Category: Uncategorized

Value Based Contracting….. the great hope for fixing many of the disparities in access and payment for pharmaceuticals, especially those that cost a boat load of bucks!

Our curiosity was piqued by the article below detailing a major value-based contracting initiative by Delaware Medicaid. The program will target a quarter million lives in the state. It will include three payor organizations – . AmeriHealth Caritas, Highmark Health Options and Centene Corp.’s Delaware First Health.  Selection was based on each payor’s willingness to implement reforms to migrate the system away from traditional fee-for-service (FFS)/volume-based care to a system that focuses on rewarding and incentivizing improved outcomes, quality improvement and reduced expenditures.

Unfortunately no detailed terms of the VBC terms were disclosed. What is noteworthy, however, is the fact that a major account like Delaware Medicaid has made the leap to try a VBC program. Hopefully some proofs of concept will be forthcoming over the first year of implementation. 

Specialty pharmacies may want to follow VBC development as they can play a key role in the administration of these contracts….. something that we’ve said many times over the past couple of years.

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Centene Will Join Delaware in Value-Based Medicaid Revamp

With a focus on value-based care, health equity and social determinants of health, Delaware recently selected three managed care organizations to serve some 280,000 Medicaid and CHIP recipients through the statewide Diamond State Health Plan and DSHP Plus managed care programs. Incumbents AmeriHealth Caritas and Highmark Health Options Blue Cross Blue Shield were both chosen for the new pacts, while Centene Corp.’s Delaware First Health will round out the trio of plans. 

New contracts mark state’s shift to value-based care 

•            Delaware’s Medicaid managed care program is currently operating under the authority of a Section 1115 demonstration waiver that was most recently extended through Dec. 31, 2023. It provides integrated physical health, behavioral health and long-term services and supports (LTSS) to eligible Medicaid and CHIP enrollees. 

• According to AIS’s Directory of Health Plans, Highmark Health has the largest share of lives (55.6%) with 156,267 enrollees. AmeriHealth Caritas serves 84,144 lives, while the remaining 40,395 Medicaid/CHIP beneficiaries are in fee-for-service Medicaid. The new five-year pacts will be effective Jan. 1, 2023, with three optional one-year extensions. 

• In its December request for proposals, the Delaware Dept. of Health and Social Services’ Division of Medicaid and Medical Assistance asked bidders to describe how they plan to implement a value-based purchasing model in the first year of the contract. The state in its RFP said it intends to “accelerate the implementation of reforms and innovation within Delaware’s health care delivery system to migrate the system away from traditional fee-for-service (FFS)/volume-based care to a system that focuses on rewarding and incentivizing improved outcomes, quality improvement and reduced expenditures.” 

Win supports Centene’s growth story 

• The award will mark the 30th state where Centene has Medicaid plans; its Ambetter Affordable Care Act exchange product is available in 25 of its current 29 Medicaid states. 

• Assuming Centene will serve one-third of the total population, the new contracts will contribute approximately 2 cents to Centene’s earnings per share and add more than $700 million to the company’s revenues, estimated Oppenheimer & Co., Inc. 

•  “Although the contribution is modest, we believe this represents incremental growth and reflects favorably on the positioning of the business,” wrote securities analyst Michael Wiederhorn in a July 12 note to investors. “Overall, we continue to believe Centene is deploying the correct strategy with its value creation plan by focusing on its core strengths.” The firm maintained an outperform rating for Centene. 

•  The state plans to hold an open-enrollment period for the new program starting on Oct. 1. For individuals who are required to enroll in a DSHP or DSHP Plus MCO and fail to voluntarily choose one, they will be automatically assigned to an MCO and be informed of their auto-assignment, according to the RFP. 

by Lauren Flynn Kelly, AIS Health

Several recent reports have touched on biosimilars and today we’ll offer up some new data that shows how pricing is being impacted.

A new university study drills down into the pricing trends of two well-established follow on biosimilars, Fulphila and Udenyca, as well as Neulasta, their reference product.

Here’s what’s interesting…..
The use of pegfilgrastim biosimilars was associated with lower patient OOP costs….. but the biosims did not generate the lowest health plan costs! As noted below, out-of-pocket costs were 47% to 59% lower for patients overall, but, payer costs were actually lower for Neulasta vs. the biosimilars. Go figure! Bottom line, the researchers found no significant differences in febrile neutropenia treatment and management costs between biosimilars and the brand product.

