Payer

Radar On Market Access: Biden Administration’s Drug-Pricing Moves May Be Limited

November 17, 2020

As is the case for other flavors of health care reform, President-elect Joe Biden’s chance of passing substantial, transformative drug-pricing legislation is now highly dependent upon whether Democrats can eke out a majority in the Senate. While that question won’t be resolved until Georgia completes runoff elections in January, industry observers point out that there are still ways that a Biden administration can address drug pricing, AIS Health reported.

“A president can do a lot even with a divided Congress,” says Stephanie Kennan, a member of McGuireWoods Consulting’s federal public affairs group. “Part of how well something gets done…depends upon the skills of the president or those negotiating for him. With Biden perhaps having a better understanding of the Senate, having come from the Senate, [that] might help him.”

As is the case for other flavors of health care reform, President-elect Joe Biden’s chance of passing substantial, transformative drug-pricing legislation is now highly dependent upon whether Democrats can eke out a majority in the Senate. While that question won’t be resolved until Georgia completes runoff elections in January, industry observers point out that there are still ways that a Biden administration can address drug pricing, AIS Health reported.

“A president can do a lot even with a divided Congress,” says Stephanie Kennan, a member of McGuireWoods Consulting’s federal public affairs group. “Part of how well something gets done…depends upon the skills of the president or those negotiating for him. With Biden perhaps having a better understanding of the Senate, having come from the Senate, [that] might help him.”

During a webinar held on Nov. 5, Avalere Health experts highlighted restructuring the Medicare Part D benefit as an area of potential bipartisan compromise. “I see something like that packaged with the health care extenders that’ll need to move in 2021,” said Chris Sloan, an associate principal at the consulting firm.

Yet Kathryn Bakich, the National Health Compliance Practice Leader at Segal, says that adding an out-of-pocket cost cap in Part D could raise some concerns from employers. “The problem with that is for employer-sponsored plans that have a Part D program, that could make the value of that program less to them,” she says.

In a Nov. 3 note to investors, Leerink SVB analyst Geoffrey Porges pointed out that using regulatory authority to rein in drug prices won’t have as large of an impact as legislation would. “Drug pricing mechanisms implemented via executive order are likely to be limited to a small class of higher-priced drugs within Medicare and Medicaid, with expansion to the commercial side requiring congressional action,” he wrote.

Porges also argued that regardless of who is in charge of the federal government, “the PBM system is likely to remain a target of future reforms.”

Going forward, it’s likely that “lawmakers will focus on the incentives governing formulary decisions and rebates in considering drug pricing reform, although the vehicle for this change is highly uncertain,” he wrote.

MMIT Reality Check on Cystic Fibrosis (Nov 2020)

November 13, 2020

According to our recent payer coverage analysis for cystic fibrosis treatments, combined with news from key healthcare influencers, market access is shifting in this drug landscape.

According to our recent payer coverage analysis for cystic fibrosis treatments, combined with news from key healthcare influencers, market access is shifting in this drug landscape.

To help make sense of this new research, MMIT’s team of experts analyzes the data and summarizes the key findings for you. The following are brief highlights. To read the full piece, including payer coverage, drug competition and prescriber trends, click here.

Payer Coverage: A review of market access for cystic fibrosis treatments shows that under the pharmacy benefit, almost 62% of the lives under commercial formularies are covered with utilization management restrictions.

Trends: In September 2020, the FDA expanded the label of Vertex Pharmaceuticals Inc.’s Kalydeco (ivacaftor) for use in children ages 4 months to less than 6 months old with cystic fibrosis who have at least one mutation in their cystic fibrosis transmembrane conductance regulator (CFTR) gene that is responsive to Kalydeco based on clinical and/or in vitro assay data.

Perspectives on MA Star Ratings

November 12, 2020

Although more than three-quarters of Medicare Advantage beneficiaries remain in highly rated plans, roughly 77% of MA Prescription Drug (MA-PD) members are currently in contracts that will have 4 or more stars in 2021, down from about 81% in 2020, estimated CMS.

