Radar on Specialty Pharmacy

2018 Saw Slowing M&A Activity; Expect More of the Same in ’19

January 24, 2019

The specialty pharmacy and infusion therapy spaces have certainly seen their share of merger and acquisition (M&A) activity over the years. Some challenges within those industries may have helped slow down 2018 activity a bit, observes Reg Blackburn, managing director at The Braff Group. And for 2019, we may see more of the same.

As far as specialty pharmacy trends in 2018, Blackburn points out that “the largest specialty pharmacies continue to get even larger. Payer- and chain-owned dominate. Most new entity growth is coming from large academic hospitals starting their own specialty pharmacies.”

Direct and indirect remuneration (DIR) fees in Medicare Part D that include rebates and price concessions occurring after the point of sale have been around since the start of that program more than a decade ago.

By Angela Maas

The specialty pharmacy and infusion therapy spaces have certainly seen their share of merger and acquisition (M&A) activity over the years. Some challenges within those industries may have helped slow down 2018 activity a bit, observes Reg Blackburn, managing director at The Braff Group. And for 2019, we may see more of the same.

As far as specialty pharmacy trends in 2018, Blackburn points out that “the largest specialty pharmacies continue to get even larger. Payer- and chain-owned dominate. Most new entity growth is coming from large academic hospitals starting their own specialty pharmacies.”

Direct and indirect remuneration (DIR) fees in Medicare Part D that include rebates and price concessions occurring after the point of sale have been around since the start of that program more than a decade ago.

But they started really becoming an issue for specialty drugs around 2016, and it doesn’t look like that’s changing any time soon.

Within the specialty pharmacy space, M&A activity “was lower than in past years,” he explains. Through third-quarter 2018, The Braff Group recorded eight specialty pharmacy deals, compared with 18 for full-year 2017, 20 for 2016 and 10 for 2015.

This lower volume, he says, “is driven by fewer acquisition targets of a size large enough to move-the-needle for strategic buyers and/or large enough to be a platform for PE [i.e., private-equity] buyers. In addition, there is caution from both buyer types given the impact of DIR fees on gross margin.”

Moving forward into 2019, Blackburn expects to see “continued consolidation at a measured pace.” In addition, he says, “smaller independents will remain under pressure for gross margin and closed networks. They will want to exit, but buyers will be limited.”

Within the infusion therapy space over the past year, observes Blackburn, intravenous immune globulin and other specialty infusion products continue to drive revenue growth.

The Braff Group recorded four infusion therapy deals through the third quarter of last year, compared with seven in 2017, six in 2016 and 14 in 2015. 2018, says Blackburn, “continued the recent trend of low deal flow. The sector has experienced significant consolidation over the past five to 10 years.”

In the new year, Blackburn expects to see “continued modest deal activity primarily because of low inventory.”

FDA Approves Second Tissue-Agnostic Drug; Refund Is Available

December 17, 2018

As the FDA continues to approve drugs targeted toward specific biomarkers, the agency has granted accelerated approval to another tissue-agnostic oncology treatment. While the gene fusion is fairly rare, Loxo Oncology, Inc. and Bayer Corp.’s Vitrakvi (larotrectinib) has shown high overall response rates across multiple solid tumors. Not surprisingly, the medication comes with a high price tag — but also a refund for qualified patients who do not respond within three months of initiating treatment.

By Angela Maas

As the FDA continues to approve drugs targeted toward specific biomarkers, the agency has granted accelerated approval to another tissue-agnostic oncology treatment. While the gene fusion is fairly rare, Loxo Oncology, Inc. and Bayer Corp.’s Vitrakvi (larotrectinib) has shown high overall response rates across multiple solid tumors. Not surprisingly, the medication comes with a high price tag — but also a refund for qualified patients who do not respond within three months of initiating treatment.

On Nov. 26, the FDA gave accelerated approval to Vitrakvi for the treatment of adult and pediatric patients with solid tumors that have a neurotrophic receptor tyrosine kinase (NTRK) gene fusion without a known acquired resistance mutation; are metastatic or where surgical resection is likely to result in severe morbidity; and have no satisfactory alternative therapies or that have progressed after treatment.

