CMS should extend prior authorization pilots, GAO says

• CMS should continue its prior authorization demonstration projects, currently on pause or scheduled to end this year, or risk “missed opportunities for achieving its stated goal of reducing costs and realizing program savings,” according to a Government Accountability Office report released Monday.
• The handful of Medicare prior authorization programs have saved an estimated $1.1 billion to $1.9 billion through March 2017, the report found. However, the GAO acknowledged it is difficult to separate the projects’ savings from other CMS cost-cutting efforts.
• GAO said many providers and suppliers found prior authorization to be an “effective tool to reduce unnecessary utilization and improper payments,” but did struggle with documentation requirements.

Payers continue to experiment with prior authorization policies, but providers have pushed back strongly. While both sides generally approve of reducing unneeded services, doctors say prior authorization tends to be overly burdensome.

More than nine in 10 doctors sampled in a recent American Medical Association survey said prior authorizations hurt clinical outcomes, and 84% said their administrative burdens were either high or extremely high. Clinics deal with an average of about 30 prior authorization requests a week and spend an average of 14.6 hours a week working on them, the survey found.

Doctors also said they were seeing more requests, as payers look at multiple avenues for cutting the country’s notoriously high healthcare costs. Anthem, which has come under fire for its aggressive tactics, has said it won’t pay for MRI or CT scans at hospitals on an outpatient basis without prior authorization. Earlier this year, Aetna’s programs were scrutinized after a former medical director for the payer said he didn’t review patient medical records when deciding on authorizations.

Despite the struggles, the potential for savings and reduction in unnecessary treatment mean prior authorization isn’t going away. AMA, along with the American Hospital Association and America’s Health Insurance Plans, is making an effort to work with payers to develop industry best practices.

The Medicare prior authorization demonstrations, which began in September 2012, are relatively small-scale. Four fixed-length programs covered repetitive scheduled non-emergency ambulance services, home health services, certain mobility devices and non-emergency hyperbaric oxygen therapy. There is also a permanent program for some durable medical equipment, prosthetics, orthotics and supplies.

HHS “neither agreed nor disagreed” with GAO’s recommendations but continues to evaluate program results. The agency has looked at extending prior authorization to other items, including hospital beds and oxygen concentrators, according to the report.

https://bit.ly/2IBmrKZ

Insys: FDA Panel on Buprenorphine Voted Not to Recommend Approval

INSYS Therapeutics, Inc. (NASDAQ: INSY), a leader in the development, manufacture and commercialization of pharmaceutical cannabinoids and spray technology, confirmed today that an expert panel convened by the U.S. Food and Drug Administration (FDA) voted not to recommend approval of the company’s New Drug Application (NDA) for a buprenorphine sublingual spray as a treatment for moderate-to-severe acute pain.

“We appreciate the panelists’ perspective and guidance,” said Steve Sherman, senior vice president of regulatory affairs for INSYS Therapeutics. “Believing that our sublingual delivery technology could contribute significantly to bring value to patients, we will continue to work with the FDA in the coming months to discuss the path forward for our buprenorphine product candidate and to build on the current body of evidence for its efficacy and safety.”

https://bit.ly/2kkYNEh

Top 3 biotech takeover targets

Most investors thought 2018 would be a big year for mergers and acquisitions in the biopharma industry because of changes to the tax law, and so far they’ve been right. The biggest deals have been Sanofi’s acquisition of Bioverativ for about $11.6 billion and Ablynx for $4.8 billion, both in January. Also in January, Celgene Corporation bought Juno Therapeutics for about $9 billion, then shortly afterwards Celgene bought Impact Biomedicines for $1.1 billion. In April, Sanofi agreed to sell its generics division, Zentiva, to Advent International for about $2.4 billion.

Another big deal was GlaxoSmithKline agreeing to buy out its stake in its Novartis joint venture for $13 billion. And, of course, the biggest deal of the year so far is Takeda Pharmaceutical’s acquisition of Shire for about $62.2 billion.

Datamonitor, which is part of Pharma Intelligence, recently published an analysis of 11 “under the radar” biotechs that could be takeover targets, with a particular focus on the largest three on the list. Here’s a look.

#1. Nektar Therapeutics. Based in San Francisco, Nektar has a promising immunotherapy, NKTR-214, that the company hopes will become part of a combination therapy with Bristol-Myers Squibb’s Opdivo and Yervoy. It has a market value of $17 billion. The drug is involved in clinical trials for 20 indications and nine different types of tumors, including melanoma, renal cell carcinoma and non-small cell lung cancer. It inked a deal with Bristol-Myers Squibb with a $1.85 billion upfront and equity payment and another possible $1.78 billion in “biobucks” milestone payments. With that kind of an investment, the report proposes that Bristol-Myers might consider taking over the company entirely.

