Radar on Drug Benefits

Drug Pricing Legislation in the States: What to Expect in 2020

January 15, 2020

State lawmakers will continue to focus on the cost of prescription drugs as the 2020 legislative season gets underway, potentially advancing measures to require the disclosure of manufacturer drug pricing information and bills to limit or eliminate the role PBMs play in state Medicaid programs.

However, the abbreviated length of the election-year legislative sessions, plus some unexpected hiccups in states that already have passed bills on those issues, could limit how much actually gets done at the state level in 2020, legislative observers say.

State lawmakers will continue to focus on the cost of prescription drugs as the 2020 legislative season gets underway, potentially advancing measures to require the disclosure of manufacturer drug pricing information and bills to limit or eliminate the role PBMs play in state Medicaid programs.

However, the abbreviated length of the election-year legislative sessions, plus some unexpected hiccups in states that already have passed bills on those issues, could limit how much actually gets done at the state level in 2020, legislative observers say.

“We expect considerable action this year, but it is a short session in most states, which limits the number of bills that will be considered,” says Trish Riley, executive director of the National Academy for State Health Policy. “We expect to see bills that address prices, address price gouging [and] allow importation. Several states may advance bills to allow a buy-in to public programs and the ability to bulk purchase drugs.”

In recent years, state lawmakers have been looking into managed care programs and their drug spend, turning to their PBM contracts as a source of potential savings, says Matt Magner, director of state government affairs for the National Community Pharmacists Association. West Virginia, for example, decided in 2017 to carve out its pharmacy benefits from its Medicaid program, Magner says, noting, “they saved $54 million in the first year they did that.”

Still, the pace of state legislative action regarding PBMs may not be as brisk in 2020 as it was in 2019. Riley says that PBMs already have been the subject of considerable state action, so it’s not clear how many more states will consider bills on PBM issues in 2020. “We may see several more states eliminate or deeply regulate PBMs in Medicaid and develop more enforceable contracts to ensure discounts are passed through,” she says.

Drug pricing likely will stay in the news, says Jeff Myers, founder of OptDis, but he anticipates a slowdown in drug price transparency legislation, in part because states that have approved such legislation are running into roadblocks in implementation.

2020 Could Be ‘Wild Year’ for Consolidated PBMs

January 13, 2020

Though the two major transactions that upended the PBM landscape — Cigna Corp. buying Express Scripts Holding Co. and CVS Health Corp. acquiring Aetna Inc. — have already taken place, that doesn’t mean the sector won’t see more changes this year, industry experts tell AIS Health.

“The market is evolving,” says Brian Anderson, a principal with Milliman, Inc. The year 2020 will be marked by a presidential election and significant price pressure on manufacturers, along with pharmacies trying to retain their margin, he adds, “so it’s going to be a really wild year.”

By Leslie Small

Though the two major transactions that upended the PBM landscape — Cigna Corp. buying Express Scripts Holding Co. and CVS Health Corp. acquiring Aetna Inc. — have already taken place, that doesn’t mean the sector won’t see more changes this year, industry experts tell AIS Health.

“The market is evolving,” says Brian Anderson, a principal with Milliman, Inc. The year 2020 will be marked by a presidential election and significant price pressure on manufacturers, along with pharmacies trying to retain their margin, he adds, “so it’s going to be a really wild year.”

Indeed, 2019 ended with Prime Therapeutics LLC and Express Scripts unveiling a three-year collaboration in which the latter PBM will negotiate with pharmaceutical manufacturers, on behalf of Prime’s members, for drugs covered on the pharmacy benefit, as well as provide services related to retail network contracting.

By teaming up with Prime, Express Scripts will be leading rebate negotiations and pharmacy network development for 103 million people, Adam Fein, Ph.D., CEO of Pembroke Consulting, Inc.’s Drug Channels Institute, wrote in a blog post. “This combined volume of Express Scripts and Prime will have enormous leverage with manufacturers and pharmacies,” he noted.

To Ashraf Shehata, KPMG national sector leader for health care and life sciences, the Prime/Express Scripts partnership is yet another example of “pure play” PBMs’ move toward consolidation. Given that trend, the opportunity to scale up both organizations’ purchasing power, and “the ability to kind of lock in Blue clients,” Shehata says, “I think it makes a lot of sense” for the two PBMs to team up.

Employers, meanwhile, are likely to press PBMs of all varieties for innovative solutions — not just deep drug-pricing discounts — during the selling season for 2021 contracts, Anderson says.

Therefore, “there’ll probably be a lot of new innovators in the market — people coming up with new products that maybe look and sound different,” he says. “But the question people are going to have to ask is, how different really is it? And is it really a differentiator in the marketplace?”

New Sickle Cell Medications Offer Both Opportunities and Challenges

January 2, 2020

The first targeted therapy to treat pain crises in people with sickle cell disease presents a “welcome” new option that payers likely will embrace, a PBM head tells AIS Health. While the drug’s manufacturer cites “positive” early discussions with payers on it, some experts note the lifetime treatment — via a monthly intravenous infusion — is costly: around $100,000 annually.

By Judy Packer-Tursman

The first targeted therapy to treat pain crises in people with sickle cell disease presents a “welcome” new option that payers likely will embrace, a PBM head tells AIS Health. While the drug’s manufacturer cites “positive” early discussions with payers on it, some experts note the lifetime treatment — via a monthly intravenous infusion — is costly: around $100,000 annually.

On Nov. 15, the FDA approved Novartis’ Adakveo (crizanlizumab-tmca), a treatment to fight the underlying cause and reduce the frequency of vaso-occlusive crisis, described as a common and painful complication of sickle cell disease. It is approved for patients ages 16 and older with the genetic blood disorder.

