Radar on Market Access

Radar On Market Access: Specialty Drug Pipeline Holds Promise Amid High Costs

January 24, 2019

Blockbuster pharmaceuticals scheduled for launch in 2019 are expected to have a significant impact in treating certain cancers, spinal muscular atrophy, inflammatory conditions and some mental illnesses, according to Express Scripts Holding Co. With specialty medications managed through the pharmacy benefit now accounting for 41% of health plans’ total pharmacy spend, the PBM asserts it is crucial for plans to understand the product pipeline and create strategies to manage new, costly drug therapies, AIS Health reported.

Blockbuster pharmaceuticals scheduled for launch in 2019 are expected to have a significant impact in treating certain cancers, spinal muscular atrophy, inflammatory conditions and some mental illnesses, according to Express Scripts Holding Co. With specialty medications managed through the pharmacy benefit now accounting for 41% of health plans’ total pharmacy spend, the PBM asserts it is crucial for plans to understand the product pipeline and create strategies to manage new, costly drug therapies, AIS Health reported.

On the new drug front, Prime Therapeutics, in its December 2018 monthly update on the specialty pipeline, cites an annual wholesale acquisition cost (WAC) of $203,100 for Pfizer’s Daurismo (glasdegib), an oral drug approved by the FDA in combination with intravenous low-dose cytarabine to treat newly diagnosed acute myeloid leukemia in elderly and certain other adult patients. The Blues-affiliated PBM also points out that Loxo Oncology’s Vitrakvi (larotrectinib), approved by the FDA to treat adult and pediatric patients with certain solid tumors, has an average annual WAC for an adult patient of $393,600.

On the plus side for payers, Express Scripts notes some major drugs are coming off patent protection this year. This means, through the end of 2019, there is also opportunity for several blockbuster medications, including Advair Diskus, EpiPen and Lyrica, to face first-time generic competition.

Moreover, Express Scripts spokesperson Jennifer Luddy says, “We believe there is a $54.4 billion saving opportunity between 2017 and 2022 if [a dozen] biosimilars come to market when the originator patents expire.”

In a recent blog post, Express Scripts singled out two specialty drugs to watch in 2019:

(1) AVXS-101, a DNA-based gene therapy that delivers a functional copy of a human survival motor neuron 1 (SMN1) gene to treat children with spinal muscular atrophy (SMA) Type 1. It is expected to cost between $1 million and $3 million for the one-time IV infusion. The FDA action date is June 18, 2019, but early approval is expected, the PBM says.

(2) Tafamidis meglumine, which is expected to be the first drug approved for the treatment of cardiomyopathy caused by transthyretin-mediated amyloidosis. The drug’s approval is expected in mid-2019, and Express Scripts says it “could rapidly become the standard-of-care for these patients.”

Many pharmaceutical launches this year will treat a variety of cancers, with cancer therapies representing about one-third of all specialty drugs in the pipeline.

Radar On Market Access: Drug-Pricing Transparency, Vertical PBM Deals Are Top of Mind for Employers in 2019

January 22, 2019

As they look to win over employer clients this year, PBMs should be prepared to face stiff competition and embrace emerging trends such as value-based formularies and rebate-free models, benefits consultants tell AIS Health.

As they look to win over employer clients this year, PBMs should be prepared to face stiff competition and embrace emerging trends such as value-based formularies and rebate-free models, benefits consultants tell AIS Health.

“I’ve heard more interest about RFPs and going out, looking for or market-checking vendors than I have in a while — particularly on the PBM side,” says Suzanne Taranto, a principal and consulting actuary for Milliman, Inc.

Companies are also considering how the vertical integration in the PBM space is “reshaping the landscape,” says Renya Spak, who leads Mercer’s Center for Health Innovation.

“The main players in the pharmacy and medical space are all going to start operating a little bit differently,” Spak says. “We thought we knew how they operated and their business model, but now that they’re vertically integrated, I think we need to apply a whole new lens to understanding how they will operate and what will drive their business forward in the future.”

That said, many of the same themes that employers are focused on will apply, including greater transparency around drug pricing and rebates, and even rebate-free models, she says. Presumably in response to that demand, CVS in early December unveiled a Guaranteed Net Cost PBM model, under which it will pass 100% of rebates to plan sponsors.

Along similar lines, Spak says she’s seeing renewed interest in formularies that are based on the value that certain drugs deliver versus how rebates flow.

Another trend that Taranto is seeing involves “more care management programs, more interest in the specialty space and looking at alternative ways to procure those drugs,” she says.

Specialty drug spending is always a high-attention area, Taranto explains, but now there more tools and different options available — not only from the “usual suspects,” PBMs — but also from other vendors that are offering to help manage these pricey medications.

