Perspectives

Perspectives on Cigna’s Efforts to Spur Biosimilar Adoption

July 22, 2021

Cigna Corp. revealed in a recent press release that starting in July, it “will offer all eligible customers the option to receive a one-time $500 debit card for health care services and products if they decide to switch to a biosimilar or another preferred medication.” The insurer also gave preferred status on its formularies to two approved biosimilars for Janssen’s immunosuppressive drug Remicade (infliximab), Avsola and Inflectra, AIS Health reported.

Cigna Corp. revealed in a recent press release that starting in July, it “will offer all eligible customers the option to receive a one-time $500 debit card for health care services and products if they decide to switch to a biosimilar or another preferred medication.” The insurer also gave preferred status on its formularies to two approved biosimilars for Janssen’s immunosuppressive drug Remicade (infliximab), Avsola and Inflectra, AIS Health reported.

Background:

  • The new “Shared Savings Program” comes months after the American Journal of Managed Care obtained a letter sent to providers by the insurer, stating that patients could receive a $500 debit card if they switch from Novartis’ Cosentyx (secukinumab) to Eli Lilly & Co.’s Taltz (ixekizumab) or an older biologic before Aug. 31 and then refill the prescription before Dec. 31.
  • At the time, Taltz was already preferred over Cosentyx on most of Cigna’s 2021 formularies, “so the $500 card program may have been a signal that Cigna didn’t feel that their traditional utilization management tools were as effective at migrating existing patients to a preferred drug when it comes to these chronic drugs,” says Omar Hafez, managing director at Avalere Health.

Expert’s view:

  • According to Hafez, patient preferences as well as “continuity of care/non-medical switching/step therapy laws” are all barriers to moving patients from their existing biologics, “but the $500 card could help convince some patients to switch on their own, partially neutralizing these barriers.”

“The fact that Cigna is rolling this out to the infliximabs could be a sign that Cigna was pleased with the results of [the Taltz/Cosentyx] program and is trying to replicate it in a physician administered drug setting,” Hafez says.

by Leslie Small

 

Perspectives on Amazon’s Expanded Pharmacy Business

July 8, 2021

Amazon.com, Inc. launched a long-anticipated expansion of its pharmacy business on June 8, saying it will allow Prime members to purchase up to six-month supplies of generic prescription drugs for $6. Experts say Amazon is well positioned to claim substantial market share in the growing prescription drug delivery market, which incumbent players have already begun to target, AIS Health reported.

“I love the model,” says Ashraf Shehata, national sector leader for health care and life sciences at KMPG. Shehata expects that Amazon will offer “almost a branded generic, although it’s branded by the distributor, not the manufacturer. I wouldn’t be surprised if we’re going to see an Amazon Basics side of this — they already have a branded category for other commodities that would fit nicely into this.”

Amazon.com, Inc. launched a long-anticipated expansion of its pharmacy business on June 8, saying it will allow Prime members to purchase up to six-month supplies of generic prescription drugs for $6. Experts say Amazon is well positioned to claim substantial market share in the growing prescription drug delivery market, which incumbent players have already begun to target, AIS Health reported.

“I love the model,” says Ashraf Shehata, national sector leader for health care and life sciences at KMPG. Shehata expects that Amazon will offer “almost a branded generic, although it’s branded by the distributor, not the manufacturer. I wouldn’t be surprised if we’re going to see an Amazon Basics side of this — they already have a branded category for other commodities that would fit nicely into this.”

Shehata says the idea of a white-label generic drug line isn’t novel, but Amazon’s unmatched online retail operation gives it meaningful differentiation.

What separates Amazon is “consumer convenience,” he says. Customers are going to be swayed, he predicts, “not only by the branded generics and the pricing, but people like the familiar consumer front end.”

