Radar on Market Access

Radar On Market Access: New Administration’s Stance on Copay Accumulators Remains Unclear

March 30, 2021

Thanks to recent regulatory moves and the increasing prevalence of copay accumulator/maximizer programs, the tactics that payers use to counter drug manufacturer copay assistance continue to be a controversial topic in the health care sector, AIS Health reported.

Copay accumulators work by preventing any monetary assistance that pharmaceutical companies offer commercially insured patients from counting toward their deductible or out-of-pocket maximum. Their close cousin, copay maximizers, take the total amount of a manufacturer’s copay offset program and divide it by 12, and that amount becomes the new monthly copayment for all patients on any given drug over the course of a year.

Thanks to recent regulatory moves and the increasing prevalence of copay accumulator/maximizer programs, the tactics that payers use to counter drug manufacturer copay assistance continue to be a controversial topic in the health care sector, AIS Health reported.

Copay accumulators work by preventing any monetary assistance that pharmaceutical companies offer commercially insured patients from counting toward their deductible or out-of-pocket maximum. Their close cousin, copay maximizers, take the total amount of a manufacturer’s copay offset program and divide it by 12, and that amount becomes the new monthly copayment for all patients on any given drug over the course of a year.

From insurers’ perspective, the goal of copay accumulators/maximizers is to help steer patients toward lower-cost drugs. However, copay accumulator programs have been fiercely criticized by the pharmaceutical industry and patient advocates, who argue that they lead to higher costs for consumers and thus limit access to life-saving medications.

Data collected by AIS Health’s parent company, MMIT, show that copay accumulators and maximizers are gaining steam across the commercial insurance space. Of insurers covering a collective 127.5 million lives, 41% had implemented a copay accumulator program and 32% had implemented a copay maximizer program prior to 2020, and another 26% and 24%, respectively, implemented such programs in 2020.

Recent revisions to federal regulations may be contributing to the increasing prevalence of copay accumulators. In its Notice of Benefit and Payment Parameters (NBPP) for 2021, CMS allowed non-grandfathered group and individual market plans to use copay accumulator policies even when a generic equivalent to a drug isn’t available.

A Feb. 23 analysis from Avalere Health also pointed to a December 2020 rule aimed at facilitating value-based contracts for prescription drugs in Medicaid managed care, which “created new risks for manufacturers when copay accumulator or maximizers are applied to their products.”

“They’ve definitely introduced new uncertainties and complexities into the market,” Mark Gooding, a principal at Avalere and co-author of the report, says of the regulatory developments related to copay accumulators.

Both regulations were finalized under the Trump administration, and therefore could be revised by the Biden administration. According to Gooding, it’s not yet obvious what stance the administration will take. “It’ll be interesting to see; we are still getting a sense of how new leadership at HHS and CMS view the role of accumulators and the risk that they pose to patient access and affordability,” he says.

Radar On Market Access: Health Insurers May See Earnings Hit From COVID Vaccine Reimbursement Hike

March 25, 2021

CMS has significantly boosted the amount that Medicare will pay for administering COVID-19 vaccines, a move that appears to be a positive development for health care providers and retail pharmacies but a potential headwind for commercial health insurers, AIS Health reported.

Previously, the national average Medicare payment rate for administering single-dose vaccines was $28, but CMS on March 15 increased that to $40. For two-dose vaccines, the rate rose from $45 to $80.

CMS has significantly boosted the amount that Medicare will pay for administering COVID-19 vaccines, a move that appears to be a positive development for health care providers and retail pharmacies but a potential headwind for commercial health insurers, AIS Health reported.

Previously, the national average Medicare payment rate for administering single-dose vaccines was $28, but CMS on March 15 increased that to $40. For two-dose vaccines, the rate rose from $45 to $80.

Since the federal government has already purchased large quantities of the three FDA-authorized COVID-19 vaccines and distributed them free of charge to providers, neither public nor private health plans will have to absorb the cost of the vaccines themselves. But federal rules require non-grandfathered individual and group plans to pay both in and out-of-network providers a “reasonable rate” for administering the vaccines that references Medicare’s reimbursement rate as a guideline.

