Drug Benefits

Part D, Private Plan Spending Rises on Retail Specialty Drugs

December 11, 2020

Specialty drugs accounted for 37.7% of retail and mail-order prescription spending, net of rebates, in 2016 and 2017, according to a recent study published in Health Affairs. Average annual net spending on retail specialty drugs for Medicare Part D beneficiaries rose from $11.3 billion in 2010-2011 to $35.4 billion in 2016-2017. For private insurance enrollees, net spending increased from $24.6 billion to $57.6 billion during that time period. The growth in spending was partially driven by the increased use of retail specialty drugs — the proportion of people who obtained at least one specialty drug was 5.0% in 2016-2017, more than doubling the rate observed in 2010-2011. Meanwhile, the trend in Medicaid net spending was relatively flat.

by Jinghong Chen

Specialty drugs accounted for 37.7% of retail and mail-order prescription spending, net of rebates, in 2016 and 2017, according to a recent study published in Health Affairs. Average annual net spending on retail specialty drugs for Medicare Part D beneficiaries rose from $11.3 billion in 2010-2011 to $35.4 billion in 2016-2017. For private insurance enrollees, net spending increased from $24.6 billion to $57.6 billion during that time period. The growth in spending was partially driven by the increased use of retail specialty drugs — the proportion of people who obtained at least one specialty drug was 5.0% in 2016-2017, more than doubling the rate observed in 2010-2011. Meanwhile, the trend in Medicaid net spending was relatively flat.

NOTES: “Overall population” is the entire civilian noninstitutionalized population, which also includes people who are uninsured and people in other government programs. Total gross spending comprises payments to pharmacies by all payers, including out-of-pocket payments. Total drug rebates were paid by pharmaceutical manufacturers to pharmacy benefit managers and state Medicaid programs. Total net spending is gross spending minus rebates.

SOURCE: “Net Spending on Retail Specialty Drugs Grew Rapidly, Especially for Private Insurance and Medicare Part D,” Health Affairs 39, NO. 11 (2020): 1970–1976. Visit https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2019.01830.

Insurers Will Play Key Role in COVID Vaccine Distribution, Reimbursement

December 7, 2020

As details continue to emerge about the availability of COVID-19 vaccines and how they will be administered, the role that payers will play in the process is becoming clearer.

It’s imperative for health plans to do two key things at the same time, according to Katherine Dallow, M.D., the vice president of clinical programs and strategy at Blue Cross Blue Shield of Massachusetts. Payers need to help the entities that will be distributing the vaccine to identify the individuals who should be first in line to be vaccinated, and they need to use their resources to help educate the community.

By Brian Eastwood

As details continue to emerge about the availability of COVID-19 vaccines and how they will be administered, the role that payers will play in the process is becoming clearer.

It’s imperative for health plans to do two key things at the same time, according to Katherine Dallow, M.D., the vice president of clinical programs and strategy at Blue Cross Blue Shield of Massachusetts. Payers need to help the entities that will be distributing the vaccine to identify the individuals who should be first in line to be vaccinated, and they need to use their resources to help educate the community.

“We might be able to put a puzzle together that an individual provider or group may not have,” she said during a Nov. 18 National Institute for Health Care Management (NICHM) Foundation webinar. “Data from many sources should be used to ensure those who are most vulnerable are ID’d per federal and state guidelines. We can see where folks have seen three different doctors, used telehealth and gone to urgent care.”

In addition, health plans are more likely than providers to have better data about whether individuals have received each of their vaccine doses. That’s because states may expand the scope of the type of providers that can administer vaccines in an effort to broaden access.

While multiple vaccines appear ready to come to market, health plans do have some concerns. According to a recent Avalere Health survey of 39 U.S. health plans and one PBM, collectively representing about 48 million covered lives, the effectiveness of vaccines and therapeutics is the top COVID-19 concern for more than 47% of health plans.

