Perspectives

Perspectives on Racial Bias in Optum Risk-Prediction Algorithm

November 28, 2019

To improve care for patients with the most complex health needs, many providers and payers turn to risk-prediction tools that use an algorithm to determine which patients need more intense care management. But a recent study, published in the journal Science, found that one such widely used algorithm exhibits significant racial bias by assigning black patients the same level of risk as white patients even when they are far sicker, AIS Health reported.

To improve care for patients with the most complex health needs, many providers and payers turn to risk-prediction tools that use an algorithm to determine which patients need more intense care management. But a recent study, published in the journal Science, found that one such widely used algorithm exhibits significant racial bias by assigning black patients the same level of risk as white patients even when they are far sicker, AIS Health reported.

This study garnered significant media attention, and at least one state’s regulators launched an investigation into UnitedHealth Group, whose Optum subsidiary sells Impact Pro, the data analytics program that researchers studied.

Brian Powers, M.D., one of the study’s authors and a researcher at Brigham and Women’s Hospital, says that “the algorithm did a great job of what it was specifically designed to do, which was predict future health care costs.” The problem is that the organizations deploying the tool often “use health care costs as a proxy for health care need,” he says, and black patients tend to cost the health system less because of a “lack of access to care due to structural inequalities, and a variety of other issues that have been well documented.” So while there is a correlation between high-risk patients and high health care spending, just looking at expenditures doesn’t paint a truly accurate picture of patients’ health care needs.

Rich Caruana, a Microsoft Corp. senior researcher who studies machine learning in health care, says he was “not at all surprised” to learn that researchers uncovered hidden bias in a predictive algorithm.

“Most of what machine learning is doing is right, but in addition to these things it’s doing really right, roughly 5% of what it’s learning are these sort of silly, wrong things,” he continues. “These are known as treatment effects — we’re seeing patients’ risk as more or less based on the treatment that they receive.”

Perspectives on How Drug Pricing Legislation Impacts Innovation

November 14, 2019

Many innovative new therapies are coming onto the market, but they also are launching with increasingly higher price tags, even as lawmakers and regulators launch a flurry of activity aimed at bringing down drug prices. Some industry experts caution that a few of the bills, if passed, could endanger the research and development efforts around these novel drugs, while others question that hypothesis, AIS Health reported.

Many innovative new therapies are coming onto the market, but they also are launching with increasingly higher price tags, even as lawmakers and regulators launch a flurry of activity aimed at bringing down drug prices. Some industry experts caution that a few of the bills, if passed, could endanger the research and development efforts around these novel drugs, while others question that hypothesis, AIS Health reported.

One of the proposals is the International Pricing Index, an effort by HHS to bring payments for Medicare Part B closer to what 16 other “developed economies” pay for these drugs. The Senate’s Prescription Drug Pricing Reduction Act of 2019 proposes multiple changes to Medicare Part B and Part D, as well as Medicaid. And the House’s Lower Drug Costs Now Act proposes, among other things, requiring HHS to negotiate the prices of up to 250 drugs in Medicare without competitors. Companies not coming to an agreement would be subject to financial penalties.

Drugmakers have vociferously pushed back on many of the proposals, with one of the arguments against them being that the efforts would have a chilling effect on pharma R&D.

“Empirical evidence” exists to support the idea that “lower spending on pharmaceuticals will lead to lower R&D spending and lower yield of innovative drugs,” says Elan Rubinstein, Pharm.D., principal at EB Rubinstein Associates. But “there isn’t enough evidence either way” to say whether “there aren’t policies besides spending that can impact innovation.”

“Additional patent protections and favorable tax treatment of R&D expenditures for drugs designated to treat ‘orphan’ indications appear have resulted in a large push among manufacturers and investors to bring those products to market,” he notes.

According to Lisa Kennedy, Ph.D., chief economist and managing principal at Innopiphany LLC, “the biopharmaceutical industry is responsible for approximately 70% of all innovation within health care. Price fixing of pharmaceuticals has been shown in several studies to have a knock-on effect on innovation.”

She also asserts that oncology, one of the most productive and exciting areas of innovation in the biopharmaceutical industry, could be hit particularly hard.

Perspectives on Pelosi Drug Pricing Legislation

October 31, 2019

Although there is bipartisan support for drug pricing reform and recent bills introduced in the House and the Senate share some concepts, conservatives and pharmaceutical manufacturers have found plenty to dislike about the drug pricing legislation unveiled in September by House Speaker Nancy Pelosi (D-Calif.), AIS Health reported.

Although there is bipartisan support for drug pricing reform and recent bills introduced in the House and the Senate share some concepts, conservatives and pharmaceutical manufacturers have found plenty to dislike about the drug pricing legislation unveiled in September by House Speaker Nancy Pelosi (D-Calif.), AIS Health reported.

In addition to restructuring the Part D benefit to include an out-of-pocket cap, the Lower Drug Costs Now Act (H.R. 3) would allow the HHS secretary to negotiate drug prices for at least 250 drugs where there is no effective competition. Manufacturers would be subject to certain transparency requirements and a “noncompliance fee.” Moreover, the bill would require that the negotiated price should be no more than 1.2 times the weighted average of the price in six other countries.

Speaking at AHIP’s 2019 National Conference on Medicare, held Sept. 23-24 in Washington, D.C., American Action Forum President Douglas Holtz-Eakin called H.R. 3 a “terrible bill” and said the structure of an upper limit and a noncompliance penalty is not negotiation but is “price fixing and extortion.” He also argued that its proposed inflation rebate would only incentivize manufacturers to create high launch prices.

