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.”

Datapoint: BCBS Vermont to Revamp Drug Benefit

November 18, 2020

Blue Cross and Blue Shield of Vermont last week revealed it will revamp its entire drug benefit under a new consumer-focused, tech-driven platform. The initiative, Vermont Blue Rx, is set to launch in July 2021. In a press release, the insurer said it has selected a new pharmacy benefits manager to implement the program, but did not disclose which org it chose. BCBS Vermont will continue working with its current PBM, Express Scripts, through June 2021. The insurer is currently the largest in Vermont, serving 171,086 members.

Blue Cross and Blue Shield of Vermont last week revealed it will revamp its entire drug benefit under a new consumer-focused, tech-driven platform. The initiative, Vermont Blue Rx, is set to launch in July 2021. In a press release, the insurer said it has selected a new pharmacy benefits manager to implement the program, but did not disclose which org it chose. BCBS Vermont will continue working with its current PBM, Express Scripts, through June 2021. The insurer is currently the largest in Vermont, serving 171,086 members.

Source: AIS’s Directory of Health Plans

Pharmacies Can’t Ignore Amazon Drug Threat

November 18, 2020

Amazon.com, the boogeyman of retail, is stalking pharmacies now. Shareholders are rightly spooked.

The retail giant said Tuesday that customers can buy prescription medications through a new store on its platform. Members of its Prime service will receive two-day shipping on all medications ordered through the pharmacy at no charge. Amazon said that patients would have access to discounts negotiated by industry middlemen….

Amazon.com, the boogeyman of retail, is stalking pharmacies now. Shareholders are rightly spooked.

The retail giant said Tuesday that customers can buy prescription medications through a new store on its platform. Members of its Prime service will receive two-day shipping on all medications ordered through the pharmacy at no charge. Amazon said that patients would have access to discounts negotiated by industry middlemen….

Read the full The Wall Street Journal article

What You Need to Know About the Moderna and Pfizer Coronavirus Vaccines

November 18, 2020

The vaccines are made by different companies: One is being developed by pharmaceutical giant Pfizer and its German partner, BioNTech, and the other by biotechnology firm Moderna, in partnership with the National Institute of Allergy and Infectious Diseases. Both drugmakers have moved at record speed and will seek regulatory clearance for their vaccines in the coming weeks.

Why is the FDA using emergency powers to approve a vaccine?

The vaccines are made by different companies: One is being developed by pharmaceutical giant Pfizer and its German partner, BioNTech, and the other by biotechnology firm Moderna, in partnership with the National Institute of Allergy and Infectious Diseases. Both drugmakers have moved at record speed and will seek regulatory clearance for their vaccines in the coming weeks.

Why is the FDA using emergency powers to approve a vaccine?

The FDA has emergency authority to issue temporary approvals of medical products to get them to the public more quickly during public health emergencies. Such authorizations require less data and can be done more rapidly than full approvals. Since February, the FDA has used this power to authorize hundreds of coronavirus tests and a few treatments. But it has authorized a vaccine that way only once in its history — in 2005, against anthrax — and that was under sharply different circumstances….

Read the full The Washington Post article

States May Expand Drug Price Review Boards to Curb Costs

November 18, 2020

In response to rising drug prices, some states have launched prescription drug review boards designed to make medicines more affordable. So far, the boards control prices mainly for states’ Medicaid and state employee plans, but some states are considering whether to set up panels that would also work to set upper payment limits for prescription drugs in commercial insurance.

A new report by Manatt found that 17 states so far have implemented or introduced legislation for boards that exercise some influence on drug prices, primarily in state Medicaid plans and commercial plans in which the state government is the plan sponsor. The report found that six states — Maine, Maryland, Massachusetts, New Hampshire, New York and Ohio — have such boards in place.

By Peter Johnson

In response to rising drug prices, some states have launched prescription drug review boards designed to make medicines more affordable. So far, the boards control prices mainly for states’ Medicaid and state employee plans, but some states are considering whether to set up panels that would also work to set upper payment limits for prescription drugs in commercial insurance.

A new report by Manatt found that 17 states so far have implemented or introduced legislation for boards that exercise some influence on drug prices, primarily in state Medicaid plans and commercial plans in which the state government is the plan sponsor. The report found that six states — Maine, Maryland, Massachusetts, New Hampshire, New York and Ohio — have such boards in place.

Jeff Myers, senior vice president for market access and reimbursement strategies at Catalyst Health Care Consulting, says that the drug-affordability boards have had a mixed impact on prices so far.

“They have had an impact, but generally on classes where there are several products from which to choose,” Myers tells AIS Health via email. “Smaller classes without significant overlap on labels for competing products are generally less successful.”