So, we can see two things in this analysis.
First, the list price of Neulasta has dropped significantly since competition appeared on the scene.
Second, rebates further mask how patient out of pocket costs are assessed while payer costs are still likely to be even lower than the study was able to document.

Oh what a tangled web….. even with data.

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No Significant Cost Savings From Neulasta Biosimilars for Payers

A study of Neulasta (pegfilgrastim) compared with its biosimilars in the prevention of febrile neutropenia has shown savings for patients but not for payers.

Use of Neulasta and other white blood cell growth stimulators is recommended as prophylaxis to lower the risk of infection following myelosuppressive chemotherapy. However, real-world studies of the savings have been lacking, according to lead author Ching-Yu Wang, M.S., of the Department of Pharmaceutical Outcomes and Policy at University of Florida in Gainesville, and his co-authors.

Wang and his co-authors acknowledged that competition from Neulasta biosimilars, five of which have been approved by the FDA since 2018, has succeeded in pushing down the price of Neulasta. By the second quarter of 2021, Neulasta’s average sales price had dropped 41%, according to its maker, Amgen.

But if appearances are to be believed, Neulasta, despite being the reference brand, is not selling at a premium to its biosimilars. Wang and his co-investigators said that during the 2019, one-year period they selected for retrospective analysis of commercial payer data, there was no significant difference in payer costs for febrile neutropenia management between Neulasta and two of its biosimilars, Fulphila (pegfilgrastim-jmdb) and Udenyca (pegfilgrastim-cbqv). They reported their findings in the July 2022 issue of the Journal of Managed Care and Specialty Pharmacy.

One major limitation of that finding, though, was that information was not available on discounts and rebates manufacturers gave to payers to incentivize preference of Neulasta or the biosimilars.

“For managed care pharmacies interested in adopting pegfilgrastim biosimilars, prices offered by manufacturers after considering all discounts and rebates is a determining factor,” Wang and his co-authors wrote.

The study looked at costs of primary prophylaxis use of the reference product and its biosimilars for patients receiving chemotherapy in the first cycle. Patients were predominantly treated for breast cancer (> 64%), lung cancer, and non-Hodgkin lymphoma.

Data show that out-of-pocket (OOP) costs were 47% to 59% lower for patients who received biosimilars as primary prophylaxis for febrile neutropenia. Again, there were limitations attached to this finding. One was that 67% to 83% of patients paid nothing for treatment in the first cycle, possibly because of manufacturer patient support programs or possibly because patients had maxed out their deductibles and co-pay requirements by the time Neulasta and the biosimilars were prescribed, the researchers noted.

In the study (N = 1,930), 46% of patients used Neulasta; 22%, Fulphila; and 32%, Udenyca. The respective per-patient, per-cycle reference drug or biosimilar OOP costs were $299, $182, and $159, Wang and his co-authors wrote.

Payer costs for the biologic drugs were clustered in a narrow range: Neulasta, $5,618; Fulphila, $5,783; and Udenyca, $5,845.

When it came to per patient, per cycle febrile neutropenia treatment and management costs, health plan costs, and total costs overall, there were no significant differences for patients who received either the reference product or its biosimilars, study authors said. OOP treatment costs for patients were $192 for Neulasta, $197 for Fulphila, and $240 for Udenyca. The respective FN treatment costs for health plans were $2,804, $2,970, and $2,745.

Although savings studies of Neulasta vs biosimilars are rare, use of Neulasta biosimilars could produce savings that enable expanded access to treatment for patients with non-Hodgkin lymphoma, according to a recent simulation study led by Ali McBride, Pharm.D., M.S., BCOP, former clinical coordinator of hematology/oncology at the University of Arizona Cancer Center and currently director of health economics and outcomes research for Bristol Myers Squibb.

McBride was also lead author on another recent simulation study that suggested significant cost efficiencies are possible by switching patients from the Neulasta on-body injector to standard Fulphila injections. Those potential savings were based on on-body injector failures and related FN hospitalization costs.