Also speaking at the conference, PhRMA Senior Vice President for Policy and Research Jennifer Bryant said that while Pelosi’s bill is being presented as a “benign and fairly incremental approach,” the proposed structure is “not actually one of negotiation at all and is about tying prices in the U.S. to prices internationally.” Moreover, she challenged AHIP, which released a statement in support of the Pelosi bill, to make a case for an “alternative that reduces costs through competition.”

Perspectives on New Solutions to Finance High-Cost Treatments

October 17, 2019

With concerns mounting about how health plan sponsors will pay for breakthrough treatments with ultra-high price tags, some major insurers are offering up new solutions aimed at easing that burden, AIS Health reported.

With concerns mounting about how health plan sponsors will pay for breakthrough treatments with ultra-high price tags, some major insurers are offering up new solutions aimed at easing that burden, AIS Health reported.

Cigna Corp. “appears at the forefront” of initiatives to cope with super-high-cost drugs, as Citi analyst Ralph Giacobbe puts it, given that the firm recently introduced a new solution that would help clients pay for and manage two gene therapies: Luxturna and Zolgensma.

Members whose plan sponsors pay a per-member per-month fee for Cigna’s new solution — called Embarc Benefit Protection — will pay nothing out of pocket for Zolgensma or Luxturna if they meet the clinical qualifications to be treated with one of those therapies.

Steve Wojcik, vice president of public policy for the National Business Group on Health, says that “employers are looking for solutions like that from their health plan partners and the PBMs.” However, while offerings like Cigna’s could help employers “smooth out the spikes in expenses,” businesses remain concerned about the overall costs of breakthrough therapies in the pipeline, he notes.

Besides Cigna, other major names in the insurance sector, such as CVS Health Corp.’s Aetna and Anthem, Inc., are working on their own solutions to help cope with high-cost therapies, including annuity-style payment arrangements and value-based contracts.

David Dross, managed pharmacy practice leader at the consulting firm Mercer, says some large, self-insured employers that are concerned about ultra-costly treatments are rethinking their decision to forgo stop-loss coverage.

However, issues can arise if clinical and financial management of a high-cost drug are done separately, he adds. In other words, a plan sponsor may determine that a member qualifies for a high-cost drug, but the stop-loss carrier that’s taking on the financial responsibility may not agree.

Perspectives on Changes to Addiction Treatment Privacy Rules

October 3, 2019

A recent federal proposal — which would loosen privacy rules surrounding substance use disorder (SUD) treatment — is being applauded by health insurer trade groups. But some advocates are worried about potential harms to patients, AIS Health reported.

A recent federal proposal — which would loosen privacy rules surrounding substance use disorder (SUD) treatment — is being applauded by health insurer trade groups. But some advocates are worried about potential harms to patients, AIS Health reported.

At the center of the debate is legislation enacted in the 1970s and the subsequent regulations implementing that law, known as 42 CFR Part 2, which was designed to protect the confidentiality of SUD patient records created by federally funded treatment programs. Under the proposed changes to 42 CFR Part 2, opioid treatment programs would be able to enroll in state prescription drug monitoring programs and submit the dispensing data for controlled substances consistent with applicable state laws. SUD patients also would be able to consent to disclosure of their Part 2 treatment records to an entity, without having to name a specific person.

“At the highest level, ACHP does see the proposed rule as a positive development,” says Connie Hwang, M.D., chief medical officer of the Alliance of Community Health Plans. When an individual is undergoing treatment for SUD, “you want to make sure that all the other groups engaged in the ongoing care are aware and don’t inadvertently interfere with that or put the patient at greater danger,” she adds.

However, not everyone shares that view.

Paul Samuels, president and director of the advocacy group, said in a news release, “while the Legal Action Center strongly supports the need for coordinated flow of health information between providers, it must be done so with patient consent in disclosure and re-disclosure,.

The current privacy rules are “a necessary protection for individuals who would otherwise be susceptible to a multitude of detrimental consequences if their SUD information was disclosed without their permission to potential employers, housing providers, law enforcement and more,” Samuels added.

Perspectives on Million-Dollar Treatments

September 19, 2019

For large, self-insured U.S. employers, their No. 1 concern related to pharmacy benefits is how to finance treatments that come with seven-figure price tags.

For large, self-insured U.S. employers, their No. 1 concern related to pharmacy benefits is how to finance treatments that come with seven-figure price tags.

That’s one finding of the National Business Group on Health (NBGH) 2020 Large Employers’ Health Care Strategy and Plan Design Survey, AIS Health reported. Among the 147 employer respondents, 86% said they were either concerned or very concerned about “the impact of million-dollar treatments getting approved by the FDA.”

Ellen Kelsay, NBGH’s chief strategy officer, said at a press briefing in Washington, D.C., “the pipeline is looming — there are an estimated 14 new therapies in excess of $1 million each that are on the docket for FDA approval in the coming months and years.”

Nearly a quarter of large employers polled said that as of 2019, they are delaying the inclusion of newly launched treatments from their formulary to enable their PBM or health plan to better determine the treatment’s efficacy and safety, the NBGH survey noted.

Kelsay also highlighted the fact that 46% of employer respondents in the 2020 survey indicated they would consider a role for government in helping to negotiate prices for high-cost therapies.

“I think that’s a reflection of the frustration employers have” with how to finance high-cost treatments, NBGH President and CEO Brian Marcotte said at the briefing. “It’s not a question of are these good therapies. It’s a question of what can society afford — not just what can employers afford.”

When it comes to specialty drug management, the most notable area of growth is in the use of prior authorization (PA) for medications billed under the medical benefit. The share of employers using PA for drugs under the medical benefit rose from 36% in 2019 to 59% in 2020.