Given the increased Medicare payment rates for COVID vaccine administration, “CMS will expect commercial carriers to continue to ensure that their rates are reasonable in comparison to prevailing market rates,” the agency said in its March 15 press release.

In a March 16 note to investors, Credit Suisse analyst A.J. Rice deemed the heightened Medicare reimbursement rate for administering COVID vaccines a “modest headwind for commercial health plans.” He predicted a larger negative impact on “more heavily concentrated commercial plans” such as Anthem, Inc. and Centene Corp., and a smaller hit for government-focused insurers like Humana Inc. and for diversified firms including Cigna Corp., CVS Health Corp. (which owns Aetna) and UnitedHealth Group.

Health care providers, on the other hand, welcomed CMS’s move. In a statement, American Medical Association President Susan R. Bailey, M.D., wrote that “this has been a trying time for physician practices, and we thank the administration for acknowledging the challenges of practicing medicine during a pandemic.”

Companies with significant retail pharmacy holdings also stand to gain from CMS’s move. Citi analyst Ralph Giacobbe estimated in a March 16 research note that Medicare’s reimbursement increase could boost CVS Health’s earnings per share by approximately 39 cents and Walgreens Boots Alliance’s by about 52 cents.

Radar On Market Access: How Will Subsidy Expansion Impact ACA Marketplaces?

March 23, 2021

For an individual health insurance market that is already hitting its stride, the new pandemic relief legislation’s expansion of Affordable Care Act (ACA) subsidies is yet another positive catalyst that should make the exchanges more attractive to insurers and customers alike, experts tell AIS Health.

Under the American Rescue Plan, which President Joe Biden signed into law on March 11, individuals who already qualified for premium tax credits under the ACA will see more generous financial aid. In addition, people who earn more than 400% of the federal poverty level (FPL) will be eligible for reduced premiums for the first time thanks to a provision that caps marketplace premiums at 8.5% of all enrollees’ income.

For an individual health insurance market that is already hitting its stride, the new pandemic relief legislation’s expansion of Affordable Care Act (ACA) subsidies is yet another positive catalyst that should make the exchanges more attractive to insurers and customers alike, experts tell AIS Health.

Under the American Rescue Plan, which President Joe Biden signed into law on March 11, individuals who already qualified for premium tax credits under the ACA will see more generous financial aid. In addition, people who earn more than 400% of the federal poverty level (FPL) will be eligible for reduced premiums for the first time thanks to a provision that caps marketplace premiums at 8.5% of all enrollees’ income.

Fritz Busch, an actuary at Milliman, Inc., says the newly expanded ACA subsidies will likely bring even more people into the exchanges than the pandemic-related special enrollment period that started Feb. 15. And, “it’s generally agreed that more membership in the individual market means favorable morbidity,” so actuaries will need to figure out just what the impact of that will be, he adds.

Looking ahead to 2022, not only will the revamped subsidies bring more people into the marketplaces, but they will also likely change how people sort themselves among the different coverage tiers — and how insurers respond, Busch says.

“The higher subsidies go, the more likely it is going to be that someone is eligible for a free plan — particularly bronze plans, so there could be some movement towards bronze because of that,” he explains. Health insurers, then, “will want to make sure that they’re in position for [enrollees] to select their bronze plan as a free plan. If their bronze plans are too expensive, they’re not going to be free anymore.”

“We’ll also have an extensive increase of competition in marketplaces in 2022, ’23 and ’24,” says David Anderson, a research associate at the Duke-Margolis Center for Health Policy. He predicts that more insurers will enter the marketplaces and spread their footprints within states where they already operate.

With that increased competition, which will continue a trend already taking place on the exchanges, “the opportunity for monopoly pricing…is going down dramatically,” according to Anderson.

Radar On Market Access: Orphan Drug Act Has Been Overused, A New Study Shows

March 18, 2021

A new study published in Health Affairs found that spending in the orphan drug category is overwhelmingly concentrated on so-called partial orphan drugs, which have both orphan and nonorphan indications. The study affirms growing concerns across the health care industry that drugmakers are misusing the orphan drug designation and introducing unwarranted cost into the drug channel, AIS Health reported.