For employers that are large enough, that may mean they consider a different contract, she says. But “if you’re smaller, you may be looking at a number of specialty pharmacy providers outside of the standard PBM, on a carve-out basis, who promise better pricing, better deals.”

Radar On Market Access: Vermont Pushes Ahead on Canadian Drug Importation

January 17, 2019

A new report concludes that if Vermont undertakes wholesale importation of prescription drugs from Canada, such a program could achieve cost savings for the state’s commercial payers. But achieving benefits requires an emphasis on program mechanics, and Vermont’s own effort is far from a done deal — with the state’s largest health insurer pointing out that administrative costs and hurdles, which may be significant, are not quantified in this feasibility study, AIS Health reported.

A new report concludes that if Vermont undertakes wholesale importation of prescription drugs from Canada, such a program could achieve cost savings for the state’s commercial payers. But achieving benefits requires an emphasis on program mechanics, and Vermont’s own effort is far from a done deal — with the state’s largest health insurer pointing out that administrative costs and hurdles, which may be significant, are not quantified in this feasibility study, AIS Health reported.

The state’s 14-page report on the preliminary design of the “Canadian Rx Drug Import Supply Program,” written with the National Academy for State Health Policy’s (NASHP) technical assistance, estimates savings of $1 million to $5 million annually, based on just 17 high-spend drugs identified for two of the state’s three major carriers.

Blue Cross and Blue Shield of Vermont was among the three major carriers in the state asked to voluntarily identify top-spend prescription drugs for the second quarter of 2018, excluding drugs such as narcotics, biologics, and IV and infused drugs that are not eligible for importation under federal law. MVP Health Care also provided data, but Cigna Corp. opted not to do so.

While NASHP Executive Director Trish Riley declined to identify by name the 17 high-spend drugs contained in the report, she says they are used for contraception, chronic obstructive pulmonary disease, diabetes, hepatitis C, HIV/AIDS, multiple sclerosis, arthritis and venous thromboembolism prevention, along with one cancer drug.

Payers also were asked to calculate net savings from importation, with NASHP adding a “conservatively-high estimated mark-up” for program administration of 45% on top of the Canadian price. To determine savings, plans were asked to determine their net spend (net of rebates) on the 17 drugs, comparing it to the would-be net spend for the same drugs if they were imported from Canada with a 45% mark-up.

Even with the 45% mark-up, plans reported savings ranging from $2.61 to $2.82 per member per month, or $1 million to $5 million annually, the report says. But it notes these savings for commercial payers, post mark-up, don’t take into consideration the state’s costs in operating the importation program.

Broadly speaking, the Vermont Blues plan supports efforts to reduce prescription drug costs for its members, says its spokesperson Sara Teachout. Yet she notes the complexity of the issue, pointing out that “some of the administrative hurdles [for Canadian drug importation in Vermont] are significant.”

Radar On Market Access: Don’t Expect Major Action on Drug Prices in 2019, Experts Say

January 15, 2019

As 2019 gets under way, public outrage over high prescription drug prices does not appear to have abated, especially in light of recent news reports indicating manufacturers are raising prices on hundreds of drugs this month, AIS Health reported.

As 2019 gets under way, public outrage over high prescription drug prices does not appear to have abated, especially in light of recent news reports indicating manufacturers are raising prices on hundreds of drugs this month, AIS Health reported.

Yet there are plenty of reasons why this concern over drug prices might not result in any significant legislative or regulatory action, experts tell AIS Health. And whatever does occur might benefit health plans and PBMs more than challenge them.

Walid Gellad at the University of Pittsburgh says there’s sure to be a lot of drug-pricing bills proposed — and even passed — by the House, but it’s not certain that any will become law. He says that’s because many Senate Republicans aren’t likely to be very interested in passing legislation that harms the pharmaceutical industry. “The real uncertainty is whether the president would get behind one of those bills, and if so, that could change things,” Gellad says.

One hot topic on Democrats’ legislative agenda will be allowing Medicare to negotiate drug prices with manufacturers. While the idea of broad-based Medicare price negotiation probably has little chance of passing, “there could be a tie-in between negotiation and external reference prices for Part D,” says Gerard Anderson, professor at Johns Hopkins University Bloomberg School of Public Health.

In fact, Sen. Bernie Sanders (I-Vt.) and other left-leaning lawmakers introduced a trio of drug-pricing bills on Jan. 10, one of which would direct HHS to negotiate lower prices for Part D drugs, and another that would peg the price of prescription drugs in the U.S. to the median price in five major countries.

Overall, Anderson says he expects most potential actions to lower drug prices will benefit the managed care sector, as the result could be lower costs for such companies.

On the regulatory front, Gellad says he expects “small changes here and there…[but] nothing that’s going to radically change prices now or over the next two years — or until the next election.” However, “the big one for me is whether there will be big action around rebates,” he adds.