“It definitely is an exciting development within the oncology treatment arena, but where it’s going to fit into treatment” in terms of guidelines and protocols “is yet to be seen,” says Beckie Fenrick, Pharm.D., senior partner at RemedyOne.

The drug is available as a capsule, dosed at 100 mg twice daily, as well as a liquid formulation for certain pediatric patients, with dosing 100 mg/m2 twice daily. Bayer set the monthly wholesale acquisition cost for a 30-day supply of 100 mg capsules at $32,800, and the WAC for the liquid formulation at $11,000 monthly.

Multiple programs through TRAK Assist are in place to help people afford the medication:

• TRAK Assist $0 Co-Pay Program will be available for eligible patients with commercial or private insurance.
• VITRAKVI Bridge Program will provide the drug for free to people who have coverage delayed or who have a temporary coverage lapse during the period without coverage.
• TRAK Assist will refer publicly insured patients to third-party assistance programs.
• A patient assistance foundation will help qualified uninsured or underinsured people.

In addition, in a situation where a patient does not have a clinical benefit within 90 days of starting the drug, the cost of up to two months of Vitrakvi will be refunded to each entity that made a payment for the drug — patients, payers and third-party organizations — through the Vitrakvi Commitment Program.

Industry Insiders Have Conflicting Opinions on Proposed Drug Price Ad Rules

October 22, 2018

by Angela Maas

While HHS has taken multiple steps toward lowering prescription drug prices, the agency’s latest proposal has been its most contentious so far. And while it may succeed in providing consumers more information on drugs’ wholesale acquisition costs (WACs), industry experts wonder how effective it really will be in letting consumers know what they will pay for a drug.

The proposed rule would require direct-to-consumer (DTC) television ads for prescription drugs covered by Medicare or Medicaid that have a WAC of more than $35 per month to include that list price in the ad.

by Angela Maas

While HHS has taken multiple steps toward lowering prescription drug prices, the agency’s latest proposal has been its most contentious so far. And while it may succeed in providing consumers more information on drugs’ wholesale acquisition costs (WACs), industry experts wonder how effective it really will be in letting consumers know what they will pay for a drug.

The proposed rule would require direct-to-consumer (DTC) television ads for prescription drugs covered by Medicare or Medicaid that have a WAC of more than $35 per month to include that list price in the ad.

Barbara McAneny, M.D., president of the American Medical Association, said while the agency opposes DTC ads for prescription drugs, “as long as the practice is allowed, the ads should come with at least a small dose of transparency.…While this proposed rule alone won’t remove the often-misleading nature of prescription drug ads, it will give consumers a data point that is currently unavailable. That is a step in the right direction.”

And Frederick Isasi, J.D., M.P.H., executive director of Families USA, said, “Today’s announcement is a welcome step to rein in the cost of prescription drugs. People will be shocked to know how much their drugs really cost….This policy will focus public attention on the abusive prices charged by many pharmaceutical manufacturers.”

Others within the industry, however, question how effective the proposed rule, if implemented, would really be.

“Patients do not typically pay a drug’s list price at the pharmacy counter,” points out Elan Rubinstein, Pharm.D., principal at EB Rubinstein Associates. “Showing the average monthly list price in direct-to-consumer advertising may not be meaningful. It could also frighten some people enough not to take prescribed medication as directed, thinking that they would have to actually pay this amount. It is not possible for a manufacturer to show estimated out-of-pocket cost, because this is highly variable.”

In addition, he tells AIS Health, a different cost for a drug at the pharmacy than what is shown in an ad may confuse patients, making it likely that they’ll contact their providers’ offices, which will need to take the time to explain the discrepancy.

