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Perspectives on Part D Reform in 2020

February 20, 2020

If Congress or the Trump administration are able to enact any type of drug-pricing reform during 2020, it’s likely to be a redesign of Medicare Part D, industry experts tell AIS Health.

If Congress or the Trump administration are able to enact any type of drug-pricing reform during 2020, it’s likely to be a redesign of Medicare Part D, industry experts tell AIS Health.

In the Senate, tweaking the Part D benefit is part of a larger piece of bipartisan legislation (S. 2543), championed by Sens. Chuck Grassley (R-Iowa) and Ron Wyden (D-Ore.). From the House, there’s the sweeping legislation (H.R. 3) proffered by Speaker Nancy Pelosi (D-Calif.).

Both bills would implement out-of-pocket spending caps for Part D beneficiaries and considerably change how costs are divided up in the catastrophic phase of coverage. They would also require drug manufacturers to repay Medicare if certain Part B or Part D drug prices rise faster than inflation.

“If you look at both the House and the Senate bills that have been put forward here, those [Part D] designs look very similar to one another, so I’m somewhat optimistic that…maybe there’s an opportunity for that to move forward,” says Stacie Dusetzina, an associate professor of health policy at the Vanderbilt University School of Medicine.

However, Elizabeth Carpenter at Avalere Health contends that “it is unlikely in this environment that any drug pricing legislation would move as a standalone bill.” The most likely pre-election vehicle for a Part D redesign would be the health care extenders package that expires in May, she adds.

Gerard Anderson, a professor at Johns Hopkins University Bloomberg School of Public Health, is more optimistic. “Drug pricing is the No. 1 issue for most voters when they’re talking about health care,” he points out. “So they’re going to feel a strong pressure” to pass something in Congress. Given that dynamic, he says he expects the Wyden/Grassley bill is likely to pass this year.

In whatever form a Part D redesign passes, Dusetzina says the biggest winner would be patients. While manufacturers and health plans would be on the hook for more spending in the catastrophic coverage phase, “on net, it probably isn’t very harmful for any one entity,” she contends.

Radar On Market Access: Payers Try New Strategies to Control Diabetes Drug Costs

February 20, 2020

With the cost of diabetes drugs still growing, PBMs and payers are looking for more innovative strategies to hold down costs, AIS Health reported. For some, that might include a strategy similar to the one recently unveiled by CVS Health Corp.’s Caremark unit. The plan, called RxZERO, offers a slimmer formulary for the diabetes drug class, but with no out-of-pocket costs for members.

With the cost of diabetes drugs still growing, PBMs and payers are looking for more innovative strategies to hold down costs, AIS Health reported. For some, that might include a strategy similar to the one recently unveiled by CVS Health Corp.’s Caremark unit. The plan, called RxZERO, offers a slimmer formulary for the diabetes drug class, but with no out-of-pocket costs for members.

Mike Schneider, a principal in the commercialization and market access practice at Avalere Health, says the plan is innovative. “You’ve seen Express Scripts do something where they’re offering specific insulins at very low out-of-pocket costs, but this is the first time I’ve seen a PBM come up with a way to eliminate out-of-pocket costs completely,” he tells AIS Health.

With the elimination of copays and other cost-sharing payments for diabetes drugs, CVS is betting members will better adhere to drug regimens and potentially avoid unnecessary hospitalizations and other services.

But these types of plans might not work for all member populations. Marc Guieb, a pharmacy consultant at Milliman, Inc., says member satisfaction can play a part in whether a plan sponsor goes this route, or sticks to a more traditional strategy that places higher-cost drugs in a step therapy plan.

The market for diabetes drugs is tight, with a few big manufacturers that all have similar prices. But there’s one new player, Civica Rx, that’s aiming to change that. In January, 18 plans in the Blue Cross Blue Shield Association joined with Civica Rx to produce up to 10 generic drugs at low cost by 2021.

Included in the partnership is Blue Shield of California, where Alison Lum is the vice president of pharmacy services. “The way that we’ve managed [drugs] in the past probably won’t get us to be sustainably affordable in the future,” Lum says. “We have to think about new ways of doing things.”

Radar On Market Access: Some Experts Question Legality of Closed Medicaid Formularies

February 18, 2020

As part of long-awaited guidance that CMS issued to states on Jan. 30 outlining how they can test-drive a fixed federal Medicaid budget and more program flexibilities, the Trump administration invited states to try out something else that hasn’t been done before: implement a closed drug formulary for a portion of their Medicaid population, AIS Health reported.