For 25% of plans, their top concern is the cost of a vaccine. That said, 50% of payers expect to begin reimbursing for a COVID-19 vaccine within two months of authorization, and 78% expect to begin reimbursing in four months.

CMS released an Interim Final Rule with Comment Period on Oct. 28 requiring that all non-grandfathered individual and group private health plans cover a recommended COVID-19 vaccine and its administration, both in-network and out-of-network, with no cost sharing. The rule also says that “out-of-network rates cannot be unreasonably low,” and suggests as a reimbursement guideline the approved Medicare payment rate for a COVID-19 vaccine, which is $28.39 for a single dose and $16.94 for additional doses.

For PBMs, Amazon Pharmacy May Pose Only Indirect Threat

December 3, 2020

Amazon.com, Inc. made a splash in the health care world on Nov. 17 when the online retail powerhouse unveiled new pharmacy offerings that aim to disrupt the prescription drug market with increased convenience and savings.

In addition to setting up its own online pharmacy, Amazon is partnering with one of the three largest PBMs — Cigna Corp.’s Express Scripts — to offer a prescription-savings benefit that will be available to Amazon Prime members. “It can be used for discounts up to 80% off generic and 40% off brand name medications at over 50,000 participating pharmacies nationwide,” according to a press release.

By Leslie Small

Amazon.com, Inc. made a splash in the health care world on Nov. 17 when the online retail powerhouse unveiled new pharmacy offerings that aim to disrupt the prescription drug market with increased convenience and savings.

In addition to setting up its own online pharmacy, Amazon is partnering with one of the three largest PBMs — Cigna Corp.’s Express Scripts — to offer a prescription-savings benefit that will be available to Amazon Prime members. “It can be used for discounts up to 80% off generic and 40% off brand name medications at over 50,000 participating pharmacies nationwide,” according to a press release.

Notably, Amazon’s new service offers similar functionalities that health insurers, PBMs and major retail pharmacies have included in their prescription-drug shopping tools — but with the twist of making it clear to consumers when it might be cheaper to purchase their drugs without insurance.

To SVB Leerink analyst Stephen Tanal, that constitutes the only notable — and likely minimal — threat to PBMs’ business models.

“The way in which it could be potentially somewhat bad for PBMs is pretty indirect,” says Tanal. “It’s the idea that to the extent that Amazon is now going to be showing every Prime customer two prices for every pharmacy transaction they do with Amazon, it’s really going to highlight the disparities of the cost to you of any given drug if you use insurance or if you choose not to use insurance.”

“What I worry about a little on the margin is, if a lot of people, a lot of the time, for a lot of different drugs start to see that cash pay’s better than insurance, boy, that’s not going to help sentiment and people’s perceptions of insurers and PBMs,” he adds. If that happens, it could increase policymakers’ appetite to regulate PBMs, Tanal points out.

Still, Ashraf Shehata, KPMG’s national sector leader for health care and life sciences, says that payer-owned PBMs have an advantage that Amazon would be hard-pressed to replicate. “The broader value proposition is the drug spend in combination with the total medical spend,” he says, noting that employers, in particular, want to look at the whole picture when trying to keep down costs.

Datapoint: Samsung, AstraZeneca Abandon Rituxan Biosimilar Plans

November 30, 2020

Samsung Biologics and AstraZeneca earlier this month dissolved their joint venture, Archigen Biotech, citing lack of commercial viability. Archigen’s primary project was developing SAIT101, a biosimilar to Biogen’s Rituxan. The drug was currently in phase III trials for the treatment of follicular lymphoma. Under the pharmacy benefit, Rituxan currently holds preferred status for 4% of covered lives for the treatment of follicular lymphoma.

Samsung Biologics and AstraZeneca earlier this month dissolved their joint venture, Archigen Biotech, citing lack of commercial viability. Archigen’s primary project was developing SAIT101, a biosimilar to Biogen’s Rituxan. The drug was currently in phase III trials for the treatment of follicular lymphoma. Under the pharmacy benefit, Rituxan currently holds preferred status for 4% of covered lives for the treatment of follicular lymphoma.

