Provider

Radar On Market Access: Trump’s $200 Medicare Drug Card Proposal Prompts Criticism

October 15, 2020

Experts say a last-minute proposal by President Donald Trump to distribute $200 prescription drug credits to Medicare Part D enrollees on preloaded debit cards faces many unanswered questions and will be difficult to implement, especially in the short time before the Nov. 3 election, AIS Health reported.

Little is known about the drug credit plan other than what can be gleaned from public statements by the president and an unnamed HHS source cited by the Washington Post. The president announced the plan during a Sept. 24 campaign speech in North Carolina.

“This is just another of the president’s many off-the-cuff promises, one it appears none of his staff knew about before he made it in a campaign speech,” says Joe Paduda, principal of Health Strategy Associates.

Experts say a last-minute proposal by President Donald Trump to distribute $200 prescription drug credits to Medicare Part D enrollees on preloaded debit cards faces many unanswered questions and will be difficult to implement, especially in the short time before the Nov. 3 election, AIS Health reported.

Little is known about the drug credit plan other than what can be gleaned from public statements by the president and an unnamed HHS source cited by the Washington Post. The president announced the plan during a Sept. 24 campaign speech in North Carolina.

“This is just another of the president’s many off-the-cuff promises, one it appears none of his staff knew about before he made it in a campaign speech,” says Joe Paduda, principal of Health Strategy Associates.

“This is definitely shameless electoral politics,” says Avalere Health founder Dan Mendelson. “Once the $200 is gone, beneficiaries still have to pay out of pocket for expensive medications. I don’t think anybody looks at this and says that this is a solution to the consumer problem [of high drug prices].”

In the absence of a written plan, health care experts have begun to speculate about what legal authority the administration could use to implement the program — which would likely cost about $7 billion — and whether the president has the ability to implement the program at all.

Matt Kazan, a principal at Avalere, says that there seem to be two possible legal avenues for the administration to pay for the debit card program. The first is a demonstration program through the Center for Medicare and Medicaid Innovation (CMMI), and the second via Section 402 of Public Law 92-603, which “grants CMS the authority to waive Medicare payment and benefit statutes to conduct these demonstrations,” according to a CMS document.

“Which authority they use probably determines some of the policy specifics,” Kazan says. “I think linked to that is a financing question. If you’re sending this to all Part D enrollees, the cost of that does become significant.”

Leaving all the legal wrangling aside, Raja Sekaran, a partner at Nossaman LLP, says that the short time until the election, and the speed that would be needed to get the drug card program off the ground, will likely doom the proposal.

Radar On Market Access: New Manufacturing Approach May Drive Down CAR-T Therapies’ Prices

October 1, 2020

This summer, a drug called Tecartus (brexucabtagene autoleucel) became the third chimeric antigen receptor T-cell (CAR-T) therapy approved by the FDA. CAR-T therapies, which use a patient’s genetically modified immune cells to target and fight cancer cells, are a cutting-edge type of treatment that comes with eye-popping price tags, ranging from $373,000 to $475,000. However, a new report from OptumRx highlights an “industry trend to watch” that could eventually provide some relief to payers worried about how to finance CAR-T treatments, AIS Health reported.

Currently, CAR-T therapies’ high cost is at least in part attributable to the “labor-intensive and time-consuming” manufacturing process for such drugs, stated the UnitedHealth Group-owned PBM’s Drug Pipeline Insights Report for the third quarter of 2020. Essentially, T-cells are taken from a patient, treated and multiplied in a lab, and reinfused into the same patient — a completely personalized process known as autologous therapy.

This summer, a drug called Tecartus (brexucabtagene autoleucel) became the third chimeric antigen receptor T-cell (CAR-T) therapy approved by the FDA. CAR-T therapies, which use a patient’s genetically modified immune cells to target and fight cancer cells, are a cutting-edge type of treatment that comes with eye-popping price tags, ranging from $373,000 to $475,000. However, a new report from OptumRx highlights an “industry trend to watch” that could eventually provide some relief to payers worried about how to finance CAR-T treatments, AIS Health reported.

