial Health successfully adopt it too,” he says, adding that his company sees five trends that are driving the adoption of the model.

First, “vertical integration of health plans, PBMs, and retail providers…is forcing health systems to differentiate their outpatient clinics to compete with retail providers,” says Zappa. “It’s also driving health systems, especially those in at-risk and value-based contracts, to find innovative ways to partner with health plans.”

Krogh echoes that point: North Memorial Health is “entering more risk-based contracts with payers, so the ability to offer more comprehensive care and control the total cost of care for our customers is very important to us. Being able to support our customers across the care continuum, including their specialty medication experience, is critical to improving health outcomes and preventing avoidable medical events.”

Second, as reimbursement for specialty drugs shifts from the buy-and-bill model within the medical benefit to the pharmacy benefit, health systems can provide more comprehensive patient care if they can fill and administer not only medical benefit drugs but also those adjudicated under the pharmacy benefit, he points out. In addition, being able to provide therapies regardless of their benefit gives the health system a “financial advantage.”

Having the ability to access integrated pharmacy and medical records allows for a comprehensive approach to health care. By having its own specialty pharmacy, North Memorial Health is “able to offer the highest level of care to customers,” asserts Krogh, adding that patients’ experiences with external specialty pharmacies often are “confusing and uncoordinated.”

Customer care is at the heart of the third trend: a “heightened focus on patient experience to differentiate” health systems from their competitors, says Zappa. “As ‘consumerization’ increases in the health care industry, health systems must differentiate themselves by providing a convenient, data-driven and personalized experience to attract and retain patients. A hospital specialty pharmacy program creates a superior patient experience that can build loyalty and brand equity,” he maintains.

Indeed, says Krogh, North Memorial Health “is one of the only remaining independent health systems in the Minneapolis area. As consolidation has increased in our market, we’ve focused on differentiating ourselves by offering the best customer experience and service. Offering clinic-based specialty pharmacy services is one way we can provide concierge-style care to our customers, while also improving access and adherence to specialty medications in order to enhance clinical outcomes.”

Zappa explains that “providers often spend up to two hours per day managing administrative tasks required for specialty medication prescriptions, adding to the current burnout epidemic.” With specialty liaisons on site to handle administrative work, an internal specialty pharmacy can “reduce the burden of specialty medications on our providers, which boosts their satisfaction,” says Krogh, who cites a recent study that estimates physicians spend almost 853 hours annually on tasks related to prior authorization.

Finally, Zappa tells AIS Health, “as health systems invest in outpatient services to combat inpatient revenue declines and improve margins, offering on-site specialty pharmacy services can bolster this strategy. In addition to creating a multimillion-dollar revenue stream, a specialty pharmacy program can improve a health system’s bottom line by attracting more patients to its outpatient clinics and reducing the total cost of care.”

Zappa contends that there are multiple key advantages for health systems with their own specialty pharmacy as opposed to using an outside company. Face-to-face interactions with patients allow clinic-based personnel to get to “know patients personally and can build credibility and trust via in-person interactions. Being on-site also allows clinical pharmacists and pharmacy liaisons to communicate more effectively with patients, which enables them to develop solutions to access and adherence barriers more quickly.”


Source: Some Misconceptions Exist Around Health System Specialty Pharmacies

As more health systems implement in-house specialty pharmacies, some misunderstandings potentially could pose an issue for this approach. Tony Zappa, chief solutions officer at Trellis Rx, which partners with health systems in order to finance, build and operate specialty pharmacies, says his firm encounters some common misconceptions.

The first is that these specialty pharmacies are more expensive for payers and patients. “Health system specialty pharmacies generally accept the same reimbursement rates as other specialty pharmacies, including those owned by PBMs and health plans,” he maintains. “And clinic-based programs help make specialty medication therapies more affordable for patients by securing financial assistance from patient advocacy groups, drug manufacturers and other organizations.”

Another is that such specialty pharmacies are not as good at improving patient outcomes. Counters Zappa, “health systems with clinic-based specialty pharmacies are well-positioned to enhance outcomes compared to external specialty pharmacies. This is because health system specialty pharmacies are uniquely able to (1) coordinate communication between patients, providers and specialty pharmacy team members, and (2) manage patients’ care holistically by embedding pharmacists and pharmacy liaisons into care teams and combining pharmacy dispense data with patients’ medical records.”

A third misperception is that health system specialty pharmacies are unable to access payer contracts and limited-distribution drugs. While this may be one of the biggest challenges for these entities, “it is possible for health systems to access payer contracts and limited-distribution drugs. However, doing so requires thoughtful planning and ongoing execution.…Health systems can overcome this barrier by demonstrating outcomes improvements and developing and executing a tailored strategy.”

Contact Zappa through Savannah Matthews at

by Angela Maas


In addition, with a clinic-based approach, patients can get more coordinated care. “Pharmacists and pharmacy liaisons work directly alongside doctors, nurses and other health system team members,” he says. This helps streamline communication among all the health care professionals, “allowing the health system to provide the highest level of clinical care.”

Health systems with an on-site specialty pharmacy get can a total patient profile, allowing them to “holistically understand their patients’ care,” Zappa contends. “An in-house program allows hospitals to merge pharmacy dispense data with patients’ medical records. This means providers have visibility into whether or not patients are picking up and refilling prescriptions — information that can be difficult to track down when working with an external pharmacy.”

Increased revenue is another advantage, he says. “A specialty pharmacy service line can make pharmacy a revenue-generating department instead of a cost center. Health systems participating in the 340B drug pricing program significantly benefit from bringing specialty pharmacy services in-house. Depending on a health system’s 340B structure, a program can create a multimillion-dollar revenue stream.”

That revenue, Krogh says, can be reinvested “in programs that allow us to extend care and offer more comprehensive services to underserved customers in our community.” He explains that “offering specialty pharmacy services helps us achieve our mission. That’s why specialty pharmacy is now one of our organization’s five strategic priorities.”

But with all the advantages, some challenges still exist. “Gaining access to payer networks and limited-distribution drugs was a major challenge before partnering with Trellis Rx,” says Krogh (see box, p. 4). When the system was looking to expand the program, it faced the issue of “getting the resources we needed to grow. It’s very difficult for pharmacy leaders to ask their health system’s executives to invest more in a program prerevenue, but those resources are critical to growth. Trellis Rx eliminated this challenge — they hire and manage the specialty pharmacy team, though we have a lot of control over this process.”

Asked what advice he would give to a health system considering implementing a specialty pharmacy, Krogh replies, “consider what kind of support you will need to be successful. Are you looking for a consultant, or are you looking for a partner that will fully implement a specialty pharmacy for you? Ensure you understand the different options and the amount of resources needed for each option. Choosing the appropriate partner is the most important step to ensure you meet the needs of your customers and your business. Leverage at-risk share and accountable care contracts. Keeping more of a patient’s care in-house through expanded specialty pharmacy offerings aligns with and helps supports care models being built to support customers covered on these at-risk plans.”

Zappa recommends that when health systems are trying to decide whether to self-develop their own specialty pharmacy versus partnering with a specialty pharmacy services firm, that they evaluate their organization first. Specific needs, he says, include organizational capabilities — “risk tolerance, access to start-up funding, a collaborative culture with strong cross-functional partnership, and staffing and recruiting competency” — as well as certain pharmacy competencies: “specialty pharmacy expertise, an integrated technology solution, specialty physician practice structure and leadership, a current retail network and a dedicated pharmacy leader to oversee the program.”

According to Zappa, “a specialty pharmacy initiative must be an enterprise effort, not a pharmacy program. As a result, health systems need both organizational capabilities as well as pharmacy-specific ones to succeed. A lack of necessary pharmacy-specific and organizational competencies can delay or, worse, inhibit a program’s success. It may also cause health systems to miss opportunities to enhance clinical outcomes and improve patients’ experiences with their brands.”

Contact Krogh and Zappa through Savannah Matthews at

by Angela Maas


IL-17 Use in Psoriasis Grows As Adherence, Outcomes Rise

For many years, the psoriasis treatment landscape was dominated by tumor necrosis factor (TNF) inhibitors. But with the FDA’s approval of three interleukin-17 (IL-17) inhibitors — as well as other drugs with different mechanisms of action — for the condition, those therapies are becoming more common among treatment regimens. An AllianceRx Walgreens Prime study shows that not only are people switching to IL-17s from another biologic, but many are starting on them as their initial biologic. Patients who switched had better adherence to treatment, and almost half reported that their symptoms were better on an IL-17 inhibitor.

The first IL-17 inhibitor on the U.S. market was Cosentyx (secukinumab) from Novartis Pharmaceuticals Corp., which the FDA approved for plaque psoriasis Jan. 21, 2015. The next therapy was Taltz (ixekizumab) from Eli Lilly and Co., approved for plaque psoriasis March 22, 2016. Then on Feb. 15, 2017, the agency approved Siliq (brodalumab) from Ortho Dermatologics, a division of Bausch Health Companies Inc.

Researchers examined pharmacy records from a national specialty pharmacy database to find people starting on an IL-17 from January 2016 through December 2017. They also looked at the members’ biologic regimens over the previous 12 months. Members were followed for 180 days after initiating on an IL-17.

A study sample of 5,215 members showed that 2,218, or 42.5%, switched from a prior biologic, while 2,997, or 57.5%, started on an IL-17 as their first psoriasis biologic.

Among those who started their biologic regimens on an IL-17 inhibitor, 2,266 started on Cosentyx, followed by 725 who initiated on Taltz and six who started on Siliq.

Among those members who switched to an IL-17:

✦ 793 switched from AbbVie Inc.’s Humira (adalimumab).

✦ 425 switched from Johnson and Johnson unit Janssen Biotech Inc.’s Stelara (ustekinumab).

✦ 821 switched from Amgen Inc.’s Enbrel (etanercept).

✦ 179 switched from another medication.

The IL-17 inhibitor that patients most often switched to was Cosentyx, dispensed to 1,705, or 76.2%, of patients. Next was Taltz, to which 511, or 23.7%, of people switched. Only two people moved to Siliq.

