Radar on Market Access

Radar On Market Access: New Manufacturing Approach May Drive Down CAR-T Therapies’ Prices

October 1, 2020

This summer, a drug called Tecartus (brexucabtagene autoleucel) became the third chimeric antigen receptor T-cell (CAR-T) therapy approved by the FDA. CAR-T therapies, which use a patient’s genetically modified immune cells to target and fight cancer cells, are a cutting-edge type of treatment that comes with eye-popping price tags, ranging from $373,000 to $475,000. However, a new report from OptumRx highlights an “industry trend to watch” that could eventually provide some relief to payers worried about how to finance CAR-T treatments, AIS Health reported.

Currently, CAR-T therapies’ high cost is at least in part attributable to the “labor-intensive and time-consuming” manufacturing process for such drugs, stated the UnitedHealth Group-owned PBM’s Drug Pipeline Insights Report for the third quarter of 2020. Essentially, T-cells are taken from a patient, treated and multiplied in a lab, and reinfused into the same patient — a completely personalized process known as autologous therapy.

This summer, a drug called Tecartus (brexucabtagene autoleucel) became the third chimeric antigen receptor T-cell (CAR-T) therapy approved by the FDA. CAR-T therapies, which use a patient’s genetically modified immune cells to target and fight cancer cells, are a cutting-edge type of treatment that comes with eye-popping price tags, ranging from $373,000 to $475,000. However, a new report from OptumRx highlights an “industry trend to watch” that could eventually provide some relief to payers worried about how to finance CAR-T treatments, AIS Health reported.

Currently, CAR-T therapies’ high cost is at least in part attributable to the “labor-intensive and time-consuming” manufacturing process for such drugs, stated the UnitedHealth Group-owned PBM’s Drug Pipeline Insights Report for the third quarter of 2020. Essentially, T-cells are taken from a patient, treated and multiplied in a lab, and reinfused into the same patient — a completely personalized process known as autologous therapy.

As the industry searches for a cheaper and more scalable way of manufacturing CAR-T treatments, a new approach known as an allogeneic process “is currently under study as one possible solution,” according to OptumRx. In this process, previously extracted and banked healthy donor T-cells are multiplied “many times over for use in many patients,” effectively spreading out the high initial manufacturing cost over multiple doses.

When asked how much the allogeneic process could reduce the manufacturing cost of CAR-T therapies, Bill Dreitlein, senior director of pipeline and drug surveillance at OptumRx, cited a 2019 study.

“Per the International Society for Cell and Gene Therapy, the cost to manufacture CAR-T using current methods is at $95,780 per dose,” he says via email. “That study also calculates the production cost using the new process would be only $4,460 per dose — over 95% lower.”

However, because manufacturing costs are only one part of the drug-pricing equation, the new allogeneic process may not actually lower CAR-T prices that dramatically, the report noted.

Tecartus’ list price is $373,000, and the wholesale acquisition costs of the other CAR-T therapies, Kymriah (tisagenlecleucel) and Yescarta (axicabtagene ciloleucel), are $373,000 and $475,000 respectively, per the OptumRx report. As of Oct. 1, 2019, CMS agreed to cover CAR-T therapies for qualifying Medicare beneficiaries, but private payers generally reimburse providers for CAR-T treatment on a case-by-case basis, industry experts previously told AIS Health.

Radar On Market Access: Experts Remain Skeptical That SCOTUS Will Scuttle Entire ACA

September 29, 2020

The Sept. 18 death of Justice Ruth Bader Ginsburg — which could tip the scales in favor of striking down the Affordable Care Act (ACA) — was hardly welcome news for health insurers during a year when a pandemic and a presidential election are already fueling high levels of uncertainty. However, industry analysts and legal experts say there are plenty of reasons not to hit the panic button just yet, AIS Health reported.

“This definitely increases the chance of the Supreme Court striking down the full ACA. But we’re going from a pretty low likelihood base,” says Chris Sloan at Avalere Health. “The odds are still really stacked against anything materially changing for the ACA.”