#2. BioMarin. BioMarin, headquartered in San Rafael, California, has a market value of about $14.3 billion. The company focuses on rare diseases and has three promising orphan drugs in its pipeline that might launch in the next two years. In fact, it is awaiting a U.S. Food and Drug Administration (FDA) decision on its Biologics License Application (BLA) for pegvaliase, a PEGylated recombinant phenylalanine ammonia lyase enzyme product to treat adults with phenylketonuria (PKU) who have problems controlling their blood phenylalanine levels despite previous treatment with available therapeutics, including sapropterin. The PDUFA goal date is Friday, May 25.

Others include valoctocogene roxaparvovec (val rox) for hemophilia A and vasoritide for achondroplasia. Pharmaphorum writes, “Sanofi is the most likely for a ‘low risk’ acquisition with an immediate revenue stream of $1.5 billion thanks to already approved rare disease therapies, according to the analysis.”
#3. Alnylam Pharmaceuticals. Located in Cambridge, Massachusetts, Alnylam focuses on RNA interference (RNAi). On May 8, the company reported preclinical results that supports its RNAi therapeutics for central nervous system disorders. The study, which was successful in rats, supports the company’s selection of its first CNS-targeted development candidate this year. It expects to file its first investigational new drug (IND) or equivalent in late 2019 or early 2020, with potentially one or more INDs per year after that.

Its filed its first RNAi therapy, patisiran, with the FDA for hereditary transthyretin-mediated amyloidosis (hATTR) with polyneuropathy earlier this year. The company’s market value is $11.9 billion, and Sanofi is considered a potential buyer because of its connections to Regeneron and a focus on biologics. Celgene is also viewed as another possible buyer.

Other smaller companies viewed as potential takeover targets include Global Blood Therapeutics , Ultragenyx, Sarepta, OncoSet Medical, Mesoblast, Acorda, Sangamo and Acceleron.

https://bit.ly/2LlHNKd

UDG Healthcare disappoints on weaker Sharp business

Britain’s UDG Healthcare posted a weaker-than-expected first-half performance at its second-largest business, Sharp, on Tuesday and lowered its outlook for the division, sending its shares down more than 6 percent.

The company, which provides outsourced sales and marketing, drug distribution and packaging services to healthcare companies, said revenue at Sharp fell 4.4 percent to $118.6 million (88.4 million pounds) in the six months ended March 31.

Sharp, which specialises in contract packaging, also saw a 1.6 percent decline in operating profit, hurt by weaker demand for bottling at the division’s U.S. business.

The company said Sharp is expected to deliver double-digit underlying operating profit growth in the second half of this year, but that will still only leave full year growth in the mid-single digits compared to its earlier guidance of low double digit growth.

Shares of the company were last down 5.3 percent at 882 pence, and were among the top losers in a FTSE midcap <.FTMC> index that edged up overall on Tuesday.

“Given the lack of an upgrade to (overall) guidance and the short-term softness at Sharp, we would expect the shares to underperform today,” Liberum analysts said in a client note. “That said, we do not believe the softness at Sharp will persist and expect a bounceback year in 2019.”

The weakness at Sharp was offset by a 26 percent surge in revenue at UDG’s biggest business, Ashfield, which benefited from the completion of a series of recent acquisitions.

The company reaffirmed its guidance for constant currency adjusted EPS growth of 18-21 percent and said total revenue rose 17 percent to $568.7 million.

“While this is below normal underlying growth rates, the improved pipeline of business in both the US and Europe leaves Sharp well positioned to generate strong underlying operating profit growth in FY19,” the company said.

https://bit.ly/2LkQWTr

Pets at Home sees more price cuts as competition grows

Price cuts to tackle rising competition hit full-year profits at Pets at Home Group Plc, Britain’s biggest pet shop company said on Tuesday, signalling it expected more reductions this year.

Shares in the group fell as much as 8.7 percent to an all-time low of 143 pence, among the biggest falls on the FTSE 250 midcap index <.FTMC>.

Pets at Home, which also offers veterinary care and grooming services, said profit before tax for the year ended March 29 fell 12.3 percent to 84.5 million pounds.

Margins fell to 51.7 percent from 54.2 percent a year earlier due to price investments, it said, adding it expected a further drop of 75 to 125 basis points this financial year.

