Radar on Market Access

Radar On Market Access: Humana, Centene Maintain 2020 Earnings Outlook Amid COVID-19 Pandemic

May 5, 2020

Humana Inc. and Centene Corp. are both maintaining their 2020 earnings outlook despite the emergence of the COVID-19 pandemic and economic contraction at the end of the first quarter, AIS Health reported.

Humana Inc. and Centene Corp. are both maintaining their 2020 earnings outlook despite the emergence of the COVID-19 pandemic and economic contraction at the end of the first quarter, AIS Health reported.

Humana’s revenues increased to $18.9 billion, and it reported $5.40 in adjusted earnings per share (EPS), beating the Wall Street consensus of $4.66 adjusted EPS. Centene’s first quarter revenues increased 41% year-over-year to $26 billion, and it reported an adjusted EPS of $0.86. Centene fell short of the consensus with $0.99 adjusted EPS. Both insurers affirmed their projections for the end of the year, with Humana forecasting adjusted EPS of $18.25 to $18.75 and Centene $4.56 to $4.76.

But both companies warned that the pandemic and recession presented substantial risk, and noted that utilization could spike in the latter half of 2020 due to pent-up demand. They also reported that utilization dropped toward the end of the first quarter, and anticipated the same result for the second.

Analysts were cautiously optimistic about both firms’ outlook for the rest of the year. “We believe that Humana boasts a compelling growth opportunity in the increasingly appealing [Medicare Advantage] market. Furthermore, the company also has an opportunity to drive margins given a potentially more favorable reimbursement environment and the maturation of its high-growth member base,” Oppenheimer’s Michael Wiederhorn wrote in an April 29 note.

Despite Centene’s seemingly less impressive results, analysts were positive or neutral about the firm’s first-quarter performance.

Windley wrote in an April 28 note regarding Centene that “we aren’t expecting ridiculously low 2Q [medical loss ratios] as management guards against an increase in utilization and claims severity. That said, the delay in procedures and incremental revenue from higher Medicaid/[health exchange] membership helps absorb new headwinds such as slower WellCare synergy capture, COVID-19 treatment costs, and adverse impacts on investment income/interest expense.”

Though Centene’s results were less robust than Humana’s, the company indicated it is in a strong position for the remainder of the year. The company has a large Medicaid managed care book, and Medicaid enrollment is certain to spike due to layoffs caused by the COVID-19 pandemic.

Radar On Market Access: Oncology Drugs Drive Price Growth in Medical-Benefit Spend

April 30, 2020

Spending on prescription drugs that are covered under the medical benefit increased by 65% between 2014 and 2018 for commercial insurers and 40% for Medicare, according to Magellan Rx Management’s annual Medical Pharmacy Trend Report.

Spending on prescription drugs that are covered under the medical benefit increased by 65% between 2014 and 2018 for commercial insurers and 40% for Medicare, according to Magellan Rx Management’s annual Medical Pharmacy Trend Report.

“The increase in medical pharmacy spend seems to largely be driven by inflation,” Kristen Reimers, Magellan’s senior vice president of specialty clinical solutions, tells AIS Health. “This can be a combination of two things, increasing costs of existing drugs and providers utilizing newer more expensive drugs. The pipeline was extremely robust and new therapies to market are contributing to inflation, driving the trend.”

According to the report, new oncology therapies are both emblematic and a primary driver of growth in drug prices. A new generation of highly effective, biologic oncology drugs have emerged in the last decade. However, these pioneering drugs are expensive. According to the report, oncology drugs and the drugs needed to support them accounted for 43% of per-patient per-month medical pharmacy spending for commercial carriers.

Like other biologic drugs, most biologic oncology drugs have yet to see significant biosimilar competition due to barriers in the biosimilar market and development pipeline.

“The most exciting biosimilars are those currently in the oncology space. Herceptin, Avastin and Rituxan have been the top five drugs in terms of spend for the last 10 years,” says Reimers. “Rituxan and Avastin now have two biosimilars on the market, and Herceptin has five marketed products. There will be competition, which will help to flatten the trend for these products, although there is still expected to be growth.”

Emerging competition could bolster the already-improving price outlook for more established biologic drugs. However, growth in oncology spending is not likely to stop any time soon. In some ways, this is good news for patients: according to Reimers and the Magellan report, promising new, targeted therapies for hard-to-treat cancers will account for much of the increased spending in coming years.

“The pipeline for oncology is extremely robust, with over 700 drugs being studied for a variety of different cancer types,” Reimers says.

