Provider

Radar On Market Access: Will Blockchain Transform Relationships Industry Wide?

July 30, 2019

Industry consultants from Milliman Inc. assert in a July 11 report that blockchain — which is described as a real-time digital ledger for building secure networks — “could potentially transform the relationship between payers, pharmaceutical manufacturers, wholesalers, and pharmacies by offering an alternative, transparent mechanism for processing, pricing, and validating prescription transactions.”

Industry consultants from Milliman Inc. assert in a July 11 report that blockchain — which is described as a real-time digital ledger for building secure networks — “could potentially transform the relationship between payers, pharmaceutical manufacturers, wholesalers, and pharmacies by offering an alternative, transparent mechanism for processing, pricing, and validating prescription transactions.”

Using blockchain technology, payers and pharmacies would reduce the time they spend validating insurance coverage, making phone calls and managing data, Milliman explains. The firm is urging PBMs to work to “evaluate a blockchain alternative now with an eye toward a more efficient drug financing system” capable of handling additional technology improvements, AIS Health reported.

“We’re just trying to get people thinking outside the box, and I believe blockchain has applications with supply chain management, claim-processing and transparency to the consumer,” says Brian Anderson, a principal for Milliman and co-author of the blockchain paper.

In the Milliman report, Anderson and his colleagues, Gregory Callahan and Michael DiPrima, note the current electronic approach to processing pharmacy claims is a sometimes opaque, centralized database management system managed by the PBM.

By contrast, blockchain’s database management system model would be decentralized. Milliman explains that means a distributed network of “nodes” would validate all transactions and would store data throughout the distributed network rather than in a centralized server.

The Milliman consultants conclude blockchain technology “appears to hold great promise for the PBM marketplace.” But they concede there are obstacles to overcome, explaining that while blockchain has shown great potential for security in cryptocurrency, its true potential in health care has not yet been evaluated.

Perspectives on New York’s Pricing Transparency Bill

July 25, 2019

Lawmakers in New York in June approved wide-ranging legislation designed to require pricing transparency from PBMs and to eliminate key PBM practices. But the bill could potentially limit plans’ ability to respond to pricing moves by manufacturers, one consultant tells AIS Health.

Lawmakers in New York in June approved wide-ranging legislation designed to require pricing transparency from PBMs and to eliminate key PBM practices. But the bill could potentially limit plans’ ability to respond to pricing moves by manufacturers, one consultant tells AIS Health.

The New York bill (S.B. 6531) would require that PBMs disclose key pricing and rebate information and pass through all rebates and discounts to the plans and payers, and that they act in the best interests of the covered individual and the health plan or provider.

The New York Health Plan Association, which did not support the legislation, is particularly concerned with the “best interests” section, which imposes a fiduciary relationship on PBMs “in all but name,” says Ashley Stuart, director of government affairs for the association.

The legislation also would prohibit mid-year formulary changes and drug substitutions, and it would require PBMs operating in the state to be licensed beginning next year.

Josh Golden at Arthur J. Gallagher & Co.’s Solid Benefit Guidance says, “formulary strategies are designed to help keep drug costs in check. In moving forward with this legislation, the state potentially limits the ability of health plans to apply pricing pressure on pharmaceutical manufacturers throughout the year.”

More generally, the legislation will lead to higher health insurance premiums for employers and consumers, warned New York Health Plan Association President and CEO Eric Linzer in a statement.

The legislation comes at a time when several states are considering efforts to rein in PBMs. “At least four or five states are looking at the impact of Medicaid [pharmacy benefit] price transparency,” says Alex Shekhdar, founder of Sycamore Creek Healthcare Advisors. “It goes back to the larger fundamental conversation of what states should be looking at — they recognize there’s money under the table, especially in the PBM space.”

Radar On Market Access: Post-Rebate Rule, Trump Administration Mulls ‘Any and All Tools’

July 25, 2019

With only six months to go until a planned implementation date of Jan. 1, 2020, HHS on July 11 pulled its controversial rule that would have eliminated pharmaceutical manufacturer rebates in Medicare and Medicaid, leaving Part D stakeholders to ponder the Trump administration’s next moves on lowering prescription drug pricing.

With only six months to go until a planned implementation date of Jan. 1, 2020, HHS on July 11 pulled its controversial rule that would have eliminated pharmaceutical manufacturer rebates in Medicare and Medicaid, leaving Part D stakeholders to ponder the Trump administration’s next moves on lowering prescription drug pricing.

Although news of its withdrawal appeared to surprise the investment community, the rebate rule had too much stacked against it to become final, Larry Kocot, a principal at KPMG, LLP, tells AIS Health. “[T]here were a lot of challenges,” starting with the Congressional Budget Office’s (CBO) estimate that the rule as proposed would have increased federal spending by about $177 billion over the next decade.

Looking ahead to the 2020 elections, President Trump is under the gun to deliver a solution to rising drug prices. While HHS is likely to finalize its proposed International Pricing Index model for Part B drugs, Senate leadership at press time was reportedly considering drug reimportation as well as a proposal that would essentially penalize manufacturers if their drug prices went up by more than a certain inflation factor by making them pay rebates on a percentage of the overage.

At the same time, Congress could advance a House proposal to restructure the Part D benefit such that manufacturers would have to provide more discounts in the catastrophic coverage phase and insurers would have more responsibility for catastrophic spending because of a reduction in federal reinsurance.