The Sept. 18 death of Justice Ruth Bader Ginsburg — which could tip the scales in favor of striking down the Affordable Care Act (ACA) — was hardly welcome news for health insurers during a year when a pandemic and a presidential election are already fueling high levels of uncertainty. However, industry analysts and legal experts say there are plenty of reasons not to hit the panic button just yet, AIS Health reported.

“This definitely increases the chance of the Supreme Court striking down the full ACA. But we’re going from a pretty low likelihood base,” says Chris Sloan at Avalere Health. “The odds are still really stacked against anything materially changing for the ACA.”

At issue is a case now known as California v. Texas, which Republican state officials filed in 2018 to challenge the constitutionality of the ACA. Because Congress changed the tax penalty for the law’s individual mandate to $0 via the 2017 Tax Cuts and Jobs Act, they argued, the mandate is unlawful, and if that part is unconstitutional, the whole law must go.

Until Ginsburg’s death from cancer complications, many legal observers expected that the ACA had a good shot at surviving this latest Supreme Court challenge. But if Senate Republicans are able to confirm a replacement for Ginsburg before Nov. 10 oral arguments, not one but two conservative justices would have to side with their liberal colleagues to produce a pro-ACA ruling, explains health care attorney Katie Keith.

Ultimately, “I’m still skeptical that the entire law would be invalidated; I think that would be a step too far and does go against some of the recent decisions we’ve seen on severability from this court,” Keith says. However, she adds that the loss of Ginsburg “makes it more likely that parts of the ACA will be struck down” — in particular, the so-called preexisting condition protections.

Wall Street analysts, meanwhile, appeared unconvinced that the law will be unraveled — but noted that Centene Corp. has the most exposure if that happens, given its strong concentration in Medicaid and the individual market. Credit Suisse’s A.J. Rice estimated that those two business lines make up roughly 26% of Centene’s earnings, but only 4% for Anthem, Inc., and less than 1% each for Cigna Corp., CVS Health Corp., Humana Inc. and UnitedHealth Group.

Radar On Market Access: Pandemic, Market Stability Encourage Major Insurers to Expand ACA Footprints

September 24, 2020

Given that enrollment in the Affordable Care Act (ACA) exchanges has basically flatlined, one might not expect insurers to view the exchanges as a growth opportunity. But recent moves by some of the country’s largest payers suggest otherwise.

Centene Corp. said on Sept. 11 that it will widen its ACA marketplace footprint by selling plans in “nearly 400 new counties” next year. The company will increase its presence in 13 of the states where it already sells plans, plus enter two new states: Michigan and New Mexico.

Given that enrollment in the Affordable Care Act (ACA) exchanges has basically flatlined, one might not expect insurers to view the exchanges as a growth opportunity. But recent moves by some of the country’s largest payers suggest otherwise.

Centene Corp. said on Sept. 11 that it will widen its ACA marketplace footprint by selling plans in “nearly 400 new counties” next year. The company will increase its presence in 13 of the states where it already sells plans, plus enter two new states: Michigan and New Mexico.

On Sept. 10, Cigna Corp. announced that it will be increasing its ACA exchange presence by “nearly 80 counties” next year, expanding its customer reach in that market by more than 50%. All told, Cigna will offer marketplace plans in 220 counties spanning 10 states.

In addition, UnitedHealth Group has so far announced it will expand to three new states in 2021: Maryland, Tennessee and Virginia. And startup insurer Oscar said on July 30 that it will increase its ACA marketplace presence for the fourth consecutive year in 2021, entering four new states.

As for what may be driving those moves, Katherine Hempstead, a senior policy adviser at the Robert Wood Johnson Foundation, observes that “there’s been this kind of secular trend away from employer-sponsored insurance vs. various other government or quasi-government products — Medicaid, Medicare Advantage and the marketplace — and I think that carriers are seeing synergies between all those government markets and want to be in all of them.”

The COVID-19 pandemic and its economic repercussions comprise another, more recent, catalyst for insurers’ ACA exchange expansions, according to S&P Global Ratings analyst Deep Banerjee.

