Radar on Drug Benefits

Evernorth Drug Trend Report Highlights Pandemic’s Impact on Utilization

April 12, 2021

In the 2020 Drug Trend Report recently released by Evernorth, the Cigna Corp. division added yet another chapter to the growing volume of data detailing the profound effects that the COVID-19 pandemic has had on health care.

On the one hand, the massive amount of deferred routine and elective health care utilization had a dampening effect on the number of new medication users that Evernorth — which houses the PBM Express Scripts — recorded in 2020. New users of asthma/COPD medications dropped the most, by 7.1% year over year, likely reflecting the avoidance of clinical settings among a group that is at particular risk of contracting severe COVID-19.

NOTE: The abstract below is a shortened version of the RADAR on Drug Benefits article “Evernorth Drug Trend Report Shows Varied Pandemic Impacts.”

By Leslie Small

In the 2020 Drug Trend Report recently released by Evernorth, the Cigna Corp. division added yet another chapter to the growing volume of data detailing the profound effects that the COVID-19 pandemic has had on health care.

On the one hand, the massive amount of deferred routine and elective health care utilization had a dampening effect on the number of new medication users that Evernorth — which houses the PBM Express Scripts — recorded in 2020. New users of asthma/COPD medications dropped the most, by 7.1% year over year, likely reflecting the avoidance of clinical settings among a group that is at particular risk of contracting severe COVID-19.

Yet for commercial plans managed by Evernorth, the overall drug utilization trend increased by 3.1%, compared with just 1.4% in 2019.

“We saw higher utilization of prescription drugs to treat mental health issues associated with the pandemic — anxiety, insomnia, and depression,” says Evernorth Chief Innovation Officer Glen Stettin, M.D. “Among people with previously diagnosed and common chronic conditions, such as diabetes, high blood pressure and heart disease, many of which are risk factors for hospitalization and death from COVID-19, we also saw an increase in utilization. This utilization was driven by higher medication adherence, itself a result of more people choosing to fill their medication for 90 day vs. 30 day supplies, and the convenience and safety of having their medication delivered to their homes.”

The overall use of diabetes drugs, for example, increased by 7.4%, while utilization of asthma/COPD medications and anticoagulants each ticked up by 6.6%. To respond to the rising demand, Evernorth said it ordered significantly more albuterol.

Similarly, “when we saw spikes in prescriptions for treating COVID-19 inappropriately with hydroxychloroquine, we worked to protect the supply for people who truly needed it to treat rheumatoid arthritis and lupus,” the report said.

Evernorth’s report also included statistics that are typical of drug trend reports in more normal years. The Cigna division reported 4% total trend across its commercial plans, 3% trend in Medicare, 1.4% in Medicaid and 5.5% in health insurance exchange plans.

“Adverse selection likely played a small part in driving higher trend for health exchange plans,” the report suggested. “Of the top five classes, four are driven primarily by specialty medications, and the difference in prevalence rates among these classes compared to commercial plans is very small.”

PBM Regulation, Rebate Rule Are High on Legislative Agenda

March 31, 2021

As a new bill introduced by Sen. Bernie Sanders (I-VT) indicates, Congress is once again looking seriously at tackling drug pricing reform. D.C. insiders say that Democrats could pursue big changes to PBM regulation and Medicare’s ability to negotiate drug prices.

Also, Congress could repeal the Trump administration’s so-called “rebate rule,” which would have removed safe-harbor protections under the federal anti-kickback statute for rebates paid by drug manufacturers to PBMs and Medicare Part D plans.

NOTE: The abstract below is a shortened version of the RADAR on Drug Benefits article “PBM and Part D Reform Could Be on Legislative Agenda.”

By Peter Johnson

As a new bill introduced by Sen. Bernie Sanders (I-VT) indicates, Congress is once again looking seriously at tackling drug pricing reform. D.C. insiders say that Democrats could pursue big changes to PBM regulation and Medicare’s ability to negotiate drug prices.

Also, Congress could repeal the Trump administration’s so-called “rebate rule,” which would have removed safe-harbor protections under the federal anti-kickback statute for rebates paid by drug manufacturers to PBMs and Medicare Part D plans.

Each of H.R. 3 , the new bill from Sanders, and a Senate bill sponsored by Sens. Chuck Grassley (R-Iowa) and Ron Wyden (D-Ore.) would implement out-of-pocket spending caps for Part D beneficiaries and considerably change how costs are divided up in the catastrophic phase of coverage. In each bill, Medicare would pay less, enrollees would pay nothing, and manufacturers and plan sponsors would pay more in the catastrophic coverage phase. H.R. 3 also would mandate more drug price transparency from manufacturers, allow HHS to negotiate prices for covered drugs, and set the maximum price for a drug at 120% of the average of prices in Australia, Canada, France, Germany, Japan and the United Kingdom.

Dan Mendelson, founder of Avalere Health, says that lowering drug prices is a popular policy.

“They need to pass something if they do it at all, because next year it’s going to be the run-up to the [2022 midterm] election,” Mendelson observes. “What sits on the other side of that is that these laws are exceedingly difficult to pass. I think there’s…an intensified support for the pharmaceutical industry given their incredible performance in getting these COVID vaccines to market so quickly. And they are a force of nature when it comes to lobbying, so…it’s likely that this stuff will get tempered a lot.”

Further complicating matters is Democrats’ narrow majority in the Senate. A standalone drug reform bill is unlikely to garner support from enough members of the upper chamber.

As the American Rescue Plan was passed through the budget reconciliation process, eliminating the rebate rule is likely to be part of the next package. The rebate rule would be costly but hasn’t actually been implemented, so eliminating it would create a massive savings on paper without the political cost that would come from cutting a real program of similar scale.

New Administration’s Stance on Copay Accumulators Remains Unclear

March 29, 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.

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.

NOTE: The abstract below is a shortened version of the RADAR on Drug Benefits article “How Will Biden Administration Handle Copay Accumulators?

By Leslie Small

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.

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.

Orphan Drug Act Has Been Overused, A New Study Shows

March 17, 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.

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.

NOTE: The abstract below is a shortened version of the RADAR on Drug Benefits article “Researchers Argue Orphan Drug Designation Has Been Overused.”

By Peter Johnson

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.

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.

Ohio Names New Medicaid PBM, Sues One of Current Vendors

March 15, 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.

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.”

NOTE: The abstract below is a shortened version of the RADAR on Drug Benefits article “Meet Ohio’s New Single PBM for Medicaid Beneficiaries.”

By Leslie Small

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.

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.”