Radar on Specialty Pharmacy

Use of Biologics, Biosimilars Showed Rapid Uptake in 2018

May 16, 2019

Almost 5.8 billion prescriptions were dispensed in the United States in 2018, an increase of 2.7% over the previous year, according to the IQVIA Institute for Human Data Science’s report Medicine Use and Spending in the U.S.: A Review of 2018 and Outlook to 2023.

By Angela Maas

Almost 5.8 billion prescriptions were dispensed in the United States in 2018, an increase of 2.7% over the previous year, according to the IQVIA Institute for Human Data Science’s report Medicine Use and Spending in the U.S.: A Review of 2018 and Outlook to 2023.

Retail and mail pharmacies dispensed 127 million specialty prescriptions last year, an increase of 15 million since 2014. In 2018, for the second year in a row, specialty prescription volume grew more than 5% although the medicines accounted for only 2.2% of prescriptions overall. With an increase in the availability of oral and self-injected specialty therapies, these drugs “are increasingly dispensed through retail pharmacies,” said Murray Aitken, executive director of the institute, during a May 6 press call.

Researchers found that there has been rapid uptake of the programmed cell death-1 (PD-1) and programmed cell death ligand-1 (PD-L1) inhibitors. In 2014, following the FDA approval of Merck & Co., Inc.’s Keytruda (pembrolizumab) in September, there were 2,403 people treated with an immuno- oncology checkpoint inhibitor. That number rose to 212,473 in 2018, with six products on the market boasting numerous indications.

The use of biosimilars — which the institute defines on a broader basis than only those therapies approved through the 351(k) pathway — “in terms of volume is still modest,” said Aitken, with these therapies representing less than 2% of the total biologics market in 2018. But in those areas where a biosimilar is available, “there is reasonably rapid uptake.”

CBO Says Proposed Drug Rebates Rule Will Increase Government Spending by $177B

May 13, 2019

When HHS unveiled a proposed rule in late January aimed at eliminating drug rebates in Medicare Part D and Medicaid managed care, the proposal was met with mixed responses. A recently released score from the Congressional Budget Office (CBO) calls into question whether the administration chooses to move forward with the proposal in its current form.

The proposal would do away with the safe harbor protection in the anti-kickback statute for rebates negotiated between manufacturers and PBMs starting Jan. 1, 2020.

By Angela Maas

When HHS unveiled a proposed rule in late January aimed at eliminating drug rebates in Medicare Part D and Medicaid managed care, the proposal was met with mixed responses. A recently released score from the Congressional Budget Office (CBO) calls into question whether the administration chooses to move forward with the proposal in its current form.

The proposal would do away with the safe harbor protection in the anti-kickback statute for rebates negotiated between manufacturers and PBMs starting Jan. 1, 2020.

In the CBO’s report, the agency projects that if the rule is implemented as proposed, it will increase federal spending by approximately $177 billion from 2020 to 2029. Of that total, spending on Medicare Part D premiums would increase by about $170 billion. Without rebates to keep premiums low, beneficiaries would face higher premiums. The agency anticipates that “rather than lowering list prices, manufacturers would offer the negotiated discounts in the form of chargebacks,” which are shared with beneficiaries via a manufacturer payment to a pharmacy.

The report, however, also concludes that “no current system could both meet the proposed rule’s standards and facilitate chargebacks.”

If “rebates could no longer be paid to PBMs in Medicare Part D,” but “systems are not available to support retail pharmacy chargebacks,…this would be an untenable situation,” says Elan Rubinstein, Pharm.D., principal at EB Rubinstein Associates, making it “reasonable to delay” the proposed implementation date.

“The increase in premiums was expected by many, but the growth in federal spending was somewhat surprising given that lower upfront prices would generally benefit the end payer, which in this case is the federal government,” says Jeremy Schafer, Pharm.D., senior vie president, director, access experience team at Precision for Value. “It seems changing the safe harbor may not accomplish patient savings or reduced government spending as hoped for by the administration.”

Copay Accumulators’ Use Rises; Virginia Passes Law Banning Such Programs

April 24, 2019

Payers are continuing to implement copay accumulators and copay maximizers in an effort to counter copay assistance from pharmaceutical manufacturers, according to a recent survey.

A Zitter Insights report shows that more than 90 million commercial lives are covered by payers that have a copay accumulator program — and it doesn’t look like these arrangements are going away any time soon.

By Angela Maas

Payers are continuing to implement copay accumulators and copay maximizers in an effort to counter copay assistance from pharmaceutical manufacturers, according to a recent survey.

A Zitter Insights report shows that more than 90 million commercial lives are covered by payers that have a copay accumulator program — and it doesn’t look like these arrangements are going away any time soon.

It also explores the use of a similar kind of program: copay maximizers. Among 51 payer respondents covering 177.9 million lives, payers covering more than 50 million commercial lives have implemented a copay maximizer program. But payers representing 58% of covered lives say they do not have plans to incorporate maximizers within their benefits offerings.

Melinda Haren, a senior consultant at Zitter Insights, notes that accumulators and maximizers are focused on specialty drugs, particularly those products that are adjudicated through the pharmacy benefit.

The savings for payers — and the additional burden on manufacturers — are not insignificant. But drugmakers can do little to limit the use of these programs, at least in the short term, says Haren.

One recent effort may prove to be effective against accumulators: On March 21, Virginia Gov. Ralph Northam (D) signed a law that will go into effect Jan. 1, 2020, which states, in part, “When calculating an enrollee’s overall contribution to any out-of-pocket maximum, deductible, copayment, coinsurance, or other cost-sharing requirement under a health plan, a carrier shall include any amounts paid by the enrollee or paid on behalf of the enrollee by another person.”

This approach to counter accumulators “will likely be effective, at least in the near term,” maintains Jeremy Schafer, Pharm.D., senior vice president of payer access solutions at Precision for Value.

Drugmakers Strategize to Sidestep Copay Accumulator Programs

April 8, 2019

As more health plans are implementing copay accumulator programs, manufacturers are struggling to find ways to counter them.

By Angela Maas

As more health plans are implementing copay accumulator programs, manufacturers are struggling to find ways to counter them.

Drugmakers may want to “evaluate [their specialty pharmacy] network and consider narrowing it to independent SPs that will accept contracts precluding sharing with payers/PBMs the patients who are participating in your copay offset program,” recommends a recent survey report from Zitter Insights.

To make sure patients are getting the savings intended, manufacturers could allocate “fewer or no dollars to rebates and more dollars to coupons,” says Elan Rubinstein, Pharm.D., principal at EB Rubinstein Associates. “If the CMS safe harbor proposal is finalized as proposed, and if it becomes effective in January 2020 as proposed, this is in my view an approach that manufacturers will consider.”

However, according to Lisa Kennedy, Ph.D., chief economist at Epiphany, “it is hard to pull back rebates in a highly competitive area especially where there are limited formulary places versus where a manufacturer is in a segment where they have greater capacity for negotiation.”

Some drugmakers are offering patients debit cards to sidestep these programs, as it is more difficult to track these than, say, a coupon that a pharmacy must process, says Melinda Haren, a senior consultant at Zitter Insights. Companies also could offer rebate programs by which the patient pays out-of-pocket for a drug and then is reimbursed.

A few manufacturers are speaking with payers about contracting to exclude their drugs from these programs. But some legal risk exists with this approach because “money paid to patients doesn’t count toward the calculation for best price because it’s going to the patient, not the payer,” says Haren. In contrast, when manufacturers contract with payers, those details are “likely reportable under best price,” she says, acknowledging that this is a “gray area” for drugmakers.

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.”