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Drugmakers on the Hot Seat
three manufacturers of insulin — Eli Lilly, Novo Nordisk and Sanofi — and the pharmacy benefit managers CVS Health, Express Scripts and OptumRX, which administer prescription drug programs for commercial health plans and other entities testified on Wednesday. Insulin prices are rocketing higher and if drugmakers don’t fix the problem, the government might have to set prices for the lifesaving diabetes medication, Energy and Commerce Chairman Frank Pallone (D-N.J.) saidduring a hearing Wednesday. Needless to say, the CEOs from Eli Lilly, Novo Nordisk and Sanofi didn’t support that idea. Pallone indicated he’d rather not go there either but said something has to give because the current system “is not working.” The three manufacturers said they would consider lowering list prices if the Trump administration’s proposal to eliminate rebates went into effect across government and commercial plans. House lawmakers on Wednesday asked manufacturers and pharmacy benefit managers (PBMs) to explain why insulin prices are so high. (If you want to better understand what a PBM does, read this article.) The answer? It’s the other guy’s fault. The drugmakers said they have to keep list prices high because of the rebates they pay to PBMs, the drug middlemen who handle claims for big insurers and help negotiate drug prices with manufacturers. PBMs said manufacturers are the only ones responsible for setting a list price. Executives from the three companies that make insulin, as well as the three largest PBMs, faced sharp questions from frustrated Democrats and Republicans on the House Energy and Commerce oversight subcommittee. The hearing was notable in that it was the first time both PBMs and drug companies were testifying together. The manufacturers– Sanofi, Novo Nordisk, and Eli Lilly– pointed to patient assistance programs and point-of-sale coupons as proof that almost nobody pays the full list price.
Takeaway: Insulin pricing is a bipartisan issue for lawmakers. But it was not clear during the hearing what the solution may be because the hearings did not uncover any tangible, realistic policies at addressing what is causing insulin and drug prices to increase so dramatically over the past few years, which was the aim of the hearings. Lawmakers are looking at eliminating the rebates from the supply chain, which could be part of the solution to high costs. Sanofi announced this week it would expand a savings program allowing patients with high out-of-pocket costs to pay $99 per month for 10 boxes of insulin pens, or 10mL vials, dropping down from $149 for a box of pens in the same program last year. This move was in response to Cigna and ExpressScripts announcement last week to cap monthly insulin costs for its commercially consumers at $25. Lawmakers currently have three options – eliminate rebates, watch spread pricing and consider applying drug caps. Senator Grassley is asking HHS’s inspector general to investigate PBMs’ spread pricing which is the practice of reimbursing pharmacies less than what they charge health plans for the drugs. Last year Ohio ended Medicaid contracts with CVS and OptumRx over spread pricing and this year sued OptumRx to recover $16 million it said the PBM overcharged the government. Pennsylvania and Kentucky also recently reported that spread pricing cost their governments millions. And at the state level, Massachusetts applied drug caps to address the costs, which is gaining coalition support, which drug companies warn will stifle research and development.
CMMI Seeks Feedback on Bundles for Post-Acute Care
The Trump Administration is eyeing the concept of creating post-acute care bundles, the head of the Centers for Medicare & Medicaid Services’ innovation arm told an audience at the American Hospital Association conference on Monday. “Now is the time to bring us ideas there. We’re really in listening mode,” said Adam Boehler, director of the Center for Medicare and Medicaid Innovation (CMMI). “I think there’s been a lot of intrigue and interest we’ve heard from people. So we’re gathering stakeholder input there on that and it’s a great time to give us thoughts on where we can lower costs.” This expensive segment of the healthcare industry has been drawing investment both from private equity firms and big hospital systems as they buy up nursing homes. Hospitals are increasingly reluctant to release patients to skilled-nursing facilities if they can send them home, citing quality reporting issues. This is supported by an October report from Welltower that said the post-acute provider world will shrink in the face of changing regulations and a shift to new payment systems.
Takeaway: With bundled payments, the total allowable acute and/or post-acute expenditures (target price) for an episode of care (typically 90-days) are predetermined and the profit (gainsharing) is created by delivering the actual care for less than the target (expected) price. There is a lot of waste in post-acute care. However, there is only one pot of money and waste to be reduced across a patient population and multiple payment models and stakeholders are focused on how to lower post-acute spend. For now the agency is in “listen mode.” If this model moves forward and post-acute facilities participate, there is a high likelihood it will reduce opportunities for specialists participating in bundled payments and ACOs to receive credit for post-acute cost savings. This would happen across the same population if the post-acute facility receives precedence for the savings generated, which is an area that requires watching.
Walgreens and VillageMD Collaborate to Offer Primary Care Services
Walgreens and VillageMD, a leading national provider of primary care, announced this week a collaboration focused on providing adult patients in the Houston community with a transformative primary care experience. VillageMD will operate state-of-the-art primary care clinics next to five Walgreens stores in the Houston area, with the first locations scheduled to open by the end of 2019. The conveniently located clinics, branded ‘Village Medical at Walgreens,’ will provide comprehensive primary care services, integrated tightly with pharmacists, nurses and social workers to meet the full suite of patient needs. The clinics will be comprised of 2,500 square feet with six to eight exam rooms and offer a full range of primary care services to serve the full adult continuum, including seniors. The two companies continue to explore expansion of ‘Village Medical at Walgreens’ primary care clinics in Houston and other markets.
