Datapoint: North Carolina Medicaid Transformation Set for Next Year

July 13, 2020

North Carolina Governor Roy Cooper (D) on July 2 signed a bill that will allow the state’s long-awaited Medicaid transformation to begin no later than July 2021. The bill mandates that the state must finally begin transitioning its Medicaid beneficiaries from the fee-for-service system to managed care plans, a move that was originally set to begin in November 2019, then delayed to February 2020, then stalled again after Republican legislators staged a budget standoff. North Carolina serves 2,286,807 Medicaid beneficiaries as of June 2020.

North Carolina Governor Roy Cooper (D) on July 2 signed a bill that will allow the state’s long-awaited Medicaid transformation to begin no later than July 2021. The bill mandates that the state must finally begin transitioning its Medicaid beneficiaries from the fee-for-service system to managed care plans, a move that was originally set to begin in November 2019, then delayed to February 2020, then stalled again after Republican legislators staged a budget standoff. North Carolina serves 2,286,807 Medicaid beneficiaries as of June 2020.

Source: AIS’s Directory of Health Plans

New Vertical Merger Guidelines Offer Little Clarity for Health Care Firms

July 13, 2020

On June 30, the Trump administration released the first major update to regulators’ guidance on vertical mergers and acquisitions since 1984.

In the new guidelines, the Federal Trade Commission and Dept. of Justice pointed out that there are “distinct considerations” unique to vertical mergers, relative to horizontal deals, that require separate guidance. “For example, vertical mergers often benefit consumers through the elimination of double marginalization, which tends to lessen the risks of competitive harm.”

By Leslie Small

On June 30, the Trump administration released the first major update to regulators’ guidance on vertical mergers and acquisitions since 1984.

In the new guidelines, the Federal Trade Commission and Dept. of Justice pointed out that there are “distinct considerations” unique to vertical mergers, relative to horizontal deals, that require separate guidance. “For example, vertical mergers often benefit consumers through the elimination of double marginalization, which tends to lessen the risks of competitive harm.”

But FTC commissioner Rohit Chopra — who voted against the new guidelines alongside fellow commissioner Rebecca Slaughter — wrote in a dissenting statement that it is short-sighted to “assume that a merger’s impact on competition can be measured by weighing the likely occurrence of certain abusive conduct against the potential for efficiencies that lower consumer prices.” This “balancing theory,” he argued, “doesn’t capture the ways that vertical mergers can restructure the market to make it difficult or impossible for other companies to compete with a merged firm.”

The administration’s new guidelines do comport with how regulators have typically viewed different types of transactions — with more scrutiny reserved for horizontal deals than vertical ones. For instance, the DOJ successfully blocked Aetna Inc. from purchasing Humana Inc. and Anthem, Inc. from buying Cigna Corp. (both horizontal deals) but allowed the CVS Health Corp./Aetna and Cigna/Express Scripts deals to close with few or no conditions.

When it comes to vertical transactions, “the law here is very undeveloped,” so in that sense the new guidelines are potentially important, says David Balto, a Washington, D.C.-based antitrust attorney. But Balto says that “they just don’t elaborate competitive concerns in here as well as they should have.”

Legal considerations aside, the new guidelines might influence the health care industry’s business strategies, according to Avalere Health consultant Tim Epple.

“I think it sort of brings into sharp focus what exactly has been happening with the insurers as they acquire the various PBM, pharmacy [and] other partners downstream,” he says. “I think it probably pushes them to acquire smaller platforms or more tech-enabled platforms that plug into their existing offerings, as compared to really purchasing more market share like they’ve done through some of the mergers or large scale acquisitions.”

People on the Move

July 10, 2020

With More Than 75% of the Market, Top 10 MA-PD Payers Enroll Most Members in Highly Rated Plans

July 10, 2020

As of CMS’s May 2020 data release, the top 10 Medicare Advantage Prescription Drug payers combined enrolled 76.3% of the national MA-PD market, with 81.4% of their combined 18.7 million lives enrolled in a contract with an overall star rating of 4 stars or higher. Kaiser Permanente’s seven regional insurance subsidiaries remain on top of the pack, with 94.3% of their members enrolled in a 5-star contract. Only one of the top 10 payers, WellCare Health Plans Inc., had any of its contracts score below a 3 overall. See the full ratings and enrollment distribution for the top 10 MA-PD insurers below.

by Carina Belles

As of CMS’s May 2020 data release, the top 10 Medicare Advantage Prescription Drug payers combined enrolled 76.3% of the national MA-PD market, with 81.4% of their combined 18.7 million lives enrolled in a contract with an overall star rating of 4 stars or higher. Kaiser Permanente’s seven regional insurance subsidiaries remain on top of the pack, with 94.3% of their members enrolled in a 5-star contract. Only one of the top 10 payers, WellCare Health Plans Inc., had any of its contracts score below a 3 overall. See the full ratings and enrollment distribution for the top 10 MA-PD insurers below.

NOTES: The above lives distribution does not include enrollment data from contracts that were too new to be rated, or did not have enough data available to measure a star rating. Centene Corp. completed its acquisition of WellCare Health Plans, Inc. in January 2020.

SOURCE: CMS; DHP, AIS’s Directory of Health Plans. See the full 2020 star ratings release here: https://go.cms.gov/1VM3k0Z.

Datapoint: Novartis Loses Another Shot at Enbrel Biosimilar

July 9, 2020

Amgen has successfully fought off Novartis’ Enbrel biosimilar, Erelzi, following a U.S. Federal Appeals Court decision that upheld an earlier ruling in favor of Amgen’s intellectual property. Novartis is considering a further appeal to the U.S. Supreme Court. For the treatment of rheumatoid arthritis under the pharmacy benefit, Enbrel currently holds preferred status for just 5% of covered lives, but this grows to 48% after prior authorization and/or step therapy. Enbrel is classified as a specialty drug for 27% of covered lives.

Amgen has successfully fought off Novartis’ Enbrel biosimilar, Erelzi, following a U.S. Federal Appeals Court decision that upheld an earlier ruling in favor of Amgen’s intellectual property. Novartis is considering a further appeal to the U.S. Supreme Court. For the treatment of rheumatoid arthritis under the pharmacy benefit, Enbrel currently holds preferred status for just 5% of covered lives, but this grows to 48% after prior authorization and/or step therapy. Enbrel is classified as a specialty drug for 27% of covered lives.

SOURCE: MMIT Analytics, as of 7/8/20