Radar on Market Access

Radar On Market Access: IngenioRx Acquires ZipDrug to Improve Medication Adherence, Affordability

July 16, 2020

In what one expert calls a “logical” move for a PBM vying for business from cost-conscious payers, Anthem, Inc.’s IngenioRx said on July 6 that it acquired ZipDrug, a company that focuses on improving patients’ medication adherence and affordability, AIS Health reported.

“As plan sponsors and members opt in for the service, ZipDrug ensures members are matched with the best high-quality pharmacy to fulfill their needs,” Justin Petronzi, IngenioRx’s vice president of strategic growth, explains to AIS Health via email. Services offered by ZipDrug include “guaranteed prescription delivery, multi-dose compliance packaging that provides specific instructions to empower patients to manage their medications at home safely on a daily basis, along with other targeted clinical programs,” he says.

In what one expert calls a “logical” move for a PBM vying for business from cost-conscious payers, Anthem, Inc.’s IngenioRx said on July 6 that it acquired ZipDrug, a company that focuses on improving patients’ medication adherence and affordability, AIS Health reported.

“As plan sponsors and members opt in for the service, ZipDrug ensures members are matched with the best high-quality pharmacy to fulfill their needs,” Justin Petronzi, IngenioRx’s vice president of strategic growth, explains to AIS Health via email. Services offered by ZipDrug include “guaranteed prescription delivery, multi-dose compliance packaging that provides specific instructions to empower patients to manage their medications at home safely on a daily basis, along with other targeted clinical programs,” he says.

Petronzi adds that IngenioRx’s interest in ZipDrug materialized after it began a pilot program in 2018 in New York and New Jersey markets that was focused on matching members with the best pharmacy for their needs and providing deliveries of lower cost prescriptions.

To Avalere Health consultant Tim Epple, IngenioRx’s purchase of ZipDrug makes sense. “It’s an investment that follows a lot of trends and themes that we’re seeing in the industry,” he tells AIS Health. “And I think certainly from a PBM perspective, [ZipDrug’s services are] something that we’re hearing that a lot of payers and a lot of plans want, because they’re thinking through these same strategies on their end, and giving them the ability to do that in a sort of ‘one-stop shop’ is a logical and probably good move.”

In general, “we’ve actually seen a lot more interest in the pharma services sector,” Epple says, explaining that helping “lowest-hanging fruit patients” — those who are high cost but struggle with medication adherence — is an area that plan sponsors “are really looking hard at now as they think about how to bend the cost curve and really figure out where they can save money at a relatively simple level.”

The acquisition also aligns with the ongoing trend of specializing pharmacy assets, he adds. “I think we’re seeing a little bit of a movement toward specialty pharmacy platforms that really have specific expertise in either certain disease states, certain patient types [or] certain intervention types,” Epple says.

Radar On Market Access: Remdesivir’s $3,120 Price Tag Stirs Debate

July 14, 2020

Gilead Sciences, Inc. recently revealed that for promising COVID-19 treatment remdesivir, it will charge $2,340 for a typical five-day, six-vial treatment course for people covered by U.S. government health programs and $3,120 for those covered by private insurance, AIS Health reported.

In an open letter, Gilead CEO Daniel O’Day argued that Gilead priced remdesivir “well below” its estimated value, considering it can save the U.S. health care system approximately $12,000 per patient by reducing the length of COVID-19 patients’ hospital stays.

Gilead Sciences, Inc. recently revealed that for promising COVID-19 treatment remdesivir, it will charge $2,340 for a typical five-day, six-vial treatment course for people covered by U.S. government health programs and $3,120 for those covered by private insurance, AIS Health reported.

In an open letter, Gilead CEO Daniel O’Day argued that Gilead priced remdesivir “well below” its estimated value, considering it can save the U.S. health care system approximately $12,000 per patient by reducing the length of COVID-19 patients’ hospital stays.

But not everyone is convinced by that argument.

“So they’re saying by shortening hospital stays, the system is going to save all these monies, but I always ask the question, ‘Why is it that the drug company should get to pocket all or some substantial portion of that savings?'” says Jack Hoadley, Ph.D., a research professor emeritus at Georgetown University’s Health Policy Institute. “That’s a savings we should accumulate for consumers, for payers [and] everybody else.”

Hoadley is not alone in those views. The advocacy group Patients for Affordable Drugs, in a June 29 statement, wrote that “Gilead’s price for remdesivir shows once again that we can’t trust Big Pharma to act responsibly — even in the face of a global pandemic.”

The U.S. government helped fund the development of remdesivir, and dexamethasone — a generic steroid — is priced at less than $1 per day even though it ‘showed promise for combating severe COVID-19 cases and reducing potential mortality rates,” the organization said.