Radar On Market Access: PBMs Say Use of Mental Health Meds Surges Amid COVID-19

April 28, 2020

Newly released data from Express Scripts shows that the number of prescriptions filled per week for antidepressants, anti-anxiety and anti-insomnia medications combined jumped 21% between mid-February and mid-March — reaching a zenith during the week ending March 15, when the COVID-19 outbreak officially reached pandemic status. And analytics from UnitedHealth Group’s OptumRx showed prescription increases of 15% for anti-anxiety medications, 14% for antidepressants and 5% for anti-insomnia medications during the month of March.

Newly released data from Express Scripts shows that the number of prescriptions filled per week for antidepressants, anti-anxiety and anti-insomnia medications combined jumped 21% between mid-February and mid-March — reaching a zenith during the week ending March 15, when the COVID-19 outbreak officially reached pandemic status. And analytics from UnitedHealth Group’s OptumRx showed prescription increases of 15% for anti-anxiety medications, 14% for antidepressants and 5% for anti-insomnia medications during the month of March.

Industry consultants tell AIS Health that they’re not at all surprised that the use of such medications is spiking. And they say that situation creates an urgent opportunity for companies that combine a health insurer with a PBM — like Express Scripts parent company Cigna Corp. and its peers — to leverage their unique insights into members’ health.

“Pharmacies are often the most utilized part of the benefit compared to medical or behavioral, but now, an increase in some pharmacy utilization can actually signal a need to use more of the behavioral benefit,” Peter Manoogian, principal at the health care consulting firm ZS Associates, tells AIS Health.

Rita Numerof, Ph.D., president and founder of the consulting firm Numerof & Associates, says health care organizations should conduct generalized outreach to members that stresses non-pharmaceutical coping mechanisms when appropriate. “Practical guidance, and not looking at this as a mental illness or a mental health issue, in the face of this kind of crisis, is really important,” she tells AIS Health.

For its part, UnitedHealth opened up an emotional support help line and is offering a free on-demand emotional support mobile app called Sanvello to help people “cope with stress, anxiety and depression during the COVID-19 pandemic,” according to a company spokesperson.

Express Scripts, meanwhile, is offering a “digital mental health platform” to its clients at no cost, which “enables members to build resilience and develop skills to better manage stress and sleep issues,” according to Rochelle Henderson, Ph.D., vice president of health services research at the PBM.

Radar On Market Access: Medicaid MCOs Are Likely to See COVID-Related Enrollment Growth

April 23, 2020

As the COVID-19 pandemic continues to dominate the news cycle, headlines related to rising unemployment often underscore the impact to Medicaid, but what about the Medicaid managed care organizations that will absorb the newly jobless and uninsured?

As the COVID-19 pandemic continues to dominate the news cycle, headlines related to rising unemployment often underscore the impact to Medicaid, but what about the Medicaid managed care organizations that will absorb the newly jobless and uninsured?

“I think that Medicaid MCOs are clearly in the best position to handle the influx of folks,” remarks Jerry Vitti, founder and CEO of Healthcare Financial, Inc. While onboarding a wave of new members may put some initial stress on plans, the real “strain” will come from covering new members who have unmet health care needs, he tells AIS Health.

Vitti says new enrollees will likely fall into one of two buckets. “One is the previously insured folks who had commercial insurance before they lost their job and have been in the health care system,” he observes. This is not likely to be a “super high-demand population.” But the second grouping, previously uninsured individuals who may end up enrolling as awareness goes up and barriers to enrollment go down, are likely to have “pent-up and untreated medical [needs] and substance use issues,” he predicts.

“I’m hearing from plans I’ve worked with that on both the MA and the Medicaid side…their [medical loss ratios] have dropped substantially,” says Jeff Myers, senior vice president, reimbursement strategy and market access with Catalyst Health Care Consulting. “And though I think their net income is certainly looking up, that means they’re busy strengthening their capital position for what they expect to be the next phase, which is a big enrollment spike on both the [Affordable Care Act] marketplace and Medicaid programs.”

Myers points out that this is usually the time when managed care rate negotiations would begin with states. “I think the challenge for the few state folks I’ve talked to is modeling out, in states with extensive managed care programs, what that influx of people is going to look like given what the unemployment rate may look like, and also given whether they’ve expanded [Medicaid] or not,” he adds.

