Radar on Market Access

Radar On Market Access: COVID-19 Pandemic May Change Rx Delivery Permanently

May 26, 2020

Industry experts expect the COVID-19 pandemic and related economic crisis, in addition to the trend of vertical integration in the PBM sector, will increase those companies’ direct interaction with consumers, AIS Health reported.

Industry experts expect the COVID-19 pandemic and related economic crisis, in addition to the trend of vertical integration in the PBM sector, will increase those companies’ direct interaction with consumers, AIS Health reported.

The recent wave of payer acquisitions of PBMs has kept the latter on strong footing despite the crisis. CVS Health Corp.’s Caremark, UnitedHealth Group’s OptumRx and Cigna Corp.’s Express Scripts control approximately 74% of the market, according to a January 2020 estimate by Drug Channels Institute CEO Adam Fein, Ph.D.

Fein said in a May 8 webinar that he expects the dominant PBMs’ bargaining clout, deepening synergies and cash reserves to drive more aggressive formulary management during the COVID-19 crisis.

Vertical integration has changed the revenue mix of large PBMs. According to Fein, rebates account for a declining amount of profits for the big three PBMs, and they are largely passed through to payer clients.

The vertical integration trend has also helped PBMs adapt to new consumer choices driven by COVID-19, according to Fein. “Mail pharmacies [had] a huge spike [in fills] into March, and right now, mail pharmacy growth has now flatlined again. Retail pharmacy has taken a very big hit. Once the lockdown started to go into effect, [retail] prescriptions started to decline because people couldn’t get to the retail pharmacy,” Fein said.

Still, he is skeptical about the durability and scale of the consumer shift away from retail toward mail order.

“[Mail order] gained a little, but it’s not some runaway shift in the market,” Fein explained, citing its still-small share of the overall prescription drug market. “The notion of a retail-to-mail shift — it’s going to happen, but it may not last too much longer. So for PBMs, it’s a short-term boost, but perhaps not a long-term shift.”

However, Mike Schneider, a principal at Avalere Health, says that he’s bullish on the trend toward mail order. Schneider says consumers with chronic conditions and long-term medications are likely to stick with mail-order fills — assuming they are still available after the pandemic ends. The key to continuing that trend, he adds, is whether seniors, the largest demographic group of prescription drug users, take a liking to the mail order system.

Radar On Market Access: COVID-19 Pandemic Drives Home Infusion Utilization

May 21, 2020

With numerous hospitals focused on the COVID-19 pandemic and many areas under stay-at-home mandates, home infusion is more important than ever. Changes within the industry already have been seen, and the current situation is likely to result in permanent shifts within the home infusion space, AIS Health reported.

With numerous hospitals focused on the COVID-19 pandemic and many areas under stay-at-home mandates, home infusion is more important than ever. Changes within the industry already have been seen, and the current situation is likely to result in permanent shifts within the home infusion space, AIS Health reported.

“If you can do infusion at home, you need to do it there,” maintains Ashraf Shehata, KPMG national sector leader for Healthcare & Life Sciences. “This is about controlling infection risk in the near term, and many home infusion candidates are in a high-risk category. Longer term, there has been a shift toward delivering care in the most economical and clinically appropriate setting, largely driven by payers.”

“We have seen an increase in some home infusion utilization of select therapies in certain markets where patient administration sites of care are shifting from the acute care or hospital outpatient setting to the home, related to the pandemic,” says Drew Walk, CEO of Soleo Health.

Some plans already have been shifting administration of certain therapies to patient homes and provider offices, which are more cost-effective settings than hospitals, points out Elan Rubinstein, Pharm.D., EB Rubinstein Associates.

“There could be more home infusion, with drugs that pose low risk of serious adverse events during or immediately after infusion or where a patient tolerated prior infusions of these drugs with no or minimal difficulty,” says Rubinstein.

Lisa Kennedy, Ph.D., chief economist and managing principal at Innopiphany LLC, points out that while CMS has changed some policies in support of home infusion, “not everyone is on board.” She notes that the Community Oncology Alliance “has raised safety concerns about home infusion centered on a lack of training of those in the community administering treatment at home versus trained oncology nurses.”

“Going forward there will be a lot of candidates for home infusion, and some customers/patients may like the convenience of getting care at home,” says Shehata. “There might be opportunities for alternative care models to be introduced here. The ability for nurses to teach patients how to self-administer the medicines is an important facet to this.”

Radar On Market Access: PBMs See Solid 1Q Results Despite Challenges Ahead

May 19, 2020

Major PBMs reported strong results for the first quarter of 2020 as members rushed to fill prescriptions in March ahead of the COVID-19 pandemic. However, financial analysts warn the pandemic could have unpredictable effects on PBMs’ finances for the rest of 2020 and moving into 2021, AIS Health reported.