Text on Amazon’s landing page for the expanded service indicates that, while the company will seek to enter pharmacy networks with insurance carriers, the firm will try to bypass them when possible and capture rebate revenue for itself. While the site says that “we work with most insurance plans,” it also says customers can “save by paying with Amazon Prime.” According to a June 8 note by Citi analyst Ralph Giacobbe, Amazon’s Prime prescription drug operation is administered by Inside Rx, a subsidiary of Cigna Corp.’s Evernorth PBM.

Brian Anderson, a principal at Milliman Inc., says that Amazon will be in the pole position as consumers begin to think of online retail as the default space for filling prescriptions, particularly for maintenance medications. He also expects that Amazon pharmacy could increase utilization.

Shehata says that Amazon’s logistics give the company a notable advantage over legacy players. He also predicts that Amazon can “have a much more predictable inventory of these categories of drugs,” since it will have a more centralized pharmacy operation than legacy pharmacies. What’s more, Amazon “knows a lot about the individual [members.]”

by Peter Johnson

 

Perspectives on GoodRx’s Acquisition

June 24, 2021

Prescription drug shopping app GoodRx, Inc.’s 2021 is off to a good start, with strong growth in its first publicly traded quarter yielding enough liquidity for the startup to purchase one of its competitors, RxSaver, for $50 million in cash. Experts say the deal and the company’s strong results are proof that it is here to stay, regardless of how retail giants like CVS Health Corp. and Amazon.com Inc. try to shake up the prescription drug market, AIS Health reported.

GoodRx reported 20% revenue growth year over year for the first quarter of 2021 and 9% growth in prescription volume. It acquired health and wellness video production company HealthiNation in April.

Prescription drug shopping app GoodRx, Inc.’s 2021 is off to a good start, with strong growth in its first publicly traded quarter yielding enough liquidity for the startup to purchase one of its competitors, RxSaver, for $50 million in cash. Experts say the deal and the company’s strong results are proof that it is here to stay, regardless of how retail giants like CVS Health Corp. and Amazon.com Inc. try to shake up the prescription drug market, AIS Health reported.

GoodRx reported 20% revenue growth year over year for the first quarter of 2021 and 9% growth in prescription volume. It acquired health and wellness video production company HealthiNation in April.

GoodRx gives consumers more transparency and notable savings in point-of-sale drug prices, but critics have pointed out that the company’s model doesn’t address the ballooning list price of prescription drugs by allowing consumers to circumvent the rebate system — and may even contribute to list price growth in the long run.

Ge Bai, Ph.D., an associate professor at Johns Hopkins University’s Carey Business School and Bloomberg School of Public Health, says the RxSaver deal is evidence that GoodRx has promising prospects.

“This is a sweet deal,” Bai says. “They’re crushing their competitors.”

She observes that RxSaver is “very affordable” for a firm of GoodRx’s size, and says that the deal seems to be a play by GoodRx to further expand its market share.

Ashraf Shehata, national sector leader for health care and life sciences at KPMG, says he expects GoodRx will disrupt PBM rebating as it consolidates its position.

He adds GoodRx could expand its contracting reach to disrupt the PBM business itself by going direct to consumers — not just operating at the outer margins of the drug channel.

Shehata can see a future where GoodRx “is more like a PBM model, where they’re going to offer kind of extended, membership-like services. One of them is going to be a point-of-care model. Some of them are literally sold right there at the pharmacist on the front end. And then this web front end. So to me, it’s now going to be a combination of all of these things. I think you’re going to see more of these kind of direct-to-consumer pharmaceutical products that are not directly a PBM infrastructure, but more of a program where you can afford direct-to-consumer rebating.”

by Peter Johnson

 

Perspectives on MA Prior Authorization Bill

June 10, 2021

A bipartisan bill, which was recently introduced in the House of Representatives by Rep. Suzan DelBene (D-Wash.) and co-sponsored by Reps. Mike Kelly (R-Pa.), Ami Bera (D-Calif.) and Larry Bucshon (R-Ind.), would push health insurers to make “real-time” prior authorization determinations for Medicare Advantage (MA) beneficiaries, AIS Health reported.

