Radar on Market Access

Radar On Market Access: Centene to Bolster Pharmacy Services with Magellan Deal

January 19, 2021

In addition to creating “one of the nation’s largest behavioral health platforms,” Centene Corp. will add another pharmacy-related asset to its portfolio with its recently announced $2.2 billion proposed purchase of Magellan Health, Inc, AIS Health reported.

The deal, unveiled on Jan. 4, will deliver 2 million PBM members and 16 million medical pharmacy lives to Centene. The transaction creates “additional value across our pharmacy capabilities,” Centene Chief Financial Officer Jeff Schwaneke said during a Jan. 4 conference call. “This is a large and significant market….We have invested in this area in recent years given its attractive growth opportunities, most recently with the addition of PANTHERx.”

In addition to creating “one of the nation’s largest behavioral health platforms,” Centene Corp. will add another pharmacy-related asset to its portfolio with its recently announced $2.2 billion proposed purchase of Magellan Health, Inc, AIS Health reported.

The deal, unveiled on Jan. 4, will deliver 2 million PBM members and 16 million medical pharmacy lives to Centene. The transaction creates “additional value across our pharmacy capabilities,” Centene Chief Financial Officer Jeff Schwaneke said during a Jan. 4 conference call. “This is a large and significant market….We have invested in this area in recent years given its attractive growth opportunities, most recently with the addition of PANTHERx.”

Centene’s purchase of PANTHERx Rare, LLC, a specialty pharmacy company that focuses on orphan drugs and treatments for rare diseases, closed on Dec. 30.

However, when it comes to integrating its new pharmacy-related holdings, Centene may face some challenges.

During the conference call, Bank of America analyst Kevin Fischbeck asked executives whether they’re worried that Magellan Rx Management could lose managed Medicaid business opportunities in states such as California that are carving out their pharmacy benefits, as it will no longer be a “pure-play PBM.” Centene President, Chairman and CEO Michael Neidorff downplayed such concerns, emphasizing that states’ decisions to carve benefits in and out “are cyclical” and that Magellan will still be able to operate independently once under its acquirer’s umbrella.

Yet in a research note to investors sent after the call, Jefferies analysts David Windley and David Styblo warned about the “risk of customer abrasion” once Magellan is no longer truly independent. “That was a selling point [Magellan] made for all three of its businesses, especially the PBM,” they wrote.

Timothy Epple, a principal at Avalere Health, says that given “the differentiation in how states operate formularies and how states regulate pharmacy benefits, I do think the pharmacy piece of Magellan could be more complex” to integrate than its behavioral health business. “Centene is very state-focused, and you’re basically talking about integrating two assets that likely don’t have perfect overlap in terms of where they’re operating,” Epple adds.

Centene and Magellan expect their deal to close in the second half of 2021, pending approval from regulators and Magellan Health’s stockholders, and other customary closing conditions.

Radar On Market Access: Centene, UnitedHealth Ring in New Year With M&A

January 14, 2021

Although 2021 has just begun, major health insurers appear to be wasting no time when it comes to spending the influx of cash that they’ve collected as a result of lower routine health care utilization during the COVID-19 pandemic, AIS Health reported.

On Jan. 4, Centene Corp. revealed that it struck a deal to purchase Magellan Health, Inc. for $2.2 billion, a transaction that promises to augment the insurer’s existing behavioral health, specialty health care and pharmacy management assets. Two days later, UnitedHealth Group said it plans to purchase the technology company Change Healthcare for approximately $13 billion in a deal that will bolster its analytics and advisory arm, OptumInsight.

Although 2021 has just begun, major health insurers appear to be wasting no time when it comes to spending the influx of cash that they’ve collected as a result of lower routine health care utilization during the COVID-19 pandemic, AIS Health reported.

On Jan. 4, Centene Corp. revealed that it struck a deal to purchase Magellan Health, Inc. for $2.2 billion, a transaction that promises to augment the insurer’s existing behavioral health, specialty health care and pharmacy management assets. Two days later, UnitedHealth Group said it plans to purchase the technology company Change Healthcare for approximately $13 billion in a deal that will bolster its analytics and advisory arm, OptumInsight.