Hydroxyurea, a drug approved by the FDA in 1998, is now generic, costs about $1,000 a year, and is approved for children, the New York Times reported on Dec. 7. The two newcomers are Adakveo and Global Blood Therapeutics’ Oxbryta (voxelotor), a daily pill granted accelerated approval by the FDA 10 days after Adakveo’s approval. This led one expert to tell the news outlet that insurers likely will want to begin with hydroxyurea as the front-line therapy.

Yet Mesfin Tegenu, R.Ph., president of PerformRx, LLC, says that “options for patients with sickle cell disease have been very limited up to this point, so the approval of Adakveo is a welcome addition in the treatment of this debilitating disease.”

Eric Althoff, a Novartis spokesperson, says the company anticipates that health plans will see a value proposition with Adakveo. “Early discussions with payers are positive,” Althoff says. “In fact, a number of payers have already added Adakveo to medical policy including state Medicaid [programs].” Florida and Alabama’s Medicaid programs have agreed to cover Adakveo, Reuters reported on Dec. 20.

Express Scripts, Prime Therapeutics Team Up to Boost Negotiating Clout

December 30, 2019

Major PBM Express Scripts is teaming up with Prime Therapeutics, a PBM owned by 18 Blue Cross and Blue Shield plans, in a deal that one analyst says should silence concerns that Express Scripts might lose health plan customers after being acquired by Cigna Corp.

Under the three-year agreement, Express Scripts “will provide services to Prime related to retail pharmacy network and pharmaceutical manufacturer contracts,” the companies said in a Dec. 19 press release. That means Express Scripts will now negotiate with pharmaceutical manufacturers on behalf of Prime’s 28 million members for drugs covered on the pharmacy benefit, in addition to its own 75 million customers.

By Leslie Small

Major PBM Express Scripts is teaming up with Prime Therapeutics, a PBM owned by 18 Blue Cross and Blue Shield plans, in a deal that one analyst says should silence concerns that Express Scripts might lose health plan customers after being acquired by Cigna Corp.

Under the three-year agreement, Express Scripts “will provide services to Prime related to retail pharmacy network and pharmaceutical manufacturer contracts,” the companies said in a Dec. 19 press release. That means Express Scripts will now negotiate with pharmaceutical manufacturers on behalf of Prime’s 28 million members for drugs covered on the pharmacy benefit, in addition to its own 75 million customers.

That arrangement will let Prime “essentially add to and tap into the purchasing power/scale of Express, ultimately allowing for greater rebates from manufacturers,” Citi Research analyst Ralph Giacobbe wrote in a Dec. 20 note to investors. The collaboration, he said, “represents a transparent…pass-through model as rebates are fully passed on to Prime,” while Prime can also tap into Express Scripts’ retail network, contracting with Cigna and collecting a fee for its services.

However, each company will continue to separately manage “certain relationships on the medical benefit” and value-based contracting, the press release said. The firms’ “other relationships with members, caregivers and key stakeholders” will also remain independent.

“While there are some financial benefits, we view this as a significant favorable development for Cigna and most important for sentiment as [Cigna’s] ability to retain health plan clients has certainly come into question following its combination with [Express Scripts], despite strong retention figures,” Giacobbe advised. “The announcement is clearly an indication of a large sophisticated customer acknowledging the value and benefit of partnering with [Cigna/Express Scripts].”

Patient-Reported Outcomes Play Key Role in New Multiple Sclerosis Value-Based Contract

December 19, 2019

Under a value-based contracting agreement believed to be the first of its kind, UPMC Health Plan will receive discounts for two Biogen Inc. multiple sclerosis (MS) drugs — Tecfidera (dimethyl fumarate) and Avonex (interferon beta-1a) — based on patient-reported measures of disability progression. The agreement is also based on research with a panel of key MS stakeholders who identified the most meaningful outcomes in relapsing forms of MS.

UPMC’s Center for Value-Based Pharmacy Initiatives led the research and developed the value-based contract.

By Sharon Bender

Under a value-based contracting agreement believed to be the first of its kind, UPMC Health Plan will receive discounts for two Biogen Inc. multiple sclerosis (MS) drugs — Tecfidera (dimethyl fumarate) and Avonex (interferon beta-1a) — based on patient-reported measures of disability progression. The agreement is also based on research with a panel of key MS stakeholders who identified the most meaningful outcomes in relapsing forms of MS.

UPMC’s Center for Value-Based Pharmacy Initiatives led the research and developed the value-based contract.

Previous value-based contracts for MS drugs have connected payment to outcome indicators derived from claims and electronic health record data, says Rochelle Henderson, Ph.D., Express Scripts’ vice president of research and a co-author of the study report.

“This research [gives] a greater level of transparency into the outcome indicators that rank the highest in terms of value for stakeholders,” she says. “The key advantage of patient-reported outcomes is that it gets at information that can be used to evaluate the success of a medication where that information is not available by traditional means.”

Similarly, Henderson says, many outcomes that are important to payers are not available in the electronic medical record. “What we learned is that stakeholders rated ‘worsening physical disability’ and ‘functional impairment’ as the most valuable indicators for providing information about the status of MS.”

Payer interest and participation in outcomes-based contracting with manufacturers continues to grow. “Based on our research and our discussions with stakeholders in health care, there are a number of organizations on the payer side who would like to go in this direction,” says Avalere Health’s John E. Linnehan, practice director of health economics and advanced analytics.

“Payers typically are looking for outcomes-based contracting in conditions with high prevalence, high costs, or both,” Linnehan says, adding that because the MS category includes new entrants and generics, it is a focus of interest for outcomes-based contracts.