Radar on Drug Benefits

CVS Health, Cigna Tout Benefits of PBM-Insurer Integration

November 20, 2019

Cigna Corp. and CVS Health Corp. — organizations that both recently combined a PBM and a health insurance business — are striving to prove to investors that they’re seeing valuable benefits from such vertical consolidation.

Executives from CVS, which purchased Aetna Inc. in late 2018, during the company’s third-quarter 2019 earnings call said that having such a diversified enterprise is helping it win over PBM clients for its Caremark division.

By Leslie Small

Cigna Corp. and CVS Health Corp. — organizations that both recently combined a PBM and a health insurance business — are striving to prove to investors that they’re seeing valuable benefits from such vertical consolidation.

Executives from CVS, which purchased Aetna Inc. in late 2018, during the company’s third-quarter 2019 earnings call said that having such a diversified enterprise is helping it win over PBM clients for its Caremark division.

For the 2020 PBM selling season, “our focus was to go to market with a more integrated medical-pharmacy offering,” said Karen Lynch, CVS Health executive vice president and Aetna president, according to a transcript of the call from Thomson Reuters. To that end, she noted that Caremark saw “increased traction in overall pharmacy penetration” for its employer-sponsored business, particularly among Aetna’s existing medical-benefits clients.

While CVS has won $4.9 billion in gross new business during the 2020 PBM selling season, — up from the $3.8 billion that it previously projected — “net new business is projected to be down -$6.4B overall (vs. -$7.4B previously),” due to the loss of Centene Corp.’s business and other non-renewals, Citi Research analyst Ralph Giacobbe wrote in a Nov. 6 note.

Cigna, which purchased Express Scripts Holding Co. in 2018, said a major driver of its better-than-expected quarterly financial results was the performance of its health services segment, which includes its PBM business. That book of business reported pretax operating earnings of $1.4 billion, which beat Wall Street’s consensus of $1.36 billion and far surpassed the $67 million it earned in the third quarter of 2018 — before Cigna’s purchase of Express Scripts closed.

“We were most encouraged by the PBM earnings step-up, increasing confidence [Cigna] will achieve its 2019 [earnings] target,” Jefferies analysts wrote in an Oct. 31 research note. Cigna raised its 2019 earnings per share estimate to a range of $16.80 to $17.00.

Independent Pharmacies Push Bill to Increase Access to Part D Preferred Networks

November 18, 2019

In the Medicare Part D market in 2020, preferred cost-sharing pharmacy networks continue to be king. But because independent pharmacies often find themselves shut out of such arrangements, recently introduced legislation is seeking to change that dynamic.

“The Part D plans have fully adopted preferred networks over the last few years,” says Adam Fein, Ph.D., president of Pembroke Consulting, Inc., and CEO of Drug Channels Institute. “The [retail] chains obviously have some different strategies but are looking for the foot traffic” that comes from offering lower cost sharing as part of a preferred network.

By Leslie Small

In the Medicare Part D market in 2020, preferred cost-sharing pharmacy networks continue to be king. But because independent pharmacies often find themselves shut out of such arrangements, recently introduced legislation is seeking to change that dynamic.

“The Part D plans have fully adopted preferred networks over the last few years,” says Adam Fein, Ph.D., president of Pembroke Consulting, Inc., and CEO of Drug Channels Institute. “The [retail] chains obviously have some different strategies but are looking for the foot traffic” that comes from offering lower cost sharing as part of a preferred network.

Meanwhile, many independent pharmacies and the pharmacy services administrative organizations (PSAOs) that represent them in negotiations with health plans are moving away from preferred Part D networks.

Fein says they “have concluded that the incremental traffic they’re going to get is not worth the profit they’re going to sacrifice.”

Ultimately, “I think the open question is, will this create access problems to preferred networks, and does CMS care?” he says.

The National Community Pharmacists Association (NCPA) isn’t counting on regulatory intervention. The organization is supporting a bill — introduced last month by U.S. Reps. Peter Welch (D-Vt.) and Morgan Griffith (R-Va.) — which would allow any pharmacy located in an underserved area to participate in a Part D preferred network as long as that pharmacy accepts the terms and conditions.

“We’re not asking for different terms and conditions, [or] higher reimbursement; we’re just asking to be able to see what the terms and conditions are to be in the preferred network and then make our best decision if we want to participate or not,” says Ronna Hauser, the president of policy and government affairs operations at NCPA.

The Pharmaceutical Care Management Association opposes the bill.

“The proposed any willing pharmacy provisions threaten the effectiveness of selective contracting with pharmacies as a tool for lowering costs,” says as statement from the PBM trade group.

CMS Updates Medicare Plan Finder Amid Advocates’ Concerns

October 30, 2019

Having already rolled out a major redesign of the Medicare Plan Finder in August, CMS recently revealed additional updates it made before the start of Medicare open enrollment on Oct. 15 — including a feature that advocates have said is critical to helping people find the best Part D plan.

In an Oct. 11 email, a CMS spokesperson said the agency “added a feature that allows Medicare Plan Finder users to sort plans by the total cost of estimated annual drug costs plus premiums.”

By Leslie Small

Having already rolled out a major redesign of the Medicare Plan Finder in August, CMS recently revealed additional updates it made before the start of Medicare open enrollment on Oct. 15 — including a feature that advocates have said is critical to helping people find the best Part D plan.

In an Oct. 11 email, a CMS spokesperson said the agency “added a feature that allows Medicare Plan Finder users to sort plans by the total cost of estimated annual drug costs plus premiums.”