Sandy Robinson, the author of the Manatt report and a managing director at the firm, says drug manufacturers have raised concerns that the boards will make previously confidential pricing information public. However, she emphasizes that the figures arrived at by the boards are not rebates or commercial agreements.

She observes that most of the state boards have limited impact on drug prices in the commercial market, since they manage costs for state-controlled plans.

However, that could be changing. Trish Riley, executive director of the National Academy for State Health Policy (NASHP), says some states have begun to pursue drug-affordability boards that would operate in the commercial market. NASHP originated the idea for commercial prescription drug rate-setting boards and has drafted model legislation for the concept.

“Ours is not a rebate model, nor is it a pricing model,” Riley tells AIS Health. “Drug[makers] say, ‘This is the price, pay it.’ So what [our policy] does is say, ‘Nope, we’re going to set a payment limit within the state that commercial payers will pay.’”

Datapoint: BCBS North Carolina to Add Rural-Focused ACO to Value-Based Care Initiative

November 17, 2020

Blue Cross and Blue Shield of North Carolina on Oct. 29 said it is partnering with Caravan Health to enhance its Blue Premier value-based care network, creating a new ACO for rural hospitals and providers. In a press release, the insurer pointed to challenges rural providers face when adopting value-based care practices that it intends to tackle by using Caravan’s solutions to bridge the technology gap. The Blue Premier program is one of the largest moves toward value-based care ever made by a commercial insurer. Blue Cross NC in August said Blue Premier generated $153 million in savings since its January 2019 launch, and about 52% of its 2,595,509 members see a participating provider.

Blue Cross and Blue Shield of North Carolina on Oct. 29 said it is partnering with Caravan Health to enhance its Blue Premier value-based care network, creating a new ACO for rural hospitals and providers. In a press release, the insurer pointed to challenges rural providers face when adopting value-based care practices that it intends to tackle by using Caravan’s solutions to bridge the technology gap. The Blue Premier program is one of the largest moves toward value-based care ever made by a commercial insurer. Blue Cross NC in August said Blue Premier generated $153 million in savings since its January 2019 launch, and about 52% of its 2,595,509 members see a participating provider.

Source: AIS’s Directory of Health Plans

With Strong Data on Two Covid-19 Vaccines, We Have More Answers About the Road Ahead — and Questions Too

November 17, 2020

The success of a second vaccine against Covid-19 means the world is a big step closer to curbing the coronavirus pandemic.

Moderna, joined by U.S. government scientists, announced Monday that their mRNA vaccine candidate was 94.5% effective in preventing Covid-19, the disease caused by the novel coronavirus, according to an interim analysis of a 30,000-patient clinical trial. The news comes exactly one week after Pfizer and BioNTech said their respective Covid-19 vaccine candidate, also created using mRNA technology, was more than 90% effective in its own 60,000-patient clinical trial.

The success of a second vaccine against Covid-19 means the world is a big step closer to curbing the coronavirus pandemic.

Moderna, joined by U.S. government scientists, announced Monday that their mRNA vaccine candidate was 94.5% effective in preventing Covid-19, the disease caused by the novel coronavirus, according to an interim analysis of a 30,000-patient clinical trial. The news comes exactly one week after Pfizer and BioNTech said their respective Covid-19 vaccine candidate, also created using mRNA technology, was more than 90% effective in its own 60,000-patient clinical trial.

Here’s what we know — and still need to learn — about the two most advanced Covid-19 vaccines and how they might reshape the pandemic that has killed 1.3 million people worldwide and infected at least 54.5 million….

Read the full Stat article

Focus on Standing Signals Supreme Court Won’t Nix ACA

November 17, 2020

Although a constitutional challenge to the Affordable Care Act (ACA) has been winding its way through the court system for more than two years, the Supreme Court during a Nov. 10 hearing appeared highly skeptical that the case has much merit.

The suit California v. Texas was first brought by a Texas-led coalition of conservative states in 2018. It argues that the ACA’s individual mandate — which compels people to purchase health insurance — is unconstitutional because Congress removed the mandate’s tax penalty via a budget bill in 2017. And if that mandate is unconstitutional, the suit claims, so is the rest of the law.

By Leslie Small

Although a constitutional challenge to the Affordable Care Act (ACA) has been winding its way through the court system for more than two years, the Supreme Court during a Nov. 10 hearing appeared highly skeptical that the case has much merit.

The suit California v. Texas was first brought by a Texas-led coalition of conservative states in 2018. It argues that the ACA’s individual mandate — which compels people to purchase health insurance — is unconstitutional because Congress removed the mandate’s tax penalty via a budget bill in 2017. And if that mandate is unconstitutional, the suit claims, so is the rest of the law.

