Radar on Drug Benefits

Trump’s Drug Importation Plan Faces Significant Hurdles

August 13, 2019

Amid an ongoing outcry against rising drug costs, the Trump administration recently introduced two importation pathways to reduce what U.S. residents pay for drugs.

Under the Safe Importation Action Plan, the first pathway would allow states, wholesalers and pharmacists to propose to HHS demonstration projects for importing certain drugs from Canada. Under the second pathway, drug manufacturers could import non-U.S. countries’ versions of their drugs into the United States.

By Aine Cryts

Amid an ongoing outcry against rising drug costs, the Trump administration recently introduced two importation pathways to reduce what U.S. residents pay for drugs.

Under the Safe Importation Action Plan, the first pathway would allow states, wholesalers and pharmacists to propose to HHS demonstration projects for importing certain drugs from Canada. Under the second pathway, drug manufacturers could import non-U.S. countries’ versions of their drugs into the United States.

What do health plan executives need to worry about with these two pathways? Not much, at least not in the next couple of years, according to Jigar Thakkar, Pharm.D., a managing director at FTI Consulting.

“There are so many hurdles that this isn’t something that’s going to happen tomorrow or in the next year or two,” Thakkar says. The hurdles include passage of legislation to allow biologics such as insulin to be imported and the ability of drugs imported from other countries to be tracked via FDA-TRACK, the FDA’s agency-wide performance system that monitors drugs during their journey from manufacturer to distributors to pharmacies.

Another significant hurdle is pushback from interest groups in Canada. Bloomberg News reported that the Canadian Medical Association and 14 other groups sent a letter to Canada Health Minister Ginette Petitpas Taylor protesting the Trump administration’s moves.

Deb Devereaux, senior vice president of pharmacy at Gorman Health Group, isn’t optimistic about the success of the first pathway where drugs would be imported to the United States from Canada. “The bottom line is the Canadian drug supply would be exhausted in 16 months with all the U.S. states trying to avail themselves of Canadian drugs,” she says.

PBMs Offer High-Touch Care Management for Chronic Conditions

August 12, 2019

Though PBMs are most known for the influence they have on prescription drug costs, some firms are increasingly focused on offering high-touch condition management services that give them a more active role in patient care.

For specialty PBM AscellaHealth, LLC, that means harnessing a variety of resources to help better manage treatment for hemophilia, a notoriously expensive disease state.

By Leslie Small

Though PBMs are most known for the influence they have on prescription drug costs, some firms are increasingly focused on offering high-touch condition management services that give them a more active role in patient care.

For specialty PBM AscellaHealth, LLC, that means harnessing a variety of resources to help better manage treatment for hemophilia, a notoriously expensive disease state.

Not only does the PBM leverage its specialty pharmacy network to obtain the best prices for hemophilia clotting factor, but it also uses technology to monitor medication dispensing in real time and provides clinical interventions when necessary, explains Mike Baldzicki, AscellaHealth’s executive vice president of growth and strategy.

“Managing cost and quality kind of go hand in hand in this regard,” adds Dea Belazi, the PBM’s CEO.

Meanwhile, CVS Health Corp. is expanding its Transform Diabetes Care program, which helps members of its PBM, Caremark, control their diabetes by providing technology-enabled, personalized support and coaching focused on improving medication adherence and controlling blood-sugar levels. As part of the expansion, the program will also focus on the prevention and early identification of diabetes as well as hypertension, which is twice as common in diabetes patients as the regular population.

While care-management programs are hardly a new concept in the health care industry, “the new part, I would say, is putting the PBM at kind of the center of these programs,” says Ashraf Shehata, a principal in KPMG’s health care life sciences advisory practice and the firm’s Global Healthcare Center of Excellence.

In the PBM space, firms are increasingly integrating traditional medication therapy management with connected medical devices “to help create a much more visible data and information stream around people’s ability to successfully accomplish their medication regimen,” he says.

Congress Eyes Measures That Could Affect PBMs

August 1, 2019

Now that the Trump administration has abandoned its bid to overhaul the Medicare Part D drug rebate system, all eyes are on what Congress will do to address the ever-vexing problem of high drug prices.

While some ideas lawmakers are considering could be very problematic for PBMs, industry analysts are dubious about their prospects. Other less-drastic changes, though, could make it into law.

By Leslie Small

Now that the Trump administration has abandoned its bid to overhaul the Medicare Part D drug rebate system, all eyes are on what Congress will do to address the ever-vexing problem of high drug prices.

While some ideas lawmakers are considering could be very problematic for PBMs, industry analysts are dubious about their prospects. Other less-drastic changes, though, could make it into law.

“The bottom line is [that] the most hurtful, the most damaging proposals, at least looking at it from a PBM perspective, we do not think that they will pass,” says Ji Liu, an analyst for the credit rating firm Standard & Poor’s (S&P). Liu and his colleagues recently released a report that analyzes how a handful of health care reform proposals might affect PBMs’ creditworthiness.