“This market has not been growing in terms of the number of people signing up each year — it’s not drastically declining either, but you wouldn’t look at this market and say all of a sudden it’s a growth market,” Banerjee says. “But because of unemployment, because of [commercial group enrollment] shrinking, this could become a growth option in the future.”

While the economy is expected to eventually rebound, it makes sense for firms that stand to lose group-market members in the short term to follow those enrollees by investing in other market segments, Hempstead adds.

Radar On Market Access: As Payer M&A Slows Down, What’s Next?

September 22, 2020

The climate for payer mergers and acquisitions (M&A) has cooled substantially at a national level ever since the collapse of the proposed deals between Anthem, Inc. and Cigna Corp. and between Aetna Inc. and Humana Inc. However, consolidation in the provider sector has increased since the start of the COVID-19 pandemic as such firms grapple with the rapid collapse of fee-for-service revenue, AIS Health reported.

The breakdown of Anthem’s bid to acquire Cigna resulted in a public spat and dueling lawsuits over Cigna’s attempt to exit their agreement before exhausting the firms’ option to appeal a federal ruling against the transaction. On Aug. 31, the Delaware Court of Chancery ruled that neither firm had to pay damages to the other over the failed deal.

The climate for payer mergers and acquisitions (M&A) has cooled substantially at a national level ever since the collapse of the proposed deals between Anthem, Inc. and Cigna Corp. and between Aetna Inc. and Humana Inc. However, consolidation in the provider sector has increased since the start of the COVID-19 pandemic as such firms grapple with the rapid collapse of fee-for-service revenue, AIS Health reported.

The breakdown of Anthem’s bid to acquire Cigna resulted in a public spat and dueling lawsuits over Cigna’s attempt to exit their agreement before exhausting the firms’ option to appeal a federal ruling against the transaction. On Aug. 31, the Delaware Court of Chancery ruled that neither firm had to pay damages to the other over the failed deal.

This failed deal was a catalyst for the slowing pace of health insurance consolidation at the national scale, according to antitrust lawyer and former Federal Trade Commission official David Balto.

Ashraf Shehata, KPMG national sector leader for health care and life sciences, says that Cigna’s acquisition of Express Scripts, a transaction that the firm pursued partly because of the failed Anthem merger, set a precedent of its own.

“I would say what that has spawned instead of the health plan integration, it’s spawned…the PBM integration. Rather than health plan to health plan, it was health plan plus PBM. And we saw that across the board with all the commercial entities,” he says.

Shehata says he sees three likely types of payer transactions and reorganizations going forward. The first is the PBM-payer integration. Second, Shehata says that horizontal coordination between regional payers, if not outright mergers, is likely to accelerate. Finally, he’s tracking the emerging model of “health plan plus retail plus PBM.”

Michael Abrams, co-founder and managing partner of consultancy Numerof & Associates, says that large regional hospital systems with healthy balance sheets are likely to speed up their vertical acquisition of independent hospitals or horizontal consolidation with local peers.

Abrams also points out that this wave of consolidation will compound or accelerate the rising cost of health care. He adds this continual rise in prices will eventually drain the generous margins that payers have enjoyed over the course of the pandemic.

Radar On Market Access: Prime Therapeutics Introduces Real Time Benefit Tool

September 17, 2020

With the deadline approaching for Medicare Part D plans to implement a Real Time Benefit Tool (RTBT) — which informs prescribers when lower-cost alternative therapies are available under a beneficiary’s drug benefit — Prime Therapeutics, LLC said on Sept. 2 that it is rolling out a tool that will meet the new requirements, AIS Health reported.

In addition to showing a drug’s price, the Real Time Benefit Check tool displays lower-cost and therapeutically equivalent alternatives to any given drug, breaks down costs based on a member’s health plan formulary, and alerts a prescriber if a drug requires prior authorization.

With the deadline approaching for Medicare Part D plans to implement a Real Time Benefit Tool (RTBT) — which informs prescribers when lower-cost alternative therapies are available under a beneficiary’s drug benefit — Prime Therapeutics, LLC said on Sept. 2 that it is rolling out a tool that will meet the new requirements, AIS Health reported.