In interviews with AIS Health following the Nov. 10 oral arguments, experts say they were intrigued to find that a significant portion of justices’ questions centered on whether the Texas-led coalition of states even had the right to bring its lawsuit — a legal question known as standing.

Joel Ario, managing director of Manatt Health, points out that justices seemed to favor the term “inoperative provision” when describing the mandate — meaning they were skeptical that states could be harmed by a requirement that carried no penalty for noncompliance.

“I think ultimately, given the tenor of the questions, they will find [that the states have] standing, but the bulk of the argument was discussing the standing issue,” says Bill Jordan, a partner and co-leader of Alston & Bird’s Health Care Litigation Group. “So we’ve been describing it to clients as, ‘expect the decision to kind of be a nothingburger. The Affordable Care Act will survive and we’ll go on.’”

Even if the court rules that the states have standing to sue and agrees that the individual mandate is unconstitutional, both Ario and Jordan say they expect the rest of the ACA to remain intact, citing the fact that right-leaning Justice Brett Kavanaugh and Chief Justice John Roberts expressed skepticism about the mandate being inseverable from the rest of the law.

Citi analyst Ralph Giacobbe noted that health care stocks rose following the hearing, an unsurprising outcome since “this case would clear a big hurdle in being the ‘last’ overhang for the sector among recent headlines/fears.” Still, “we acknowledge that oral arguments are not a perfect indicator of how the justices may eventually rule,” Giacobbe added.

Datapoint: Premera Blue Cross Blue Shield of Alaska to Issue COVID-19 Premium Credits

November 16, 2020

Premera Blue Cross Blue Shield of Alaska will issue $1.7 million in premium credits to its individual plan members, spurred by the COVID-19 crisis. The credits will apply to the November billing cycle. Premera Blue Cross currently serves 113,793 lives in Alaska, making it the largest insurer in the state. 11.8% of its members are enrolled in individual plans.

Premera Blue Cross Blue Shield of Alaska will issue $1.7 million in premium credits to its individual plan members, spurred by the COVID-19 crisis. The credits will apply to the November billing cycle. Premera Blue Cross currently serves 113,793 lives in Alaska, making it the largest insurer in the state. 11.8% of its members are enrolled in individual plans.

Source: AIS’s Directory of Health Plans

Biden Administration’s Drug-Pricing Moves May Be Limited

November 16, 2020

As is the case for other flavors of health care reform, President-elect Joe Biden’s chance of passing substantial, transformative drug-pricing legislation is now highly dependent upon whether Democrats can eke out a majority in the Senate. While that question won’t be resolved until Georgia completes runoff elections in January, industry observers point out that there are still ways that a Biden administration can address drug pricing.

“A president can do a lot even with a divided Congress,” says Stephanie Kennan, a member of McGuireWoods Consulting’s federal public affairs group. “Part of how well something gets done…depends upon the skills of the president or those negotiating for him. With Biden perhaps having a better understanding of the Senate, having come from the Senate, [that] might help him.”

By Leslie Small

As is the case for other flavors of health care reform, President-elect Joe Biden’s chance of passing substantial, transformative drug-pricing legislation is now highly dependent upon whether Democrats can eke out a majority in the Senate. While that question won’t be resolved until Georgia completes runoff elections in January, industry observers point out that there are still ways that a Biden administration can address drug pricing.

“A president can do a lot even with a divided Congress,” says Stephanie Kennan, a member of McGuireWoods Consulting’s federal public affairs group. “Part of how well something gets done…depends upon the skills of the president or those negotiating for him. With Biden perhaps having a better understanding of the Senate, having come from the Senate, [that] might help him.”

During a webinar held on Nov. 5, Avalere Health experts highlighted restructuring the Medicare Part D benefit as an area of potential bipartisan compromise. “I see something like that packaged with the health care extenders that’ll need to move in 2021,” said Chris Sloan, an associate principal at the consulting firm.

Yet Kathryn Bakich, the National Health Compliance Practice Leader at Segal, says that adding an out-of-pocket cost cap in Part D could raise some concerns from employers. “The problem with that is for employer-sponsored plans that have a Part D program, that could make the value of that program less to them,” she says.

In a Nov. 3 note to investors, Leerink SVB analyst Geoffrey Porges pointed out that using regulatory authority to rein in drug prices won’t have as large of an impact as legislation would. “Drug pricing mechanisms implemented via executive order are likely to be limited to a small class of higher-priced drugs within Medicare and Medicaid, with expansion to the commercial side requiring congressional action,” he wrote.

Porges also argued that regardless of who is in charge of the federal government, “the PBM system is likely to remain a target of future reforms.”

Going forward, it’s likely that “lawmakers will focus on the incentives governing formulary decisions and rebates in considering drug pricing reform, although the vehicle for this change is highly uncertain,” he wrote.