When researchers asked patients why they switched to an IL-17, the most common reason was that the prior therapy had been ineffective, cited by 64.7%. The next most common response was that they were uncertain why they had switched, cited by 8%. Other reasons included side effects, preference, drug interaction, lab abnormalities, inconvenience and administration.

Researchers also examined 180-day adherence outcomes among members who switched to an IL-17 inhibitor from another biologic, as determined by proportion of days covered (PDC). The mean PDC increase after moving to an IL-17 was 6.4%. An 8.4% increase in adherence also was seen after people switched to an IL-17 inhibitor. Patients who were receiving care from a rheumatologist also had better adherence than those treated by other non-dermatology providers.

Among those moving to an IL-17, 45.7% said their outcomes were better, 26.5% said they were the same, 5.3% said they were worse, and 22.6% said they were inconsistent.

Results of the study were presented at the 2019 National Association of Specialty Pharmacy’s (NASP) seventh annual meeting, which was held in Washington, D.C., from Sept. 9 through 12.

According to Renee Baiano, Pharm.D., clinical program manager at AllianceRx Walgreens Prime and the lead author of the poster, the main takeaway for payers is that “by [the] last quarter of 2017, IL-17 inhibitors may have gained clinical acceptance in the treatment of psoriasis, given the increase in patients prescribed as their first biologic.” She adds that “it is important for payers to be aware they may see more of their members being prescribed IL-17 inhibitors and will need to determine the appropriate placement of these newer agents within their formulary.”

Baiano says the slow uptake for Siliq — which didn’t launch until July 27, 2017, almost five months before the close of the study period — could be due to a few factors: First, it’s indicated for people “who have failed to respond or have lost response to other systemic therapies.” Cosentyx and Taltz both are approved as first-line treatments. Second, Siliq is available only through a Risk Evaluation and Mitigation Strategy known as the SILIQ REMS Program. That means “health care providers and pharmacies must be registered in this program in order to prescribe and dispense Siliq; patients must also sign a Prescriber-Patient Agreement Form before receiving Siliq,” she explains. And third, the therapy was the most recent IL-17 to gain FDA approval.

Findings Reinforce Ones of Earlier Study

AllianceRx Walgreens Prime also presented a study on members switching to Cosentyx and Taltz at the 2018 NASP annual meeting. That study showed that providers may be comfortable prescribing one of the drugs as a first-line biologic. Asked how the newer findings relate to that study, Baiano says that they “support or reinforce the data previously presented. In the newer poster, we were able to augment the prior poster with more data. This allowed for a better analysis of the utilization patterns of the IL-17 medications included in the study.”

According to Baiano, people with psoriasis may switch biologics due to efficacy, safety and tolerability. She says that the side effect profile of the IL-17s is similar to other biologics for psoriasis.

As far as the improved adherence outcomes after switching, she says those “could possibly be attributed to patients experiencing improved outcomes (as 45.7% of patients reported they felt better for at least two consecutive months following the start of their IL-17 inhibitor). Favorable dosing frequency (once or twice monthly) could also be a factor.”

The study did not evaluate the effect of provider specialty on adherence, Baiano tells AIS Health, but “a potential reason a provider specialty can impact adherence may be due to having more experience in treating patients with a specific illness (e.g., psoriasis). This could lead to proactive education of the patient on the importance of adherence at the initiation of therapy. This proactive provider education may also be reinforced through a specialty pharmacy specializing in the management of psoriasis patients. The complementary support provided by both the provider and the specialty pharmacy may lead to improved adherence. This is an interesting hypothesis that will require research to validate.”

Contact Baiano through Adrienne Foley at

by Angela Maas

This story was reprinted from AIS Health’s monthly publication RADAR on Specialty Pharmacy. Visit

Plans Have Array of Ovarian Cancer Drugs Spanning Medical, Pharmacy Benefits

November 25, 2018

Ovarian cancer continues to be one of the top cancers affecting women. But physicians have a good array of therapies — including three oral poly (ADP-ribose) polymerase (PARP) inhibitors that have come onto the U.S. market fairly recently — at their disposal to treat this condition.

The American Cancer Society says ovarian cancer ranks No. 5 in cancer deaths among women. Among cancers of the female reproductive system, it accounts for the most deaths.

Ovarian cancer continues to be one of the top cancers affecting women. But physicians have a good array of therapies — including three oral poly (ADP-ribose) polymerase (PARP) inhibitors that have come onto the U.S. market fairly recently — at their disposal to treat this condition.

The American Cancer Society says ovarian cancer ranks No. 5 in cancer deaths among women. Among cancers of the female reproductive system, it accounts for the most deaths. A woman has a one in 78 chance of getting ovarian cancer during her lifetime and a one in 108 chance of dying from it.

“The current standard of care for first line chemotherapy treatment is with a platinum-based agent with a taxane,” explains Winston Wong, Pharm.D., president of W-Squared Group. A carboplatin-paclitaxel combination regimen is preferred, he says, “due to the efficacy being similar to cisplatinum and docetaxel, however with less adverse effects and greater tolerability. Treatment usually goes for six cycles, mainly because there is no data that shows anything longer than six cycles improved the clinical outcomes.” He notes that adding Avastin (bevacizumab) from Genentech USA, Inc., a member of the Roche Group, also is a treatment alternative.

When the disease is recurrent, patients with a platinum-free interval of more than six months are considered platinum-sensitive, while those with a PFI of fewer than six months are platinum-resistant. For platinum-resistant patients, “there is limited data to suggest any benefits from continuing therapy,” says Wong. When it comes to platinum-sensitive patients, second-line treatment “consists of a platinum agent (usually carboplatin) in combination with paclitaxel, bevacizumab, gemcitabine or pegylated liposomal doxorubicin,” he tells AIS Health.

Once the patient achieves either a complete or partial response to the second-line therapy, “the chemotherapy is discontinued and [a] PARP inhibitor is initiated as maintenance therapy, even though survival data is still in the preliminary stages.” The PARP inhibitors include AstraZeneca and Merck & Co., Inc.’s Lynparza (olaparib); Clovis Oncology’s Rubraca (rucaparib); and Tesaro, Inc.’s Zejula (niraparib).

These three oral therapies “are approved for use as maintenance treatment of adult patients with recurrent epithelial ovarian, fallopian tube or primary peritoneal cancer, who are in a complete or partial response to platinum-based chemotherapy,” Wong explains.

Ovarian cancer therapies fall under both the pharmacy and the medical benefit. In the medical benefit, says Wong, “management of ovarian cancer will fall under two different paradigms: (1) a clinical pathway program, or (2) management to the NCCN [i.e., National Comprehensive Cancer Network] guidelines. In some cases, the paradigms mirror each other. At a minimum, plans will manage to the NCCN guidelines.”

Under the pharmacy benefit, the PARP inhibitors likely will be subject to prior authorization “where the authorization criteria will be driven by the approved indication and, in the case of use in advanced disease, results of the companion test to verify the BRCA mutation,” as well as the number of regimens that the patient has tried. “Olaparib also has the additional indication for use in advanced breast cancer. Although there is some crossover of approved indications between the three PARP inhibitors, more aggressive exclusion programs to drive utilization have not been seen. “For the most part,” he says, “there is not an integrated utilization management plan in place between the medical and prescription drug benefits.”

A particular challenge with this cancer is that it has a “strong hereditary risk component,” and NCCN recommends familial testing once a woman has been diagnosed, he says. In addition, “involvement into the fallopian tube and peritoneal cavity are common. As such, these additional areas of involvement bring additional procedures, e.g., peritoneal dialysis, to the treatment plan.”

by Angela Maas  


 Ovarian Cancer: MMIT’s Take

“There are several traditional treatments for ovarian cancer that are the current standard of care and with the addition of immunotherapy and targeted therapy, the treatment arsenal for this disease is getting larger,” says Jayne Hornung, R.Ph., a vice president at MMIT.

“In addition to the traditional platinum-based and taxane derivative chemotherapy, there are VEGF inhibitors and monoclonal antibodies along with the three recent approvals of PARP inhibitors,” she notes. “There will likely be many more treatment options to choose from over time. Currently most of the payer policies dictate where to give traditional and targeted agents, when to give them within the treatment pathway, whether to give them in the maintenance setting or the treatment setting, and whether to use them early or late,” she says.

“Clinical trials are suggesting we should use targeted agents earlier on in the treatment cycle. It will be interesting to see how the treatment paradigm shifts in the class over time as manufacturers develop more targeted treatments.”


MMIT Adds New Migraine Criteria

MMIT is now collecting expanded criteria for a new class of drugs in the migraine therapy market. Calcitonin gene-related peptide (CGRP) inhibitors are high-cost specialty biologic products being introduced into a therapeutic class that has long been dominated by generics.

This new product enhancement is the result of collaboration between MMIT researchers and input from our clients. It adds five new class-specific criteria (in italics below) for migraine indication in the neurology product class exposed through our MMIT Analytics and data feeds. These criteria are being assessed for Botox, as well as the CGRP products for the migraine indication:

✦ Diagnosis of Episodic Migraine Required

✦ Exclusion Criteria

✦ Concomitant Use of the Following Required

✦ Frequency of Chronic Migraines

✦ Frequency of Episodic Migraines

✦ Diagnosis of Chronic Migraine Required (previously available)

✦ Migraine Frequency (previously available)

Migraine therapy had not seen much development in the past decade until Aimovig was approved in May, followed by Ajovy and Emgality approvals in September. MMIT has already identified some 165 million pharmacy benefit lives with “Covered or Better” status for Aimovig — indicating plans covering those lives have already reached a decision to cover Aimovig.               

Most migraine therapies are intended to prevent headaches in patients with chronic migraines, but CGRPs are the first class that may be used for both episodic and chronic migraines. Prior to the advent of CGRPs, MMIT’s migraine-specific fields included overall frequency criteria, but now two of the new fields specify requirements of frequency for chronic migraines and episodic migraines. This data can help pharmaceutical manufacturers refine their market access brand goals and better communicate patient restrictions to therapy.