In addition to showing a drug’s price, the Real Time Benefit Check tool displays lower-cost and therapeutically equivalent alternatives to any given drug, breaks down costs based on a member’s health plan formulary, and alerts a prescriber if a drug requires prior authorization.

To develop its new tool, Prime conducted a 14-month pilot with multiple vendors, including DrFirst, which created the myBenefitCheck tool that the PBM decided to release first.

After processing 700,000 transactions among 25,000 prescribers, Prime calculated an average annual savings of $692 for each prescription that was changed as a result of using the tool. One Blues plan involved in the pilot “realized a total estimated savings due to alternate drug choices of $348,000 from April 2019 to March 2020,” stated a news release from the PBM.

Prime’s new Real Time Benefit Check tool will fulfill its obligations under the Medicare Advantage and Part D Drug Pricing Final Rule, which was issued in May 2019 and requires each Part D health plan to adopt one or more RTBTs that can integrate with at least one prescriber’s ePrescribing system or electronic health record system starting Jan. 1, 2021. In addition to Prime’s Part D members, the Real Time Benefit Check tool will also be available to the PBM’s commercial members.

Matt Kazan, a principal at Avalere Health, says that initially the new RTBT requirement was slated to go into effect in 2020, but CMS pushed back the deadline one year in response to some industry stakeholders’ concerns over readiness.

“Generally speaking, larger organizations had a system in place…and CMS is allowing them to utilize that,” says Kazan. “I think more of the concern was from maybe smaller, midsized organizations that didn’t have their own system ready to go.”

However, “time has lapsed since that final rule, so I’ve heard less about major concerns about the upcoming deadline,” he adds.

Radar On Market Access: Trump’s International Drug Pricing Order Is Still Missing; Rebate Order Draws Fire

September 16, 2020

A promised executive order that would tie drug prices to their costs in other countries has yet to emerge, although President Donald Trump has promoted the order as part of his re-election campaign. Meanwhile, payers and PBMs are continuing to push back against three executive orders the Trump administration issued in July with the intention of lowering drug prices, one of which would overhaul the Medicare Part D prescription drug rebate system, AIS Health reported.

“I think the purpose of these executive orders is to give the president some talking points going into the debates,” says Avalere Health founder Dan Mendelson. He adds that, regardless of their purpose, the orders will not make a difference in the real world any time soon.

A promised executive order that would tie drug prices to their costs in other countries has yet to emerge, although President Donald Trump has promoted the order as part of his re-election campaign. Meanwhile, payers and PBMs are continuing to push back against three executive orders the Trump administration issued in July with the intention of lowering drug prices, one of which would overhaul the Medicare Part D prescription drug rebate system, AIS Health reported.

“I think the purpose of these executive orders is to give the president some talking points going into the debates,” says Avalere Health founder Dan Mendelson. He adds that, regardless of their purpose, the orders will not make a difference in the real world any time soon.

Administration officials indicated during the rollout of the executive orders on July 24 that the international pricing order would be released within 30 days of the debut of the other three drug pricing orders. Yet the deadline passed and the administration at press time had not released the promised order.

Meanwhile, the executive orders that actually have been released are being criticized from stakeholders across health care. The order that would remove safe harbor protections from the Anti-Kickback Statute for prescription drug rebates in Medicare Part D has been panned even by conservatives.

Alex Brill, a resident fellow at the American Enterprise Institute (AEI), penned a white paper sponsored by PBM trade group Pharmaceutical Care Management Association (PCMA) that concluded the executive order would “restrict an important tool for providing savings to the federal government and Medicare Part D beneficiaries. Moreover, net drug costs and drug company revenues would rise significantly if the Medicare Part D safe harbor for rebates is eliminated.”

Mendelson says that the pharmaceutical industry is beginning to realize that it will have to change its business model one way or another.

“The pharmaceutical industry is facing a real pivot point where there are going to have to be more innovative ways to price for these products,” Mendelson observes. “…it’s really important that the industry start to figure out ways to engage positively with payers. And the government is the biggest payer.”