Taken together, Centene and UnitedHealth’s moves are “really interesting and sizable transactions to kick off the new year given that the buyers were clearly going through [due] diligence during a volatile election cycle and pandemic,” observes Timothy Epple, a principal at Avalere Health.

Centene’s latest acquisition is especially timely given the news that Democrats will have control of the White House and the House of Representatives, plus a narrow majority in the Senate, Epple suggests. The election results “suddenly make that deal look even more attractive given the probable stability and growth tailwinds for government and [Affordable Care Act] markets,” he says.

Further, “while the Change transaction is riding analytic tailwinds that are somewhat party-agnostic, reduced volatility in the near-term policy outlook is a positive for M&A activity across the health care ecosystem,” Epple adds.

Wall Street analysts say the deals make strategic sense for the acquiring organizations, which have been aggressive about inorganic growth.

“We see this transaction as complementary as it builds on [UnitedHealth’s] focus and expansion of Optum, with Change’s data and analytics platform augmenting offerings within OptumInsight,” Citi analyst Ralph Giacobbe wrote in a note to investors. “We expect continued M&A from [UnitedHealth] in its efforts to continue to grow and scale its Optum segments, as we have seen over the years,” he added.

Regarding the Centene/Magellan tie-up, Oppenheimer’s Michael Wiederhorn offered an optimistic take. “Overall, we believe this deal continues Centene’s efforts to strengthen its capabilities in serving the highly complex portion of the government population,” he advised investors.

Radar On Market Access: FDA Approves First Oral Treatment for HAE Attack Prevention

January 12, 2021

When the FDA approved BioCryst Pharmaceuticals, Inc.’s Orladeyo (berotralstat) last month, the drug became the first oral treatment for prophylaxis to prevent hereditary angioedema (HAE) attacks, AIS Health reported. According to Zitter Insights, payers with nearly three-quarters of covered lives plan to manage it at parity to other prophylactic treatments.

The FDA approved the first drug to treat HAE, Shire plc’s Cinryze (C1 esterase inhibitor [human]), on Oct. 10, 2008. Since then, the FDA has approved eight drugs to treat HAE: half for acute attacks and half for prophylaxis.

When the FDA approved BioCryst Pharmaceuticals, Inc.’s Orladeyo (berotralstat) last month, the drug became the first oral treatment for prophylaxis to prevent hereditary angioedema (HAE) attacks, AIS Health reported. According to Zitter Insights, payers with nearly three-quarters of covered lives plan to manage it at parity to other prophylactic treatments.

The FDA approved the first drug to treat HAE, Shire plc’s Cinryze (C1 esterase inhibitor [human]), on Oct. 10, 2008. Since then, the FDA has approved eight drugs to treat HAE: half for acute attacks and half for prophylaxis.

Orladeyo will compete against Cinryze, Haegarda (C1 esterase inhibitor [human]) and Takhzyro (lanadelumab-flyo) to prevent HAE attacks.

For the Managed Care Biologics and Injectables Index: Q1 2020, between Feb. 25, 2020, and April 1, 2020, Zitter surveyed 51 commercial payers with 138.1 million covered lives about their anticipated management of Orladeyo. Payers covering 93% of lives said they likely would manage it to label and not allow off-label use.

Among 46 commercial payers with 130.3 million covered lives surveyed during the same time period, payers with 74% of covered lives said they were likely to manage Orladeyo at parity to the prophylactic therapies. And even though it is the only oral HAE drug, payers with 80% of lives said they were unlikely to manage it separately from the other drugs based on route of administration.

Among providers who would transition current patients to Orladeyo, the most likely prophylactic agent to transfer from was Cinryze, cited by 42%; followed by Haegarda, at 25%; and Takhzyro at 8%.

BioCryst has priced Orladeyo at $485,000 per person per year, which is slightly more than the $450,000 PPPY that Evercore ISI expected, according to analyst Liisa Bayko in a Dec. 4 research note. That price, though, is lower than Haegarda’s $510,000 PPPY and Takhzyro’s $566,000, she pointed out.

“As an oral, once-daily option, Orladeyo provides significant attack reduction without the burden associated with injectables — the hallmark of treatment options,” wrote Bayko. “Our market research showed that patients and physicians were eagerly awaiting an oral option, with anticipated use of Orladeyo reaching 34% of prophylaxis HAE market by [year-end] 2021 — driven by switching and growth of the market with use of prophylaxis rising from 60% to 80% over time.”

