Perspectives

Perspectives on Proposed Part D Change

November 29, 2018

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

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

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

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

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

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

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

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

Perspectives on MA Plans’ Use of Step Therapy in Part B

November 15, 2018

While many stakeholders have praised CMS’s move to allow Medicare Advantage (MA) plans to apply step therapy to drugs covered under Part B, others have cautioned that it could result in delays or restrictions in patients accessing much-needed medications, AIS Health reported.

While many stakeholders have praised CMS’s move to allow Medicare Advantage (MA) plans to apply step therapy to drugs covered under Part B, others have cautioned that it could result in delays or restrictions in patients accessing much-needed medications, AIS Health reported.

On Aug. 7, CMS issued new guidance allowing MA plans to use step therapy for Part B drugs as of Jan. 1, 2019. The letter also states that those MA plans that also offer prescription drug coverage may use step therapy to have a beneficiary use a drug under Part D before stepping to one under Part B.

Matt Eyles, president and CEO of America’s Health Insurance Plans, praised the administration’s move. He said, “patients and families deserve the prescription drugs they need at a price they can afford. The new CMS policy helps deliver on that promise while also helping to ensure patients continue to have access to safe, effective, and evidence-based care.”

Meanwhile, some groups expressed their concerns. In a letter to HHS Secretary Alex Azar, the American Medical Association said, “The AMA is concerned about the utilization management tools frequently used by PBMs and health plans to control costs, as they often have little clinical basis and can simply be a means of shifting costs in the system. For example, prior authorization and step therapy protocols can create significant barriers for patients by delaying the start or continuation of necessary medical treatment, which can negatively affect patient health outcomes.”

In an Aug. 8 research note, Leerink analysts noted that “pharmaceutical companies could be enticed to offer rebates back to payers and plans in order to gain preferred status at the front of a step-edit or risk losing volume as a second-line or later agent. In turn, these rebates will lower drug costs for Part B MA plans and patients, but also lower pharmaceutical revenues.”

Perspectives on CVS Bid to Lower Drug Launch Prices

November 1, 2018

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

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

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

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

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

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

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

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

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

Perspectives on Indication-Based Formularies in Part D

October 18, 2018

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

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

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

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

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

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

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

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

Perspectives on Indication-Based Formularies in Part D

October 18, 2018

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

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

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

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

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

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

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

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

Perspectives on Express Scripts’ 2019 National Preferred Formulary

October 4, 2018

With 48 new exclusions on its 2019 National Preferred Formulary (NPF), Express Scripts Holidn Co. is getting more aggressive in its attempt to broaden access to pharmaceuticals and bring value to its clients, AIS Health reported. But some industry stakeholders are questioning its strategy of excluding more specialty drugs.

In 2019, the NPF will cover more than 25 million lives and will include 3,886 medications. The PBM estimates that the exclusions, including multiple sclerosis drug Extavia,

With 48 new exclusions on its 2019 National Preferred Formulary (NPF), Express Scripts Holidn Co. is getting more aggressive in its attempt to broaden access to pharmaceuticals and bring value to its clients, AIS Health reported. But some industry stakeholders are questioning its strategy of excluding more specialty drugs.
In 2019, the NPF will cover more than 25 million lives and will include 3,886 medications. The PBM estimates that the exclusions, including multiple sclerosis drug Extavia, hepatitis C medication Mevyret and HIV drug Atrupla, will save $3.2 billion.
According to Jeremy Schafer. senior vice president at Precision for Value, “The inclusion of categories like HIV, hereditary angioedema and hemophilia was certainly a surprise. Rare disease categories such as these were commonly seen as too sensitive and individualized to be managed by something as blunt as an exclusion. Even though Express Scripts is grandfathering current users, this move represents an aggressive step in the management of rare disease drugs.”
Within the hepatitis C class, Adam Fein, PH.D., CEO of Drug Channels Institute, noted in an Aug. 16 blog that excluding Mavyret is a ‘patient unfriendly change to the hepatitis C category.”
“Express Scripts has excluded Mavyret, the lowest list price product that can treat the one in four patients who has HCV [i.e., hepatitis C virus] genotype 2 and 3,” he said. “These patients can’t take Zepatier, which treats only genotypes 1 and 4. They will therefore most likely be treated with Harboni, a product with a higher list price and presumably high rebates.”
According to Express Scripts spokesperson Jennifer Luddy, “no formulary decision is based strictly on price.” The company says that “after clinical considerations, formulary preference is given to high-value therapies with the lowest net cost, achieved through low list price, rebate, or both.”