Approximately 49% of MA-PD plans (194 contracts) that will be offered in 2021 earned overall star ratings of 4 or higher, compared with 52% of MA-PDs (210 contracts) offered in 2020, according to CMS.

Although more than three-quarters of Medicare Advantage beneficiaries remain in highly rated plans, roughly 77% of MA Prescription Drug (MA-PD) members are currently in contracts that will have 4 or more stars in 2021, down from about 81% in 2020, estimated CMS.

Approximately 49% of MA-PD plans (194 contracts) that will be offered in 2021 earned overall star ratings of 4 or higher, compared with 52% of MA-PDs (210 contracts) offered in 2020, according to CMS.

Those declines are at least partly due to the increased weight of member experience measures based on Consumer Assessment of Healthcare Providers and Systems (CAHPS) and CMS administrative data, Melissa Newton Smith at HealthMine, Inc. tells AIS Health. For the 2021 star ratings, CMS increased the weighting value of the Part C Patients’ Experience and Complaints measures from 1.5 to 2.

That combined with the “continued improved performance on the Part D measures” created a downward shift in overall performance, she suggests.

MA-PDs performed worse on nine out of 14 Part D measures, including on all three medication adherence measures and in Statin Use in Persons with Diabetes (SUPD), which contribute about 15% to the overall rating. And 15 out of the 16 cut points for those measures increased, observes Smith.

“When you look at the number of plans that improved, there were 65 contracts that improved and only 19 picked up the fourth star, which is a pretty low number,” observes Smith. “And if you compare that to the plans that dropped this year…you can [observe that] CMS is seeing more plans dip below the 4-star level and losing quality bonus payments, which obviously trickles down into the market and changes the competitiveness of those contracts, which really jumped out.”

Tom Kornfield, senior consultant with Avalere Health, estimates that the 31 contracts that lost their fourth star collectively cover about 2 million enrollees, which is “not insignificant.” And even though three-quarters of the MA population are still in contracts with 4 or more stars, “when we look at the fact sheets from the last several years, there’s been an increase — or if it went down it was maybe by a percentage point,” says Kornfield.

Radar On Market Access: What’s Next for Health Insurers in a Likely Split Congress?

November 12, 2020

Though the new makeup of Congress may not be cemented until runoff elections take place in Georgia, perhaps the most consequential outcome of the 2020 general elections for the health insurance industry is that no one political party is likely to control the White House and both chambers of Congress, AIS Health reported.

“[I]t is evident there is no ‘blue wave’ as Republicans appear to have held the Senate,” Citi analyst Ralph Giacobbe advised investors on Nov. 5. “The news drove significant outperformance within the managed care space,” he observed. On Nov. 7, the presidential election was called in favor of former Vice President Joe Biden.

Though the new makeup of Congress may not be cemented until runoff elections take place in Georgia, perhaps the most consequential outcome of the 2020 general elections for the health insurance industry is that no one political party is likely to control the White House and both chambers of Congress, AIS Health reported.

“[I]t is evident there is no ‘blue wave’ as Republicans appear to have held the Senate,” Citi analyst Ralph Giacobbe advised investors on Nov. 5. “The news drove significant outperformance within the managed care space,” he observed. On Nov. 7, the presidential election was called in favor of former Vice President Joe Biden.

Jefferies analyst Brian Tanquilut, in his note to investors on Nov. 5, pointed out that a split Congress helps health insurers because it “essentially eliminates” the risk associated with Medicare for All gaining traction and generally limits legislators’ ability to advance progressives’ health care priorities.

In addition to implementing a public insurance option and lowering the Medicare eligibility age, other Democratic health care priorities that likely won’t happen with a GOP-controlled Senate include expanding Affordable Care Act (ACA) subsidies to middle-income individuals and allowing the federal government to negotiate Medicare Part D drug prices, Larry Levitt at the Kaiser Family Foundation, wrote in a Nov. 5 post on Twitter.

Kathryn Bakich, National Health Compliance Practice Leader at Segal, points out that a split Congress is also less likely to pass legislation that rescues the ACA if all or part of the law is struck down by the Supreme Court, which on Nov. 10 heard oral arguments in a case challenging the law’s constitutionality.