For states whose budgets have been stretched thin by COVID-19 testing and presumptive eligibility determinations to guarantee payments to hospitals, the pandemic could be the driving factor in expanding Medicaid where a legislature has historically blocked it. Or it may result in states seeking to expand federal Medicaid funding rather than limit it through block grants, suggests Myers.

Radar On Market Access: Insurers Are Now Required to Cover Coronavirus Antibody Testing

April 21, 2020

With the Trump administration anxious to “reopen” the U.S. economy and ease the social-distancing measures meant to slow the spread of COVID-19, officials have pointed to antibody testing as a critical tool to accomplish those goals. To that end, the administration on April 11 issued a document clarifying that most private health plans must cover such tests, which detect antibodies against the new coronavirus found in the blood of people who have been infected and now may be immune.

With the Trump administration anxious to “reopen” the U.S. economy and ease the social-distancing measures meant to slow the spread of COVID-19, officials have pointed to antibody testing as a critical tool to accomplish those goals. To that end, the administration on April 11 issued a document clarifying that most private health plans must cover such tests, which detect antibodies against the new coronavirus found in the blood of people who have been infected and now may be immune.

“It’s not exactly a surprise, [but] I don’t know that it was 100% expected,” Jason Karcher, a Milliman Inc. actuary, tells AIS Health regarding the requirement. “It seems like as much a point of clarification rather than a ‘hey, we’re going to require something totally out of the blue.'”

So far, at least serological tests have received an Emergency Use Authorization from the FDA.

Cost information is not as readily available for serological tests as it is for tests that diagnose COVID-19, which cost around $51 until CMS increased the reimbursement rate for “high-throughput” diagnostic tests to $100. Cellex, which makes one of the antibody tests that received emergency authorization by the FDA, did not respond to an inquiry about the price of its test as of press time, but Vox reported that “a serological test can be less than $10.”

William Schaffner, M.D., a professor of preventive medicine and infectious diseases at Vanderbilt University, says there are good reasons to temper expectations about how testing people for COVID-19 antibodies could help the U.S. reopen businesses, schools and events.

Since the FDA is essentially allowing companies to do their own evaluation of serological tests’ effectiveness, that will naturally invite questions about whether their results can be trusted, Schaffner says, suggesting that some tests may be more rigorously evaluated than others. “Then there’s the question of availability of the tests — we’ve been down this road once before, where people were told that the nasal swab test for the virus itself would be widely available, and anybody can have it who wants it,” he says. “Well, we’re still struggling with that, and we would like not to repeat that fiasco.”

Radar On Market Access: Slow Biosimilar Adoption and Opaque Markets Impede Potential Savings

April 16, 2020

Biosimilar medications can offer meaningful cost savings for payers, but market and regulatory barriers are still preventing them from realizing their full economic potential, according to a March 31 Johns Hopkins University study funded by the ERISA Industry Committee.

Biosimilar medications can offer meaningful cost savings for payers, but market and regulatory barriers are still preventing them from realizing their full economic potential, according to a March 31 Johns Hopkins University study funded by the ERISA Industry Committee.

“We could see and empirically prove that patients…tended to be better off if they were on the biosimilar,” Mariana Socal, a physician and researcher at the Johns Hopkins Bloomberg School of Public Health and one of the study’s authors, tells AIS Health. “They had lower out-of-pocket costs when they were on the biosimilar.”

While 16 biosimilars have earned FDA approval, according to the report, most of those drugs are the only biosimilar in their category, creating a duopoly price structure rather than robust market competition with at least three drugs.

Per the report, multiple biosimilars have entered the market for only two drugs, Remicade (infliximab) and Neupogen (filgrastim). The report concludes that, in those categories, biosimilar competition has generated remarkable cost savings and has the potential to generate much more through increased biosimilar use.

Socal says she believes opaque markets are to blame for biologics’ limited impact on drug markets at scale.

“When we looked at [the study companies’] formularies and their utilization, we were surprised to see that even within the same company, they had such a remarkable diversity in terms of biosimilar market share, in terms of the prices they were paying, and how much biosimilars they were able to use,” Socal says. She adds that PBMs should do more to inform their clients about the potential savings from higher biosimilar use in formularies.

Steve Cutts, head of specialty pharmacy for the PBM Magellan Rx Management, says that Magellan makes an overt effort to tell clients about the potential price savings from biosimilars.

Cutts says that many biologics are administered through a medical benefit, rather than a pharmacy benefit. That claims structure could explain some of the limited visibility of biosimilar substitution opportunities for plan administrators designing formularies, and would require coordination with providers to be addressed.