Radar on Drug Benefits

New Part D Regulation Stirs Speculation About Rebate Safe-Harbor Rule

December 18, 2018

Since mid-July, a proposed rule has been languishing at the Office of Management and Budget that could remove the safe-harbor protections that shelter the rebates drugmakers give to PBMs from penalties under the federal antikickback statute.

In the meantime, CMS on Nov. 26 released another rule that could essentially force Medicare Part D plans to pass all types of price concessions negotiated with pharmacies onto consumers at the point of sale. The introduction of the new Part D rule, which also seeks to revamp the protected classes of drugs and make other Part D changes, led to renewed speculation about the status of the administration’s safe-harbor rebate rule.

By Leslie Small

Since mid-July, a proposed rule has been languishing at the Office of Management and Budget that could remove the safe-harbor protections that shelter the rebates drugmakers give to PBMs from penalties under the federal antikickback statute.

In the meantime, CMS on Nov. 26 released another rule that could essentially force Medicare Part D plans to pass all types of price concessions negotiated with pharmacies onto consumers at the point of sale. The introduction of the new Part D rule, which also seeks to revamp the protected classes of drugs and make other Part D changes, led to renewed speculation about the status of the administration’s safe-harbor rebate rule.

Miryam Frieder, a vice president at Avalere, says the new Part D rule is not in opposition to the regulation still being reviewed, “but it kind of could be seen as complementary.”

But the fact that the safe-harbor rebate rule has been stuck in the review process since July 18 “to me indicates there’s a lot of discussion going on about this,” says Larry Kocot, a principal at KPMG and national leader of its Center for Healthcare Regulatory Insight.

One of the major questions the administration has to grapple with is whether it actually has the authority to remove prescription-drug rebates’ exemption from the federal antikickback statute, he says. In addition, the administration will have to figure out how to actually go about removing safe-harbor protections for rebates and replacing the current system with a new one.

The way the Citi analysts see it, removing the safe-harbor protection for drug rebates, in isolation, would have a muted impact. “While the market has focused on PBM-negotiated rebates as the chief driver contributing to drug price inflation, the PBM industry has moved over the last 3 years to reduce rebate retention to <5% as indicated in recent CVS [Health Corp.] and [Express Scripts Holding Co.] disclosures,” they wrote in a research note.

Medication Adherence Star Measures Trip Up Part D Plans

December 3, 2018

Both stand-alone Medicare Prescription Drug Plans and Medicare Advantage prescription drug (MA-PD) plans struggled this year with star rating measures for medication adherence and comprehensive medication review. But while MA-PD plans continued to make some progress on those measures, PDP plans fell shorter, in part because they don’t have the same financial incentives to improve, analysts say.

By Jane Anderson

Both stand-alone Medicare Prescription Drug Plans and Medicare Advantage prescription drug (MA-PD) plans struggled this year with star rating measures for medication adherence and comprehensive medication review. But while MA-PD plans continued to make some progress on those measures, PDP plans fell shorter, in part because they don’t have the same financial incentives to improve, analysts say.

PDPs struggled with all three medication adherence measures: Medication Adherence for Diabetes Medications, Medication Adherence for Hypertension (RAS antagonists) and Medication Adherence for Cholesterol (Statins).

Meanwhile, MA-PDs had trouble on the new Statin Use in Persons with Diabetes, MTM Completion Rate, and two of the medication adherence measures (for hypertension and cholesterol).

Still, MA-PDs eked out some improvement, says Melissa Smith, senior vice president of sales, marketing, strategy and stars for Gorman Health Group. “In MA-PD, the national average for these four measures continued rising in the 2019 ratings. The continuously rising performance impacts cutpoints — which are determined after the performance period ends. That always presents challenges to plans.”

MA-PDs have a powerful financial incentive to improve their performance on star measures, says Cary Badger, principal at HealthScape Advisors, LLC, in Chicago. “Plans on the PDP side don’t have that” since they don’t earn star-related bonuses, he says.