So did CMS’s plan finder update ease Medicare beneficiary advocacy organizations’ concerns about the redesigned tool? Partially, says Ann Kayrish, the National Council on Aging’s senior program manager for Medicare. She says while it’s good that the sort function is back, the total-cost feature is not available on the plan-comparison page — which makes comparing plans more complicated than it was before.

“In general, the opening week of open enrollment has been rocky as some of the basic information like extra help subsidy levels and copay have been inaccurate, [and] pharmacy status and cost information inconsistent,” she adds. “To increase confidence in plan selections, counselors are spending time contacting the plan or Medicare to confirm coverage information.”

In its Oct. 11 email, CMS noted that it also implemented several other changes to the Medicare Plan Finder prior to open enrollment, including:

✦ The ability to display drug tier costs;
✦ A footnote for excluded drugs;
✦ An option to add mail order on the pharmacy selection page;
✦ A note about over-the-counter drugs on the drug lookup page; and
✦ An option to compare a third retail pharmacy when mail order isn’t selected.

Walgreens Joins Centene in Pact With Cloud-Based PBM RxAdvance

October 28, 2019

A recently announced partnership between Centene Corp., Walgreen Co. and the technology-focused PBM RxAdvance promises “an innovative model for pharmacy management that aims to increase transparency, enhance customer experience and ultimately result in better health outcomes at lower costs.”

While retail pharmacy-PBM-insurer combinations are “going to be par for the course” now, what makes this move unique is the fact that Centene is taking that model beyond the commercial space and into Medicaid, says Ashraf Shehata, a principal in KPMG’s health care life sciences advisory practice and the firm’s Global Healthcare Center of Excellence.

By Leslie Small

A recently announced partnership between Centene Corp., Walgreen Co. and the technology-focused PBM RxAdvance promises “an innovative model for pharmacy management that aims to increase transparency, enhance customer experience and ultimately result in better health outcomes at lower costs.”

While retail pharmacy-PBM-insurer combinations are “going to be par for the course” now, what makes this move unique is the fact that Centene is taking that model beyond the commercial space and into Medicaid, says Ashraf Shehata, a principal in KPMG’s health care life sciences advisory practice and the firm’s Global Healthcare Center of Excellence.

In Shehata’s view, the cloud-based PBM platform that all three organizations will use is key to the alliance, since it eventually will allow advanced point-of-care capabilities for pharmacists.

“The idea would be to use that platform to evolve it even further. This is an area where we’re going to start to see more and more technological enhancements,” he says, which is key to “getting to a patient-centered, member-centered design.”

The new partnership builds on Centene’s initial investment in RxAdvance back in 2018. The insurer has now increased its stake in RxAdvance, and Walgreens has “made a small investment” in the firm.

Centene Chairman and CEO Michael Neidorff said during the insurer’s third-quarter earnings call on Oct. 22 that his company chose to deepen its existing partnership with Walgreens because its business niche aligns well with Centene’s.

“Walgreens has done a particularly good job in urban areas and is recognized for it in the inner cities, where we have a large population,” he said.

Asked which payers might be interested in such a model, Shehata points to Blue Cross Blue Shield plans that don’t contract with the Blues-owned PBM Prime Therapeutics, LLC. The products emerging from the partnership also could be of interest to provider-owned health plans, he notes.

Low-Cost Enhanced PDP Offerings See Growth in 2020

October 16, 2019

When it comes to Medicare Part D stand-alone Prescription Drug Plans (PDPs) in 2020, experts say the most notable trend is the rising prevalence of lower-cost enhanced plan offerings.

According to CMS’s recently released landscape files, there will be a total of 1,433 PDP plans in 2020, up from 1,369 in 2019.

That increase is “mainly due to additional enhanced, low-premium plans being offered this year, both through existing carriers offering new plans, and then there’s also a new entrant to the national PDP market,” says Shelly Brandel, a principal and consulting actuary in the Milwaukee office of Milliman, Inc.

By Leslie Small

When it comes to Medicare Part D stand-alone Prescription Drug Plans (PDPs) in 2020, experts say the most notable trend is the rising prevalence of lower-cost enhanced plan offerings.

According to CMS’s recently released landscape files, there will be a total of 1,433 PDP plans in 2020, up from 1,369 in 2019.

That increase is “mainly due to additional enhanced, low-premium plans being offered this year, both through existing carriers offering new plans, and then there’s also a new entrant to the national PDP market,” says Shelly Brandel, a principal and consulting actuary in the Milwaukee office of Milliman, Inc.

The new carrier, Clear Spring Health, will offer PDPs for the first time in 2020 in 41 states and Washington, D.C. Brandel notes that Clear Spring’s Premier Rx plans, an enhanced offering, have an average premium of around $15.

Also worth noting is that Humana Inc. created a new offering called the Humana Walmart Value Rx Plan. The premium for that plan is $13.20 across all states.

WellCare Health Plans, Inc., meanwhile, is offering the new WellCare Wellness Rx plan, an enhanced plan that has an average premium of about $14, according to Brandel.

In general, Brandel says, “the enhanced plans with low premiums have been an area of growth in the PDP market.”

A regulatory change in 2018 — which said plan sponsors no longer have to demonstrate that their enhanced PDPs offered in the same region are “meaningfully different” regarding enrollee out-of-pocket costs — likely made it easier for insurers to offer low-premium enhanced plans, Brandel says. However, “the main reason more of these plans are being offered is because they are popular with members,” she adds.

Across all PDP offerings, the projected average monthly basic Part D premium in 2020 will be $30 — the lowest it’s been since 2013, according to CMS.