The Orphan Drug Act of 1983 covers diseases that affect fewer than 200,000 people in the U.S., plus diseases that affect more than 200,000 people but are so expensive to treat that companies developing and marketing such therapies are not expected to recover their costs. With the designation, the FDA grants drugmakers expanded intellectual property and commercial rights intended to offset these steep costs.

A new study published in Health Affairs found that spending in the orphan drug category is overwhelmingly concentrated on so-called partial orphan drugs, which have both orphan and nonorphan indications. The study affirms growing concerns across the health care industry that drugmakers are misusing the orphan drug designation and introducing unwarranted cost into the drug channel, AIS Health reported.

The Orphan Drug Act of 1983 covers diseases that affect fewer than 200,000 people in the U.S., plus diseases that affect more than 200,000 people but are so expensive to treat that companies developing and marketing such therapies are not expected to recover their costs. With the designation, the FDA grants drugmakers expanded intellectual property and commercial rights intended to offset these steep costs.

The new paper found that 70.7% of spending on drugs designated as orphan drugs went “to nonorphan indications,” and noted that in 2017, 25% of U.S. prescription drug spending was for orphan drugs.

Ge Bai, Ph.D., an associate professor at Johns Hopkins University’s Carey Business School and Bloomberg School of Public Health, asserts that the orphan drug designation is being abused by drug companies.

“They [orphan drugs] treat a small number of patients, but at the same time they can be used to treat much more common diseases. So they [drugmakers] can still charge a high price and take the tax credit, while at the same time enjoying their impressive commercial success,” Bai says.

Bai adds that drugmakers have become adept at coordinating outside pressure to convince the FDA to expand orphan drug designations beyond their intended purpose.

“We have so many patient advocacy groups — they are representing rare disease patients. And many of those advocacy groups are heavily sponsored by drug manufacturers,” Bai says. “You cannot just single out the drugs that are being most abused — because even those drugs do have orphan drug features….It’s very hard to disentangle.”

Similarly, Avalere Health’s Lilian Buch and David Kowalsky observed during a Feb. 26 podcast that the orphan drug advocacy work that manufacturers coordinate with patients does serve an important purpose and can improve patient outcomes on an individual basis. Kowalsky is director of the consulting firm’s commercialization and regulatory strategy practice, while Buch is an associate principal in the same practice.

Buch added that, for some rare disease patients with acute symptoms, drug manufacturers sometimes offer the kind of support services more often provided by plans or providers.

Radar On Market Access: Ohio Names New Medicaid PBM, Sues One of Current Vendors

March 16, 2021

Ohio recently cleared a key hurdle in its plan to revamp how Medicaid enrollees’ pharmacy benefits are managed, choosing Gainwell Technologies as the single PBM that will replace big-name firms including Cigna Corp.’s Express Scripts, CVS Heath Corp.’s Caremark, UnitedHealth Group’s OptumRx and Centene Corp.’s Envolve Pharmacy Solutions, AIS Health reported.

Although PBMs and insurers generally oppose state moves to carve out pharmacy benefits from their Medicaid managed care contracts, Ohio says it expects the new single-PBM approach will “drive transparency, reduce pharmacy costs and simplify provider administration.”

Ohio recently cleared a key hurdle in its plan to revamp how Medicaid enrollees’ pharmacy benefits are managed, choosing Gainwell Technologies as the single PBM that will replace big-name firms including Cigna Corp.’s Express Scripts, CVS Heath Corp.’s Caremark, UnitedHealth Group’s OptumRx and Centene Corp.’s Envolve Pharmacy Solutions, AIS Health reported.

Although PBMs and insurers generally oppose state moves to carve out pharmacy benefits from their Medicaid managed care contracts, Ohio says it expects the new single-PBM approach will “drive transparency, reduce pharmacy costs and simplify provider administration.”

“The main idea was to make sure that any PBMs that were serving the Ohio Medicaid managed care plans didn’t have conflicts of interest [and] weren’t steering business toward their sister companies — and also to save money for the state,” says Margaret Scott, an associate principal at Avalere Health who oversaw the Ohio Dept. of Medicaid’s pharmacy program until 2017.