As part of long-awaited guidance that CMS issued to states on Jan. 30 outlining how they can test-drive a fixed federal Medicaid budget and more program flexibilities, the Trump administration invited states to try out something else that hasn’t been done before: implement a closed drug formulary for a portion of their Medicaid population, AIS Health reported.

“For the first time, participating states will have more negotiating power to manage drug costs by adopting a formulary similar to those provided in the commercial market, with special protections for individuals with HIV and behavioral health conditions,” CMS said in its press release unveiling the Healthy Adult Opportunity demonstration, which states can apply for via a Section 1115 Medicaid waiver.

Currently, states’ Medicaid programs must cover all FDA-approved drugs, as mandated by federal law. But CMS is suggesting that states can waive that requirement for the population they choose to cover under their demonstration — likely people who are covered by Medicaid expansion — and still participate in the Medicaid Drug Rebate Program.

But some industry experts tell AIS Health they’re not sure whether that will be legally permissible.

“I have my doubts as to whether this will bear legal scrutiny because it goes against the entire Medicaid Drug Rebate Program, which is rebates in exchange for open formularies,” says Jeff Myers, the former CEO of Medicaid Health Plans of America and founder of health care consulting firm OptDis.

Indeed, “the legal side is obviously the giant question with the whole Healthy Adult Opportunity program,” Jason Karcher, an actuary with Milliman, Inc., tells AIS Health. “We just don’t know how the courts will ultimately see this, although I think it would be fair to be skeptical that we’ll actually get to see a waiver under this [guidance] make it in the near future.”

Radar On Market Access: ACA Exchange Draft Regulation Drops

February 13, 2020

On Jan. 31, CMS released the 2021 Notice of Benefit and Payment Parameters (NBPP), which is the annual omnibus regulation that outlines the rules of the game for Affordable Care Act (ACA) exchange plans. But that was only after a trade group for safety-net health plans sent a strongly worded letter warning the Trump administration that the clock is ticking for issuers to finalize their 2021 premiums and benefit designs.

On Jan. 31, CMS released the 2021 Notice of Benefit and Payment Parameters (NBPP), which is the annual omnibus regulation that outlines the rules of the game for Affordable Care Act (ACA) exchange plans. But that was only after a trade group for safety-net health plans sent a strongly worded letter warning the Trump administration that the clock is ticking for issuers to finalize their 2021 premiums and benefit designs.

In its Jan. 27 letter, the Association for Community Affiliated Plans (ACAP) complained to CMS that the proposed 2021 NBPP “appears to be stalled at the Office of Management and Budget.” (The OMB completed its review of the regulation on Jan. 29.) Insurers need to submit qualified health plan (QHP) applications starting in early May, ACAP pointed out. “Building in a minimum 30-day comment period in addition to 30 days for the Department to review, revise, and release the final [rule] would allow just one month for issuers to operationalize and implement necessary updates,” the group wrote. “This timeframe will not allow issuers sufficient time to prepare products and operations for Benefit Year 2021.”

Fritz Busch, an actuary with Milliman Inc., tells AIS Health that the final NBPP has come out in April during the past two years, but before that arrived much earlier. The delay of the NBPP “presents operational challenges for a lot of plans, because so many plans are right in the middle of doing their pricing and other planning for the year,” he adds.

As for the content of the draft NBPP, the most attention-grabbing proposed changes to the rules surrounding subsidy eligibility. CMS said it’s seeking public comment on “new automatic re-enrollment processes for enrollees whose share of the premium after applying premium subsidies is $0, in order to reduce the risk of incorrect expenditures on subsidies that cannot be recovered through reconciliation.” In addition, “periodic data matching standards would be amended to help ensure premium subsidies are not inappropriately paid to enrollees who are determined to be deceased, or dually eligible for Medicare.”

Radar On Market Access: New Oncology Biosimilar Launches Could Prompt Preferencing

February 11, 2020

So far, biosimilar uptake has been relatively slow in the U.S. since the 2015 launch of Sandoz Inc.’s Zarxio (filgrastim-sndz), the first product to use the 351(k) approval pathway. But recent and pending launches have resulted in therapeutic classes with more than one biosimilar, which may be the push that payers need to begin preferring them over their reference products and, in turn, realizing savings in some costly therapeutic classes.

So far, biosimilar uptake has been relatively slow in the U.S. since the 2015 launch of Sandoz Inc.’s Zarxio (filgrastim-sndz), the first product to use the 351(k) approval pathway. But recent and pending launches have resulted in therapeutic classes with more than one biosimilar, which may be the push that payers need to begin preferring them over their reference products and, in turn, realizing savings in some costly therapeutic classes.