Results indicate that 42% of formularies with Covered or Better Status for Aimovig — representing 44% of lives — have applied different frequency criteria to chronic vs. episodic migraine. The senior member of this new class is approaching the level of access enjoyed by Botox; however, 23% of all lives restrict Aimovig on number of headaches per month for chronic migraine, and 21% have restrictions for use of Aimovig for episodic migraine. Of lives specifying frequency criteria for Aimovig, 74% require >=15 headaches per month for chronic migraine.

by Susan Namovicz-Peat








Reality Check: Hypertension




A review of market access for hypertension treatments shows that payer pharmacy benefit coverage varies by channel. While about 44% of the lives under commercial formularies are unrestricted, more than half of the products under Medicare formularies are not covered.


For 68% of the covered lives, payer pharmacy benefit formularies do not require step therapy (ST). Of the lives that require ST, 58% require multiple steps. Only 35% of payer-controlled pharmacy benefit covered lives require prior authorization, with about 50% consisting of policies that are restrictive as compared with an FDA-approved label.


Trends From AIS Health

Generics Reduce Cost Burden

With a wide variety of generic drugs available, brand name hypertension drugs are rarely prescribed to patients, and costs for both payers and members remain low. Experts say that adherence is key in keeping costs down. “There are little to no cost-saving measures, outside of a generic first strategy, that would outweigh the benefit of members taking these medications when appropriate,” Mesfin Tegenu, R.Rh., president of Perform RX LLC, told AIS Health.

Subscribers to AIS’s Health Plan Weekly may read the in-depth article online

Valsartan Recall Investigation Continues

The FDA in July 2018 recalled several medications containing valsartan after finding unexpected impurities that may be carcinogenic. The recall has generally not affected the supply chain, but the FDA’s investigation is ongoing.

Updates from the FDA are available here

Programs Boost Adherence

UnitedHealthcare recently took heat on a coverage policy for Gilead’s HIV drug Truvada (emtricitabine/tenofovir disoproxil fumarate) that patient rights groups said was designed to steer HIV or potential HIV patients away from joining — or staying — in their plan. This growing pattern of requiring PA every three months for Truvada among some health plans — along with placing HIV, MS and other costly drugs and their generic equivalents on the highest tier — is drawing more attention.

Subscribers to AIS’s RADAR on Drug Benefits may read the in-depth article online


Key Findings

Generics Dominate the Market

In this mature market with widely available generics, it is rare for a brand name hypertension drug to be preferred on formulary. Few new or novel hypertension therapies have been developed in recent years. The only agents in late-phase pipelines are new combinations of existing treatments. Allergan plc’s Byvalson, a combination agent, was approved in June 2016.

Market Coverage Is Extensive

Pharmacy benefit coverage is extensive for most products, and formulary status is favorable by default. Step edits often require trial and failure of multiple generics, while prior authorizations are mostly only relevant for non-preferred agents on Medicaid. Quantity limits are often in place.

Presence of Combination Agents

Most patients start on one of the first-line agents and then a second is added if pressure goals aren’t reached. Combination agents and once-daily dosing are commonly used as convenience and to promote compliance.


Latest Effort Aimed at Drug Prices Could Have Huge Impact on Pharma Industry

November 25, 2018

While HHS has taken multiple steps toward bringing down spending on prescription drugs (see story below), the agency’s latest proposal — which comes less than two weeks before the midterm elections — has been its most contentious so far. The effort, unveiled Oct. 25 in an Advanced Notice of Proposed Rulemaking (ANPRM), takes aim at “global freeloading” and would bring payments for Medicare Part B closer to what other countries pay for these medications.

In the ANPRM,

While HHS has taken multiple steps toward bringing down spending on prescription drugs (see story below), the agency’s latest proposal — which comes less than two weeks before the midterm elections — has been its most contentious so far. The effort, unveiled Oct. 25 in an Advanced Notice of Proposed Rulemaking (ANPRM), takes aim at “global freeloading” and would bring payments for Medicare Part B closer to what other countries pay for these medications.

In the ANPRM, HHS said that it is seeking comments on a variety of payment changes to Medicare Part B. The agency said it is considering issuing a proposed rule in the spring, with the actual model starting one year later, in spring 2020, running until spring 2025, with changes being phased in during those five years. It would apply to half of the country.

The document, titled Medicare Program; International Pricing Index Model for Medicare Part B Drugs (83 Fed. Reg. 54546, Oct. 30, 2018) was published in the Federal Register on Oct. 30. Comments are due by 5 p.m. Dec. 31.

Currently CMS reimburses Medicare Part B drugs at their average sales price (ASP) plus 6% (although it really is plus 4.3% due to the 2013 budget sequestration). The administration is proposing that CMS instead reimburse these medications based on an International Pricing Index (IPI) based on drug pricing data from not only the U.S. but also 16 other “developed economies: Austria, Belgium, Canada, Czech Republic, Finland, France, Germany, Greece, Ireland, Italy, Japan, Portugal, Slovakia, Spain, Sweden, and the United Kingdom.”

In addition, instead of an add-on payment based on a percentage of ASP — a structure that many argue encourages providers to prescribe higher-priced drugs over lower-priced ones — there would be a set payment amount.

CMS also is proposing an alternative to the buy-and-bill process by which private-sector vendors will negotiate drug prices, take title of them and compete for business from physicians and hospitals — essentially a revival of the Competitive Acquisition Program (CAP) that the agency discontinued nearly a decade ago (see story, p. 11).

Analysis Shows Pricing Discrepancies

On the same day as the ANPRM was unveiled, HHS’s Office of the Assistant Secretary for Planning and Evaluation (ASPE) released a report that analyzed pricing differences among the U.S. and 16 other countries for 27 Part B-reimbursed drugs that represented the top spending among U.S. physician offices and hospital-based outpatient departments. Total spending on these drugs in the U.S. was more than $17 billion in 2016.

Titled Comparison of U.S. and International Prices for Top Spending Medicare Part B Drugs, the report — which was cited in the ANPRM — notes that since 2006, even though there has been low enrollment growth within fee-for-service Medicare Part B, spending on Part B drugs has doubled.

The analysis found that for the 27 drugs, the prices that manufacturers charged wholesalers and distributors in the U.S. were 1.8 times higher than what they were on average in other countries (see chart, p. 13). Six of the products had higher U.S. prices that were within 20% of the average international price. Prices for 20 medications within the U.S. were more than 20% higher on average than those in the other countries. Only one product — Gammagard (immune globulin [human]) from Shire plc — had a lower U.S. price than the average international price.

On a country-by-country basis, of the 27 products, 19 had the highest price within the U.S. For the other eight drugs analyzed, while the average international price was less than that of the U.S. price, at least one other country’s price was more than that in the U.S.

In an Oct. 25 speech at HHS, President Donald Trump maintained that the model was “a bold and historic action to bring down the prices of prescription drugs.”

The U.S. will “begin to confront one of the most unfair practices — almost unimaginable that it hasn’t been taken care of long before this — that drives up the cost of medicine in the United States. We’re taking aim at the global freeloading that forces American consumers to subsidize lower prices in foreign countries through higher prices in our country,” he said. “For decades, other countries have rigged the system so that American patients are charged much more — and in some cases, much, much more — for the exact same drug. In other words, Americans pay more so that other countries can pay less.”  


Proposed Medicare Part B Model Poses Array of Questions

Multiple questions exist around the ability of CMS to implement various changes to Medicare Part B as recently floated in an Advanced Notice of Proposed Rulemaking (ANPRM). Proposed adjustments would be implemented in half of the U.S. under a five-year model. Elan Rubinstein, Pharm.D., principal at EB Rubinstein Associates, spoke with AIS Health about some unknowns around the proposal:

“According to the Kaiser Family Foundation, Medicare is projected to be 31% of U.S. drug spend in 2018, going up to 35% in 2025. While this is a very large share of U.S. drug spend and represents significant leverage in the aggregate, will CMS succeed in forcing manufacturers to lower drug prices below the international reference prices, not through direct price negotiation but rather through imposing reduced reimbursement?

“Will model vendors be able to purchase drugs and biologicals sufficiently below their international reference prices, as determined by the IPI [i.e., International Pricing Index] model methodology, so as to support model vendor operating and profit requirements?

“Will model participants be willing to pay drug distribution costs to the model vendors as contemplated in the ANPRM, say for lease and maintenance of on-site automated drug inventory boxes just for model vendor-owned drugs and biologicals?

“Since the model vendor will supply unopened vials of drugs or biologicals, and because the provider may prescribe a dose that is less than 100% of vial content, will the model vendor be compensated for the full vial that it provided to the model participant — because if not, the model vendor will suffer a loss on unused drug that is wasted.

“Because Medicare will pay model vendors the IPI model drug price less a patient’s 20% Part B cost share, how quickly will model participants forward collected cost share payments to model vendors — because the best-case scenario is that model vendors will be under water until those dollars are received.”

Contact Rubinstein at

by Angela Maas


The IPI model, contended Trump, also will “fix a broken payment system where doctors are reimbursed more if they prescribe a much more expensive drug. Under our new proposed payment system, doctors will be paid a flat rate. When you think of it, it’s like being a contractor or anything else. If it’s an expensive drug or a less-expensive drug, it’s the same.…And I think this will be good in terms of the pricing of the drug — it’ll be fantastic for that — but it’ll also be much better for patients, and it very well may be better for doctors.”

If the ANPRM is implemented, “it will have a huge impact on the prescription drug marketplace in the U.S. and will dramatically impact foreign drug markets,” contends Elan Rubinstein, Pharm.D., principal at EB Rubinstein Associates. He tells AIS Health that “the only thing that would have a more dramatic impact on the U.S. prescription drug marketplace would be elimination of the anti-kickback safe harbor for drug rebates, because if those go away, many businesses will need to change strategy — such as PBM drug formulary/tier placement.”

Manufacturer advocacy groups immediately derided the proposal.

