Radar on Drug Benefits

New Nasal Spray Offers Hope for Depression Treatment, But Coverage May Be Tricky

March 20, 2019

Many clinicians have publicly expressed cautious optimism about the FDA’s recent approval of a nasal spray for major depressive disorder in adults who have been resistant to multiple other treatments. But payer issues abound for Spravato (esketamine), partly because the FDA is imposing strict parameters on its use due to safety concerns.

By Judy Packer-Tursman

Many clinicians have publicly expressed cautious optimism about the FDA’s recent approval of a nasal spray for major depressive disorder in adults who have been resistant to multiple other treatments. But payer issues abound for Spravato (esketamine), partly because the FDA is imposing strict parameters on its use due to safety concerns.

Esketamine is derived from ketamine, a general anesthetic first approved by the FDA in 1970. Similar to ketamine, Spravato is designated as a Schedule III controlled substance that may carry the risk of illicit use or diversion. In approving Spravato on March 5, The FDA said that the nasal spray cannot be taken at home. Instead, the patient must self-administer it under the supervision of a health care provider in a doctor’s office or clinic certified by the drug’s manufacturer — a distribution model that will further add to the cost of an already expensive treatment.

Typically, the cost of generics for antidepressants is “really inexpensive, less than $50 a month,” notes Dea Belazi, Pharm.D., president and CEO of AscellaHealth, a Berwyn, Pa.-based PBM. By comparison, the cost would mushroom into thousands of dollars monthly for Spravato.

Janssen’s nasal spray can work faster than other treatment options, with some antidepressants requiring four to six weeks of use to become effective, Belazi notes. “Some psychotherapists I’ve talked to see esketamine as a bridge while antidepressants kick in,” he says. However, “because of the price point, I’d guess 99% of payers will limit this to a treatment-resistant population.”

The bottom line is, “there’s a significant cost implication here for the payers,” Belazi says, “and most payers will want to calculate what the patient population could look like to estimate costs. The data aren’t very clear on that….At the end of the day, it’s a debilitating disease. But if it’s high cost, you’d likely be looking at other options.”

Soaring Insulin Prices Prompt Insurers to Take Action

March 18, 2019

Amid increasing public scrutiny of rising insulin prices, some health insurers are taking matters into their own hands to help their diabetic members afford the lifesaving medications.

At the integrated health system HealthPartners, the members who are hardest hit by rising insulin prices are those in high-deductible health plans, says Young Fried, vice president of pharmacy plan services. But she says insulin affordability is also an issue for Medicare members who are in the Part D “doughnut hole.”

By Leslie Small

Amid increasing public scrutiny of rising insulin prices, some health insurers are taking matters into their own hands to help their diabetic members afford the lifesaving medications.

At the integrated health system HealthPartners, the members who are hardest hit by rising insulin prices are those in high-deductible health plans, says Young Fried, vice president of pharmacy plan services. But she says insulin affordability is also an issue for Medicare members who are in the Part D “doughnut hole.”

One tactic that the organization’s health plan deploys to ease the burden on members is a policy called “plan pay the difference,” Fried says. If a brand drug becomes cheaper than the generic version after rebates, “we would actually have the member pay the generic copay instead of the brand, and then we would reimburse the pharmacy the brand cost, so that they’re made whole as well,” she says.

At Geisinger Health Plan, Medicare enrollees are the ones who have the most trouble paying for their insulin, according to Jamie Miller, the health plan’s system director of managed care pharmacy. Overall, Geisinger saw its spending in the diabetes drug class rise 13.8% between 2017 and 2018, she adds.

As Geisinger works out what it wants its Medicare benefit to look like in 2020, Miller says one goal is to make insulin more affordable for its senior members. Thus, the health plan is considering adding a sixth, “zero-dollar” tier to its Part D formulary where it would put insulin and select other drugs.

What Is Behind CVS Health’s LTC Woes?

March 6, 2019

Almost four years after CVS Health Corp. spent nearly $13 billion to acquire Omnicare, the long-term-care (LTC) pharmacy business attracted negative attention as a major contributor to “headwinds” in the company’s report on fourth quarter and full-year 2018 financial results.

For the quarter ended Dec. 31, CVS Health reported a net loss of $421 million on revenues that increased 12.5% to $54.4 billion year over year. Losses reflect $2.2 billion in quarterly and $6.1 billion in full-year 2018 “goodwill impairment charges” related to its LTC business, the company said.

By Judy Packer-Tursman

Almost four years after CVS Health Corp. spent nearly $13 billion to acquire Omnicare, the long-term-care (LTC) pharmacy business attracted negative attention as a major contributor to “headwinds” in the company’s report on fourth quarter and full-year 2018 financial results.

For the quarter ended Dec. 31, CVS Health reported a net loss of $421 million on revenues that increased 12.5% to $54.4 billion year over year. Losses reflect $2.2 billion in quarterly and $6.1 billion in full-year 2018 “goodwill impairment charges” related to its LTC business, the company said.