Tony Hagen, Managed Healthcare Executive

The FDA recently approved a new subcutaneously administered therapy, Tezspire (tezepelumab-ekko) from AstraZeneca AB and Amgen, as an add-on maintenance treatment used to improve severe asthma symptoms when used with a patient’s current asthma medicine. Tezspire is approved for adults and children aged 12 years and older with severe asthma not controlled by their current asthma medicine.

Tezspire is a monoclonal antibody and the only biologic to date to significantly reduce exacerbations across a broad spectrum of severe asthma patients. This group accounts for roughly 10% of the world’s 339 million asthma sufferers.

The cost for Tezspire subcutaneous solution (210 mg/1.91 mL) is around $3,835 per vial which is the prescribed volume for the once monthly injection.

The companies did not release distribution details. It will be interesting to see if this therapy goes into limited distribution given the somewhat large patient population and ‘relatively’ low cost. If so, it may be the first specialty therapy approved in quite some time that has not gone LD. However, both Amgen and Astra Zeneca have long histories showing their preference for LD.

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FDA approves maintenance treatment for severe asthma

Action:

FDA has approved Tezspire (tezepelumab-ekko) injection as an add-on maintenance treatment used to improve severe asthma symptoms when used with a patient’s current asthma medicine. Tezspire is approved for adults and children aged 12 years and older with severe asthma not controlled by their current asthma medicine. Tezspire is the first asthma treatment targeting thymic stromal lymphopoietin, a molecule involved in airway inflammation. Tezspire is also the first treatment for severe asthma that is not limited to a specific type of severe asthma.

Tezspire is administered once every four weeks by a health care professional through a subcutaneous (under the skin) injection.

Disease or Condition:

Asthma is a long-term inflammatory disease that causes the airways of the lungs to become swollen or inflamed and can be triggered by several factors, including allergen or irritant exposure and viral infections. An asthma attack (exacerbation) can include wheezing, cough, chest tightness, and make it hard to breathe.

Severe asthma attacks can be intense, last for long periods of time, and impact daily activities. Severe asthma symptoms usually do not get better with use of short-term treatments. Approximately 5-10 percent of Americans with asthma have severe asthma.

Effectiveness:

Safety and effectiveness of Tezspire were demonstrated in two clinical trials (NCT02054130 and NCT03347279), where participants with severe asthma received Tezspire 210 mg or placebo subcutaneously once every four weeks for 52 weeks.

Participants receiving Tezspire had significant reductions in the annualized rate of asthma attacks compared to placebo. Additionally, there were fewer asthma attacks requiring emergency room visits and/or hospitalization among participants treated with Tezspire compared to placebo. The benefits of Tezspire seen in participants weren’t limited by specific severe asthma type.

Safety Information:

Tezspire should not be used to treat short-term asthma symptoms or short-term asthma attacks. Patients should not discontinue systemic or inhaled corticosteroid treatments abruptly after starting therapy with Tezspire. Reductions in corticosteroid treatment dose, if appropriate, should be gradual and performed under the direct supervision of a health care professional. Patients with pre-existing helminth infections should be treated for the helminth infection before starting therapy with Tezspire for asthma. Patients with a serious hypersensitivity reaction to Tezspire must not take Tezspire. Live vaccines should be avoided in patients receiving Tezspire.

Designations:

Tezspire received breakthrough designation for the treatment of severe asthma.

CLICK HERE: See the prescribing information for additional information 

The answer to whether biosimilar fever has arrived is ….. ‘almost’….. if one believes the comments from CIGNA in the article below. 

CIGNA is bullish on biosimilars and is willing to put its money behind its prognostications of realizing billions of dollars in savings. 

• “Under the new Shared Savings Program, members will be offered a one-time $500 debit card for healthcare services or medications if they make the decision to switch to a biosimilar.”

To get the bonus, members on Remicade therapy would need to switch to either Avsola or Inflectra, biosims approved in April 2016 and December 2019 respectively. (Of note, two other approved infliximab biosimilars, Renflexis and Ixifi, were not included in the bonus program.)

CIGNA goes on to say that they are looking closely at promoting biosimilar use of other approved and commercially available biosimilars. The potential for huge savings ramps up significantly in 2023 when already approved biosims for Humira and Enbrel are finally released for marketing.