Gainwell fits the bill in that it “doesn’t own any retail or specialty pharmacies; they don’t have any incentives to encourage members to go to one pharmacy or another or to use one drug or another. They’re free of any conflicts in that way,” Scott explains.

Ohio’s transition from multiple MCO-contracted PBMs to a single vendor is the culmination of a series of events in which the state publicly took PBMs to task for their business practices and decided to overhaul its entire Medicaid managed care program. In the most recent salvo, Ohio Attorney General Dave Yost (R) revealed on March 11 that the state is suing Centene Corp. “for an elaborate scheme to maximize company profits at the expense of the Ohio Department of Medicaid (ODM).” Centene, however, said the state’s claims are unfounded, and that Envolve Pharmacy Solutions “will aggressively defend the integrity of the pharmacy services provided to the State of Ohio.”

Ohio is not the only state to rethink how its Medicaid program interacts with PBMs. California and New York will effectively carve out pharmacy benefits from their managed care programs starting in April.

Such moves, Scott adds, are “part of a larger trend where states are taking more control of their pharmacy benefits — whether it’s doing it with a single PDL [prescription drug list] so that they’re maximizing their rebates and getting the lowest net cost on drugs, or it’s carving out pharmacy, or in other ways ensuring transparency in PBM contracts.”

Radar On Market Access: Cigna’s Evernorth to Acquire MDLive in Telehealth Expansion

March 11, 2021

Health insurers have begun to consolidate their position in the telehealth market, as indicated by a recent move by Cigna Corp. to acquire MDLive Inc. Meanwhile, lawmakers are beginning to consider the future of telehealth regulation and payment, AIS Health reported.

Cigna’s Evernorth health services arm announced on Feb. 26 that it had reached an agreement with MDLive to acquire the virtual care provider, according to MDLive’s website. MDLive has been available in-network as a primary care option to all members of Cigna’s commercial plans since January 2020.

Health insurers have begun to consolidate their position in the telehealth market, as indicated by a recent move by Cigna Corp. to acquire MDLive Inc. Meanwhile, lawmakers are beginning to consider the future of telehealth regulation and payment, AIS Health reported.

Cigna’s Evernorth health services arm announced on Feb. 26 that it had reached an agreement with MDLive to acquire the virtual care provider, according to MDLive’s website. MDLive has been available in-network as a primary care option to all members of Cigna’s commercial plans since January 2020.

Ashraf Shehata, national sector leader for health care and life sciences at KPMG, says he expects even more efforts by payers to offer telehealth benefits directly to members.

He adds that the COVID-19 pandemic has acted as an accelerant for telemedicine use. He expects patients will continue to demand telemedicine options even after the pandemic subsides, and that payers will see that demand as an opportunity to narrow the gap between themselves and members.

“We saw that with massive and immediate uptake of the platforms — all the platforms, I should say. Not only did [payers] use their existing platform relationships, but they added new platforms because demand is so high,” Shehata explains.

Shehata adds that robust, internal telemedicine options offer plans an opportunity to exercise leverage in negotiations with provider systems, which have sought to have virtual visits reimbursed at the same rate as traditional visits.

The payment equity question is central to the coming regulatory battle over telemedicine. Payer and plan sponsor lobbying groups will square off against providers in Congress over whether virtual visits should be reimbursed at the same rate as in-person visits. Early in the pandemic, the Trump administration mandated that Medicare must reimburse most telehealth visits at parity with traditional visits.

Also at issue is whether the full menu of services authorized in response to the pandemic will continue to be eligible for Medicare reimbursement. CMS expanded the types of services that could be delivered via telehealth to Medicare beneficiaries, temporarily adding 135 services. Unless Congress acts or the Biden administration issues new rules, the remaining expanded services will expire either at the end of 2021, or when the pandemic public health emergency ends.

In a March 2 hearing of the House Committee on Energy and Commerce’s Subcommittee on Health, legislators indicated that they are studying both issues.