Meanwhile, drug reimportation from other countries could be a slippery slope, warns Wayne Miller, R.Ph., vice president for pharmacy solutions with Gorman Health Group. “That’s going to have a short-term effect and pharmaceutical companies will compensate by adjusting their prices,” he predicts.

Radar On Market Access: Plans Offer More $0 Copay Drugs to Boost Adherence

July 23, 2019

As various players in the health care industry sharpen their focus on disease prevention, some experts tell AIS Health they’re seeing health plans offering more and more “preventive” drugs at no cost to members.

As various players in the health care industry sharpen their focus on disease prevention, some experts tell AIS Health they’re seeing health plans offering more and more “preventive” drugs at no cost to members.

Dean Health Plan recently said it’s “adding even more preventive drugs to our list of drugs available to [members] for $0.” Additions to the list, which total more than 200, include Advair inhalers (fluticasone propionate and salmeterol) for asthma, the diabetes drug Januvia (sitagliptin), and Alendronate for osteoporosis, says Kevin Engelien, manager of large group product and market research at the Wisconsin-based insurer.

To decide what goes on that list, Dean Health Plan works with its PBM, Navitus Health Solutions, in a “no less than monthly” process of reviewing the utilization and effectiveness of drugs, as well as any changing mandates, Engelien says.

It’s not just smaller regional insurers like Dean Health Plan that are making more drugs available to members at no cost.

“I do think there is a trend in non-grandfathered self-insured clients offering preventive drug lists, and also kind of widening their preventive drug lists,” says Stephen Wolff, a pharmacy consultant in Milliman’s Chicago office.

While Wolff attributes the expansion of those lists to the rise of high-deductible health plans in the employer-sponsored insurance market.

“I think the driving force, to the plans that I consult to, is more in trying to make sure that people with chronic conditions get the treatment necessary,” he says. “So even if you have a deductible, you can get first-dollar coverage on diabetes meds, for example.”

In fact, the Internal Revenue Service recently issued new guidance that expands the list of services and medications that patients in high-deductible health plans can access before meeting their deductible.

Radar On Market Access: In Win for Managed Care, Trump Administration Drops Rebate Rule

July 18, 2019

In a move that Wall Street analysts deemed a win for the managed care industry, the Trump administration decided to withdraw a proposed rule that would have overhauled the prescription drug rebate system in Medicare Part D, AIS Health reported.

In a move that Wall Street analysts deemed a win for the managed care industry, the Trump administration decided to withdraw a proposed rule that would have overhauled the prescription drug rebate system in Medicare Part D, AIS Health reported.

The proposed rule, first released in February, would have removed safe-harbor protections under the federal anti-kickback statute for rebates paid by drug manufacturers to PBMs, Part D plans and Medicaid managed care organizations, and it would have created a new safe-harbor protection for point-of-sale drug discounts.

Citi analyst Ralph Giacobbe told investors his firm expects the news “to be favorable most specifically to entities with larger PBM exposure (Cigna Corp., CVS Health Corp./Aetna and UnitedHealth Group) as it eliminates the uncertainty and overhang that the rebate rule had on those companies.”

Meanwhile, industry experts expressed surprise at the administration’s pullback on the rebate proposal and its timing.

“My initial reaction is it’s surprising given the amount of capital the administration has put into this policy,” says Matt Kazan, a principal in Avalere Health’s policy practice. He adds dropping the rebate rule increases the likelihood that the Trump administration will move forward on other proposals to show progress in its vow to lower drug costs.

Kazan points to various implications for health plans in the rebate rule’s demise. “Certainly, a lot of the uncertainty about 2020 and 2021 goes away in terms of bidding and Part D,” he says. But if Congress makes structural changes to Part D that it’s considering, he says there could be greater liability for plans in the catastrophic phase of the benefit.

Radar On Market Access: In Medicare Part D, Generic Drugs May Not Always Be Cheaper

July 16, 2019

A recently published study in Health Affairs shines a light on a peculiar quirk of the Medicare Part D benefit structure: For some high-priced specialty medications, seniors might pay less out-of-pocket for brand-name drugs than their generic counterparts.

A recently published study in Health Affairs shines a light on a peculiar quirk of the Medicare Part D benefit structure: For some high-priced specialty medications, seniors might pay less out-of-pocket for brand-name drugs than their generic counterparts.

The study found that, assuming a 61% discount between brand-name and generic drugs, Part D beneficiaries with prescriptions costing between $22,000 and $80,000 per year would have lower out-of-pocket spending if they use brand-name drugs over a generic, AIS Health reported.

“That’s really frustrating for consumers because you may actually not be in a plan that allows you to switch to a branded drug” if it’s cheaper than the generic, says Stacie Dusetzina, one of the study authors and an associate professor at Vanderbilt University.

“The other practical thing is, that would a terrible thing for us to be trying to get people to do because generally we want to encourage people to use generic drugs because they’re the best deal for us as a society,” she says.

Sharon Jhawar, chief pharmacy officer at California-based SCAN Health Plan, points out that because most generic prescriptions filled by seniors are not pricey specialty ones, “this kind of nuance that’s happening [with the Part D benefit] is kind of narrow and limited in scope.”

“But we know that the specialty pipeline is robust,” and so taking a look at the problem and figuring out solutions “does make sense,” she says.

However, well-intentioned policy changes don’t always turn out as planned, notes Kelly Brantley, a managing director at Avalere.

“Part D is so complicated, it’s hard to know what sort of fixes drive other quote-unquote problems,” she says.