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Cigna to offer $500 incentive for members who switch to a biosimilar drug

Cigna is launching a new program that aims to encourage eligible members to switch to biosimilar drugs. 

Under the new Shared Savings Program, members will be offered a one-time $500 debit card for healthcare services or medications if they………

CLICK HERE to read the full article

Today we offer a review of a recent report issued by the American Hospital Association (AHA) wherein the association excoriates payer practices that ‘force’ the use of the onerous practices like white bagging and prior-authorizations….. “practices that delay patient care and raise administrative costs.”

Let’s look at white bagging since everyone is up to date on this model after reading our report on the practice earlier this week. 

The AHA says “white bagging  prohibits providers from using their own medication inventory.” What the AHA is really saying is that hospitals want to use the product they have purchased so they can bill for it at their usually exorbitant, marked up rates.

AHA goes on to claim that “white bagging compromises patient safety and adds significant complexity to the healthcare system and tremendous administrative burden to providers who are trying to manage these policies on behalf of their patients. There are several safety issues that come with white bagging including delaying care when medications are not delivered on time and preventing providers from validating that specialty medications were managed appropriately when being delivered. These medications often have temperature and handling requirements.”

A response from American Health Insurance Plans (payors) disputes these claims. AHIP states that “specialty pharmacies have to meet extra safety requirements for specialty drugs that are imposed by the drug manufacturers as well as by state and federal legal and regulatory requirements.” 

Very few therapies are needed on a ‘stat’ / life threatening basis. Even-hospital owned therapies would be on the shelf waiting for payor prior-authorizations, so the delays, which can often run days or even weeks, are shared regardless. And, specialty pharmacies can reliably ship a therapy the same day as a prior authorization is approved for delivery next day. As we know, specialty pharmacies have excellent performance records relating to safely shipping medications within rigid temperature and handling requirements. 

As the article concludes….. the “report is evidence of the longstanding rift between providers and payers.”  Some things are never likely to change.

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American Hospital Association Turns Up the Heat On Commercial Insurers In Scathing Report

However, insurers’ practices, such as white bagging, are needed to reduce costs for patients says America’s Health Insurance Plans

Commercial health plans use practices that delay patient care and raise administrative costs, a recent report by the American Hospital Association charged.

The report listed several practices that it says burdens providers and harms patient care. This includes prior authorization, the process that determines if a payer will cover a service; fail-first policies, in which patients try and fail certain treatments before insurers authorize more costly treatments; white bagging, which prohibits providers from using their own medication inventory; and several others.

“Some commercial health insurers have implemented policies that add billions of dollars in added unnecessary administrative costs to the healthcare system while compromising patient care,” AHA states. “Commercial health plan abuses must be addressed to protect patients’ health and ensure that medical professionals, not the insurance industry, are making the key decisions in patient care.”

Some of these practices are needed to reduce expenses for patients, countered Kristine Grow, senior vice president of communications at America’s Health Insurance Plans. But the two topics in the report Grow particularly pushed back against were prior authorization and white bagging, also known as specialty pharmacies.

Article continues……..

CLICK HERE to read the full article

We’ve written frequently on two of the biggest trends in channel access, the shift away from buy-and-bill to other, less costly, sites of service as well as payer policies that have shifted reimbursement away from physician / hospital purchased drugs to specialty pharmacies. An article we want to review today is from Drug Channels. It is a great read and includes some fresh data to document these trends.

That article, an excerpt from a larger market report available for purchase from the company, first refreshes our understanding of the types of patient access now being employed. By now we are all familiar with White Bagging and Brown Bagging (if not, read the article). A term that is beginning to catch on is Clear Bagging in which the hospital-owned specialty pharmacy does the fulfillment.

What the data shows is that there has been a significant increase in White Bagging over the past two years with a 20% increase at physician practices and a 25% increase at hospital outpatient departments. Brown Bagging has virtually disappeared in these settings. Strangely, buy-and-bill at Home Infusion companies increased by a whopping 41% in the same time period and Brown Bagging more than doubled. Go figure! The data is based on a very large ‘n’ of payers nationally.

There are several points for further consideration.