“The administration is imposing foreign price controls from countries with socialized health care systems that deny their citizens access and discourage innovation,” said the Pharmaceutical Research and Manufacturers of America. “These proposals are to the detriment of American patients. The United States has a competitive marketplace that controls costs and provides patients with access to innovative medicines far earlier than in countries with price controls, and it’s why we lead the world in drug discovery and development. Americans have access to cancer medicines on average about two years earlier than in developed countries like in the United Kingdom, Germany and France.”

According to the Biotechnology Innovation Organization, “the proposal continues a troubling trend towards undermining the Medicare Part B drug program. This program supports the sickest, most vulnerable Medicare patients and accounts for only a small fraction of all Medicare spending.”

In the U.S., Rubinstein points out, “manufacturer drug prices are not negotiated centrally: Rebates are negotiated by individual purchasers such as health plans, PBMs and Part D plans in exchange for drug formulary position and other competitive market advantages. Purchasers, some dominant in their markets and others with national presence, leverage their own covered lives and control methods in price negotiations. On the federal government side, the Federal Supply Schedule relies on centralized purchasing leverage, including excluding access to drugs that are not contracted, and generally achieves low prices relative to other buyers.”

That’s in contrast to the IPI model, also known as reference pricing, which “is a common approach that most industrialized countries use,” says Lisa Kennedy, Ph.D., chief economist at Epiphany, a company that performs health economics, reimbursement and market access studies. “We see this a lot in our international work.”

Rubinstein tells AIS Health that the nations CMS chooses to benchmark prices “will have a huge impact — because prices vary widely in Europe, due in part to the degree of nations’ centralized purchasing leverage, whether hospitals control product choice through exclusive tenders and, possibly also to per capita income.”

According to Kennedy, the “immediate implication” of this approach “is that drug manufacturers will have to include the U.S. in how they consider the order of launch. The U.S. will likely come first, as it is the biggest market, and then you’ll find that other countries see launches after this.” Kennedy says she assumes that CMS “will take some kind of weighted or unweighted average.” She points out that of the potential nations, Austria, Belgium, the Czech Republic, Greece, Ireland and the UK “are generally lower-priced drug markets (especially Greece, UK, Czech Republic and Ireland) and so if a drug manufacturer launches a drug where most of the market is coming from Medicare Part B — say a high-priced immuno-oncology drug — they’d be inclined to weigh up the likely drop in average price from launching in those countries with not launching at all because it would so significantly affect the U.S. market size. So the implications could be difficult in these countries, as there will be less negotiating room unless the countries have a policy such as in the UK whereby there is a ‘confidential negotiation’ on a ‘real price’ that is irrelevant to a high list price.”

Another consideration for manufacturers, she says, “is the interest rate. We saw this in Japan with a drug that Lilly launched a little while ago: They pulled their drug from the reimbursement consideration in Japan for a few months, and then when the drug was reconsidered a few months later in Japan, they were stuck with a much lower price because of fluctuations in interest rates causing the average reference prices to fall. This is going to be important as far as the frequency in which the IPI is calculated.”

Kennedy also points to part of the ANPRM that is concerning with regard to the IPI: “In the absence of international pricing data, CMS could still calculate a model payment amount by applying a standard factor. CMS could, for example, assume the same ratio for the new drug as the IPI, which would be the average volume-weighted payment amount across all Part B drugs included in the model.”

This, she maintains, “is a worry because it looks like they will take the average of all Part B drugs. If that’s the case, then depending on how the average price of Part B drugs across the board compares to a potential ‘market basket’ in other countries, this could affect the launch order, delaying U.S. launch, with companies also launching with high list prices in other countries with actual prices negotiated in confidence (in those countries).”

Trump’s statement that the model “very well may be better for doctors” may be questionable for some participants. As Rubinstein points out, those drugs with reduced net prices due to the IPI will have lower ASPs. And “a lower ASP will result in reduced provider reimbursement for drugs administered ‘incident to’ a physician office visit and paid on a markup of ASP, a problem for providers if they cannot acquire drugs and biologicals below these reduced ASPs.”

On Oct. 30, STAT reported that it had obtained a Q&A by the administration that attempts to deflect much of the criticism. The document also tried to distinguish the current proposal from one that the previous administration attempted to enact.

Trump maintained in his Oct. 25 speech that “this is a revolutionary change. Nobody’s had the courage to do it, or they just didn’t want to do it.”

However, in 2016, CMS under former President Barack Obama tried to implement a multipronged approach to exploring alternative payment models for Part B, including changing the add-on payment to 2.5%, plus a $16.80 per-drug per-day flat fee payment. That proposed demonstration project was met with pushback from an array of stakeholders — including more than 1,300 comments on the proposal, most of them negative — leading the agency to scrap the Part B Drug Payment Model (81 Fed. Reg. 13230, March 11, 2016) later that year.

MD Logistics Could Be Challenging

“Currently, most medical groups and hospital outpatient departments purchase drugs, administer them to patients, bill to third parties and collect patient cost-share as appropriate,” explains Rubinstein. “Providers that participate in the IPI model and that simultaneously serve patients covered by other third-party payers such as commercial, Medicare Advantage and Medicaid will face the logistical complexity and challenge of doing things in one way for fee-for-service Medicare patients, but in other ways for patients covered by other payers.”

Ted Okon, executive director of the Community Oncology Alliance (COA), agrees. “It’s going to be tremendously complicated — in fact, think Rube Goldberg model,” he tells AIS Health. The model would impact Medicare fee-for-service, leaving Medicare Advantage (MA) and private payers, which together make up about 75% of the overall market. That population will continue to be “serviced the way it is now, which is the physician takes title to the drug, has just-in-time inventory for any patient who comes in and needs a change of medication and then bills Medicare and the patient’s insurance.”

The dilemma is around “taking the drug out of the hands of the physician,…which results in two rough scenarios.” In the first one, “some entity basically hands over to the practice an inventory of drugs that they just purchased. Under this scenario, at least the just-in-time aspect of the patient getting their drug is the same, although it’s going to have to be a separate inventory” from drugs used for MA and private payer populations. However, he says, “I do not believe there will be any willing vendor that will basically hand over millions and millions of dollars of expensive drugs on basically some kind of consignment or spec basis — I don’t even know what to call it.”

The other alternative is “some form of white bagging where the vendor will send drugs and will be triggered on a patient-by-patient basis. That is the nightmare scenario we are afraid of because…the complexity of that now is magnified greatly. You’re talking about a separate system from” MA and private payers “that somehow, from a standpoint of ordering software and everything else, you basically have to send it to that vendor, and then they have to send it back. The real concern there, aside from the pharmacy complexity, the operations complexity, is the fact that you’re now letting in a Part D provider.” He contends that practices are “experiencing nightmares on a daily basis in trying to get patients their oral drugs,” be it due to holdups, waste, incorrect therapies or some other reason.

This scenario also removes the just-in-time aspect, which is critical, as providers need the ability to change therapies based on scans and bloodwork conducted when the patient comes into the office. This means the patient will need to come back, which can be challenging for the Medicare population due to issues such as mobility and simply getting a ride to the appointment. “So the complexity ratchets up,” he maintains.

Ultimately, the proposal could have downstream issues. Kennedy asserts that “this changes the equation in decision-making for products in early development. Companies with equal choices on Part B versus Part D drug candidates will favor candidates that would fall under Part D. They might take on work in formulation or abandon drugs that have a less sure path.

“Also, companies could favor drugs for younger patients or populations where there are fewer Medicare eligible patients,” she continues. In addition to companies delaying or even abandoning product launches in certain countries, manufacturers may decide to launch in lower markets “at higher prices with little room for negotiation. So those countries could see delays or see a lack of access all together. Also, these countries will likely enable a system whereby they publish very high list prices but then negotiate confidential lower prices equivalent to one-third or one-fourth of the published price. This will be a problem in Germany as they have started to publish what they negotiate.”

View the ANPRM at Download the ASPE report at

Contact Kennedy at, Okon at and Rubinstein at

by Angela Maas  


HHS Doubles Down on Drug Pricing Efforts; How Useful Will Disclosing WACs Really Be?

HHS recently outlined two fairly assertive efforts aimed at pharmaceutical pricing. And while the one aimed at Medicare Part B (see story above) is definitely the administration’s most aggressive, its proposal to require companies to disclose drug prices in television ads has received a good amount of pushback, as well as support. Although the strategy may succeed in providing consumers more information on drugs’ wholesale acquisition costs (WACs), industry experts wonder how effective it really will be in letting consumers know what they will pay for a drug.

The proposed rule would require direct-to-consumer (DTC) television ads for prescription drugs covered by Medicare or Medicaid that have a WAC of more than $35 per month to include that list price in the ad. Specifically, an ad “must contain a statement or statements indicating the Wholesale Acquisition Cost (referred to as the ‘list price’) for a typical 30-day regimen or for a typical course of treatment, whichever is most appropriate, as determined on the first day of the quarter during which the advertisement is being aired or otherwise broadcast, as follows: ‘The list price for a [30-day supply of ] [typical course of treatment with] [name of prescription drug or biological product] is [insert list price]. If you have health insurance that covers drugs, your cost may be different.’”

HHS Secretary Alex Azar unveiled the proposal during a speech at the National Academy of Medicine’s annual meeting Oct. 15. The proposed rule (83 Fed. Reg. 22698, Oct. 18, 2018) was published Oct. 18 in the Federal Register. Comments are due by 5 p.m. Dec. 17.

Per the document, “We are proposing this regulation to improve the efficient administration of the Medicare and Medicaid programs by ensuring that beneficiaries are provided with relevant information about the costs of prescription drugs and biological products so they can make informed decisions that minimize not only their out-of-pocket costs, but also expenditures borne by Medicare and Medicaid, both of which are significant problems.”

The proposed rule notes that “in 2016, CMS and its beneficiaries spent $174 billion on drugs covered under Parts B and D, and $64 billion on drugs covered under Medicaid.”