According to DelBene’s press release, the Improving Seniors’ Timely Access to Care Act would “establish an electronic prior authorization process, require HHS to establish a process for ‘real-time decisions’ for items and services that are routinely approved, improve transparency by requiring MA plans to report to CMS on the extent of their use of prior authorization and the rate of approvals or denials, [and] encourage plans to adopt prior authorization programs that adhere to evidence-based medical guidelines in consultation with physicians.”

A bipartisan bill, which was recently introduced in the House of Representatives by Rep. Suzan DelBene (D-Wash.) and co-sponsored by Reps. Mike Kelly (R-Pa.), Ami Bera (D-Calif.) and Larry Bucshon (R-Ind.), would push health insurers to make “real-time” prior authorization determinations for Medicare Advantage (MA) beneficiaries, AIS Health reported.

According to DelBene’s press release, the Improving Seniors’ Timely Access to Care Act would “establish an electronic prior authorization process, require HHS to establish a process for ‘real-time decisions’ for items and services that are routinely approved, improve transparency by requiring MA plans to report to CMS on the extent of their use of prior authorization and the rate of approvals or denials, [and] encourage plans to adopt prior authorization programs that adhere to evidence-based medical guidelines in consultation with physicians.”

DelBene’s bill has been endorsed by dozens of provider groups, but payer groups have been silent on the measure.

Michael Lutz, a senior consultant at Avalere Health and a former MA executive at Independence Blue Cross, says some payers and providers are more prepared for prior authorization mandates than others, which has been the case for payer interoperability rules, another tech-oriented regulatory mandate.

“The impacts will be unique to each plan, not necessarily based on the size of the plan,” says Lutz via email. “For example, plans that tightly manage care with expansive Prior Authorization required conditions and services will be more impacted than plans that have few or no prior authorization requirements. Conversely, if done well, the automation of the easier cases may allow plans to free up clinical resources to focus on the complex requests, thus resulting in operational improvements and allowing the clinicians to focus their skills on those cases that most benefit from them.”

“Another impact will be to provider offices,” he adds. “If they don’t have an electronic medical record (EMR) system, are not proficient with its functionality, or don’t have skilled office staff, this could add an additional burden to the provider office.”

Still, Lutz suggests prior authorization changes could be a break-even proposition for health care organizations.

“The big impact will be on implementation costs or the costs of vendor contracts to handle the system build and management. Over time, there may be some balancing with cost savings if the process results in operational efficiencies,” he explains.

Perspectives on Alternatives to Traditional PBMs

May 27, 2021

In a sign of pent-up demand as the COVID-19 pandemic winds down, a near-record number of companies likely will consider switching to a new PBM during the 2022 selling season that’s now underway, consultants and observers tell AIS Health.

In addition, generally negative publicity about the PBM industry’s contracts and tactics is leading employers to look at more transparent alternatives to the largest traditional PBMs, says David Dross, national practice leader for managed care pharmacy consulting at Mercer.

“We have seen a tremendous increase in plan sponsors saying they want to look at the big three, but they also want to look at other non-traditional options,” says Dross. “We’ve also had some RFPs [requests for proposals] this year where at the beginning of the RFP, the plan sponsor says they don’t want to go to any of the big three — they only want to go to nontraditional providers.” Cigna Corp.’s Express Scripts, UnitedHealth Group’s OptumRx and CVS Health Corp.’s Caremark comprise the trio of dominant PBMs.

In a sign of pent-up demand as the COVID-19 pandemic winds down, a near-record number of companies likely will consider switching to a new PBM during the 2022 selling season that’s now underway, consultants and observers tell AIS Health.

In addition, generally negative publicity about the PBM industry’s contracts and tactics is leading employers to look at more transparent alternatives to the largest traditional PBMs, says David Dross, national practice leader for managed care pharmacy consulting at Mercer.