One area where the Biden administration and Congress will likely train their sights is on surprise medical billing.

Yet bipartisan support for a surprise-billing fix existed long before the election — including an executive order from Trump directing Congress to pass such legislation — and still a solution failed to materialize.

“Presumably if you had an administration that had really great negotiating skills, they could get everybody in the same room and say, ‘We’ve got to figure this out; we’re not leaving until we do,'” says Stephanie Kennan, a member of McGuireWoods Consulting’s federal public affairs group. “But I think people have tried that.”

Radar On Market Access: Humana Reports Strong Earnings, But Expects Fourth-Quarter Loss

November 10, 2020

While Humana Inc. has seen its profits swell as members avoided non-coronavirus-related care during the pandemic, the company is making it crystal clear that those financial gains will be erased before the year is over, AIS Health reported.

“We continue to expect our results for the second half of 2020, including an anticipated loss in the fourth quarter, to entirely offset the significant outperformance experienced in the first half of the year that resulted from historically low medical utilization levels,” Chief Financial Officer Brian Kane said during Humana’s third-quarter earnings call, according to a transcript from The Motley Fool.

While Humana Inc. has seen its profits swell as members avoided non-coronavirus-related care during the pandemic, the company is making it crystal clear that those financial gains will be erased before the year is over, AIS Health reported.

“We continue to expect our results for the second half of 2020, including an anticipated loss in the fourth quarter, to entirely offset the significant outperformance experienced in the first half of the year that resulted from historically low medical utilization levels,” Chief Financial Officer Brian Kane said during Humana’s third-quarter earnings call, according to a transcript from The Motley Fool.

That’s despite the fact that medical utilization has not yet returned to normal among Humana’s members, as it was tracking at 95% in September and October. And with COVID-19 cases once again rising throughout the country, the insurer anticipates the use of non-COVID care “to remain modestly below pre-COVID expectations through the end of 2020.”

Humana is also expecting to spend more on COVID-19 patients’ care than it originally anticipated. “[W]e now expect COVID testing and treatment costs to approach $1 billion in 2020,” Kane said.

For the third quarter of 2020, Humana reported earnings per share (EPS) of $10.05, or $3.08 on an adjusted basis. The large discrepancy is because the latter figure saw an impact from two major items: the receipt of unpaid Affordable Care Act risk corridor payments following a favorable Supreme Court ruling, and “a market gain from publicly traded investments,” chiefly primary care startup Oak Street Health, Inc., which raised more than expected in its initial public offering in August.

Humana’s adjusted EPS for the third quarter — which excluded the Oak Street and risk corridors impact — came in 27 cents above the Wall Street consensus, Evercore ISI analyst Michael Newshel advised investors. The insurer’s consolidated medical loss ratio of 85.3% was 60 basis points below consensus, Newshel added, “but operating costs were higher.”

Wall Street analysts took an optimistic view of Humana’s financial results. “Core utilization is still running below the baseline, which affords [management] flexibility to absorb COVID costs while pulling forward investments,” Jefferies analyst David Windley observed.

MMIT Reality Check on Chronic Lymphocytic Leukemia (Nov 2020)

November 6, 2020

According to our recent payer coverage analysis for chronic lymphocytic leukemia (CLL) treatments, combined with news from key healthcare influencers, market access is shifting in this drug landscape.

According to our recent payer coverage analysis for chronic lymphocytic leukemia (CLL) treatments, combined with news from key healthcare influencers, market access is shifting in this drug landscape.

To help make sense of this new research, MMIT’s team of experts analyzes the data and summarizes the key findings for you. The following are brief highlights. To read the full piece, including payer coverage, drug competition and prescriber trends, click here.

Payer Coverage: A review of market access for CLL treatments shows that under the pharmacy benefit, almost 51% of the lives under commercial formularies are covered with utilization management restrictions.

Trends: In April 2020, the FDA expanded the label for Pharmacyclics LLC, an AbbVie Inc. company, and Janssen Biotech, Inc.’s Imbruvica (ibrutinib) in combination with rituximab for the treatment of adults newly diagnosed with chronic lymphocytic leukemia or small lymphocytic leukemia.