HHS Maintains List Price Is ‘Relevant’

The agency maintains that people purchasing prescription drugs should be able to price shop in the same way they do “when looking to purchase a new car, a new house, or even a new coffee maker. Price shopping is the mark of rational economic behavior.” HHS acknowledges that different prices for a product exist but contends that “a number of factors make list price relevant across a variety of drug benefit designs, even though the PBM may have negotiated a lower price for the product dispensed to the beneficiary.”

For example, individuals in high-deductible health plans must pay list price for most drugs until they meet their deductible. In addition, negotiated rebates between payers and manufacturers are based on list prices, as are coinsurance amounts for beneficiaries. And people who purchase an off-formulary drug may need to pay its full price.

If implemented, the rule would impact multiple industry stakeholders.

“I think patients and providers will probably experience the most impact at first,” says Jeremy Schafer, Pharm.D., senior vice president at Precision for Value. “These stakeholders have generally been shielded from drug costs and pricing. Seeing the prices for the first time without much context may be surprising for some and concerning for others, especially for oncology and rare disease drugs. Manufacturers may experience some initial blowback from consumers and providers that are concerned on drug costs. Insurers may benefit from demonstrating to patients that insurance covers a significant portion of a patient’s drug costs.”

Multiple industry groups, including the Pharmaceutical Care Management Association, the American Medical Association (AMA) and Families USA, spoke out in support of the proposal. AMA President Barbara McAneny, M.D., said while the agency opposes DTC ads for prescription drugs, “as long as the practice is allowed, the ads should come with at least a small dose of transparency.…While this proposed rule alone won’t remove the often-misleading nature of prescription drug ads, it will give consumers a data point that is currently unavailable. That is a step in the right direction.”

And Frederick Isasi, J.D., M.P.H., executive director of Families USA, said, “Today’s announcement is a welcome step to rein in the cost of prescription drugs. People will be shocked to know how much their drugs really cost….This policy will focus public attention on the abusive prices charged by many pharmaceutical manufacturers.”

How Effective Would Proposed Rule Be?

Others within the industry, however, question how effective the proposed rule, if implemented, would really be.

“Patients do not typically pay a drug’s list price at the pharmacy counter,” points out Elan Rubinstein, Pharm.D., principal at EB Rubinstein Associates. “Showing the average monthly list price in direct-to-consumer advertising may not be meaningful. It could also frighten some people enough not to take prescribed medication as directed, thinking that they would have to actually pay this amount. It is not possible for a manufacturer to show estimated out-of-pocket cost, because this is highly variable. Showing a drug’s list price in direct-to-consumer advertising will not inform patients about either a drug’s total cost nor about the cost-share that they must pay at the pharmacy.” With this in mind, “it is difficult to see what true and useful facts the patient will have learned.”

In addition, he tells AIS Health, a different cost for a drug at the pharmacy than what is shown in an ad may confuse patients, making it likely that they’ll contact their providers’ offices, which will need to take the time to explain the discrepancy.

More broadly, points out Schafer, “between discounts, rebates, assistance programs, etc., neither the patient, employer, nor payer probably pay the list price in full.…The communicated price is likely to not be reflective of the actual cost to any stakeholder.”

Publishing prices is not likely to have an impact on specialty drugs, Bill Sullivan, principal consultant at Specialty Pharmacy Solutions LLC, tells AIS Health. “Patients already know that specialty pharmacy drugs are insanely expensive. Publishing costs for specialty is not going to make much difference especially if the manufacturer and pharmacy are able to level out-of-pocket costs through financial assistance, physician detailing and prime time ads. Patients’ primary ‘purchase’ criteria is a drug’s efficacy for their chronic disease. If they have deductibles and coinsurance, then cost may be a secondary factor, but, again, financial assistance often mitigates that concern. Patients may actually be driven to the costliest product thinking more expensive is better than a cheaper alternative. With many ‘next-generation’ therapies being approved, often at huge price premiums to the older therapy(ies), they are likely to be correct in that assumption.”

According to Lisa Kennedy, Ph.D., chief economist at Epiphany, a company that performs health economics, reimbursement and market access studies, “Transparency in the prices of health care services is always a good thing — but finding the prices of drugs is generally easier for patients to find than other health care services that they get. More importantly, what patients are most interested in is what they personally will pay, and this ruling does not help them.”

Transparency Is Needed for All Services

With individuals’ out-of-pocket costs varying greatly, it is difficult, if not impossible, for them to know from this information what they will owe. “So the efforts to empower patients to make an informed decision on health care shouldn’t be about a disproportionate focus on pharmaceuticals — transparency in the prices of health care services should expand across all health care services,” Kennedy tells AIS Health. “Moreover, government policies should extend towards developing tools that take the guesswork out of patient payments and understanding of their benefits — patients lack understanding of their benefits, which are inordinately complex for them. Even within one in-network hospital visit, a patient will get multiple bills from both in-network and out-of-network providers that cause extensive confusion and consternation.

“I really dislike the focus on just drug prices in this proposed rule,” she continues. “Let’s focus on improved health — that’s what people need. More alignment of financial and nonfinancial incentives among providers, manufacturers, commercial insurers and patients will facilitate greater health, and if payment follows health improvement, then prices of products that have unproven value are less likely to be used in favor of better products.”

In addition, said the Pharmaceutical Research and Manufacturers of America (PhRMA), “any such requirement would raise significant legal issues, including First Amendment concerns.”

However, the proposed rule states that “when the government requires accurate disclosures in the marketing of regulated products under appropriate circumstances, it does not infringe on protected First Amendment interests.”

Schafer says that whether the rule is a violation of the First Amendment “remains to be seen. Government bodies already dictate a fair amount of what drug manufacturers can communicate in advertising (safety warnings, etc.), as well as in product labels and promotional materials. I am not sure it is a radical departure for the government to require communication of another piece of information connected to a drug.”

In May, FDA Commissioner Scott Gottlieb, M.D., said that his agency had formed a working group to consider the issue. Asked about the change in agency on the issue during an Oct. 15 media call, CMS officials remarked that it is “well within our authority” to be the agency to issue the proposal. In response to another question about whether the agency needed to secure any funding or consideration from Congress to implement the rule, officials replied, “No, we don’t believe we do.”

The proposed rule notes that “although Congress has not explicitly provided HHS with authority to compel the disclosure of list prices to the public, Congress has explicitly directed HHS to operate Medicare and Medicaid programs efficiently. Promoting pricing transparency, and thus efficient markets, for drugs funded through those programs falls within the scope of that mandate.”

However, Schafer points out, “the only reason CMS is launching this effort was because the Durbin-Grassley amendment [to a Defense-Labor-HHS-Education appropriations bill] that would require basically the same price disclosure did not survive the House and Senate reconciliation. It does make one wonder why the Senate acted at all if this power was within CMS’s control from the beginning. However, the legal issue will need to be settled by courts, should it get to that point.”

PhRMA Offers Different Approach

On Oct. 15 before Azar’s speech, PhRMA unveiled an alternative approach to bringing transparency to drug costs. All of the group’s member companies agreed that their TV ads will “direct patients to information about medicine costs, including the list price of the medicine, out-of-pocket costs or other context about the potential cost of the medicine and available financial assistance. The biopharmaceutical industry will also launch a new platform that will provide patients, caregivers and providers with cost and financial assistance information for brand-name medicines, as well as other patient support resources.”

PhRMA’s board made the change through updating its voluntary DTC principles for prescription drugs. The board agreed to add the following statement: “All DTC television advertising that identifies a medicine by name should include direction as to where patients can find information about the cost of the medicine, such as a company-developed website, including the list price and average, estimated, or typical patient out-of-pocket costs, or other context about the potential cost of the medicine.”

The change is effective April 15, 2019, but the group said that member companies would begin implementing the approach “in the coming months.” Firms agreed that their CEOs and chief compliance officers would verify annually that their policies and procedures complied with the updated principles.

Move Will Be ‘Big Change’ for Firms

“Our member companies are taking a new approach to how they communicate about medicines in DTC television advertisements to make it easier for patients to access information about medicine costs,” said Stephen J. Ubl, president and chief executive officer of PhRMA, in a release unveiling the new approach. “The Administration and Congress have called on our industry to provide cost information in DTC advertisements, and our members are voluntarily stepping up to the plate.”

According to Ubl, the approach “represents a big change for our companies and it will require significant operational changes for individual companies to implement. But we believe this is the right thing to do and is an important step toward providing patients with the information they want.”

In response to the PhRMA announcement, CMS Administrator Seema Verma replied, “CMS appreciates the pharmaceutical industry’s action to increase transparency, but additional steps are required to ensure that patients have all of the information they need when they are learning about a medication.”

Azar’s response was a bit more pointed: Although he acknowledged that the PhRMA action “is a small step in the right direction,” he contended that “the drug industry remains resistant to providing real transparency around their prices, including the sky-high list prices that many patients pay.”

Schafer tells AIS Health, though, that “there could be value to this effort [by PhRMA] if the information was simple to find and provided adequate background information and context. However, it would be unlikely that all manufacturers would participate, so I don’t think the government saw the effort as adequate. Manufacturers may still want to proceed even if the rule is imposed, as it could be a useful way to educate patients and providers on the nuances of drug pricing.”

Move Follows Other Changes, Proposals

According to Verma, because of the administration’s efforts to lower the prices of prescription medications, “Americans are seeing results.”

Earlier this year in May, HHS issued the American Patients First blueprint, which contained multiple suggestions aimed at lowering medication prices and reducing costs for consumers (SMA 6/18, p. 1). Among proposed changes is lowering the add-on percentage of certain Medicare drugs that are based on WAC (SMA 8/18, p. 9).

Among actions already implemented, in late August, CMS told Medicare Part D plan sponsors that they can begin using indication-based formularies in contract year 2020 (SMA 10/18, p. 10). And earlier that month, CMS rescinded a 2012 memo and issued new guidance allowing Medicare Advantage plans to use step therapy for Part B drugs as of Jan. 1, 2019 (SMA 9/18, p. 13). According to HHS, “CMS is acknowledging that the use of step therapy is a recognized utilization management tool. The allowance of step therapy practices for Part B drugs will help achieve the goal of lower drug prices while maintaining access to covered services and drugs for beneficiaries.”