The Institute for Clinical and Economic Review (ICER) also brought up dexamethasone in its statement. The U.S. price range of $2,340 to $3,120 is “is largely in line with ICER’s independent assessment suggesting that a price of approximately $2,800 would be reasonable in proportion to the added benefits for patients and the cost offsets in the health system now that dexamethasone is rapidly becoming standard of care,” wrote ICER President Steven D. Pearson, M.D.

Leerink analyst Geoffrey Porges, in a June 29 note to investors, pointed out that the U.S. commercial price set for remdesivir was below his firm’s expectations. Still, “we believe the disclosed [remdesivir] pricing is reasonable, and should provide significant value to the Gilead shareholders and still deflect much of the criticism the company might face in this emergency,” Porges wrote.

Radar On Market Access: Upheld Transparency Rule Is Slated to Reshape Payer-Provider Negotiations

July 9, 2020

In another blow to an industry already beleaguered by the COVID-19 pandemic, a federal judge recently upheld a federal rule that requires hospitals to engage in unprecedented price transparency measures, AIS Health reported.

The rule would require hospitals to disclose the rates they negotiate with payers for all items and services they offer. It is slated to go into effect on Jan. 1, 2021, but the American Hospital Association (AHA) and other trade groups and health systems sued to block it.

In another blow to an industry already beleaguered by the COVID-19 pandemic, a federal judge recently upheld a federal rule that requires hospitals to engage in unprecedented price transparency measures, AIS Health reported.

The rule would require hospitals to disclose the rates they negotiate with payers for all items and services they offer. It is slated to go into effect on Jan. 1, 2021, but the American Hospital Association (AHA) and other trade groups and health systems sued to block it.

The crux of the plaintiffs’ argument in American Hospital Association v. Azar is that CMS exceeded its authority by redefining the “standard charges” that hospitals must disclose under the Affordable Care Act to include negotiated rates. But in a decision issued June 23, U.S. District Court Judge Carl Nichols determined that CMS’s interpretation of the statute was reasonable.

The AHA has already appealed the decision, and depending on how the D.C. Circuit Court rules on that appeal, the case could make it to the Supreme Court, says David Kaufman, a partner at Laurus Law Group LLC.

“Insurers today actually do have a pretty good sense of how hospitals are charging, but this is going to be a quantum leap forward for them in understanding the strategy that hospitals take in negotiating across insurance markets,” Dan Mendelson, founder of Avalere Health says regarding what will happen if the rule does take effect.

However, “the insurer will have more information, but I question whether they will have more leverage,” Mendelson says. “I think over time what this [rule] is likely to do is to drive more consistency in pricing — not necessarily lower prices across the board.”

Kaufman observes that the disclosure of hospitals’ negotiated rates may not have a uniform impact across different types of insurers.

“In certain ways, it’s a procompetitive kind of rule by providing more transparency,” he says. “However, large established insurers that have the advantage of broad networks with lower prices based on their large membership benefit by keeping their prices confidential. It helps them with providing better prices to large employers, etc. So by making those prices more transparent, it might ease barriers to entry [for] other insurers.”

Radar On Market Access: Reports Show Medicaid MCOs Are ‘Dominant,’ Increase Affordability

July 7, 2020

Two recent reports found that Medicaid managed care plans now enroll most Medicaid members, help keep costs and premiums low in the markets where they participate, and are competitive with commercial plans at the low end of the individual market in areas including network quality and benefit design, AIS Health reported.

One white paper was prepared by consultancy The Menges Group for America’s Health Insurance Plans (AHIP), and the other was authored by researchers at the Robert Wood Johnson Foundation (RWJF) and Urban Institute.

Two recent reports found that Medicaid managed care plans now enroll most Medicaid members, help keep costs and premiums low in the markets where they participate, and are competitive with commercial plans at the low end of the individual market in areas including network quality and benefit design, AIS Health reported.

One white paper was prepared by consultancy The Menges Group for America’s Health Insurance Plans (AHIP), and the other was authored by researchers at the Robert Wood Johnson Foundation (RWJF) and Urban Institute.

The Menges Group-AHIP white paper, which had a national scope, found that Medicaid MCO enrollment increased by 121% between fiscal years 2010 and 2018, from 26 million to over 56 million members, and that as of 2018, more than 75% of all Medicaid enrollees are members of an MCO, up from 50% in 2010. The report also found that, since 2017, capitated payments to MCOs have exceeded fee-for-service expenditures.

The RWJF-Urban Institute paper, which relied on case study surveys in Arkansas, California, Florida, New York, Ohio, and Washington state, concluded that MCOs offer coverage that is at least as good as commercial plans in the low end of the Affordable Care Act individual market.

“Many [stakeholders] feel there are no longer major distinctions between Medicaid and commercial insurers in the marketplaces. Most interviewees have positive perceptions of Medicaid insurers, crediting their ability to increase choice and affordability in the individual health insurance market,” wrote the paper’s authors.