• First, the list of impacted drugs goes beyond Oncology….. and is growing.
• Secondly, a number of specialty pharmacies have been designated by manufacturers as limited distribution (LD) partners (often exclusive) for certain drugs….. even bypassing traditional wholesalers. Since virtually all of these SPs are now also licensed distributors they can sell direct for professional use as a buy-and-bill drug….. under the medical benefit. (Not popular with hospitals and many providers.)
• Next, Payer and PBM policies have ramped in the past year+ to push these transactions over to the pharmacy benefit (even less popular) through rewriting the patient benefit plan…. including introducing patient OOP if billed as a medical benefit.
• Concurrently, PBMs and Payers have been able to co-opt these dynamics to further their cost management efforts on other, non-LD drugs. The data does not separately break out these LD drugs which further muddies up the total White Bagging picture.
• And finally, we can more easily understand why hospitals are increasingly desperate to redirect fills internally to owned specialty pharmacies to recapture lost buy-and-bill revenue.

White Bagging Update: PBMs’ Specialty Pharmacies Keep Gaining on Buy-and-Bill Oncology Channels Drug Channels

Another $2.8 million gene therapy was approved this month. So, we need to ask….. Are we looking forward to the day when specialty pharmacies as we know them will go the way of the buggy whip? Inevitably, the answer is yes. Maybe not soon….. but its ‘a comin!

When a leading PBM like Optum raises a red flag about something one should pay attention. They make the point in the article below that gene therapies are here and that more are in development. The specter of a hoard of budget busting drugs would make all payors quake in their boots.

So far, gene therapies have targeted ultra-rare diseases and conditions, and they currently account for nearly half of FDA approvals in recent years. The technologies being used to develop these ‘one shot and cured’ therapies are advancing at a rapid pace. One only needs to ask when the technology will enable researchers to develop gene cures for other more common diseases like hemophilia….. oh wait, that’s already happening!

Specialty pharmacies might want to imagine a time not so far in the future when gene therapies will be one shot and cured solutions for ALL of the disease states that they support. It would only be a matter of time before there aren’t any more patients in need of long-term therapy. It might look a lot like the last days of the buggy whip business model. Just sayin’

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The gene therapy pipeline may be at a ‘tipping point’. 

Optum says payers need to take notice

Should they be approved, the drugs highlighted in this quarter’s report would double the number of gene therapies on the market to four, and it’s a trend payers should be keeping a close—and early—eye on. (UnitedHealth Group)

The response to COVID-19 likely slowed the development of pricey gene therapy drugs, but those products are now making their way back into the approval pipeline, according to a new report from Optum Rx.

The pharmacy benefit manager released its quarterly look at the drug development pipeline. The latest analysis spotlights two gene therapy products headed to the Food and Drug Administration’s approval table this fall: elivaldogene autotemcel, under the brand Skysona, and betibeglogene autotemcel, as Zynteglo.

Both therapies are for rare conditions, with Skysona targeting cerebral adrenoleukodystrophy (CALD) in young boys and Zynteglo treating beta thalassemia patients who depend on blood transfusions.

Orphan drugs currently account for nearly half of FDA approvals, and gene therapies like Skysona and Zynteglo carry particularly high price tags. Should they be approved, these drugs would double the number of gene therapies on the market to four, and it’s a trend payers should be keeping a close—and early—eye on, said Bill Dreitlein, senior director of pipeline and drug surveillance at Optum Rx, in an interview.

“COVID has had somewhat of an impact, delaying the development of some of those products but now I think we’re starting to see a small wave of those products coming to market,” he said.

He said if the wave of gene therapies swells, it could signal a “tipping point” for these drugs.

Both Zynteglo and Skysona are developed by bluebird bio. Analysts forecast that a single dose of Zynteglo could cost $2.1 million, and there are an estimated 3,000 people in the U.S. with beta thalassemia, with about half dependent on regular transfusions.

The report doesn’t list a potential price for Skysona but notes that Zolgensma, a gene therapy currently on the market for the ultra-rare condition spinal muscular atrophy, costs $2.125 million per dose. There are about 40 people in the U.S. with CALD annually, according to the report.

And because these drugs treat conditions that are so rare, the data on long-term efficacy is limited, but that information would be another consideration for payers weighing coverage. For both drugs, there is data available from seven years of follow-up.