Major PBMs reported strong results for the first quarter of 2020 as members rushed to fill prescriptions in March ahead of the COVID-19 pandemic. However, financial analysts warn the pandemic could have unpredictable effects on PBMs’ finances for the rest of 2020 and moving into 2021, AIS Health reported.

The 2021 PBM selling season could be disrupted in still-unknown ways, analysts said, and members are cutting back on routine physician visits and elective procedures, resulting in lower script volume overall.

Anthem, Inc., posted a particularly strong start for its new IngenioRx PBM, with earnings of $349 million, well above the $275 million to $300 million quarterly earnings that had been expected.

The impact from COVID-19 included a large spike in prescription refills during March, which helped the PBM’s performance, Anthem Executive Vice President and CFO John Gallina said in the company’s earnings conference call. Still, investors shouldn’t expect script numbers to remain elevated, he added: “We have seen a slight drop in new scripts here in April over historical patterns.”

CVS Health Corp. reported first-quarter earnings per share (EPS) of $1.91, well above what analysts had anticipated. Citi analyst Ralph Giacobbe wrote in a May 6 investor note that the company’s Caremark PBM “put up solid results with revenue and operating profit also exceeding consensus with higher claims growth of 12.4%.” This was “aided by pull-forward of scripts due to COVID-19,” plus the partnership between CVS and Anthem on IngenioRx.

Cigna Corp.’s first-quarter adjusted EPS came in 8% above consensus, with better-than-anticipated performances in its Health Services unit, which houses PBM Express Scripts, and in its Integrated Medical segment. Health Services reported an operating profit of $1.08 billion, slightly ahead of expectations, with revenue well ahead of projections — $27.2 billion versus $25.1 billion expected, noted Giacobbe.

At UnitedHealth Group, earnings for Optum, the division that includes OptumRx, missed analysts’ expectations by about 5%, despite stronger-than-expected revenue, Jefferies equities analyst David Windley wrote in a note to investors. “OptumHealth and OptumRx both contributed to the underperformance,” which was offset by stronger-than-expected performance by OptumInsight, he said.

Radar On Market Access: COVID-19 May Drive More Insurers Into ACA Exchanges

May 14, 2020

As the impact of the COVID-19 pandemic continues to reverberate throughout the U.S. economy, it’s become clear that there will be a major enrollment shift away from employer-sponsored plans and into Medicaid and the individual market, AIS Health reported.

As the impact of the COVID-19 pandemic continues to reverberate throughout the U.S. economy, it’s become clear that there will be a major enrollment shift away from employer-sponsored plans and into Medicaid and the individual market, AIS Health reported.

In fact, one recent analysis suggested that there could be “unprecedented growth” in the individual health insurance market. “The impact of COVID-19-related job losses will likely more than double the current enrollment in Individual & Marketplace plans, with the potential for the Individual market to triple in size to over 35 million in a sustained and severe economic contraction,” stated the analysis from A2 Strategy Group.

Such growth, the report said, “will come from newly unemployed individuals in all states who exceed Medicaid eligibility thresholds” because of money they receive from the Coronavirus Aid, Relief, and Economic Security Act. And in states that haven’t expanded Medicaid, nearly all of the newly unemployed who earn below 100% of the federal poverty level could qualify for Affordable Care Act premium subsidies.

Another analysis from the Urban Institute and Robert Wood Johnson Foundation (RWJF), estimated that if U.S. unemployment reaches 20%, 25 million people would lose employer-sponsored health insurance. “Of these, 11.8 million would gain Medicaid coverage, 6.2 million would gain marketplace or other private coverage, and 7.3 million would become uninsured,” it stated.

Katherine Hempstead, the senior adviser to the executive vice president at RWJF, says it’s possible the coming enrollment shifts will cause some health insurers to re-evaluate their level of participation in the ACA exchanges, which some large insurers left in 2017 and 2018 before the market stabilized.

In fact, Maryland Gov. Larry Hogan (R) said on May 12 that UnitedHealth filed to offer plans on the sate’s ACA exchange in 2021, bringing the total number of insurers in that market from two to three.

Ari Gottlieb, a principal at A2 Strategy Group, says the effect may be even stronger after 2021.

“If the market doubles to 25 or 30 million, some of that will probably fall off, but some of that will probably stay,” he says. “I think even a year or two from now, we’re going to have a bigger individual market than we had before.”

