We look at the the DOJ's approval of Cigna's $67 billion acquistion of Express Scripts.

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Sept. 21, 2018

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FEATURED STORY
 

Just Do It: DOJ Approves Cigna-Express Scripts Deal

 
 

Earlier this week, the Department of Justice (DOJ) approved Cigna’s $67 billion acquisition of the remaining standalone pharmacy benefit manager (PBM), Express Scripts. The deal follows the recent progression of health plans either acquiring PBMs or developing in-house capabilities, thus enabling these entities to negotiate drug prices directly with manufacturers. It is also a response to external pressures from consumers and other industry players to decrease healthcare costs.

There was criticism over the potential for this acquisition to decrease competition, to which the DOJ responded with the following rationale:

  • Cigna’s PBM services on a national scale are not large
  • At least 2 other large PBMs and several smaller PBMs will remain in the market post-merger
  • Cigna’s current PBM services provider, UnitedHealthcare’s subsidiary Optum, will be free to compete for PBM customers who purchase medical insurance from Cigna

Additionally, the DOJ does not believe the merger will increase costs, as they argue any price increases by Express Scripts would result in Cigna losing PBM customers without sufficient volume of health insurance business to offset those losses.

Previously blocked horizontal mergers between payers Cigna-Anthem and Aetna-Humana occurred because the DOJ felt competition would have decreased while costs would have increased. However, the approval of this vertical merger makes it likely that the $69 billion proposal for CVS Health to buy Aetna will also be approved.

Completion of the Cigna-Express Scripts merger is anticipated by the end of 2018, as announced in Cigna’s press release.

 
XCENDA ORIGINAL RESEARCH
 

I’m Lovin’ It: Utilization Not Tied to Reimbursement Rates in Part B

 
 

Earlier this week, Xcenda released original research that tested the hypothesis that prescribers of Part B drugs disproportionately prescribe therapies with higher reimbursement rates to financially benefit from larger add-on payments. The Medicare Part B reimbursement methodology for covered drugs, average sales price (ASP) plus 6%, has been criticized for incentivizing physicians to prescribe medications based on maximizing profit potential, since the 6% “add-on” payment increases as the Medicare payment amount for the drug increases. The physician community counters that argument by asserting that medicines are not often interchangeable, and their prescribing is guided by best available evidence on the safety and effectiveness of medicines and patient needs.

On behalf of the Part B Access for Seniors and Physicians Coalition, Xcenda analyzed claims data for Medicare Part B fee-for-service beneficiaries receiving physician-administered drugs for rheumatoid arthritis (RA), breast cancer (BC), and non-small cell lung cancer (NSCLC) in the office setting.

Xcenda found no meaningful correlation between drug payment and utilization. The payment rates of RA, BC, and NSCLC drugs only contributed 5%, 1%, and 1% of the variation in utilization, respectively. In other words, the lack of a strong, positive correlation between drug payment and utilization suggests that physician prescribing is not driven by payment-per-drug administration.

These findings are particularly important now, as the Trump Administration is considering actions that would materially affect the Part B architecture of drug payment, such as reintroducing a Competitive Acquisition Program and shifting some or all Part B drugs to the Part D program. Policy makers should evaluate the payment and utilization relationship as they consider reforms; such changes may not secure savings but place patients and providers in turmoil and lead to treatment delays and adverse health consequences.

 

 

 

Fifteen Years of Part D: Gaining Perspective on the Medicare Prescription Drug Benefit

 
 

Xcenda is proud to contribute to a new report recently released by Medicare Access for Patients Rx (MAPRx) on Medicare Part D.

Findings reveal the program is as popular and robust as ever, but faces challenges that could result in increased costs and limited access for millions of beneficiaries.

Our experts provided significant support to this report and are honored to be part of the collaboration with MAPRx. Click here to learn more.