Insurers and PBMs “only know as much as the data available to us,” which makes tracking these products key, Dreitlein said.

“Now is a good time to get back into monitoring the gene therapy pipeline,” he added.

Click Here to access the article on the web

Last week, the FDA approved yet another one-and-done gene therapy, Zynteglo (betibeglogene-autotemcel) from Bluebird Bio, for the treatment of adult and pediatric patients with beta-thalassemia who require regular red blood cell transfusions. FDA’s Cellular, Tissue, and Gene Therapies Advisory Committee unanimously recommended approval in June.

Beta-thalassemia causes a significant reduction of hemoglobin or the absence of hemoglobin altogether, owing to mutations in the beta-globin gene. Patients typically require transfusions every 2–5 weeks. The median age of death is 37 years.

Zynteglo, a one-time gene therapy, represents a potential cure in which functional copies of the mutated gene are inserted into patients’ hematopoietic stem cells via a replication-defective lentivirus. The therapy is administered as a single dose. Each dose of Zynteglo is a customized treatment created using the patient’s own cells (bone marrow stem cells) that are genetically modified to produce functional beta-globin (a hemoglobin component).

In trials, 89% of 41 patients aged 4 to 34 years maintained normal or near-normal hemoglobin levels and didn’t need transfusions for at least a year.

The gene therapy had been approved in Europe with a $1.8 million price tag. However, in 2021, Bluebird discontinued operations there due to failing “negotiations with European payers and challenges to achieving appropriate value recognition and market access.”

Zynteglo is expected to launch in the US at a whopping $2.1 million. Experts that specialize in medical cost-effectiveness analyses have stated that, given the annual costs of standard care, Zynteglo meets commonly accepted value thresholds at an anticipated price of $2.1 million.” Bluebird has also offered to pay back 80% of the cost if patients require a second transfusion within 5 years.

Bluebird did not announce plans for distribution at this time.

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FDA Approves First Cell-Based Gene Therapy to Treat Adult and Pediatric Patients with beta-thalassemia Who Require Regular Blood Transfusions

August 17, 2022 — The U.S. Food and Drug Administration has approved Zynteglo (betibeglogene autotemcel), the first cell-based gene therapy for the treatment of adult and pediatric patients with beta-thalassemia who require regular red blood cell transfusions.

“Today’s approval is an important advance in the treatment of beta-thalassemia, particularly in individuals who require ongoing red blood cell transfusions,” said Peter Marks, M.D., Ph.D., director of the FDA’s Center for Biologics Evaluation and Research. “Given the potential health complications associated with this serious disease, this action highlights the FDA’s continued commitment to supporting development of innovative therapies for patients who have limited treatment options.”

Beta-thalassemia is a type of inherited blood disorder that causes a reduction of normal hemoglobin and red blood cells in the blood, through mutations in the beta-globin subunit, leading to insufficient delivery of oxygen in the body. The reduced levels of red blood cells can lead to a number of health issues including dizziness, weakness, fatigue, bone abnormalities and more serious complications. Transfusion-dependent beta-thalassemia, the most severe form of the condition, generally requires life-long red blood cell transfusions as the standard course of treatment. These regular transfusions can be associated with multiple health complications of their own, including problems in the heart, liver and other organs due to an excessive build-up of iron in the body.

The safety and effectiveness of Zynteglo were established in two multicenter clinical studies that included adult and pediatric patients with beta-thalassemia requiring regular transfusions. Effectiveness was established based on achievement of transfusion independence, which is attained when the patient maintains a pre-determined level of hemoglobin without needing any red blood cell transfusions for at least 12 months. Of 41 patients receiving Zynteglo, 89% achieved transfusion independence.

The most common adverse reactions associated with Zynteglo included reduced platelet and other blood cell levels, as well as mucositis, febrile neutropenia, vomiting, pyrexia (fever), alopecia (hair loss), epistaxis (nosebleed), abdominal pain, musculoskeletal pain, cough, headache, diarrhea, rash, constipation, nausea, decreased appetite, pigmentation disorder and pruritus (itch).