Currently, CAR-T therapies’ high cost is at least in part attributable to the “labor-intensive and time-consuming” manufacturing process for such drugs, stated the UnitedHealth Group-owned PBM’s Drug Pipeline Insights Report for the third quarter of 2020. Essentially, T-cells are taken from a patient, treated and multiplied in a lab, and reinfused into the same patient — a completely personalized process known as autologous therapy.

As the industry searches for a cheaper and more scalable way of manufacturing CAR-T treatments, a new approach known as an allogeneic process “is currently under study as one possible solution,” according to OptumRx. In this process, previously extracted and banked healthy donor T-cells are multiplied “many times over for use in many patients,” effectively spreading out the high initial manufacturing cost over multiple doses.

When asked how much the allogeneic process could reduce the manufacturing cost of CAR-T therapies, Bill Dreitlein, senior director of pipeline and drug surveillance at OptumRx, cited a 2019 study.

“Per the International Society for Cell and Gene Therapy, the cost to manufacture CAR-T using current methods is at $95,780 per dose,” he says via email. “That study also calculates the production cost using the new process would be only $4,460 per dose — over 95% lower.”

However, because manufacturing costs are only one part of the drug-pricing equation, the new allogeneic process may not actually lower CAR-T prices that dramatically, the report noted.

Tecartus’ list price is $373,000, and the wholesale acquisition costs of the other CAR-T therapies, Kymriah (tisagenlecleucel) and Yescarta (axicabtagene ciloleucel), are $373,000 and $475,000 respectively, per the OptumRx report. As of Oct. 1, 2019, CMS agreed to cover CAR-T therapies for qualifying Medicare beneficiaries, but private payers generally reimburse providers for CAR-T treatment on a case-by-case basis, industry experts previously told AIS Health.

Radar On Market Access: As Payer M&A Slows Down, What’s Next?

September 22, 2020

The climate for payer mergers and acquisitions (M&A) has cooled substantially at a national level ever since the collapse of the proposed deals between Anthem, Inc. and Cigna Corp. and between Aetna Inc. and Humana Inc. However, consolidation in the provider sector has increased since the start of the COVID-19 pandemic as such firms grapple with the rapid collapse of fee-for-service revenue, AIS Health reported.

The breakdown of Anthem’s bid to acquire Cigna resulted in a public spat and dueling lawsuits over Cigna’s attempt to exit their agreement before exhausting the firms’ option to appeal a federal ruling against the transaction. On Aug. 31, the Delaware Court of Chancery ruled that neither firm had to pay damages to the other over the failed deal.

The climate for payer mergers and acquisitions (M&A) has cooled substantially at a national level ever since the collapse of the proposed deals between Anthem, Inc. and Cigna Corp. and between Aetna Inc. and Humana Inc. However, consolidation in the provider sector has increased since the start of the COVID-19 pandemic as such firms grapple with the rapid collapse of fee-for-service revenue, AIS Health reported.

The breakdown of Anthem’s bid to acquire Cigna resulted in a public spat and dueling lawsuits over Cigna’s attempt to exit their agreement before exhausting the firms’ option to appeal a federal ruling against the transaction. On Aug. 31, the Delaware Court of Chancery ruled that neither firm had to pay damages to the other over the failed deal.

This failed deal was a catalyst for the slowing pace of health insurance consolidation at the national scale, according to antitrust lawyer and former Federal Trade Commission official David Balto.

Ashraf Shehata, KPMG national sector leader for health care and life sciences, says that Cigna’s acquisition of Express Scripts, a transaction that the firm pursued partly because of the failed Anthem merger, set a precedent of its own.

“I would say what that has spawned instead of the health plan integration, it’s spawned…the PBM integration. Rather than health plan to health plan, it was health plan plus PBM. And we saw that across the board with all the commercial entities,” he says.

Shehata says he sees three likely types of payer transactions and reorganizations going forward. The first is the PBM-payer integration. Second, Shehata says that horizontal coordination between regional payers, if not outright mergers, is likely to accelerate. Finally, he’s tracking the emerging model of “health plan plus retail plus PBM.”

