Radar on Market Access

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.

Radar On Market Access: New Migraine Drugs Could Spark Value-Based Contracting

November 29, 2018

Therapy for chronic migraine — a condition that’s been notoriously difficult to treat and which often leads to significant direct and indirect health care costs — has been upended with the recent approval of three injectable monoclonal antibody products in a new preventive medication class that’s significantly more effective than older preventive migraine drugs, a researcher says.

Therapy for chronic migraine — a condition that’s been notoriously difficult to treat and which often leads to significant direct and indirect health care costs — has been upended with the recent approval of three injectable monoclonal antibody products in a new preventive medication class that’s significantly more effective than older preventive migraine drugs, a researcher says.

These new calcitonin gene-related peptide (CGRP) inhibitors — Amgen, Inc. and Novartis AG’s Aimovig (erenumab), Teva Pharmaceuticals’ Ajovy (fremanezumab) and Eli Lilly and Co.’s Emgality (galcanezumab) — also may usher in an era of value-based contracting for migraine products, with plan sponsors willing to pay more to get better results, Machaon Bonafede, Ph.D., outcomes research practice leader at IBM Watson Health, told attendees Oct. 23 at the Academy of Managed Care Pharmacy Nexus annual meeting, AIS Health reported.

“Prior to the approval of CGRPs, migraine preventive therapy was characterized by poor treatment persistence and medication, frankly, because of use of products that were never developed for or intended to treat migraine,” Bonafede said.

Express Scripts Holding Co. already has inked a value-based deal for two of the three drugs in the new migraine class. The PBM’s new SafeGuardRx Migraine Care Value program, which starts April 1, will cover Aimovig and Emgality. It will include a comprehensive clinical care program with access to CGRP inhibitors. In addition, Express Scripts is offering what’s in effect a money-back guarantee for plan sponsors when a patient discontinues therapy in the first 90 days.

According to Institute for Clinical and Economic Review (ICER), it is reasonable for payers to develop prior authorization criteria to ensure prudent use of CGRP inhibitors. ICER also urged drug manufacturers to exercise restraint in pricing and price negotiation so that net prices for the new therapies align with added benefits.

These new medications have the potential to remake migraine treatment, the direct and indirect costs of which have been estimated at $36 billion annually in the U.S., Bonafede said. Indirect costs — such as lost productivity — can be difficult to capture and quantify, he added.

Radar On Market Access: New Biosimilars Help Crohn’s Cost, but Boost Oversight Needs

November 27, 2018

New biosimilars for Janssen Biotech, Inc.’s Remicade (infliximab) have helped to moderate costs for Crohn’s disease as they’ve launched over the last two years, but plans still rely on utilization management strategies, including site-of-service programs, to keep the cost of treating the condition under control, experts tell AIS Health.

New biosimilars for Janssen Biotech, Inc.’s Remicade (infliximab) have helped to moderate costs for Crohn’s disease as they’ve launched over the last two years, but plans still rely on utilization management strategies, including site-of-service programs, to keep the cost of treating the condition under control, experts tell AIS Health.
Additional biosimilars — notably, three biosimilars for AbbVie Inc.’s Humira (adalimumab) — eventually will enter the marketplace as well, but the Humira biosimilars currently are mired in patent litigation and likely won’t launch until 2023, says April Kunze, Pharm.D., senior director, clinical formulary development and trend management strategy at Prime Therapeutics LLC.
Even though biosimilars don’t reduce the cost of care as much as generics, “more competition has led to decreases in costs,” Kunze says. Immunomodulator biosimilars Inflectra (infliximab-dyyb) and Renflexis (infliximab-abda) both have launched over the last two years in the U.S. — Pfizer Inc.’s Inflectra in late 2016 and Merck & Co. Inc.’s Renflexis in mid-2017.
Biologics represent the biggest slice of Crohn’s drug costs. Most of the non-biologic agents have generic equivalents available, while the biologics are dominated by brand name products, even though over the past year or so, infliximab biosimilars have introduced competition to Remicade, says Beckie Fenrick, Pharm.D., senior partner-consulting, RemedyOne.
Plans employ utilization management to ensure appropriate drug use — “the right drug for the right patient based on clinical guidelines,” Kunze says. “Selection of formulary agents will depend on their guideline recommendations, cost and utilization.”
Mesfin Tegenu, R.Ph., president of PerformRx, notes that prior authorization is required for the anti-TNF inhibitors and biologic products, and that generics are available for some of the products. Meanwhile, he adds, rebates traditionally have been used to reduce unit cost for expensive brand name products, which then lowers overall costs.
Fenrick says that in addition to prior authorization and care management, plans also may employ site-of-service strategies for the infused products, ensuring members have access to the medications in the most cost-effective sites. Finally, “payers are looking at indication-based contracts, given that many of the biologics have a variety of indications with varying levels of clinical efficacy,” Kunze 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.