There is a potential risk of blood cancer associated with this treatment; however, no cases have been seen in studies of Zynteglo. Patients who receive Zynteglo should have their blood monitored for at least 15 years for any evidence of cancer. Patients should also be monitored for hypersensitivity reactions during Zynteglo administration and should be monitored for thrombocytopenia and bleeding.

This application was granted a rare pediatric disease voucher, in addition to receiving Priority Review, Fast Track, Breakthrough Therapy, and Orphan designations.

The FDA granted approval of Zynteglo to Bluebird Bio, Inc.

Earlier this year CVS published a sponsored article in Fierce Healthcare that raised a red flag around the concept of a specialty pharmacy carve-out. 

Before we start, there may be some confusion as to what exactly is a “carve-out”. Our definition of a carve-out is to take a coverage category and treat it as a health benefit to manage on a stand-alone basis. Examples of clinical carve-outs that have delivered positive results both clinically and financially include mental health, radiology, dental, vision care…. but these benefits remain as part of the total package offered to a member.

But, some health plans have already turned to “alternate funding programs (AFPs) wherein the specialty drugs are removed from the plan R_x formulary. This essentially provides no coveragefor the specialty drugs. The payer will select a third-party company to support these now “uninsured” members and will apply for manufacturers’ patient assistance (PAP) funds to cover the cost of the prescriptions. The manufacturer ends up paying the full cost of the prescription and the pharmacy services. According to published reports, about 8% of payers have already taken this action and 30%+ are evaluating what appears to be a scam. 

But let’s take a closer look at what CVS has to say.

CVS states that payers are asking themselves whether they should carve out specialty pharmacy services from the integrated pharmacy benefit management model and spotlight some of the consequences.  It is unclear whether they mean ‘my’ definition of a carve-out or the APF model.

CVS says that payors are concerned with “ensuring member access to important treatments.” With so many specialty therapies launching through limited distribution one could say that a clean carve-out program (not an AFP) might be even better positioned to provide broader access.

CVS also says, “Many niche vendors (AFP vendors??) make bold claims about the results they can deliver with specialty carve-out including that it will lead to dramatic savings and enhance clinical care. Such claims are simply myths…..” But, CVS goes on to say, “In fact, our unique approach to specialty cost management can enable up to 49 percent savings on gross specialty spend.” Are such huge savings are possible without shifting a big chunk of members to uninsured status for SP??? We can’t find clarity on this claim.)

CVS says that a carve-out “involves hidden costs in the form of rebate losses and multiple vendor fees.”  If anything, a unified carve-out could be better positioned to negotiate rebates. One also has to ask….. What vendor fees unless there are AFP vendors in the middle?

So, we are left with more questions than answers at this point.

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Multiple Specialty Vendors Mean More Headaches

Breaking down the myths about specialty carve-out — Sponsored by CVS Health

Specialty medications continue to be the biggest cost management challenge for payers, driving 54 percent of overall drug spending in 2021. The trend shows no signs of slowing and has employers and health plans looking for solutions to regain control of rising specialty pharmacy costs while ensuring member access to important treatments.

This has led to some payers asking themselves whether they should carve out specialty pharmacy services from an integrated pharmacy benefit management approach.

The question they should be asking is, “Are specialty carve-out savings too good to be true?” Many niche vendors make bold claims about the results they can deliver with specialty carve-out including that it will lead to dramatic savings and enhance clinical care. Such claims are simply myths they are perpetuating to support carving out specialty management. The reality is starkly different.

Financial Risks Outweigh the Perceived Benefits

Payers seeking tighter management of specialty drugs and greater specialty savings won’t find them by carving out. A careful analysis shows there’s no credible evidence that carve-out strategies by these niche vendors reduce net cost. Instead, two studies published in the Journal of Managed Care & Specialty Pharmacy find integrating pharmacy benefits resulted in lower medical costs and fewer hospitalizations.1,2

So, what really happens with a carved-out approach? It leads to exaggerated savings estimates that don’t take into account that treatment denials not rooted firmly in clinically rigorous decision making are likely to be overturned in the appeals process. It also involves hidden costs in the form of rebate losses and multiple vendor fees. In fact, in most cases much of the perceived “savings” are simply shifting costs from the pharmacy benefit – which has much tighter controls – to the medical benefit setting, which does not, and is often more expensive.