“We have seen a tremendous increase in plan sponsors saying they want to look at the big three, but they also want to look at other non-traditional options,” says Dross. “We’ve also had some RFPs [requests for proposals] this year where at the beginning of the RFP, the plan sponsor says they don’t want to go to any of the big three — they only want to go to nontraditional providers.” Cigna Corp.’s Express Scripts, UnitedHealth Group’s OptumRx and CVS Health Corp.’s Caremark comprise the trio of dominant PBMs.

These requests by plan sponsors have nothing to do with the pandemic, Dross says. “It’s a philosophical position on the part of the plan sponsors that they just don’t want to work with one of the big three, because they’re basically opposed to their business model.”

For 2022, the plan sponsors who definitely don’t want to contract with one of the big three PBMs are emphasizing transparency, member experience and customization, Dross says.

Overall, this doesn’t involve enough business right now for the biggest PBM players to “really get worried,” Dross says, but it could pose a threat to them in the future.

“The big three players still do have incredible size and scale compared to the rest of the market — it’s roughly 75% or 80% market share,” Dross says. “But the market dynamic around moving to transparency is real, and it’s definitely something that plan sponsors want.” Dross says he’s seeing “little baby steps around providing additional disclosure around underlying financial structure.”

Peter Manoogian, principal at the consulting firm ZS Associates, says that specialty pharmacy costs are receiving considerable scrutiny from employer groups. “Employers are getting out of the year of hibernation” that occurred as a result of the pandemic, Manoogian says. “It’s shaping up to be a very competitive season from all accounts. Employers are increasingly looking at PBMs’ abilities to manage specialty drug costs proactively as a top decision criteria for selection.”

by Jane Anderson

 

Perspectives on Uber’s Partnership With ScriptDrop

May 13, 2021

Uber, seeking to expand its prescription delivery business nationwide, has inked a deal with pharmacy home delivery start-up ScriptDrop that makes Uber the default delivery app for a network of grocery store and independent pharmacies that spans 37 states, AIS Health reported.

The partnership, which is just one of many corporate moves in the pharmacy delivery space, positions Uber to take advantage of the vastly increased consumer demand for home delivery services sparked by the pandemic.

It also puts PBMs in the position of playing some catch-up on developing and promoting home delivery services beyond traditional mail order, says Ashraf Shehata, partner and advisory industry leader for health plans at consulting firm KPMG.

Uber, seeking to expand its prescription delivery business nationwide, has inked a deal with pharmacy home delivery start-up ScriptDrop that makes Uber the default delivery app for a network of grocery store and independent pharmacies that spans 37 states, AIS Health reported.

The partnership, which is just one of many corporate moves in the pharmacy delivery space, positions Uber to take advantage of the vastly increased consumer demand for home delivery services sparked by the pandemic.

It also puts PBMs in the position of playing some catch-up on developing and promoting home delivery services beyond traditional mail order, says Ashraf Shehata, partner and advisory industry leader for health plans at consulting firm KPMG.

The immediate question, he says, is “as we start to see these home delivery options, are we really starting to see the digital world competing against the bricks-and-mortar world, plus delivery? That’s really the dynamic tension here. And I think that there are a lot more chapters to be written in that story.”

But Uber is far from the only company investing in this space, and opportunities for partnerships and acquisitions are plentiful. Meanwhile, PBMs do not appear to be reacting much to the changes in prescription delivery and purchasing patterns, says David Dross, national practice leader for managed care pharmacy consulting at Mercer. “It feels like, at this juncture, PBMs are honestly not seeing enough threat to do something different,” he says.

Competition from Amazon and its subsidiary PillPack hasn’t turned out to be as big of a threat as some in the industry had feared, at least so far, Dross notes. Shehata also doesn’t see Uber and Amazon as immediate threats to PBMs and mail-order pharmacy.

However, Peter Manoogian, principal at the consulting firm ZS Associates, notes that that there are multiple deals that touch on prescription delivery, and PBMs definitely are watching. “I think my clients — PBMs and mail order pharmacies — they are thinking about the threat that an Amazon could bring in the Rx delivery space, because the Amazon delivery model is so intertwined into so many people’s lives,” he says.

by Jane Anderson