Most of the surveyed stakeholders, which the paper says “included representatives from state departments of insurance, hospital associations, medical or primary care provider associations, insurance brokers, and consumer advocates,” believe that Medicaid MCOs have improved the level of competition in their state marketplace, and offer their members similar network quality to commercial plans.

Radar On Market Access: Insurers Are Required to Cover Only ‘Medically Necessary’ COVID-19 Tests

July 2, 2020

As more employers turn to COVID-19 testing to see if employees are safe to return to the workplace, the Trump administration has clarified that insurers must cover only physician-ordered “medically necessary” diagnostic and antibody tests, AIS Health reported.

The guidance, released jointly on June 23 by HHS, the Dept. of Labor and the Dept. of the Treasury, also says self-funded employer plans must pay for COVID-19 testing that’s medically appropriate.

As more employers turn to COVID-19 testing to see if employees are safe to return to the workplace, the Trump administration has clarified that insurers must cover only physician-ordered “medically necessary” diagnostic and antibody tests, AIS Health reported.

The guidance, released jointly on June 23 by HHS, the Dept. of Labor and the Dept. of the Treasury, also says self-funded employer plans must pay for COVID-19 testing that’s medically appropriate.

“Testing conducted to screen for general workplace health and safety (such as employee ‘return to work’ programs), for public health surveillance for SARS-CoV-2, or for any other purpose not primarily intended for individualized diagnosis or treatment of COVID-19 or another health condition is beyond the scope” of the requirements embedded in the legislation approved by Congress earlier this year that requires insurers to pay for COVID-19 testing, the FAQ document said.

“I think now that [the insurers] have had this clarification, they’re going to use that as part of their determination of coverage,” Ashraf Shehata, KPMG national sector leader for health care and life sciences, tells AIS Health.

Richard Hughes IV, managing director at Avalere Health, says that it’s possible to argue that Congress intended insurers to cover all tests for their members, regardless of whether a physician ordered them, whether the person was symptomatic, or whether the test was needed to return to work.

However, Hughes says it’s also possible to argue that Congress gave CMS the authority to implement these testing requirements with some restrictions. “There could be tremendous variability across payers’ approaches to coverage policy and how they process claims,” he says.

In fact, many insurers already have moved to limit testing coverage in some ways, although their policies are fluid and have been updated frequently, says Danielle Showalter, principal at Avalere.

Individuals whose plans will not cover a test can turn to what Shehata calls the “retail model,” which is direct-to-consumer COVID-19 testing sites that don’t require a health care provider’s permission. Costs vary for this type of testing, which generally wouldn’t be covered by insurance unless the person is symptomatic.

Radar On Market Access: CMS Proposes New Medicaid Best Price Rules for Pricey Therapies

June 30, 2020

In an effort to boost adoption and lower costs for curative therapies, CMS proposed a new rule that the agency says would allow state Medicaid plans to enter into value-based, outcome-dependent purchasing agreements with drug manufacturers using a new interpretation of best price rules, AIS Health reported.

CMS proposed an updated interpretation of Medicaid “best price” rules by clarifying best price reporting requirements and enabling new structures including year-to-year scheduled prices that could change in relation to patient outcomes.

In an effort to boost adoption and lower costs for curative therapies, CMS proposed a new rule that the agency says would allow state Medicaid plans to enter into value-based, outcome-dependent purchasing agreements with drug manufacturers using a new interpretation of best price rules, AIS Health reported.

CMS proposed an updated interpretation of Medicaid “best price” rules by clarifying best price reporting requirements and enabling new structures including year-to-year scheduled prices that could change in relation to patient outcomes.

New curative therapies present a novel financial challenge for payers. Curative therapies eliminate the need for intensive treatment of chronic and terminal conditions, which create substantial savings for payers, patients and providers alike.

However, their high up-front cost is borne by payers and patients, and the initial payer may not see the entire financial benefit of the curative therapy. What’s more, under a traditional payment model, insurers are unable to recoup costs if a new, experimental therapy with curative potential has limited effect.

In order to spread risk and value across all stakeholders involved, some drug benefit industry leaders have called for broad adoption of the value-based pricing methods CMS’s proposed rule seeks to create, backed by a reinsurance mechanism.

Avalere Health principal Mike Schneider tells AIS Health that, although CMS’s proposal does not include a reinsurance mechanism, it should advance adoption of curative therapies. He says that, as they are currently implemented, Medicaid’s best price rules have made it difficult for commercial payers to negotiate with drug manufacturers to include outcomes and proof of concept in purchasing agreements.

Though the proposed rule applies directly to state Medicaid plans, Schneider says that the rule could have a substantial impact on the commercial market as plans bidding on Medicaid contracts gain experience with the new paradigm.

Still, barriers remain in adopting new curative therapies. Drug Channels Institute CEO Adam Fein points out that the rule does not address the challenge presented by copay accumulators to patients who might benefit from expensive, new specialty drugs — which suggests the rule might not speed up curative therapy adoption as quickly as patients might hope.