Radar On Market Access: Supreme Court’s ACA Ruling May Upend Biosimilars Market

January 7, 2021

As the Supreme Court decides on the fate of the Affordable Care Act (ACA), much of the focus has been on the people who would lose health insurance coverage and protections for pre-existing conditions if the law is overturned. Another ramification of such a ruling is that the biosimilars market could be completely upended, AIS Health reported.

The Biologics Price Competition and Innovation Act of 2009 (BPCIA) created the 351(k) biosimilar pathway. After more than one attempt to get a stand-alone bill to pass, lawmakers made it part of the ACA, and it became law on March 23, 2010.

As the Supreme Court decides on the fate of the Affordable Care Act (ACA), much of the focus has been on the people who would lose health insurance coverage and protections for pre-existing conditions if the law is overturned. Another ramification of such a ruling is that the biosimilars market could be completely upended, AIS Health reported.

The Biologics Price Competition and Innovation Act of 2009 (BPCIA) created the 351(k) biosimilar pathway. After more than one attempt to get a stand-alone bill to pass, lawmakers made it part of the ACA, and it became law on March 23, 2010.

Industry observers expect a decision on the case California v. Texas by June 2021, according to various sources. And opinions among industry experts vary on what the court will decide.

“I do think it is severable, but I am optimistic that that won’t be needed,’ says one industry expert who declines to be identified.

A second industry expert who declines to be identified points out that “there have been a fair amount of amicus briefings,” which will make the court “think twice” about doing away with the BPCIA.

“I think the outcome of the Affordable Care Act case before the Supreme Court will be similarly mixed as a ruling like last time,” says F. Randy Vogenberg, Ph.D., principal at the Institute for Integrated Healthcare. “I doubt they will rule the ACA is severable but will keep that door open….If the court strikes down the ACA entirely, biosimilars on the U.S. market or in the FDA approval pipeline would have to either be grandfathered in or face a regulatory wind-down.”

If the ACA and thus the BPCIA are struck down, “personally, I think it’s unlikely that medicines would be pulled off the market,” says source No. 2. However, if the ACA is invalidated, the Supreme Court likely would include “guidance to regulators for carrying out their order.”

“I would not expect FDA to de-approve anything already approved, but the pipeline might get more muddled,” says the first source.

All that said, “[g]ood business practices would recommend that biosimilar manufacturers should be preparing for the possibility of the ACA, and thus the BPCIA, being struck down,” recommends Vogenberg. “What should they be doing is scenario planning and being prepared for the best or worst and everything in between. If biosimilars are not available, this could impact payers that have them on formulary should a disruption occur in their marketing.”

Radar On Market Access: Despite New Approvals, Plans Still Favor Generics for Epilepsy

January 5, 2021

Pharmaceutical treatment for different types of epilepsy generally still relies on tried-and-true generics, despite recent efforts by drug manufacturers to introduce new branded medications into the mix, PBM insiders tell AIS Health.

Xcopri (cenobamate tablets), manufactured by SK Biopharmaceuticals Co., Ltd.’s subsidiary SK Life Science, Inc., launched in May for the treatment of partial-onset seizures. However, many plans haven’t jumped to add Xcopri to their formularies, says Mesfin Tegenu, R.Ph., president of PerformRx.

Pharmaceutical treatment for different types of epilepsy generally still relies on tried-and-true generics, despite recent efforts by drug manufacturers to introduce new branded medications into the mix, PBM insiders tell AIS Health.

Xcopri (cenobamate tablets), manufactured by SK Biopharmaceuticals Co., Ltd.’s subsidiary SK Life Science, Inc., launched in May for the treatment of partial-onset seizures. However, many plans haven’t jumped to add Xcopri to their formularies, says Mesfin Tegenu, R.Ph., president of PerformRx.

“Some plans have opted to take a cautious approach and leave the medication as non-formulary to start,” Tegenu says. “It is difficult to tell the impact of this new drug launch on the treatment of epilepsy. However, Xcopri trials demonstrated high efficacy in partial onset seizures and refractory epilepsy, lending it a strong clinical profile. One could reasonably suspect a high impact on the epilepsy treatment paradigm.”