“This year we will see some further price investments,” Chief Executive Peter Pritchard said, referring to the company’s efforts to stay competitive as German rival Zooplus tries to wade in to the UK market with its low-price model.

Last week, Zooplus said it was expanding its UK fulfilment centre area by three times to improve deliveries.

Pets at Home said it invested about 13 million pounds last year in its merchandise business, which sells pet food and accessories, as part of its efforts to sharpen prices.

Pritchard, who took up his post last month, said price investments this year would not be as large as last financial year.

“We do not currently see enough evidence that Pets are able to compete well enough against the likes of a rapidly growing Zooplus, who are consistently taking market share”, Liberum analysts said in a note.

At 1010 GMT, Pets at Home shares were down 7.8 percent at 145.7 pence.

GROWTH AHEAD

The company, which listed on the London Stock Exchange in 2014, forecast a low single-digit percentage rise in profit this financial year.

Pritchard also said he expected high single-digit profit growth the year after, despite pressures on consumer spending.

“We know from history that when times are tough people are likely to cut back on a sofa, car, or holiday, but the pet market tends to fare pretty well through recessionary and tough times,” he said, adding the pet market was continuing to grow.

Pets at Home, which has 448 stores and 461 veterinary practices across the United Kingdom, said it would open 10 to 20 grooming salons and 20 to 25 vet practices during the year.

Comparable sales at it merchandise business rose 5 percent in 2017-18 compared with just 0.8 percent the year before.

Overall revenue rose 7.8 percent to 898.9 million pounds.

https://bit.ly/2KMsUj2

Lawsuit against Express Scripts over Anthem ties dismissed

A federal judge on Tuesday dismissed a lawsuit brought against Express Scripts Holding Co (ESRX.O) by shareholders who accused the pharmacy benefits manager of inflating its share price by hiding its deteriorating relationship with its largest customer, Anthem Inc (ANTM.N).

U.S. District Judge Edgardo Ramos in Manhattan, who dismissed an earlier version of the lawsuit last August, said shareholders failed to support their claim that Express Scripts knowingly misled them. Unlike last year, Ramos did not leave the shareholders permission to file a new version of their case.

A lawyer for the shareholders, who were led by the Teachers Insurance and Annuity Association of America, could not immediately be reached for comment. Express Scripts also could not be reached.

The plaintiffs accused the St. Louis-based company of hiding its souring relationship with Anthem from investors for more than a year, causing its share price to drop when Anthem sued Express Scripts for $15 billion in March 2016.

Express Scripts Holding Co77.14

ESRX.ONASDAQ

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• ESRX.O
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In that lawsuit, which is pending before Judge Ramos, Anthem claimed Express Scripts was overcharging it by $3 billion a year and sought to be let out of its 10-year contract.

In April 2017, Express Scripts said Anthem was unlikely to renew its contract when it expired in 2019, and that any new contract would likely be on less favorable terms.

In addition to Express Scripts, the shareholders also sued the company’s current Chief Executive Tim Wentworth and his predecessor, Chairman George Paz.

https://reut.rs/2s5TwDE

Grail Raises $300M in Series C Financing

Grail has raised $300 million in a Series C financing round that was oversubscribed, according to the firm.

Ally Bridge Group led the round along with Hillhouse Capital Group and 6 Dimensions Capital. Blue Pool Capital, China Merchant Securities International, CRF Investment, HuangPu River Capital, ICBC International, Sequoia Capital China, and WuXi NextCODE also contributed.

This is Grail’s third financing round since 2016, and it has raised more than $1.5 billion. The latest financing will support development and validation of its early cancer detection products.

Grail was launched in early 2016 by Illumina with $100 million in funding from that firm as well as Arch Venture Partners, Bezos Expeditions, Bill Gates, and Sutter Hill Ventures. It raised a further $900 million in a Series B round in early 2017 and used some of that money to buy back part of Illumina’s stake in the firm.

Jennifer Cook, Grail’s CEO, said in a statement that the firm has enrolled more than 73,000 participants in its two clinical studies and is “on track to complete both clinical studies this year.” In addition, she said, Grail “recently reported data supporting the potential for development of a highly specific and sensitive blood test, and are now continuing our development programs to optimize and validate a product for early detection of multiple cancer types.”

Grail President Ken Drazan added that the firm plans to launch its first product in Hong Kong this year for the early detection of nasopharyngeal cancer. A team from the Chinese University of Hong Kong described the test’s analytical performancelast week in the Proceedings of the National Academy of the Sciences.

Rumors have been circulating in recent months that Grail plans to go public in Hong Kong, though a filing for such an offering has yet to materialize.

https://bit.ly/2rYT0s4