Radar On Market Access: CVS Sees COVID Testing Sites as Part of Bigger HealthHUB Strategy

May 12, 2020

Since acquiring Aetna, CVS Health Corp. has touted its HealthHUB stores — which include expanded clinics, labs for health screening and space for wellness pursuits — as the linchpin of its plan to stand out among other large, diversified firms that include a health insurer. Yet as one analyst pointed out during CVS’s first-quarter 2020 earnings call on May 6, that strategy could face new challenges amid the COVID-19 pandemic when many people are reluctant to venture outside their homes.

Since acquiring Aetna, CVS Health Corp. has touted its HealthHUB stores — which include expanded clinics, labs for health screening and space for wellness pursuits — as the linchpin of its plan to stand out among other large, diversified firms that include a health insurer. Yet as one analyst pointed out during CVS’s first-quarter 2020 earnings call on May 6, that strategy could face new challenges amid the COVID-19 pandemic when many people are reluctant to venture outside their homes.

CVS executives said that while the company is indeed seeing less foot traffic at its brick-and-mortar locations, it is still leveraging the power of having a vast retail footprint by offering testing for the new coronavirus, AIS Health reported.

The firm teamed up with federal, state and local governments to open “large-scale diagnostic testing sites across five states,” according to a slide deck that accompanied CVS’s earnings presentation. As of May 4, the company had administered nearly 90,000 tests, and it is planning to establish additional testing sites.

As CEO Larry Merlo put it: “We’re focused on COVID testing today, but there is a broader universe of diagnostics and monitoring that we see becoming an important part of our HealthHUB strategy.”

Merlo also pointed out that virtual visits through the company’s MinuteClinic platform rose 600% in the first three months of 2020 compared with the prior-year quarter. Retail prescription home delivery increased more than 1,000% and specialty pharmacy digital refills jumped about 50%.

The effects of the COVID-19 crisis weren’t all rosy, however. Jonathan Roberts, CVS’s executive vice president and chief operating officer, acknowledged that “the biggest headwind we’re seeing now in pharmacy is really around new therapy starts.” Because doctor visits have decreased significantly, CVS saw at least a 25% dip in new prescriptions in April compared with the same month in 2019, whereas it normally sees about 7% growth.

Overall in the quarter, CVS recorded adjusted earnings per share (EPS) of $1.91, “well above” the Wall Street consensus of $1.62, as Citi analyst Ralph Giacobbe highlighted in a May 6 investor note. Total revenues increased 8.3% in the first quarter of 2020 compared with the prior-year quarter.

Radar On Market Access: Anthem, Cigna Brace for Recession-Induced Enrollment Shift

May 7, 2020

Anthem, Inc., and Cigna Corp. both reported slightly better-than-expected medical loss ratios (MLRs) as part of their first-quarter 2020 earnings, in part due to delays in elective procedures resulting from the COVID-19 pandemic. Both insurers also reaffirmed their overall earnings-per-share (EPS) guidance for 2020, AIS Health reported.

Anthem, Inc., and Cigna Corp. both reported slightly better-than-expected medical loss ratios (MLRs) as part of their first-quarter 2020 earnings, in part due to delays in elective procedures resulting from the COVID-19 pandemic. Both insurers also reaffirmed their overall earnings-per-share (EPS) guidance for 2020, AIS Health reported.

But the insurers warned that MLRs may tick up later this year. In addition, they predicted that the impact of COVID-19 may lead to significant shifts in enrollment, as workers who are laid off shift to Medicaid or to the Affordable Care Act exchanges.

Anthem posted a first-quarter MLR of 84.2%, slightly better than the consensus estimate of 84.3%, “likely aided to a limited degree by COVID-19 toward the latter part of the quarter,” Citi analyst Ralph Giacobbe pointed out in an investor note.

Anthem’s second-quarter MLR “should be historically low” due to delayed procedures, but that will be offset by a rebound in volumes, buyback suspension and low net interest/investment income during the second half of the year, Jefferies equities analyst David Windley wrote in an investor note.

Anthem management indicated that 40% to 50% of disenrolled commercial lives will move to Medicaid, while 30% will move into individual health insurance, Windley wrote. “However, this creates an unfavorable mix,” with lower per-member per-month payments, especially in Medicaid, and a move to lower-margin products, he noted.

Meanwhile, Cigna reported an MLR of 78.3%, compared with analysts’ consensus estimate of 79.3%, Giacobbe pointed out in an investor note. Cigna is maintaining its 2020 guidance for EPS and revenue, while dropping its outlooks for MLR and other specific financial metrics.

“The impact of COVID-19 is still developing,” Cigna President and CEO David Cordani said April 30. “We clearly see headwinds driven by the recession that it’s causing, including, for example, disenrollment within our commercial customers, both in our integrated medical business [and] our health service business, as well as some pressure in our group disability business.”

However, Cigna expects “the strength of our first quarter to drive us to another strong year for revenue, earnings and free cash flow,” he added.