 

 

HPW Rebuild

 
LEGISLATIVE UPDATES
 

Can You Hear Me Now: Pre-Mid Terms Rush 

 
 

On Monday, the Senate passed the Patient Right to Know Drug Prices Act (S 2554), introduced by Sen. Susan Collins (R-ME), that would prohibit insurers and PBMs from using gag clauses that can conceal lower prescription drug prices at the pharmacy point of sale. The bill would apply to plans offered through exchanges and by private employers.

A companion proposal to ban gag clauses in Medicare Advantage and Medicare Part D plans, Know the Lowest Price Act of 2018 (S 2553), was passed by the Senate earlier this month. As discussed in last week’s Health Policy Weekly, legislation prohibiting gag clauses in Medicare and private plans passed the House of Representatives Energy and Commerce Committee last week and could be voted on by the full House as early as next week.

The Patient Right to Know Drug Prices Act now heads to the House of Representatives for consideration. Following House passage, the 2 chambers will reconcile these pieces of legislation to vote on its ultimate passage.

 

Legislative Bytes

 
 

HPW Rebuild

 
REGULATORY UPDATES
 

340B: It Takes a Licking and Keeps on Ticking

 
 

On Tuesday, the American Hospital Association (AHA) released 340B Program Good Stewardship Principles aimed at increasing program transparency and communicating the positive impact of the drug discount program to patients and their communities:

  • Communicate the value of the 340B program
  • Disclose hospital’s 340B estimated savings
  • Continue rigorous internal oversight

The release of the guiding principles comes as Congress works to pass legislation to reform the 340B program. While lawmakers acknowledge the steps AHA has taken toward greater 340B program transparency, pharmaceutical industry stakeholders and some lawmakers believe the principles are not sufficient to improve the program, which has expanded dramatically since its introduction almost 3 decades ago.

Adopting the Good Stewardship principles would require 340B hospitals to annually publish a description of how the savings from the 340B program benefit communities that may otherwise struggle to access healthcare services. Hospitals would also provide an annual disclosure of 340B savings, including a commitment to conducting internal reviews to ensure compliance with Health Resources and Services Administration rules and guidelines.  

Participation in the stewardship program is voluntary, but AHA believes there will be quick adoption of the guiding principles as a way for 340B hospitals to highlight the critical role of the 340B program in providing treatment to low-income patients. For now, the AHA’s self-policing effort may be too little, too late, as the push for legislative action continues to mandate change and increase program transparency.

 

Friends Don’t Let Friends Do Step Therapy

 
 

The use of step therapy (also known as fail first) has been under increased scrutiny since the early August guidance by the Centers for Medicare & Medicaid Service (CMS) decided to allow step therapy in Medicare Advantage plans for Part B drugs and services starting in 2019. Health Policy Weekly has covered the issue here and here. As the policy and process have been criticized, there has been increasing interest in commercial payers’ experiences with that utilization-management technique.

An analysis using Tufts Medical Center’s Specialty Drug Evidence (SPEC) database, which includes data from 17 of the largest US commercial health plans, found about one quarter of coverage decisions included a step-therapy protocol. However, there was wide variation in the frequency that health plans applied such protocols in specialty drug coverage decisions. Additionally, there were differences across disease states and the number of “steps” involved (eg, patients could be required to fail up to 5 treatments before gaining access to a particular therapy).

Given this high degree of variability, stakeholders may push for increased transparency for how health plans decide on step-therapy protocols and what guardrails are in place for patient protections. Congress is also considering legislation to regulate such processes. Continued monitoring will be important as implementation of the policy begins.

 

Have it Your Way…Precision Medicine

 
 

An article in the Journal of Clinical Pathways discusses how precision medicine can be incorporated into insurance benefit design, in which the measurement of a treatment’s value is based on a patient’s genotype. The author uses immunotherapy treatments for oncology as an example: patients with a particular gene expression shown to be particular receptive to treatment may have a cheaper cost-sharing amount. Patients who do not have the particular gene expression, and for whom the treatment is expected to be less successful, would have a higher cost-share.