Michael Abrams, co-founder and managing partner of consultancy Numerof & Associates, says that large regional hospital systems with healthy balance sheets are likely to speed up their vertical acquisition of independent hospitals or horizontal consolidation with local peers.

Abrams also points out that this wave of consolidation will compound or accelerate the rising cost of health care. He adds this continual rise in prices will eventually drain the generous margins that payers have enjoyed over the course of the pandemic.

Perspectives on PBM Performance Amid COVID-19

September 17, 2020

For PBMs, 2020 has been far from business as usual, given the myriad ways the COVID-19 pandemic has changed how people interact with the health care system. However, during their second-quarter earnings conference calls, companies that own some of the largest PBMs emphasized that they are largely satisfied with how the PBM segments of their businesses are performing, AIS Health reported.

Anthem, Inc. Chief Financial Officer John Gallina said during the insurer’s earnings call that “IngenioRx is actually doing quite well, and has really done a nice job of meeting our expectations.”

For PBMs, 2020 has been far from business as usual, given the myriad ways the COVID-19 pandemic has changed how people interact with the health care system. However, during their second-quarter earnings conference calls, companies that own some of the largest PBMs emphasized that they are largely satisfied with how the PBM segments of their businesses are performing, AIS Health reported.

Anthem, Inc. Chief Financial Officer John Gallina said during the insurer’s earnings call that “IngenioRx is actually doing quite well, and has really done a nice job of meeting our expectations.”

Anthem is on track this year to realize $900 million in operating profit contributed from its relatively new PBM, which exceeds its prior expectation of $800 million, Credit Suisse analyst A.J. Rice pointed out in a July 29 note to investors. But he also noted that while maintenance prescription volume was steady compared with the prior-year quarter, “new scripts saw a 10-15% drop in April versus normal utilization. Thus, IngenioRx captured less profit in Q2.”

CVS Health Corp., which owns the PBM Caremark, reported that operating income and adjusted operating income for its pharmacy services segment increased 6.2% and 2.4%, respectively, from the prior-year quarter. Those results were “primarily driven by growth in specialty pharmacy and improved purchasing economics,” but they were offset by “continued price compression and previously disclosed client losses,” the company said in its earnings release.

Cigna Corp. reported on July 30 that for its health services segment — which houses the PBM Express Scripts — pretax adjusted income from operations increased 7% relative to the second quarter of 2019.

Executives from Anthem, Cigna and CVS all acknowledged that the PBM selling season for 2021 was affected by the shutdowns and economic uncertainty ushered in by the COVID-19 pandemic.

Anthem President and CEO Gail Boudreaux described the selling season as “an interesting operating environment, given all the change.” As the insurer mentioned in its first-quarter earnings call, “things are, I would say, at least slightly delayed, as customers try to work through their own stability across their business,” Boudreaux said.

Alan Lotvin, M.D., the executive vice president and president of Caremark, offered: “I’d say the season itself has been interesting in the lumpiness with COVID, but overall ending up about where we thought.”

Radar On Market Access: Prime Therapeutics Introduces Real Time Benefit Tool

September 17, 2020

With the deadline approaching for Medicare Part D plans to implement a Real Time Benefit Tool (RTBT) — which informs prescribers when lower-cost alternative therapies are available under a beneficiary’s drug benefit — Prime Therapeutics, LLC said on Sept. 2 that it is rolling out a tool that will meet the new requirements, AIS Health reported.

In addition to showing a drug’s price, the Real Time Benefit Check tool displays lower-cost and therapeutically equivalent alternatives to any given drug, breaks down costs based on a member’s health plan formulary, and alerts a prescriber if a drug requires prior authorization.

With the deadline approaching for Medicare Part D plans to implement a Real Time Benefit Tool (RTBT) — which informs prescribers when lower-cost alternative therapies are available under a beneficiary’s drug benefit — Prime Therapeutics, LLC said on Sept. 2 that it is rolling out a tool that will meet the new requirements, AIS Health reported.