SOURCE: MMIT Analytics, as of 11/23/20

Datapoint: Eli Lilly Scores Emergency Nod for Olumiant

November 25, 2020

The FDA last week granted emergency authorization to Eli Lilly’s rheumatoid arthritis drug Olumiant, in combination with Gilead’s Remdesivir, for the treatment of COVID-19. Lilly in September released trial data that showed the combo was found to reduce recovery time for hospitalized COVID-19 patients. Under the pharmacy benefit, Olumiant holds preferred status under the pharmacy benefit for just 14% of covered lives, with utilization management restrictions. The drug is not covered for 25% of all insured lives.

The FDA last week granted emergency authorization to Eli Lilly’s rheumatoid arthritis drug Olumiant, in combination with Gilead’s Remdesivir, for the treatment of COVID-19. Lilly in September released trial data that showed the combo was found to reduce recovery time for hospitalized COVID-19 patients. Under the pharmacy benefit, Olumiant holds preferred status under the pharmacy benefit for just 14% of covered lives, with utilization management restrictions. The drug is not covered for 25% of all insured lives.

SOURCE: MMIT Analytics, as of 11/23/20

Insurer-Affiliated PBMs Propel Parent Firms’ Revenues in Third Quarter

November 19, 2020

Large insurer-affiliated PBMs saw strong results for the third quarter of 2020, in several cases driving revenues for parent companies that are grappling with various disruptive effects of the coronavirus pandemic.

At CVS Health Corp., which reported earnings on Nov. 6, total revenues increased 3.5% year over year to $67 billion, and the company posted earnings per share (EPS) of $1.66, beating analysts’ estimates.

By Jane Anderson

Large insurer-affiliated PBMs saw strong results for the third quarter of 2020, in several cases driving revenues for parent companies that are grappling with various disruptive effects of the coronavirus pandemic.

At CVS Health Corp., which reported earnings on Nov. 6, total revenues increased 3.5% year over year to $67 billion, and the company posted earnings per share (EPS) of $1.66, beating analysts’ estimates.

“Our pharmacy services segment delivered double-digit operating income growth versus [the] prior year, reflecting strength in specialty along with favorable purchasing economics, and our 2021 [PBM] selling season is wrapping up quite nicely, with $3.3 billion of net new business,” President and CEO Larry Merlo said.

Still, SVB Leerink equities analyst Stephen Tanal said in a Nov. 6 investor note that CVS’s Caremark business remains at risk from state-level initiatives involving Medicaid pharmacy benefits.

Cigna Corp.’s new Evernorth segment, which includes the company’s Express Scripts PBM business, its Accredo specialty pharmacy division and its eviCore utilization management business, drove strong third-quarter earnings that beat analysts’ expectations.

Evernorth helped to boost Cigna’s overall revenues to $40.8 billion, said Citi analyst Ralph Giacobbe in a Nov. 5 investor note. Revenues for the Evernorth segment were $29.83 billion, a 20% increase year over year.

Evercore ISI analyst Michael Newshel said in a Nov. 5 investor note that Evernorth showed higher script volume and a slightly better margin than anticipated in the quarter, along with lower corporate expenses than expected.

UnitedHealth, which also handily beat analyst expectations with earnings of $3.51 per share, brought in $65.1 billion in the third quarter, representing an 8% increase year over year. However, the $3.51 adjusted EPS is a 10% drop from last year’s third-quarter earnings.

Health insurer Anthem, which has launched its own in-house PBM, IngenioRx, reported third-quarter adjusted EPS of $4.20, a decline of 14% year over year that reflected the company’s obligations to pay out its $594 million share of a recently settled lawsuit against Blue Cross and Blue Shield plans.

Anthem’s revenues increased by 15.9% year over year to $30.6 billion, which Chief Financial Officer John Gallina attributed largely to growth in the firm’s Medicare and Medicaid businesses, although he also gave a nod to “pharmacy revenue related to the launch of IngenioRx.”