CVS Unveiled New Approach to Manage Specialty Drugs

September 19, 2018

At the time of year when PBMs are rolling out their 2019 strategies, CVS Health has unveiled a bold new approach to managing certain specialty drugs based on data from the Institute for Clinical and Economic Review (ICER). However, industry experts are divided on how much of an impact it truly will have on drug prices.

In a white paper out last month, CVS revealed that it’s starting a program focused on bringing down launch prices of pricey me-too drugs.

At the time of year when PBMs are rolling out their 2019 strategies, CVS Health has unveiled a bold new approach to managing certain specialty drugs based on data from the Institute for Clinical and Economic Review (ICER). However, industry experts are divided on how much of an impact it truly will have on drug prices.

In a white paper out last month, CVS revealed that it’s starting a program focused on bringing down launch prices of pricey me-too drugs. The approach allows clients to exclude those medications that come onto the market with a price more than $100,000 per quality-adjusted life year (QALY) as determined by publicly available ICER analyses. Drugs to which the FDA has given breakthrough therapy status will not be eligible for exclusion.

CVS’s approach is “another example of how payers and PBMs are looking at opportunities to manage drug costs by tying access to competitive cost-effectiveness,” according to Ami Gopalan, Pharm.D., vice president at Precision for Value. “As therapeutic classes become more competitive, encompassing multiple products with similar efficacy and safety, programs like the one promoted by CVS provide another option for formulary management.”

Yet Lisa Kennedy, Ph.D., chief economist at Epiphany, is more skeptical. “Already ‘me-too’ drugs are subject to negotiation such that they can be excluded from formularies — I’m not sure if this is going to have such a material effect on them,” she says. “The question is how this will affect innovative drugs where there are fewer alternatives for patients.…I can’t see a lot of benefits to this approach.”

“I’m not sure how this will affect products at launch, but it could function to put pressure on manufacturers not to raise their prices over time — this combined with competitive pressure,” Kennedy adds

Alnylam Launches New Gene Silencing Drug

August 21, 2018

A new first-of-its-kind therapy is launching onto the U.S. marketplace with a costly price tag — and value-based deals with a handful of health insurers that should help with patient access while assuring them that they are paying for value.

On Aug. 10, the FDA approved Alnylam Pharmaceuticals, Inc.’s Onpattro (patisiran) for the treatment of adults with polyneuropathy caused by hereditary transthyretin-mediated (hATTR) amyloidosis. It is the first drug the agency has approved for this condition,

A new first-of-its-kind therapy is launching onto the U.S. marketplace with a costly price tag — and value-based deals with a handful of health insurers that should help with patient access while assuring them that they are paying for value.

On Aug. 10, the FDA approved Alnylam Pharmaceuticals, Inc.’s Onpattro (patisiran) for the treatment of adults with polyneuropathy caused by hereditary transthyretin-mediated (hATTR) amyloidosis. It is the first drug the agency has approved for this condition, as well as the first in a new class of drugs called small interfering ribonucleic acid (siRNA) treatment.

Dosing for Onpattro, an intravenous infusion administered over about 80 minutes, is weight-based. With a cost per vial of $9,500, the average annual list price is $450,000, based on an average of 2.7 vials administered an average of 17.5 times per year. But after taking into account mandatory government discounts, Alnylam estimates that the average annual net price will be $345,000.

On Aug. 13, Orsini Healthcare Specialty Pharmacy and US Bioservices, a specialty pharmacy that’s part of AmerisourceBergen Corp., said that Alnylam had selected them to distribute Onpattro.

Barry Greene, Alnylam president, says that the company has been “negotiating value-based agreements with several insurers to ensure that payment for the drug is based on the ability of Onpattro to potentially halt or in some patients reverse neuropathy impairment.” Alnylam has “agreed in principle” with Harvard Pilgrim Health Care, Inc. “and other major insurance carriers” on the structure of such arrangements.

Besides Harvard Pilgrim, Aetna Inc. would appear to be another company inking a value-based deal for Onpattro, as Jim Clement, executive director of value based care and supply chain management at Aetna Pharmacy Management, said he was “looking forward to being a part of this Alnylam initiative.”