At least one plan sponsor already has signaled that it will indeed implement this tactic next year. In its October 2018 Network Bulletin, UnitedHealthcare said that as of Jan. 1, it would require step-therapy prior authorization for Part B covered items that are not preferred for new starts. Among the therapeutic classes are the immunomodulators; United will prefer biosimilars Inflectra (infliximab-dyyb) and Renflexis (infliximab-abda), classifying reference product Remicade (infliximab) as nonpreferred. And for the erythropoiesis-stimulating agents, the plan will prefer biosimilar Retacrit (epoetin alfa-epbx) over Procrit (epoetin alfa) and Aranesp (darbepoetin alfa). The bulletin notes that Epogen (epoetin alfa) and Mircera (methoxy PEG-epoetin beta) are not subject to the step-therapy requirement.

Rule Would Impact Marketing Efforts

If the rule requiring pricing information in DTC television ads is implemented, it obviously will impact manufacturers’ marketing efforts.

“The biggest change will be the inclusion of the pricing message itself,” maintains Schafer. “Realistically, a 30-second DTC ad is too short to delve into a detailed explanation of the many nuances in U.S. drug pricing. As a result, pharma manufacturers may want to consider launching a broader educational campaign directed at providers, patients and the general public on some of the factors in drug pricing. Manufacturers may also want to do more to show where the money from drug sales goes, including the development of new drugs.”

An additional challenge is the fact that “since the proposed rule calls for the most up-to-date list price to be communicated, manufacturers will need to update the price in the DTC every time the price changes,” he notes. “Astute patients or providers may notice when the drug price increases. Drug prices are one of the few products in the marketplace that progressively increase over time, and with more patients being responsible for a percentage of drug price whether by coinsurance or deductible, seeing increases may upset these stakeholders. Manufacturers will need to consider this potential issue when deciding on whether to change a drug’s price.”

To avoid running afoul of the legislation, manufacturers simply should “follow the guidance as written,” he says. “Fortunately, the guidance seems relatively straightforward with the required message and minimal exceptions.”

If the rule is implemented, “some manufacturers may move away from DTC,” Schafer says, “but I am not convinced that will be widespread and long-lasting. Manufacturers are aware of the benefits of increasing patient and provider awareness, and it may be better in the long term to benefit from DTC even if there is some initial blowback on pricing.”

View the proposed rule at and the United bulletin at

Contact Kennedy at, Rubinstein at, Schafer via Tess Rollano at and Sullivan at

by Angela Maas  


Pharma, Payers Are Using RWE To Inform Value-Based Deals

The strategic use of real-world evidence (RWE) has important — but different — implications for multiple stakeholder groups in health care. As drugmakers strive to demonstrate the value of their products — and hopefully attain a favorable position on payer formularies — and value-based arrangements become more widespread, RWE can be particularly beneficial to payers and pharma alike.

“Many payers have research groups that are looking at RWE and comparative-effectiveness studies and using them to guide formulary decisions based on what they’re seeing in the real world,” says Sarah Alwardt, Ph.D., vice president of health informatics and health economics and outcomes research operations at McKesson Corp. “This is the biggest shift we’ve seen over the past five years in how we think about coverage and access.”

“The use of RWE to improve outcomes-related product differentiation and demonstrate economic value can help drugmakers gain favorable formulary placement and possibly thwart it for emergent competitors,” adds Camie Britton, senior director, real-world data services, Parexel International.

“The ability to assess a drug’s full clinical impact often needs longer time horizons than what was available in the trial. [Outcomes-based] agreements let payers and drug developers share the risk,” adds Sumeet Bakshi, MBBS, MBA, vice president, real world data solutions at Analytica Laser, a Certara company. “To make it possible, you must use modeling and simulation to predict clinical outcomes over time based on evidence that is available at the time of launch (such as trial data, RWE from competitor products and other sources of information).”

“As costs rise and there’s intense scrutiny over drug pricing in many therapeutic areas, the main objective of value-based pricing arrangements is to identify key product attributes that drive value as perceived by various stakeholders and then elucidate the requisite evidence to support those value claims,” says John Doyle, senior vice president and general manager, real-world & analytic services, IQVIA, and faculty member, department of epidemiology, Mailman School of Public Health, Columbia University.

“Payers really need to understand the value of today’s costly therapy options, beyond just the cost but rather in terms of real-world efficacy and long-term outcomes, and outcomes-based contracts that are highly dependent on RWE provide both opportunities and challenges,” Alwardt says.

“Payers really want to understand outcomes and benefits for patients in the real world — and not just the ‘super patient’ who was enrolled in the clinical trial,” adds Zhen Su, M.D., chief medical officer for North America at EMD Serono, Inc.

Outcomes-based agreements started to make headlines in 2015, when United Healthcare signed an OBA with Gilead Sciences, Inc. for its hepatitis C therapy Harvoni (ledipasvir/sofosbuvir), and in 2016, when Cigna established value-based contracts with Amgen Inc. for Repatha (evolocumab) and Sanofi/Regeneron Pharmaceuticals, Inc. for Praluent (alirocumab). Those latter deals tied favorable pricing and reimbursement of the companies’ PCSK9 inhibitors — which were more costly than other treatment options — and used RWE to validate that anticipated clinical benefits were, in fact, being realized by patients in real-world settings, by monitoring the patient’s “bad cholesterol” LDL-C levels over time. With those OBAs, when the PCSK9 inhibitors were able to yield LDL-C reductions that were better than or equal to what was demonstrated in the trials, the negotiated price and reimbursement terms would apply, but if Cigna patients taking the drugs were not able to reduce their LDL-C levels to those target levels, the two drugmakers would absorb additional costs through deeper discounts to the insurer.

Similarly, Aetna has established value-based pricing and reimbursement agreements with Merck & Co., Inc. for its type 2 diabetes medications Januvia (sitagliptin) and Janumet (sitagliptin plus metformin). Under the agreement, Merck’s rebates on Januvia and Janumet will be based in part on those products’ contributions to helping Aetna’s commercial member populations with type 2 diabetes achieve or maintain treatment objectives, according to the insurer.

Some Drugs Are Better Suited for Deals

Drugs that are most amenable to such innovative contracting strategies include those that already face strong competition in crowded therapeutic areas and those for which RWE related to actual clinical outcomes can be collected and used to demonstrate how the drug is working in terms of relevant outcomes, such as cure, management of long-term chronic conditions, progression-free survival, long-term survival and avoidance of other costly health care interventions.

OBAs tend to make strategic sense for not just those therapies that are competing for market share in a crowded therapeutic space, but also for those products that either have a high cost per treatment or large overall budget impact for the payer, as well as innovative treatments that have as-yet-undefined clinical benefit in large, real-world patient populations.

According to Billy Amzal, MSc, MPA, Ph.D., senior vice president, real world decision & data analytics, Analytica Laser, in addition to the already-stated deals, other examples show that OBAs have already emerged across several therapeutic categories, with a variety of insurers:

✦ Non-small cell lung cancer: Avastin (bevacizumab) from Genentech USA, Inc., a Roche Group Company, and AstraZeneca’s Iressa (gefitinib);

✦ Leukemia: Novartis Pharmaceuticals Corp.’s CAR-T therapy Kymriah (tisagenlecleucel) and Tasigna (nilotinib);

✦ Multiple sclerosis: Bayer’s Betaseron (interferon beta-1b), EMD Serono’s Rebif (interferon beta-1a) and Biogen’s Tecfidera (dimethyl fumarate);

✦ Diabetes: Eli Lilly & Co.’s Trulicity (dulaglutide) and Novo Nordisk’s Victoza (liraglutide); and

✦ Heart disease: Entresto (sacubitril/valsartan) from Novartis, Eli Lilly’s Effient (prasugrel) and AstraZeneca’s Brilinta (ticagrelor).

When it comes to negotiating and executing large-scale use of OBAs, a variety of challenges remain, according to Amzal. These include:

✦ Assessing the risks up front related to uncertainties around real-world prescribing and use of costly, complex therapies;

✦ Managing the lack of control over proper prescribing, proper dosing, proper administration and sustained adherence from patient to patient — all of which directly impact clinical outcomes over time;

✦ Defining adequate time horizons in a fragmented, multiplayer market;

✦ Managing the resources required to set up and adjudicate RWE compared with traditional rebates and discounts;

✦ Creating and leveraging a data-collection infrastructure that can appropriately measure and monitor relevant outcomes; and

✦ Modeling and predicting outcomes in the health plan population and negotiating contractual terms that are acceptable to all stakeholders.

“All medicine is about intervention, so the ability to comprehensively incorporate real-world evidence to inform drug development, change the disease trajectory, improve the patient’s life and health, and save money on health care costs allows for better, data-driven interventions,” Su says.

“When RWE developed from actual clinical practice can help to tease out additional findings related to which patients respond best to which types of therapies, the insight has broader implications, as well, because it can help to inform the next generation of drug development — something that is essential for health care as a whole and for the sustainability of the life sciences industry,” states Su.

This article was contributed by Suzanne Shelley of Pharmaceutical Commerce. For more information, visit  


Prime and Janssen Enter Into Value-Based Deal for Stelara

Prime Therapeutics LLC recently signed a value-based agreement with the Janssen Pharmaceutical Companies of Johnson & Johnson for autoimmune therapy Stelara (ustekinumab) as part of Prime’s CareCentered Contracting program. With that therapeutic class at the top in terms of spend among most payers, understanding whether a medication is being taken appropriately is critical to knowing whether a product is providing value.

The FDA has approved Stelara to treat moderately to severely active Crohn’s disease in adults, moderate or severe plaque psoriasis in people at least 12 years old and active psoriatic arthritis in adults. The agency first approved the interleukin-12/23 inhibitor in September 2009.

“The development of Prime’s value-based contracts is an iterative process, so it’s more about identifying therapeutic areas or drugs of interest and then collaborating with select manufacturers,” explains Kim Gwiazdzinski, R.Ph., senior director, trade relations, value and outcomes contracting for Prime, in response to a question about how the deal came about. “Because autoimmune is one of our costlier therapeutic areas, it made sense to explore a contract in that category.”