Integrated health plans such as Kaiser Permanente’s MA-PD plans tend to do well on Part D measures, Badger says, because their integrated nature allows them to closely track prescription habits and use peer review to influence those habits. “They’re just better at it because they are doing it in one constant workflow,” he adds.

But stand-alone Part D plans don’t have that type of influence over prescribers, Badger notes. Therefore, they wind up trying to influence patient behavior at the pharmacy window, he says. “Some of the work we’re doing is to provide real-time feedback to the doctors as to what patients are filling — what kind of adherence they’re getting,” he says.

Meanwhile, PDPs can incorporate that information into an augmented peer review process to try to influence prescriber behavior, imitating the systems set up for fully integrated health plans, Badger says.

Count on Trump Admin, not Congress, for Drug-Price Action

November 27, 2018

In the wake of the 2018 midterm elections — which handed Democrats control of the House of Representatives — President Trump said he hoped to work with lawmakers on the other side of the aisle to lower the cost of prescription drugs. Some industry analysts, though, are skeptical that sentiment will be enough to enact meaningful change, at least on the legislative front.

By Leslie Small

In the wake of the 2018 midterm elections — which handed Democrats control of the House of Representatives — President Trump said he hoped to work with lawmakers on the other side of the aisle to lower the cost of prescription drugs. Some industry analysts, though, are skeptical that sentiment will be enough to enact meaningful change, at least on the legislative front.

“A Democratic House might have an interest in working with President Trump to pass legislation calling for drug re-importation or direct negotiation, both of which the President has expressed interest in,” Credit Suisse’s A.J. Rice wrote in a note to investors. “The issue, however, would be that the Senate is highly unlikely to have any interest in moving legislation relating to re-importation or direct government negotiation over drug prices, which makes legislation highly unlikely.”

One notable development is that Sen. Chuck Grassley (R-Iowa) — who is largely seen as amenable to drug-pricing reform — is poised to take the helm of the key Senate Finance Committee, says Julius Hobson, a senior policy adviser in the Washington, D.C., office of law firm Polsinelli.

Still, “we’re probably going to end up with whole a lot of ‘kumbaya, we’d like to do this,’ but I would not be surprised in the end if they’re not able to get there,” Hobson says.

Some Wall Street analysts predicted that HHS, rather than Congress, will be the most active on the drug-pricing front.

“We do not believe we will see any fundamental shift on drug pricing given the Trump Administration has been very active through executive action (e.g., Secretary Azar’s Part B proposal and possible rebate elimination),” Leerink analyst Ana Gupte wrote in a research note. “We expect to see continued aggressive negotiation tactics from the Trump administration to rein in drug prices.”

Either way, any action on drug-pricing reform is likely to fall into three main buckets, according to Ashraf Shehata, a principal at KPMG’s life science advisory practice. Those are:

  • Increasing pricing and contract transparency to reduce Medicare drug spending;
  • Addressing ”egregious pricing” for medicines that affect public health and safety; and
  • Promoting innovation and R&D, with the goal of getting more drugs — and thus more competition — into the market.

New Biosimilars Help Crohn’s Cost, but Boost Oversight Needs

November 26, 2018

New biosimilars for Janssen Biotech, Inc.’s Remicade (infliximab) have helped to moderate costs for Crohn’s disease as they’ve launched over the last two years, but plans still rely on utilization management strategies, including site-of-service programs, to keep the cost of treating the condition under control, experts say.

By Jane Anderson

New biosimilars for Janssen Biotech, Inc.’s Remicade (infliximab) have helped to moderate costs for Crohn’s disease as they’ve launched over the last two years, but plans still rely on utilization management strategies, including site-of-service programs, to keep the cost of treating the condition under control, experts say.

Additional biosimilars — notably, three biosimilars for AbbVie Inc.’s Humira (adalimumab) — eventually will enter the marketplace as well, but the Humira biosimilars currently are mired in patent litigation and likely won’t launch until 2023, says April Kunze, Pharm.D., senior director, clinical formulary development and trend management strategy at Prime Therapeutics LLC.