“The Omnicare deal made good strategic sense,” says Adam Fein, Ph.D., president of Pembroke Consulting, Inc. and CEO of Drug Channels Institute. “CVS gained a strong position in LTC [long-term care] while also augmenting its already significant specialty pharmacy business.”

“However,” Fein adds, “CVS Health has become a very complex and highly diverse organization. It has struggled against the smaller, nimble local competitors within the LTC industry.”
CVS Health blames “industrywide challenges” in LTC pharmacy as affecting its ability to grow the business at the rate originally estimated when it acquired Omnicare.

“These challenges include lower occupancy rates in skilled nursing facilities, significant deterioration in the financial health of numerous skilled nursing facility customers which resulted in a number of customer bankruptcies in 2018, and continued facility reimbursement pressures,” the company says.

As a result, a goodwill impairment charge of $3.9 billion was recorded during the second quarter of 2018, CVS Health said.

Diplomat Pharmacy Postpones Earnings Release Amid PBM Struggles

March 4, 2019

Diplomat Pharmacy Inc.’s stock value plummeted recently after the company said it would delay the release of its fourth-quarter and full-year earnings results — primarily because of difficulties with its PBM business.

Diplomat entered the PBM space in 2017 when it acquired National Pharmaceutical Services and LDI Integrated Pharmacy Services. The company disclosed in a Feb. 22 press release that it anticipates writing down a “significant portion” of its PBM business’ approximately $630 million in assets.

By Leslie Small

Diplomat Pharmacy Inc.’s stock value plummeted recently after the company said it would delay the release of its fourth-quarter and full-year earnings results — primarily because of difficulties with its PBM business.

Diplomat entered the PBM space in 2017 when it acquired National Pharmaceutical Services and LDI Integrated Pharmacy Services. The company disclosed in a Feb. 22 press release that it anticipates writing down a “significant portion” of its PBM business’ approximately $630 million in assets. It also said it is withdrawing its preliminary 2019 full-year earnings outlook, in part because it’s seen “additional customer losses in its PBM business since early January,” which combined with a “softer outlook for client wins and other factors” has led to a lower-than-expected outlook for its PBM business in 2019.

Asked why Diplomat’s PBM may be losing customers, William Sullivan, principal consultant at Specialty Pharmacy Solutions LLC, says part of the issue may be that pharmaceutical manufacturers are unsure “how things may shake out” regarding the newly proposed changes to the drug-rebate system. That could mean they want to stick with the “big players who will have the most impact on helping steer potential changes,” he says.

Another factor is the consolidation in the PBM industry — with Cigna Corp. now owning Express Scripts, UnitedHealth Group having its PBM OptumRx, and CVS Health Corp. owning both a PBM and health insurer Aetna Inc.

That “gives them even greater purchasing power which, reciprocally, makes it much harder for the smaller players to cut deals that enable them to be competitive with the big guys,” Sullivan says.

PBMs Raise Concerns on Part D Rebate Rule

February 20, 2019

Nearly two weeks after the Trump administration issued a proposed rule that would effectively overhaul the prescription drug rebate system, the dust has still not settled in the PBM sector as firms brace for a seismic shift in how they do business.

The proposed rule would remove safe-harbor protections under the federal anti-kickback statute for rebates paid by drug manufacturers to PBMs, Part D plans and Medicaid managed care organizations. It would also create two new safe harbors: one for prescription drug discounts offered directly to patients, and one for fixed-fee service arrangements between drug manufacturers and PBMs.

By Leslie Small

Nearly two weeks after the Trump administration issued a proposed rule that would effectively overhaul the prescription drug rebate system, the dust has still not settled in the PBM sector as firms brace for a seismic shift in how they do business.

The proposed rule would remove safe-harbor protections under the federal anti-kickback statute for rebates paid by drug manufacturers to PBMs, Part D plans and Medicaid managed care organizations. It would also create two new safe harbors: one for prescription drug discounts offered directly to patients, and one for fixed-fee service arrangements between drug manufacturers and PBMs.

If the rule is enacted, “the entire Part D and Managed Medicaid pharmacy management industry would have to change,” Mike Kolar, senior vice president and general counsel of Prime Therapeutics, LLC, tells AIS Health. “Prime, and other PBMs, will need to develop new tools and methods to continue to negotiate price on behalf of millions of members,” he adds.

Kolar adds that Prime is “concerned about the adverse economic impacts of the proposal,” as it could raise Medicare Part D premiums and government program costs.

Dea Belazi, president and CEO of specialty-pharmacy-focused PBM AscellaHealth, says the new proposal, if enacted, “is going to be a revenue hit” for his company, “because it is dollars that come in that will no longer come in if this goes through.” But it’s certainly not going to put the PBM out of business, he adds.