Prime, which serves more than 27 million members, is owned by 18 Blues plans, subsidiaries or affiliates of those plans. According to Gwiazdzinski, the autoimmune class of medications was the biggest driver of spend among specialty drugs for Prime’s commercially insured members in 2017. Specifically, the category was 14% of spend and 23% of trend. In Prime’s Fall 2017 Mid-Year Update, released Oct. 12, 2017, Stelara was ranked No. 9 among the top 10 individual drugs driving drug spend, at 1.2% of spend.

“While not the highest in utilization among commercial members, Stelara use is growing, and we want to ensure that members taking Stelara are continuing therapy to be able to maximize the benefits of the drug,” Gwiazdzinski tells AIS Health.

Prime Will Analyze Persistence

Under the arrangement, which already has started, Prime will analyze both pharmacy and medical claims data in order to track how long members remain on therapy. Gwiazdzinski clarifies that “this contract measures persistence, which is more about continuing to take a medication for the intended duration, as opposed to adherence, which is taking it as prescribed.” The PBM explains that “this measure is important as it’s only when patients continue to take their medications for the prescribed amount of time that they obtain the intended benefit from the therapy.”

Asked what length of persistence Prime is looking for as part of the contract and whether the companies would analyze other benchmarks, Gwiazdzinski replies, “Persistency is a foundation for the contract and a good starting point for both parties to enter into a value-based agreement. Prime’s objective is to subsequently build on these contracts and move toward agreements that measure the impact of a product on the overall cost of care, rather than one single outcome.”

According to Gwiazdzinski, “As we advance our efforts in value-based contracting, looking at drugs like Stelara that are covered under both the medical and pharmacy benefit can provide insights such as member adherence levels and differences based on which benefit (medical or pharmacy) it is covered” in.

“Our clients invest in specialty medications, and if members don’t continue to take them, no one realizes the value of the investment,” says Susan Scheid, vice president of pharmaceutical trade relations for Prime. “Prime uses insights from its value-based contracts to build clinical programs to improve member health outcomes.”

Gwiazdzinski declined to respond to questions about whether the contract applies only to new starts on the drug, as well as whether Prime has any other value-based deals with Janssen.

The agreement is part of Prime’s CareCentered Contracting program, a value-based contracting program that the PBM launched in 2010. Asked how many value-based contracts that Prime has as part of the program, Gwiazdzinski says that “while the number of contracts fluctuates at any given time, we have entered into more than a dozen value-based contracts since the program’s inception.”

Prime’s first two contracts were with Warner Chilcott Co. for osteoporosis drug Actonel (risedronate sodium) and with Merck & Co., Inc. for its diabetes drug Januvia (sitagliptin). That was followed by an agreement with EMD Serono, Inc. for its multiple sclerosis drug Rebif (interferon beta-1a).

In response to a question about how the program has evolved, Gwiazdzinski tells AIS Health that “the CareCentered Contract signed in 2010 has provided valuable learnings regarding the operational aspects of these contracts. In addition, we now have several data points to measure impact on outcomes over time. We intentionally ramped up our strategy in the last two years, and our focus moving forward is on agreements that are measurable and meaningful, looking beyond adherence to broader clinical outcomes.”

Most Contracts Are for Specialty Drugs

Outcomes-based contracts are critical strategies within today’s health care environment, and more and more payers have been entering into these deals. Although it’s unclear exactly how many of these contracts exist because some companies do not publicly disclose them, a report from the IQVIA Institute for Human Data Science says that from 2013 to 2017, there were 24 new U.S. publicly unveiled contracts negotiated with both payers and providers. The company estimates there will be 65 new ones from 2018 to 2022, with most of them for high-cost specialty drugs. According to the report, titled 2018 and Beyond: Outlook and Turning Points, “These contracts come with challenges for both the manufacturer and the party they negotiate with, whether that is a payer or a provider. Key to any successful contract will be the use of easily captured data, adjudicated and verifiable independently, often informed by biomarkers or test results. Some contracts have an ongoing measurement of per patient outcomes, however the administrative burden is high. Other contracts set an annual, or longer, timeframe for the assessment of the value, where the discounts are applicable for the entire timeframe.”

The report maintains that “ensuring access for breakthrough drugs will require balancing the concerns and priorities of all stakeholders. Patients could be overburdened with costs, particularly if there are no means-testing mechanisms in place. Providers could face significant financial pressures if they pay up-front for a medicine before uncertain reimbursement and payers’ ability to control premiums and the overall rise of healthcare costs stretches their predictive powers when faced with high individual cost per patient. Manufacturers should be able to achieve a reasonable return on their risky investments. Mechanisms to adjudicate value and ensure access will be important for all stakeholders, and linking outcomes to payment is increasingly the option of choice.”

“Payers, employers and patients invest significant dollars on medications, and it’s important that we demonstrate the value we’re getting for that investment,” contends Gwiazdzinski. “While clinical trials demonstrate the safety and efficacy of a drug, they don’t show what happens in the real world — but value-based contracts do. It’s important that we continue to work with manufacturers to demonstrate that their product is bringing value to our clients.”

Contact Prime’s Jenine Anderson at

by Angela Maas

This story was reprinted from AIS Health’s monthly publication Radar on Specialty Pharmacy. For more information, visit  


Doctors May Be Using IL-17 Inhibitors as First-Line Drugs

Within the specialty drug space, the autoimmune class boasts one of the largest arrays of therapeutic options. And although some providers in general may tend to prescribe older medications that they have more familiarity with, a recent study shows that this may not necessarily be the case within this class. The study, led by AllianceRx Walgreens Prime, found that among analyzed patients, providers may be comfortable with prescribing a newer type of autoimmune biologic as a first-line treatment.

The study, whose findings were presented as a poster at the National Association of Specialty Pharmacy annual meeting, held in Washington, D.C., in late September, assessed the use of two third-generation biologics, Novartis Pharmaceuticals Corp.’s Cosentyx (secukinumab) and Eli Lilly and Co.’s Taltz (ixekizumab), in the treatment of psoriasis. The FDA approved Cosentyx in January 2015, with Taltz’s approval coming about a year later, in March 2016.

Psoriasis is characterized by lesions on the skin that can be painful and itchy. People with these raised patches have more of a protein called interleukin 17A (IL-17) — which causes inflammation — than those without lesions. Cosentyx and Taltz are within the newer class of biologics known as interleukin-17 inhibitors.

Researchers analyzed the records of 5,547 patients with psoriasis who changed from a different biologic for psoriasis to either Cosentyx or Taltz from 2016 to 2018 and had their prescriptions filled at AllianceRx – Central Specialty. “AllianceRx Walgreens Prime has five central specialty dispensing locations,” explains Rick Miller, R.Ph., vice president, clinical services, professional practice and accreditation, AllianceRx Walgreens Prime, who was one of the study’s co-authors. “Data was aggregated across those five sites — and are all included in the definition of ‘one national pharmacy.’”

Claims were for the pharmacy benefit only, and patient-reported data also were collected. Researchers studied the proportion of days covered (PDC), which is defined by the total of the days the medication was available divided by the total number of days — 180 — in the observation period. People under the age of 18 and off-label use were excluded from the analysis.

Most Said They Had Not Switched

Most of the patients on an IL-17 inhibitor — 4,301 — were on Cosentyx, with 1,246 on Taltz. Of those on one of the two drugs, 1,696 switched from another biologic — but 3,851 reported not having switched from another biologic. The study found that patients who switched had been on one of three biologics prior to the switch: AbbVie Inc.’s Humira (adalimumab), Bausch Health’s Ortho Dermatologics’ Siliq (brodalumab) and Stelara (ustekinumab) from the Janssen Pharmaceutical Companies of Johnson & Johnson.

“The prior medications were based on prescriptions filled at AllianceRx Walgreens Prime 12 months prior to the new/switched medication and were exclusive to the indication/diagnosis of psoriasis,” says Miller. “For patients who were new to AllianceRx Walgreens Prime — with no prior dispensing history — the prior medication(s) utilized to treat psoriasis was based upon patient-provided information — which is a known limitation of the study.”

Asked if it was surprising that no one in the study reported being on Enbrel (etanercept) prior to switching, Miller replies that “while AllianceRx Walgreens Prime dispenses etanercept, most of those patients were not prescribed etanercept for psoriasis, and for those who were prescribed etanercept for psoriasis that switched biologic agents, those patients did not switch to one of the study medications.”

The mean PDC for a six-month period among switching patients prior to moving to an IL-17 inhibitor was between 44.4% and 52.8%. For the six-month period after switching, the mean PDC ranged from 64% to 84.7%.

Based on patients’ reporting, the main reason for switching was that the prior biologic was ineffective, cited by 68.9%. Slightly more than 10% were uncertain of the reason for the switch, and 8.6% reported it was due to side effects. Other reasons included drug interaction (1.5%), lab abnormalities (0.7%), administration difficulties (0.7%) and inconvenience (0.4%). Respondents could cite more than one reason. Among the 304 patients who reported outcomes, 119 said their outcomes were better on Cosentyx or Taltz, 105 said they were the same, nine said they were worse, and 71 had inconsistent responses.

Conditions Have High Biologic Use

As far as the motivation behind the study, Miller tells AIS Health that “psoriasis and disorders within the inflammatory disease category comprise a large portion of patients on specialty medications — in particular, biologic medications. Little is known about the rates and reasons for patients switching prescribed biologic medications utilized to treat psoriasis.”

“Based on patient reporting, the majority of the patients were started on one of the study IL-17 medications instead of switching biologics,” wrote the study authors. “This may indicate that prescribers are becoming comfortable with prescribing IL-17 biologics as first-line agents for psoriasis.”

The study’s findings indicate that payers, says Miller, “should expect, and not be surprised, to see prescribers initiate patients on these newer, third-generation biologic medications for psoriasis — which may impact benefit design and prior-authorization/utilization management criteria.”