If the prescription drug rebate structure changes fundamentally, “it’s going to create a challenge for PBMs and their underwriting strategies, because they have been driven by rebates over the last couple years,” says Brian Anderson, a principal with Milliman, Inc.

Radar On Market Access: New Hep C Approach Might Not Save Money, PBM Execs Warn

January 10, 2019

A small study suggests it might be possible to shorten the length of expensive drug treatment for chronic hepatitis C virus (HCV), potentially cutting treatment time in half for 50% of patients. But managed care pharmacy clinicians say the results are far from ready to implement widely, and it’s possible the new approach might not even save money, AIS Health reported.

A small study suggests it might be possible to shorten the length of expensive drug treatment for chronic hepatitis C virus (HCV), potentially cutting treatment time in half for 50% of patients. But managed care pharmacy clinicians say the results are far from ready to implement widely, and it’s possible the new approach might not even save money, AIS Health reported.

The study, conducted at Loyola University Chicago and three medical centers in Israel, involved only 22 patients. It used a technique called modeling-based response-guided therapy, which estimated how long it would take to completely eliminate the hepatitis C virus.

“There’s a potential to save up to 20% of the costs of hepatitis C drugs,” says study author and Loyola researcher Harel Dahari, Ph.D.

However, April Kunze, Pharm.D., senior director of clinical formulary development and trend management strategy for Prime Therapeutics LLC, says that if PBMs or health plans apply policies that use the Loyola study’s data, the result may not necessarily be lower prices for hepatitis C therapy. “Drug pricing may vary significantly based on contracts and utilization,” she says. “Additionally, patients who relapse may require additional therapy, which could increase the overall cost of treatment.”

The proof-of-concept pilot study showed that using response-guided therapy to reduce treatment times is feasible, study authors said. To validate the results, a large multi-center trial is underway in Israel.

Dahari said that in addition to cutting overall costs, shorter treatment regimens would make it easier to treat hepatitis C patients who have limited drug benefits.

Still, Mesfin Tegenu, R.Ph., president of PerformRx, says that current FDA-approved protocol for treating hepatitis C is for either eight or 12 weeks, and “it will not be easy to change current protocol” for treating hepatitis C, since “all the clinical work done by drugmakers to receive approval was done for eight or 12 weeks.”

Regardless of the prospects for the response-guided therapy approach, there could be more price upheaval coming to the HCV antiviral market in 2019. Gilead said in September that it will soon launch steeply discounted generic versions of two of its HCV drugs.

Radar On Market Access: PBMs May Be Able to Handle Pressure From State Medicaid Programs

January 8, 2019

As states take a hard look at how they can reduce prescription drug spending in their Medicaid programs, they’ve put an already heavily scrutinized type of organization in their crosshairs: PBMs, AIS Health reported.

As states take a hard look at how they can reduce prescription drug spending in their Medicaid programs, they’ve put an already heavily scrutinized type of organization in their crosshairs: PBMs, AIS Health reported.

Ohio, for example, is forcing PBMs to abandon their current “spread pricing” models — in which PBMs pocket the difference between the amount they reimburse a pharmacy for a drug and the (usually higher) amount they charge a plan sponsor. Instead, they’ll move to a “pass-through” model, where PBMs will be paid an administrative fee by the Medicaid program and have to pay pharmacists the same amount that they bill the state for drugs, The Columbus Dispatch reported.

Most recently, Pennsylvania Auditor General Eugene DePasquale (D) released a report that advocates for legislation that would trade a spread-pricing model for a flat-fee model and allow the state’s Medicaid program to directly manage its prescription drug benefits instead of contracting with managed care organizations.
It might seem as though PBMs are facing a considerable threat from these moves, but industry experts say they are likely to be able to adjust to states’ changing preferences.

“I’d say that the PBMs’ business model could definitely change if more payers move toward this pass-through pricing model, but it doesn’t necessarily eliminate their role entirely,” says Tiernan Meyer, a director at Avalere Health. States can often be strapped for resources, and having a contractor administer pharmacy benefits instead of using their own resources to do so, “can be useful,” she adds.

What’s more, “the PBMs are very much used to this from other contracts that they hold, and they can certainly make money in a transparent environment,” says Robert Ferraro, R.Ph., a principal at the consulting firm Buck’s national pharmacy practice. “I think they would prefer a traditional model where their revenue wasn’t so easily identified by all their customers, but that doesn’t mean they can’t earn a very good living in a transparent or pass-through model.”

A more transparent approach to PBM contracting also helps smaller PBMs compete with the likes of UnitedHealth Group’s OptumRx, CVS Health Corp. and Cigna Corp.-owned Express Scripts Holding Co., because it simplifies the procurement process to an examination of administrative fees, he says.