Although the FDA had approved 26 biosimilars as of the end of January, only half of them are available in the U.S., with many of the drugmakers tied up in patent litigation with reference drug manufacturers.

Although the FDA had approved 26 biosimilars as of the end of January, only half of them are available in the U.S., with many of the drugmakers tied up in patent litigation with reference drug manufacturers.

2019 saw the launch of the first oncology biosimilars when Amgen and Allergan plc launched Kanjinti (trastuzumab-anns), a Herceptin (trastuzumab) biosimilar, and Mvasi (bevacizumab-awwb), an Avastin (bevacizumab) biosimilar, on July 18. Both reference drugs are from Genentech USA, Inc., a Roche Group unit. Then, on Nov. 7, Teva Pharmaceuticals USA, Inc. and Celltrion launched Truxima (rituximab-abbs), with reference drug Rituxan (rituximab) from Genentech and Biogen.

The Dec. 2 launch of Mylan N.V. and Biocon Ltd.’s Ogivri (trastuzumab-dkst) brought a second biosimilar of Herceptin onto the U.S. market, with a third — Pfizer’s Trazimera (trastuzumab-qyyp) — expected Feb. 15. Also expected to launch in the first part of this year are Ontruzant (trastuzumab-dttb) from Samsung Bioepis Co., Ltd. and Herzuma (trastuzumab-pkrb) from Celltrion and Teva.

A second Avastin biosimilar came onto the U.S. market Dec. 31 when Pfizer launched Zirabev (bevacizumab-bvzr). Rituxan also had additional biosimilar competition on Jan. 23 when Pfizer’s Ruxience (rituximab-pvvr) launched.

Kanjinti is priced 15% less than Herceptin, and its average sales price (ASP) is 13% below the reference drug. Ogivri’s price is “at a competitive discount,” according to Mylan and Biocon. Mvasi is priced 15% less than Avastin, and its ASP is 12% less than that of the reference drug. Zirabev is priced 23% less than Avastin, and Ruxience is 24% less than Rituxan.

“As more health plans set biosimilars on a preferred status, adoption and utilization should increase,” says Martin Burruano, R.Ph., vice president, pharmacy services at Independent Health. “As more become available, there will be opportunity to plan formulary selection to drive costs down. Projections are modest at 12%-15% cost savings initially but will potentially reach 70% cost savings in five years.”

Perspectives on Consolidated PBMs in 2020

February 6, 2020

Though the two major transactions that upended the PBM landscape — Cigna Corp. buying Express Scripts Holding Co. and CVS Health Corp. acquiring Aetna Inc. — have already taken place, that doesn’t mean the sector won’t see more changes this year, industry experts tell AIS Health.

Though the two major transactions that upended the PBM landscape — Cigna Corp. buying Express Scripts Holding Co. and CVS Health Corp. acquiring Aetna Inc. — have already taken place, that doesn’t mean the sector won’t see more changes this year, industry experts tell AIS Health.

“The market is evolving,” says Brian Anderson, a principal with Milliman, Inc. The year 2020 will be marked by a presidential election and significant price pressure on manufacturers, along with pharmacies trying to retain their margin, he adds, “so it’s going to be a really wild year.”

Indeed, 2019 ended with Prime Therapeutics LLC and Express Scripts unveiling a three-year collaboration in which the latter PBM will negotiate with pharmaceutical manufacturers, on behalf of Prime’s members, for drugs covered on the pharmacy benefit, as well as provide services related to retail network contracting.

By teaming up with Prime, Express Scripts will be leading rebate negotiations and pharmacy network development for 103 million people, Adam Fein, Ph.D., CEO of Pembroke Consulting, Inc.’s Drug Channels Institute, wrote in a blog post. “This combined volume of Express Scripts and Prime will have enormous leverage with manufacturers and pharmacies,” he noted.

To Ashraf Shehata, KPMG national sector leader for health care and life sciences, the Prime/Express Scripts partnership is yet another example of “pure play” PBMs’ move toward consolidation. Given that trend, the opportunity to scale up both organizations’ purchasing power, and “the ability to kind of lock in Blue clients,” Shehata says, “I think it makes a lot of sense” for the two PBMs to team up.

Employers, meanwhile, are likely to press PBMs of all varieties for innovative solutions — not just deep drug-pricing discounts — during the selling season for 2021 contracts, Anderson says.

Therefore, “there’ll probably be a lot of new innovators in the market — people coming up with new products that maybe look and sound different,” he says. “But the question people are going to have to ask is, how different really is it? And is it really a differentiator in the marketplace?”