Contact Miller through Adrienne Foley at

by Angela Maas

This story was reprinted from AIS Health’s monthly publication Radar on Specialty Pharmacy. For more information, visit  


Is Medicare Part B Market Now More Conducive to Use of CAP?

HHS’s recently published Advanced Notice of Proposed Rulemaking (ANPRM) on changes to the Medicare Part B program may have elicited a sense of déjà vu among industry stakeholders (see story, p. 1). That’s because some of the proposals are similar to ones seen before, including a Competitive Acquisition Program (CAP). An alternative to buy and bill, the mandatory model would feature private-sector vendors that will negotiate drug prices, take title of products and compete for business from physicians and hospitals.

The agency is considering numerous third-party entities that could fill this vendor role — and which would be billed by model participants, which currently bill Medicare for the drugs — including group-purchasing organizations, “wholesalers, distributors, specialty pharmacies, individual or groups of physicians and hospitals, manufacturers, Part D sponsors, and/or other entities to perform the role of model vendor as long as they could satisfy the vendor qualification requirements.” In the initial CAP, only specialty pharmacies met vendor criteria.

CMS Proposed Similar Idea in 2016

Most recently, CMS floated the idea of a CAP-like alternative in a 2016 Part B proposed demo that the agency eventually scrapped. The first — and, so far, only — iteration of CAP was mandated by the Medicare Modernization Act in 2003. It launched July 1, 2006, with specialty pharmacy BioScrip, Inc. as its sole vendor. But CAP was under fire throughout its duration, mainly from specialty pharmacy providers and physicians for what they saw as problems with potential income and operations.

A little more than two years after the program’s start, BioScrip — citing “unacceptable profit risk” — said it would not re-sign with CMS as a CAP vendor. And even though the agency said that other companies submitted “several qualified bids” for vendor contracts, “contractual issues with the successful bidders” prompted CMS to indefinitely postpone the program at the end of 2008. Since then, the agency has sought comment on it, including through Open Door Forums.

When the idea was revisited in 2016, Stephen Cichy, founder of and managing director for Monarch Specialty Group, LLC, who worked at BioScrip while it was the CAP vendor, told AIS Health that “on the surface, the program made sense in the context of 2005/2006, but the program was significantly flawed due to onerous program operating rules, restrictions [that] did not follow physician flexibility when it comes to treating patients, and unacceptable profit risk, among other factors. The program was intended to leverage competitive bidding by multiple pharmacy vendors to lower drug costs for Medicare, similar to Medicare Part D, while substantially reducing the role of physician practices as middlemen in the system. Fifteen vendors expressed interest in participating when CMS set proposed rules in 2004; however, ultimately only one vendor (BioScrip) signed a contract with CMS.”

No Mechanism to Protect Vendors Exists

Elan Rubinstein, Pharm.D., principal at EB Rubinstein Associates, points out that “it is interesting that the ANPRM does not provide a mechanism to protect the model vendor, despite that IPI [i.e., International Pricing Index] model operation is dependent on the viability of the business model for the model vendor, and profitability concerns were key to failure of the” initial CAP.

Another potential complication is tied to the fact that the ANPRM says CMS may review vendor claims quarterly to ensure they match participant claims. “If model vendor claims do not match with model participant informational claim (i.e., patient, date, drug, administered dose), then I assume that CMS will retroactively deny those model vendor claims — resulting in total loss of drug ingredient cost, shipping and other operational costs associated with that supplied drug,” Rubinstein says. “This was a major problem in the drug competitive acquisition program — a nonstarter for someone contemplating becoming a model vendor.”

According to Cichy, “At the peak of the CAP program, approximately 3,500 physicians in roughly 1,100 practices participated; however, oncologists made up less than 10% of these participating physicians. The physician practices that did participate were mostly smaller practices, especially small-size allergy and rheumatology groups that relied on patients needing injectables compared to large-practice oncology groups with patients who required multiple injections or complex infusions.”

The market, though, has since changed. During an Avalere Health webinar held just prior to the unveiling of the ANPRM, Matt Brow, Avalere president, noted that “what you had in 2003-2004 was a marketplace that looked pretty much like 80% to 85%” of physician prescribers were administering the drug in a provider office, with 15% of physicians working for hospitals. But there has been “a significant shift in consolidation in this marketplace” since then, putting it closer to 50%/50% between independent provider practices and hospitals.

In addition, he said, smaller practices have consolidated into larger groups that are more willing to take on financial risk through buy and bill.

Also during the webinar, Lance Grady, an Avalere vice president, maintained that since the initial version, “we’ve seen drastic changes in the marketplace,” including “the introduction of sequestration,…specialty pharmacy and cold-chain capabilities have grown rampantly on the commercial side,” and “25% to 30% of oncology spend is either moving through brown bag or white bag in the commercial sector.”

Brow said that if a revived CAP were to be mandatory, that would mean that all of those institutions and practices currently administering drugs through Part B and are fine with buying and billing medications either “would have to decide that they’re going to do it anyway and participate,…or a very large portion of the physician-administered drug delivery system would have to be replicated.” The latter option, he maintained, “is a pretty big deal.”

Contact Rubinstein at

by Angela Maas  


Reality Check: Epilepsy


Our Point of View

Multiple market events have driven changes within the epilepsy space. In June 2018, the FDA approved GW Pharmaceuticals plc’s Epidiolex for the treatment of seizures associated with two rare forms of epilepsy: Lennox-Gastaut syndrome and Dravet syndrome. It is the first drug that contains an active ingredient derived from marijuana that the agency has approved. In September 2017, UCB, Inc.’s Briviact was approved as a monotherapy treatment for epilepsy; it was originally used as an adjunctive therapy for partial-onset seizure patients. In 2016, the FDA approved Aprecia Pharmaceuticals, LLC.’s Spritam for epilepsy treatment, and UCB’s Vimpat was successful in renewing its patent.  



A review of market access for epilepsy shows that payer pharmacy benefit coverage varies by channel. Almost half of the lives under commercial formularies and Medicare programs are unrestricted, while just about 7% of the lives under commercial formularies are not covered for at least one of the epilepsy drugs.


For more than 80% of the covered lives, payer pharmacy benefit formularies do not require step therapy (ST). Of the lives that require ST, 60% require multiple steps. About 39% of payer controlled pharmacy benefit covered lives require prior authorization (PA), with 44% consisting of policies that are restrictive.  

AIS Health’s View

Continual challenges for payers when it comes to antiepileptic drugs include ensuring patients are adherent to their medications and identifying the best product for individual patients, according to Beckie Fenrick, Pharm.D., a senior partner at consulting firm RemedyOne. There are also some concerns about off-label use of anticonvulsants, she tells AIS Health. In fact, gabapentin — which Pfizer Inc. sells under the brand Neurontin — is becoming a factor in the opioid epidemic, as it enhances the euphoric effects of heroin and can produce a marijuana-like high when taken alone in high doses, according to Stateline. To address those concerns, payers typically employ their “standard toolbox” of utilization management strategies to ensure antiepileptic medications are being appropriately used, Fenrick says. “It could be prior authorization, it could be step therapy, it could be quantity limits, it could be other programs that are done retrospectively, [for example] a retrospective utilization review,” she adds.  

Trends From AIS Health

How Will Plans React to Marijuana-Derived Epilepsy Drug?

When a pricey, unique medication for two rare forms of childhood-onset epilepsy comes onto the market — which could happen later this year — payers are likely to cover it but will probably subject the drug to prior authorization, experts tell AIS Health. The drug in question is Epidiolex (cannabidiol), which in June became the first FDA-approved treatment that contains a purified drug substance derived from marijuana. Subscribers to AIS’s RADAR on Drug Benefits may read the in-depth article online

Current Market Access to Epilepsy Medications

The FDA in June approved Epidiolex (cannabidiol) oral solution for the treatment of seizures associated with two rare and severe forms of epilepsy in patients two years of age and older. This is the first FDA-approved drug that contains a purified drug substance derived from marijuana. Subscribers to AIS’s RADAR on Drug Benefits may read the in-depth article online

The FDA approved GW Research LTD.’s Epidiolex (cannabidiol)

The FDA approved GW Research LTD.’s Epidiolex (cannabidiol) oral solution for the treatment of seizures associated with two forms of epilepsy, Lennox-Gastaut syndrome and Dravet syndrome, in people at least two years old. It is the first drug that contains an active ingredient derived from marijuana that the agency has approved. Subscribers to AIS’s RADAR on Specialty Pharmacy may read the in-depth article online



Key Findings

Many Generics Exist

Many generic options are used in the treatment of seizures. New players have emerged but big Rx sales are illusive in comparison with previous generic and brand antiepileptic drugs (AEDs). Significant restrictions are observed for the most recently launched products in this class.

Pharmacy Benefit Implications

AEDs are one of the protected Medicare classes, so management of name brand products is restrictive but less so than other classes. AEDs are also included in some state carve-out plans, such as Michigan’s. When PA is defined, diagnosis and trial and failure of generic AEDs or use as adjunctive therapy will be required. Coverage of this class is under the pharmacy benefit.      

AIS Health’s View

In September, the FDA rescheduled Epidiolex from a schedule I controlled substance to schedule V, putting it on the lowest level of controlled substances. Fenrick says payers have likely been preparing for the launch of Epidiolex, even as it awaited rescheduling. “Health plans in general, they don’t wait until the last minute to start considering these things; they know what’s in the pipeline, they know what to expect for certain medications,” she says. Mesfin Tegenu, president of PerformRx, LLC, a Philadelphia-based PBM subsidiary of the AmeriHealth Caritas Family of Companies, agrees. “I think most plans knew that a reclassification by the DEA was likely so that didn’t come as a big surprise nor change the overall strategy,” he says. As for how payers will handle Epidiolex, which has an average annual gross price of $32,500, he points out that “plans are naturally cautious regarding any new medication to market.” Because the FDA approved it for two specific forms of seizures, Tegenu notes that “off-label use may be a concern, so most plans are likely to place a prior authorization on the medication to ensure appropriate use.”