In most cases, though, generics are the first-line treatments for many forms of the disorder, according to Tegenu. Many of the drugs used to treat epilepsy are covered without restriction by plans.

Prime Therapeutics LLC treats Xcopri as a non-preferred brand, says April Kunze, senior director of clinical formulary development and trend management strategy for the PBM. Premera Blue Cross’ Medicare Advantage formularies, Cigna Corp.’s national preferred formulary and HealthPartners’ commercial formularies impose quantity limits on Xcopri, according to their plan documents.

“Treatment is based on the type of epilepsy diagnosed, and labeled and off-label indications of the individual products. There is a fair amount of overlap as many drugs share multiple indications. However, many newer agents are narrowly indicated,” Tegenu says.

In November 2018, GW Pharmaceuticals launched its product Epidiolex (cannabidiol), a much-anticipated new drug for two rare forms of childhood epilepsy. In August, the FDA expanded indications for Epidiolex to include seizures associated with tuberous sclerosis complex in patients age 1 or older.

“Based on previous positive trial results in TSC patients, Epidiolex may become an important treatment option for patients,” Elizabeth Thiele, M.D., Ph.D., director of the Herscot Center for Tuberous Sclerosis Complex at Massachusetts General Hospital, said in a statement when the FDA widened Epidiolex indications.

For his part, Tegenu expresses some skepticism about the drug. “Epidiolex represents another option for treatment of Lennox-Gastaut and Dravet syndrome,” Tegenu says. “However, its efficacy hasn’t shown significant improvement relative to existing treatments.”

Radar On Market Access: Surprise Medical Billing Comes to An End, Insurers Oppose Arbitration Mechanism

December 31, 2020

After years of failed attempts, Congress has finally come to an agreement on a measure to end the practice of surprise medical billing, AIS Health reported.

Surprise billing, also known as balance billing, is the practice of charging patients for out-of-network procedures that insurers refuse to pay for in whole or in part. Often, patients incur these balance bills without their knowledge. The new legislation would ban providers from sending such a bill to patients, and would instead require providers to negotiate reimbursement with the patient’s insurer or submit the dispute to a binding arbitration process.

Providers will have 30 days from the day of the procedure to negotiate a compromise reimbursement amount with payers. If the parties can’t agree, they must submit their preferred reimbursement amounts to an HHS-approved arbitrator, who will pick one of the two amounts.

After years of failed attempts, Congress has finally come to an agreement on a measure to end the practice of surprise medical billing, AIS Health reported.

Surprise billing, also known as balance billing, is the practice of charging patients for out-of-network procedures that insurers refuse to pay for in whole or in part. Often, patients incur these balance bills without their knowledge. The new legislation would ban providers from sending such a bill to patients, and would instead require providers to negotiate reimbursement with the patient’s insurer or submit the dispute to a binding arbitration process.

Providers will have 30 days from the day of the procedure to negotiate a compromise reimbursement amount with payers. If the parties can’t agree, they must submit their preferred reimbursement amounts to an HHS-approved arbitrator, who will pick one of the two amounts.

Loren Adler, associate director of the USC-Brookings Schaeffer Initiative for Health Policy, praised the legislation as “closer to the ideal, consumer-friendly solution” than previous attempts to address the issue.

“It’s very likely that this bill reduces premiums,” says Adler, who has contributed to research that found surprise billing increases health care costs.

Insurance stakeholders are displeased that surprise bills will be resolved through arbitration. Instead of arbitration, America’s Health Insurance Plans had lobbied for out-of-network reimbursement to be tied to a benchmark rate.

Adler thinks that insurers’ objections to arbitration are overblown, and he argues carriers will gain leverage in balance billing negotiations because of the legislation.

“It seems pretty easy for an insurer or a [plan sponsor] company to call a provider’s bluff,” Adler says, citing rules in the bill that he thinks will prevent providers from abusing the arbitration system.

Dan Mendelson, founder of Avalere Health, is more skeptical about the bill’s potential to reduce costs and slow premium inflation, since it will require new administrative costs.

“There is no question that whenever you force more cost into the system, it’s going to be reflected in consumer cost,” Mendelson explains. “So there will be a premium effect. Will people actually be able to differentiate it from the typical rise in costs? No….I do expect that it will have an effect, just from an economics standpoint.”