The Impact on Patient Care and Support

While a carved-out approach may seem like a cost-saving solution, it enables a fragmented, siloed system that jeopardizes member care – resulting in poor health outcomes and experience.

Members lose the ability to obtain needed medications easily and efficiently to effectively manage their condition. This can lead to disruption, challenge care management, and jeopardize continuity of care, and therefore worse outcomes and increased potential for adverse events.

It’s confusing and complicated for members when different vendors handle different components of the specialty pharmacy benefit. And the potential for breaks in service, therapy delays and inconsistent care grows at every step of the therapy journey. Members in plans with carved-out pharmacy benefits could lose access to connected digital tools that support their overall health and medication adherence. With so much at stake, it’s important for payers to use strategies that keep members at the center while creating cost savings.

Better Value with an Integrated Approach

A connected specialty pharmacy can deliver the consistent, personalized support that specialty patients need to stay on track. CVS Health takes an integrated approach to specialty cost management, which targets every step across the member journey, and all the components work together to deliver the most savings for payers. In fact, our unique approach to specialty cost management can enable up to 49 percent savings on gross specialty spend.

We use proven strategies and targeted solutions to deliver significant savings along with a better, cohesive member experience. We believe there’s a clear benefit to the member journey in our integrated model, which:

Helps ensure members start and stay on the most appropriate therapy

Offers the ability to better manage all prescriptions, including non-specialty medications

Engages members and their providers throughout the duration of therapy to help reduce costly, adverse events

Supports the whole patient, including comorbidities for better health outcomes

When considering which specialty management approach to adopt, the key consideration is simply whether payers want a siloed, fragmented approach or one that’s connected, and manages spend across the duration of treatment in a seamless, integrated fashion. Working with an integrated pharmacy benefit manager that supports all specialty management needs not only results in better care but also creates maximum value.

To learn more about our connected resources, and how we can help tackle your management challenges, please visit us at: https://payorsolutions.cvshealth.com/insights/power-integration.

A recent DoJ press release (below) is a stark reminder for specialty pharmacies that they need to ensure strict compliance with federal and state laws and regulations or risk getting a severe spanking in their bank accounts….. and, heavens forbid, possibly even jail time.

The short story below is that a whistleblower at a manufacturer let the cat ‘outta de bag regarding the filing of fraudulent Medicare claims.  Much of the ‘fraud’ was related to the waiving copays without proof of financial hardship way back in 2017-18. But, the hanky-panky also extended to fraudulent handling of prior-authorizations and even patient clinical information.

So, the stroll down this path cost Solera Specialty Pharmacy a cool $1.3 million. Ouch!

All specialty pharmacies should spend a fraction of that amount to implement oversight protocols to spot any deviations from claim submission standards (usually through frequent audits). 

Remember…….there may be a whistleblower looking over your shoulder even now 👀

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Solera Specialty Pharmacy Agrees to Enter into Deferred Prosecution Agreement

Company and CEO to Pay $1.31 Million for Submitting False Claims for Anti-Overdose Drug

Wednesday, July 13, 2022 — Florida-based Solera Specialty Pharmacy has entered into a deferred prosecution agreement and agreed to pay a $1.31 million civil settlement to resolve allegations that it submitted fraudulent claims to Medicare for Evzio, a high-priced drug used in rapid reversal of opioid overdoses.

According to Solera’s admissions in the criminal and civil agreements, the pharmacy dispensed Evzio from January 2017 to May 2018. During that time, Evzio was the highest-priced version of naloxone on the market and insurers frequently required the submission of prior authorization requests before they would approve coverage for Evzio. Solera completed Evzio prior authorizations forms in place of the prescribing physicians, including instances in which Solera staff signed the forms without the physician’s authorization and listed Solera’s contact information as if it were the physician’s information. In addition, Solera submitted Evzio prior authorization requests that contained false clinical information to secure approval for the expensive drug. Finally, Solera waived Medicare beneficiary co-payment obligations for Evzio on numerous occasions without analyzing whether the patient had a genuine financial hardship.

“Pharmacies, like all Medicare providers, must submit accurate claims,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “This settlement demonstrates…………………….

CLICK HERE to read the full Department of Justice press release