Even though biosimilars don’t reduce the cost of care as much as generics, “more competition has led to decreases in costs,” Kunze says. Immunomodulator biosimilars Inflectra (infliximab-dyyb) and Renflexis (infliximab-abda) both have launched over the last two years in the U.S. — Pfizer Inc.’s Inflectra in late 2016 and Merck & Co. Inc.’s Renflexis in mid-2017.

Biologics represent the biggest slice of Crohn’s drug costs. Most of the non-biologic agents have generic equivalents available, while the biologics are dominated by brand name products, even though over the past year or so, infliximab biosimilars have introduced competition to Remicade, says Beckie Fenrick, Pharm.D., senior partner-consulting, RemedyOne.

Plans employ utilization management to ensure appropriate drug use — “the right drug for the right patient based on clinical guidelines,” Kunze says. “Selection of formulary agents will depend on their guideline recommendations, cost and utilization.”

Mesfin Tegenu, R.Ph., president of PerformRx, notes that prior authorization is required for the anti-TNF inhibitors and biologic products, and that generics are available for some of the products. Meanwhile, he adds, rebates traditionally have been used to reduce unit cost for expensive brand name products, which then lowers overall costs.

Fenrick says that in addition to prior authorization and care management, plans also may employ site-of-service strategies for the infused products, ensuring members have access to the medications in the most cost-effective sites.

Finally, “payers are looking at indication-based contracts, given that many of the biologics have a variety of indications with varying levels of clinical efficacy,” Kunze says.

FDA’s OK of Opioid Makes ‘Diversion of Even One Tablet’ Risky

November 15, 2018

By Judy Packer-Tursman

When a highly potent new opioid formulation was approved by his agency on Nov. 2, FDA Commissioner Scott Gottlieb, M.D., downplayed safety concerns about AcelRx’s Dsuvia. He stressed the importance of the painkiller for military use and the “very tight restrictions being placed on the distribution and use of this product.”

In general, PBM and health plan experts say such restrictions likely will hold and keep the drug within its proper niche,

By Judy Packer-Tursman

When a highly potent new opioid formulation was approved by his agency on Nov. 2, FDA Commissioner Scott Gottlieb, M.D., downplayed safety concerns about AcelRx’s Dsuvia. He stressed the importance of the painkiller for military use and the “very tight restrictions being placed on the distribution and use of this product.”

In general, PBM and health plan experts say such restrictions likely will hold and keep the drug within its proper niche, and the regulatory green light for Dsuvia shouldn’t interfere with broad ongoing efforts to better manage opioid use in the U.S.

Dsuvia is a sublingual formulation of an established drug, sufentanil, that is delivered through a disposable, pre-filled, single-dose applicator. It’s seen as ideally suited for certain special circumstances where patients may not be able to swallow oral medication, and where access to intravenous pain relief is not possible, including its potential use on the battlefield. Gottlieb notes that this opioid formulation, along with Dsuvia’s delivery device, was “a priority medical product” for the Pentagon because it fills a specific, though limited, unmet medical need.

“A single-dose applicator could potentially prevent abuse due to the complexity of removing it [i.e., the medication] from the applicator,” says Mesfin Tegenu, R.Ph., president of PerformRx, LLC. “However, because it is 10 times more potent than fentanyl and 1,000 times more potent than morphine, the diversion of even one tablet can be risky.”

Tegenu adds that restricting the sites where Dsuvia can be administered “is a good step in preventing misuse. However, there is no guarantee that such a diversion will not occur and contribute to the opioid crisis.”

Yet Sharon Jhawar, Pharm.D., chief pharmacy officer for SCAN Health Plan, doesn’t anticipate a significant problem with diversion of the strong medication.

“Our perspective on Dsuvia is it’s been approved only in specific health care settings by someone who is medically trained, and is really for severe, acute pain in which other opioids would not be enough,” she says. “And because of the requirement of the setting and who needs to give it, this isn’t a medication you’re going to see insurers have on their formulary.”