This “precision benefit design” is an extension of value-based insurance design, which aims to link insurance plan benefit design and patient cost-sharing to the likely benefit of a treatment net of its cost.

The author acknowledges that, despite the concept being appealing, it needs to overcome 3 challenges to be implemented:

  • Ensure formulary design is patient-centered. Precision benefit design incorporates patient preferences (eg, cost, convenience, side effects), in addition to more traditional cost-effectiveness comparisons, to ensure the treatment of highest value is provided.
  • Ensure value is measured using scientific best practices. Precision benefit design would need to measure value based not only on individual treatments, but on treatment sequences, and allow patient preferences to inform treatment order in cases where there is scientific uncertainty.
  • Overcome informational barriers. Precision benefit design can add time and extra costs on all stakeholders (patients, physicians, payers) so the chosen treatment path is approved and paid. These additional expenses may not be captured under current reimbursement structures.

With new advances in medicine come new opportunities to rethink the status quo. As precision medicine becomes more mainstream, payers and employers may well rethink their insurance designs to create a home for the right medicine at the right time.

 

Information Buffet (AKA, Other Stuff That Caught Our Attention)

 
 

We kept running into stories we wanted to bring to your attention, so here’s a quick hit list of other news we thought you should know:



 
HEARD ON THE STREET
 

“340B purchasing has expanded well beyond the government’s original intention. Many drugs are purchased at very low prices and charged out at high prices, and this drives a cost-shift whereby manufacturers seek higher price offsets outside of 340B. HHS wants to continue to narrow the buying scope of 340B entities to the initial intent.”

Source: “Don't underestimate HHS intent to lower pricing,” Morgan Stanley, September 13

 

 
POLICY BY NUMBERS
 

52%

 

An Accenture analysis revealed that 52% of US consumers have low healthcare system literacy, meaning they do not understand coverage terms such as “premium,” “deductible,” “copayment," or “prior authorization.”

Source: “The hidden cost of healthcare system complexity,” Accenture, September 6

 

Xcenda Fellowship and Student Programs Webinar

 
 

Live Webinar: Sept. 25, Oct. 17, or Nov. 8

Learn more information about our various student programs including PharmD rotations, summer internships, and fellowships. Xcenda will be hosting 3 live webinars for students who are interested in opportunities in the managed care or healthcare/biotech consulting fields. Register now >

To learn more about Xcenda’s student programs, click here.

 

 

 
UPCOMING MEETINGS & CONFERENCES
 

AMCP 2018 Nexus

October 22–25 | Orlando, FL
Xcenda is proud to support AMCP at this year’s AMCP Nexus conference in Orlando. Meet with Xcenda’s team of experts and consultants at booth #407. Students are also welcome to join our team at the Residency and Fellowship Showcase on Wednesday, October 24, 5:00–8:00 PM ET. Learn more

 
 
 

Count on Health Policy Weekly for an at-a-glance view of legislative and regulatory developments and news that impacts the healthcare industry.

 
 
 
 
 
FEATURED CONTRIBUTORS
 

EDITOR-IN-CHIEF:
Jennifer Snow
Senior Director,
Health Policy
Xcenda

MANAGING EDITOR:
Scott Shields
Associate Director,
Health Policy
Xcenda

 

ADVISORY BOARD:

Amy Grogg, PharmD
Senior Vice President | Commercialization Solutions | AmerisourceBergen Corporation

Kristine Flemister, PharmD
President | Xcenda

Tommy Bramley, PhD, RPh
President | Lash Group

Stacie Heller
Vice President | Government Policy | AmerisourceBergen Corporation

Rita Norton
Senior Vice President | Government and Public Policy | AmerisourceBergen Corporation

Ana Stojanovska
Vice President | Commercial Consulting | Xcenda

CONTRIBUTING AUTHORS:

Isabell Kang | Jenna Kappel | Katherine Bridges Maness | Scott Shields | Tammy Washington

PRODUCTION:

Kylie Matthews | Ellen Olson

 

Sept. 21, 2018

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