One proposal discussed in the report that has since become a more concrete possibility is a package of drug-pricing reforms from the Senate Finance Committee, which includes provisions that put inflation caps on Medicare Part D and Part B prices.

“Depending on how the maximum allowable inflation limit is set, we could see some modest pressure for PBMs,” which generally benefit from higher branded drug inflation because part of their revenue is tied to the list price, S&P’s report says.

In addition to the inflation caps and a slew of other provisions, the Senate Finance Committee’s drug-pricing bill would implement an out-of-pocket spending cap in Part D.

Alex Shekhdar, founder of Sycamore Creek Healthcare Advisors, says it makes sense for Congress to enact a policy that directly affects consumers’ out-of-pocket drug costs.

“Whatever policy comes to pass will focus on changing the price point that the consumer experiences,” he says, adding, “it’s a simpler lift that gets a lot of political gain.”

Will Blockchain Technology Transform the PBM-Payer-Pharmacy Relationship?

July 29, 2019

Industry consultants from Milliman Inc. assert in a July 11 report that blockchain — which is described as a real-time digital ledger for building secure networks — “could potentially transform the relationship between payers, pharmaceutical manufacturers, wholesalers, and pharmacies by offering an alternative, transparent mechanism for processing, pricing, and validating prescription transactions.”

By Judy Packer-Tursman

Industry consultants from Milliman Inc. assert in a July 11 report that blockchain — which is described as a real-time digital ledger for building secure networks — “could potentially transform the relationship between payers, pharmaceutical manufacturers, wholesalers, and pharmacies by offering an alternative, transparent mechanism for processing, pricing, and validating prescription transactions.”

Using blockchain technology, payers and pharmacies would reduce the time they spend validating insurance coverage, making phone calls and managing data, Milliman explains. The firm is urging PBMs to work to “evaluate a blockchain alternative now with an eye toward a more efficient drug financing system” capable of handling additional technology improvements.

“We’re just trying to get people thinking outside the box, and I believe blockchain has applications with supply chain management, claim-processing and transparency to the consumer,” says Brian Anderson, a principal for Milliman and co-author of the blockchain paper.

In the Milliman report, Anderson and his colleagues, Gregory Callahan and Michael DiPrima, note the current electronic approach to processing pharmacy claims is a sometimes opaque, centralized database management system managed by the PBM.

By contrast, blockchain’s database management system model would be decentralized. Milliman explains that means a distributed network of “nodes” would validate all transactions and would store data throughout the distributed network rather than in a centralized server.

The Milliman consultants conclude blockchain technology “appears to hold great promise for the PBM marketplace.” But they concede there are obstacles to overcome, explaining that while blockchain has shown great potential for security in cryptocurrency, its true potential in health care has not yet been evaluated.

In Medicare Part D, Generic Drugs May Not Always Be Cheaper

July 17, 2019

A recently published study in Health Affairs shines a light on a peculiar quirk of the Medicare Part D benefit structure: For some high-priced specialty medications, seniors might pay less out-of-pocket for brand-name drugs than their generic counterparts.

The study found that, assuming a 61% discount between brand-name and generic drugs, Part D beneficiaries with prescriptions costing between $22,000 and $80,000 per year would have lower out-of-pocket spending if they use brand-name drugs over a generic.

By Leslie Small

A recently published study in Health Affairs shines a light on a peculiar quirk of the Medicare Part D benefit structure: For some high-priced specialty medications, seniors might pay less out-of-pocket for brand-name drugs than their generic counterparts.

The study found that, assuming a 61% discount between brand-name and generic drugs, Part D beneficiaries with prescriptions costing between $22,000 and $80,000 per year would have lower out-of-pocket spending if they use brand-name drugs over a generic.

“That’s really frustrating for consumers because you may actually not be in a plan that allows you to switch to a branded drug” if it’s cheaper than the generic, says Stacie Dusetzina, one of the study authors and an associate professor at Vanderbilt University.

“The other practical thing is, that would a terrible thing for us to be trying to get people to do because generally we want to encourage people to use generic drugs because they’re the best deal for us as a society,” she says.

Sharon Jhawar, chief pharmacy officer at California-based SCAN Health Plan, points out that because most generic prescriptions filled by seniors are not pricey specialty ones, “this kind of nuance that’s happening [with the Part D benefit] is kind of narrow and limited in scope.”

“But we know that the specialty pipeline is robust,” and so taking a look at the problem and figuring out solutions “does make sense,” she says.

However, well-intentioned policy changes don’t always turn out as planned, notes Kelly Brantley, a managing director at Avalere.

“Part D is so complicated, it’s hard to know what sort of fixes drive other quote-unquote problems,” she says.