Takeaway: Walgreens approach to vertical integration is to partner with local, high quality, brand name primary care providers to build out retail health clinics. In the Tampa Bay area, Walgreens partnered with AdventHealth Express Care and in St. Louis area with SSM Health. Opening in the Houston area allows Walgreens to compete with CVS-Aetna, which began offering HealthHub pilot stores in February starting in Texas. Consumers are showing positive feedback using care alternatives like CVS and Walgreens. Forbes reported that waiting days or weeks for a medical appointment seems “nuts” to millennials and about a third of them sought care at a retail clinic in the past year. With millennials making up 25% of all Americans, we will continue to see an increase in telemedicine enabling consumers to seek care from their home or in retail health clinics with extended hours and online scheduling.
Taking Care of Charlie Helped One California Town Nearly Halve Hospital Use
Everyone in Clearlake knew Charlie. You could find him in the park, sleeping on a bench, or around town adding to his impressive list of transgressions. In a single year, Charlie racked up more than 35 skirmishes with law enforcement, 25 hospital visits, and 16 emergency transports. Millions of Americans like him — victims of poverty, inequity, mental illness, and circumstance — get caught in an unending loop of incarceration, hospitalization, and hardship. It’s more than morally unacceptable; it’s economically unsustainable. The Agency for Healthcare Research and Quality estimates that vulnerable individuals account for just 5% of the population but half of all health care resources. For years, communities across the country have turned a blind eye to people like Charlie. In 2017, residents in the small, northern California town of Clearlake decided to respond with a radical experiment in compassion. Called Project Restoration, this county-wide collaboration includes representatives from law enforcement, emergency services, nonprofits, municipal and health agencies, and faith organizations. It took a new approach to providing proactive, unconditional, and comprehensive care. Charlie was its first case. Project Restoration didn’t just save Charlie’s life. It also transformed Clearlake. In less than a year, its approach yielded a 44% reduction in hospital utilization, an 82% reduction in use of the community response system, and a 45% reduction in hospital costs among the high-use population. The project is freeing up resources, sharing data across agencies, and creating cross-sector teams to address access to affordable housing, transportation, and behavioral health. Project Restoration leveraged its success to secure a $1.6 million grant to develop a center for integrated support services. In partnership with the Camden Coalition’s National Center for Complex Health and Social Needs, the project is extending the concept to more hospitals and stakeholders. Perhaps most important, this small community has discovered the power of shared purpose and collective action.
Takeaway: San Fernando Valley invested the funds in reactively treating over utilization to fix the problem and the investment paid off far more than expected. A local health care provider and a police officer began the process by visiting Charlie in the park. They asked him a single question, “Will you tell us your story?” The essence of why this community had such success is the same formula we are applying at Navvis with our approach to whole person healthcare. The team asked a second question, “What matters to you, Charlie?” This created patient engagement and allowed the care plan to address Charlie’s problems focusing on the outcome that meant the most to him – to become sober and have the opportunity to meet his granddaughter. The article is worth reading and there is a recent TED talk that describes how San Fernando Valley transformed focusing on patient-centered care, which included addressing social determinants of health.
Americans Borrowed $88 Billion to Pay for Health Care Last Year
Americans borrowed an estimated $88 billion over the last year to pay for health care, according to a survey released by Gallup and the nonprofit West Health. Thesurvey also found that one in four Americans have skipped treatment because of the cost, and that nearly half fear bankruptcy in the event of a health emergency. There was a partisan divide when respondents were asked whether they believed that the American health care system is among the best in the world: Among Republicans, 67 percent of respondents said they believed so; that number was 38 percent among Democrats. But Democrats and Republicans had similar responses about putting off medical treatment. Asked if they had deferred treatment because of the cost, 27 percent of Democrats said they had, compared with 21 percent of Republicans and 30 percent of independents. Respondents from across the political spectrum also reported pessimism about their leaders’ abilities to reduce health care costs. About 70 percent of respondents said they had no confidence in their elected officials to bring prices down. And 77 percent said they were concerned that rising health care costs would damage the American economy. At the same time, 64 percent of respondents said they were mostly satisfied with their experiences in the health care system. When asked if they were satisfied with how well the system was serving Americans generally, only 39 percent said they were.
Takeaway: The survey’s authors noted that Americans’ feelings were complicated and at times conflicted. But one thing was clear: high health care costs had created significant anxiety. The cost of healthcare as a whole, instead of pieces, is missing from the partisan healthcare debates. (Note that some of the Medicare for All proposals include offering free healthcare but they lack the funding mechanism on how to pay for the healthcare expansion necessary to advance any serious discussions.)
Disclaimer: This blog includes content gathered from other published sources, not authored by Navvis, and is presented as information only. As with any news story, this information may have changed since its publication date. Commentary included with the information is the opinion of its authors, and is not indented to provide legal or regulatory advice or guidance to the reader. Navvis does not represent the accuracy of or assume liability for the content presented herein.