In addition to showing a drug’s price, the Real Time Benefit Check tool displays lower-cost and therapeutically equivalent alternatives to any given drug, breaks down costs based on a member’s health plan formulary, and alerts a prescriber if a drug requires prior authorization.

To develop its new tool, Prime conducted a 14-month pilot with multiple vendors, including DrFirst, which created the myBenefitCheck tool that the PBM decided to release first.

After processing 700,000 transactions among 25,000 prescribers, Prime calculated an average annual savings of $692 for each prescription that was changed as a result of using the tool. One Blues plan involved in the pilot “realized a total estimated savings due to alternate drug choices of $348,000 from April 2019 to March 2020,” stated a news release from the PBM.

Prime’s new Real Time Benefit Check tool will fulfill its obligations under the Medicare Advantage and Part D Drug Pricing Final Rule, which was issued in May 2019 and requires each Part D health plan to adopt one or more RTBTs that can integrate with at least one prescriber’s ePrescribing system or electronic health record system starting Jan. 1, 2021. In addition to Prime’s Part D members, the Real Time Benefit Check tool will also be available to the PBM’s commercial members.

Matt Kazan, a principal at Avalere Health, says that initially the new RTBT requirement was slated to go into effect in 2020, but CMS pushed back the deadline one year in response to some industry stakeholders’ concerns over readiness.

“Generally speaking, larger organizations had a system in place…and CMS is allowing them to utilize that,” says Kazan. “I think more of the concern was from maybe smaller, midsized organizations that didn’t have their own system ready to go.”

However, “time has lapsed since that final rule, so I’ve heard less about major concerns about the upcoming deadline,” he adds.

Radar On Market Access: Trump’s International Drug Pricing Order Is Still Missing; Rebate Order Draws Fire

September 16, 2020

A promised executive order that would tie drug prices to their costs in other countries has yet to emerge, although President Donald Trump has promoted the order as part of his re-election campaign. Meanwhile, payers and PBMs are continuing to push back against three executive orders the Trump administration issued in July with the intention of lowering drug prices, one of which would overhaul the Medicare Part D prescription drug rebate system, AIS Health reported.

“I think the purpose of these executive orders is to give the president some talking points going into the debates,” says Avalere Health founder Dan Mendelson. He adds that, regardless of their purpose, the orders will not make a difference in the real world any time soon.

A promised executive order that would tie drug prices to their costs in other countries has yet to emerge, although President Donald Trump has promoted the order as part of his re-election campaign. Meanwhile, payers and PBMs are continuing to push back against three executive orders the Trump administration issued in July with the intention of lowering drug prices, one of which would overhaul the Medicare Part D prescription drug rebate system, AIS Health reported.

“I think the purpose of these executive orders is to give the president some talking points going into the debates,” says Avalere Health founder Dan Mendelson. He adds that, regardless of their purpose, the orders will not make a difference in the real world any time soon.

Administration officials indicated during the rollout of the executive orders on July 24 that the international pricing order would be released within 30 days of the debut of the other three drug pricing orders. Yet the deadline passed and the administration at press time had not released the promised order.

Meanwhile, the executive orders that actually have been released are being criticized from stakeholders across health care. The order that would remove safe harbor protections from the Anti-Kickback Statute for prescription drug rebates in Medicare Part D has been panned even by conservatives.

Alex Brill, a resident fellow at the American Enterprise Institute (AEI), penned a white paper sponsored by PBM trade group Pharmaceutical Care Management Association (PCMA) that concluded the executive order would “restrict an important tool for providing savings to the federal government and Medicare Part D beneficiaries. Moreover, net drug costs and drug company revenues would rise significantly if the Medicare Part D safe harbor for rebates is eliminated.”

Mendelson says that the pharmaceutical industry is beginning to realize that it will have to change its business model one way or another.

“The pharmaceutical industry is facing a real pivot point where there are going to have to be more innovative ways to price for these products,” Mendelson observes. “…it’s really important that the industry start to figure out ways to engage positively with payers. And the government is the biggest payer.”