Provider

Radar On Market Access: Despite Threatening to Halt Integration, Judge Is Likely to Sign Off on CVS/Aetna Deal

December 11, 2018

According to CVS Health Corp., its acquisition of Aetna Inc. closed on Nov. 28 after receiving the last required approval from a state regulator. But a federal judge appears to have other ideas.

According to CVS Health Corp., its acquisition of Aetna Inc. closed on Nov. 28 after receiving the last required approval from a state regulator. But a federal judge appears to have other ideas.

In a hearing on Dec. 3, Judge Richard Leon of the U.S. District Court for the District of Columbia said he might halt CVS and Aetna’s integration efforts while he reviews the $69 billion deal, according to The Wall Street Journal.

Though the Department of Justice approved the transaction in October — contingent upon Aetna selling off its stand-alone Medicare Part D assets — Leon has the authority to review that settlement, through a statute known as the Tunney Act, to ensure that the proposed remedy for any antitrust issue is in the public interest.

Following a Dec. 3 hearing in which he expressed skepticism about the DOJ’s settlement, Leon ordered the parties involved in the case to “show cause why I should not order CVS to hold its acquired Aetna business as a separate entity and to insulate the management of the CVS business from the management of the Aetna business, and vice versa, until I have made my determination as to whether to enter final judgment in this case,” according to court documents. Written arguments are due by Dec. 14, and Leon plans to hold a hearing on Dec. 18.

So can a federal judge actually halt an acquisition that the DOJ has already approved?

“I don’t believe the Tunney Act extends that far,” antitrust attorney James Burns of Akerman LLP tells AIS Health via email. “The reason why I say that is because, under the Tunney Act, the issue before him is the sufficiency of the remedy that the parties have agreed to, and whether it serves the public interest, not whether the merger itself should be enjoined.”

Thus, Burns says he’s confident that Leon will ultimately approve the CVS/Aetna transaction, as he’s not aware of any case where a federal judge, in the end, rejected a merger settlement that the DOJ proposed.

Radar On Market Access: Future of Potential Humana/ Walgreens Tie-Up Is Murky

December 6, 2018

Just days before CVS Health Corp. said it closed its $69 billion acquisition of Aetna Inc., reports emerged that another retail pharmacy giant and health insurer— Walgreen Co. and Humana Inc. — are in preliminary talks to take equity stakes in each other.

Just days before CVS Health Corp. said it closed its $69 billion acquisition of Aetna Inc., reports emerged that another retail pharmacy giant and health insurer— Walgreen Co. and Humana Inc. — are in preliminary talks to take equity stakes in each other.

Walgreens and Humana are already collaborating on a pilot project in which the insurer opened senior- focused primary care clinics in two Walgreens stores in the Kansas City, Mo., region. Now the companies are in “wide-ranging” talks about either expanding that venture or taking stakes in each other, according to The Wall Street Journal.

If Humana and Walgreens do decide to establish cross-holdings in each other, it would be “a very interesting and shrewd play,” Rita Numerof, Ph.D., president and founder of Numerof & Associates, tells AIS Health.

“We know that a lot of outright M&A doesn’t deliver value at the end of the day,” she says. But taking equity stakes in each other isn’t a true acquisition, “so you don’t have all of the risks and costs associated with bringing [a] business under the umbrella of one that’s very, very different.”

In an note to investors, Leerink analyst Ana Gupte pointed to the upside for Humana. “Equity stakes are a way for the two companies to share economics across the different economic pools across clinical, MA distribution and associated retail pharmacy fills and front store sales, which can drive several hundred million dollars of value for [Humana] annually in EBIT [earnings before interest and taxes].”

But Jefferies analysts wondered if perhaps Walgreens might be the bigger winner, since the pharmacy business model “is under more direct attack from disruptive players than are health plans” and “partnering with [Humana] helps [Walgreens] drive market share.”

Jay Godla, a partner at PwC’s Strategy&, says that there could certainly be synergies produced by Humana and Walgreens buying stakes in each other. But any arrangements that are less than a full merger or acquisition can include issues around commitment, agility, not-so-well aligned goals and objectives, and inability to make quick decisions, he notes.

The talks reportedly going on between Humana and Walgreens “could be a starting point for a long-term future merger,” Godla adds.

Radar On Market Access: CMS’s Second Swing at Part D Protected Classes Might Work

December 4, 2018

On Nov. 26, CMS issued a proposed rule that would let Medicare Advantage and Part D plans limit coverage of certain drugs in the six “protected classes,” which include antidepressants, antipsychotics, anticonvulsants, immunosuppressants for treatment of transplant rejection, antiretrovirals and antineoplastics, AIS Health reported.

On Nov. 26, CMS issued a proposed rule that would let Medicare Advantage and Part D plans limit coverage of certain drugs in the six “protected classes,” which include antidepressants, antipsychotics, anticonvulsants, immunosuppressants for treatment of transplant rejection, antiretrovirals and antineoplastics, AIS Health reported.

Under CMS’s Contract Year 2020 Medicare Advantage and Part D Drug Pricing Proposed Rule, plans would be able to:

  • Implement broader use of prior authorization and step therapy for protected-class drugs than is currently allowed;
  • Exclude a protected-class drug from a formulary if it represents only a new formulation of an existing drug (regardless of whether the existing drug is still on the market); and
  • Exclude a protected-class drug from a formulary if its price increases, relative to the price in a baseline month and year, beyond the rate of inflation.

This is not the first time an administration has tried to make changes in Part D’s protected classes. In 2014, the Obama administration proposed a rule that, among other Part D changes, would have effectively removed the protected status of antidepressants, antipsychotics and immunosuppressants. After facing backlash from a number of health care stakeholders and lawmakers from both major parties, CMS backed off the proposal.

But some industry experts tell AIS Health it’s possible that the Trump administration’s plan could have more success than its predecessor.

“The concerns around beneficiary access to drugs in those classes is going to be similar, the same or maybe even greater than the Obama-era proposal,” Miryam Frieder, a vice president at Avalere, tells AIS Health. However, “the environment is different enough that there is certainly the possibility that one could see this moving forward.”

Wall Street analysts viewed the protected-classes proposal as good news for managed care firms.

“We remain bullish” on MA and Part D players in light of the potential new regulations, Leerink analyst Ana Gupte advised investors. She cited UnitedHealth Group, Humana Inc. and WellCare Health Plans Inc. as particularly likely to benefit, as well as Aetna Inc., Anthem, Inc. and Cigna Corp.

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.

Radar On Market Access: Count on Trump Admin, not Congress, for Drug-Price Action

November 22, 2018

In the wake of the 2018 midterm elections — which handed Democrats control of the House of Representatives — President Trump said he hoped to work with lawmakers on the other side of the aisle to lower the cost of prescription drugs.

In the wake of the 2018 midterm elections — which handed Democrats control of the House of Representatives — President Trump said he hoped to work with lawmakers on the other side of the aisle to lower the cost of prescription drugs.
Some industry analysts, though, are skeptical that sentiment will be enough to enact meaningful change, at least on the legislative front, AIS Health reported.
“A Democratic House might have an interest in working with President Trump to pass legislation calling for drug re-importation or direct negotiation, both of which the President has expressed interest in,” Credit Suisse’s A.J. Rice wrote in a note to investors. “The issue, however, would be that the Senate is highly unlikely to have any interest in moving legislation relating to re-importation or direct government negotiation over drug prices, which makes legislation highly unlikely.”
In a Nov. 7 client bulletin, Robert Laszewski of Health Policy and Strategy Associates, LLC, pointed out some of Trump’s early progress on the issue — such as getting drug company executives, like Pfizer Inc.’s CEO, to freeze prices in 2018 — has been short-lived. In a recent earnings call, Pfizer’s CEO said the company did not plan to freeze prices for 2019.
Some Wall Street analysts predicted that HHS, rather than Congress, will be the most active on the drug-pricing front.
“We do not believe we will see any fundamental shift on drug pricing given the Trump Administration has been very active through executive action (e.g., Secretary Azar’s Part B proposal and possible rebate elimination),” Leerink analyst Ana Gupte wrote in a research note. “We expect to see continued aggressive negotiation tactics from the Trump administration to rein in drug prices.”
Either way, any action on drug-pricing reform is likely to fall into three main buckets, according to Ashraf Shehata, a principal at KPMG’s life science advisory practice. Those could target:
  • Overall Medicare drug spending, which could involve increasing transparency around pricing and contract negotiation;
  • “Egregious pricing” for medicines that affect public health and safety; and
  • Innovation and R&D, with the goal of getting more drugs — and thus more competition — into the market, especially for high-cost drugs like biologics.

Radar On Market Access: Prime PBM’s Studies Show Promise for Managing Opioids

November 20, 2018

Researchers from Prime Therapeutics LLC recently presented studies on two approaches to managing the use of opioid medications, AIS Health reported.

Researchers from Prime Therapeutics LLC recently presented studies on two approaches to managing the use of opioid medications, AIS Health reported.

In the first opioid study, Florida Blue, Prime and Walgreens piloted a program where pharmacists gave a one-page opioid safety guide to Florida Blue members whose claim histories showed high opioid and controlled substance use when they picked up opioid prescriptions from a Walgreens pharmacy. The guide explained safe use, safe storage, safe disposal and overdose prevention for opioids, and included information on naloxone, a treatment used to counter the effects of an opioid overdose.

The intervention group, of 753 Florida Blue commercially insured members with pharmacy benefits through Prime, was compared with a similar group who used a non-Walgreens pharmacy and did not get the safety guide. With the intervention, researchers found “a statistically significant four-fold increase in the likelihood of a member receiving naloxone the next time they picked up an opioid prescription.”

Prime says the collaboration between the plan, PBM and pharmacy shows it is possible to identify high-risk opioid utilizers and increase the dispensing of naloxone — in keeping with the FDA’s efforts to increase the antidote’s availability as a means to reduce opioid overdose deaths — through a targeted process.

“Prime is currently working with Walgreens to operationalize an expansion of this [safety guide] program,” says Patrick Gleason, Pharm.D., Prime’s senior director of health outcomes. “A broader rollout is expected in 2019.”

In the second study, Prime’s researchers set out to develop a high-dose opioid predictive modeling process for Medicare members to identify them early, before they become high-risk opioid users.

Prime says it determined that separate predictive models are needed for first-time opioid users vs. those already using the drugs, and this approach resulted in “highly accurate” predictive models scoring and ranking the Medicare members on their future likelihood of getting high-dose opioids.

“We will be incorporating opioid predictive modeling scoring and ranking into our Medicare clinical programs beginning in first quarter of 2019,” Gleason says.