Drugstore stocks plunged on the news that Amazon (AMZN) is buying mail-order pharmacy PillPack, Bill Alpert writes in this week’s edition of Barron’s. By week’s end, shares of Walgreens Boots Alliance (WBA), CVS Health (CVS), Rite Aid (RAD), Fred’s (FRED), Cardinal Health (CAH), AmerisourceBergen (ABC), and McKesson (MCK) were all in negative territory as investors “probably overreacted,” he contends. No one should doubt the ability of Amazon to disrupt an industry, but Wall Street has greatly reduced the multiples that it pays for drug chains and chances are, drugstore stocks will recover from that “anxiety attack,” Alpert adds.
Sunday, July 1, 2018
CMS decides Okla., Mass. Medicaid modification requests
This week, the Centers for Medicare & Medicaid Services decided on two states’ requests to modify their Medicaid programs.
And the administration gave one a thumbs up and the other a thumbs down.
The CMS denied Massachusetts’ request (PDF) to limit certain expensive Medicaid drugs covered under the state’s program. The agency also denied the state’s request to move Medicaid beneficiaries with incomes over 100% of the poverty line to the state’s marketplace, which would have increased federal reimbursements to the state.
At the same time, Oklahoma’s Medicaid program became the first to win approval from the federal government to negotiate supplemental rebate agreements involving value-based arrangements with drug manufacturers, which have the goal of increasing rebates for the state if patient outcomes don’t improve.
“Oklahoma’s plan for value-based drug contracts is an important example of how states can innovate to bring down drug costs,” HHS Secretary Alex Azar said in a statement. “The Trump Administration is committed to giving states the flexibility they need to make healthcare more affordable, and strongly supports innovations like value-based purchasing for prescription drugs.”
And while the decisions have been compared to each other, one healthcare lawyer said there was an important legal distinction between the two requests.
“Oklahoma had requested assurances that a value-based payment model developed via a supplemental rebate would not reset best price,” Ross Margulies, a healthcare attorney at Foley Hoag, told FierceHealthcare. “This was a policy clarification for CMS; the agency did not have to exercise its waiver authority to waive any existing Medicaid law.”
However, Massachusetts asked to waive the legal requirement that a state generally cover all medically appropriate drugs but still be entitled to statutory rebate payments from manufacturers.
“The CMS found you can’t pick and choose,” he added.
Deep brain stimulation ‘slows Parkinson’s progression’
A new deep brain stimulation study comes to surprising conclusions.
Parkinson’s disease is a neurodegenerative condition that affects an estimated 500,000people in the United States.
As the condition mostly affects older adults, the number of affected people is likely to increase in line with the average age of the population.
The disease is caused by a loss of neurons in a part of the brain called the substantia nigra.
Loss of cells in this region leads to a reduction in dopamine levels and a range of symptoms.
Treating tremor
One of the most common symptoms of Parkinson’s disease is tremor; often starting in the hands, it tends to worsen as the disease progresses.
Some drugs limit tremor, as can deep brain stimulation (DBS). Electrode-tipped wires are inserted into the brain and connected to a device similar to a pacemaker, implanted under the skin in the chest or stomach area.
DBS will deliver high-frequency stimulation to the brain, which reduces tremor. It does not work for everyone and it is not a cure, but it has provided some patients with a new lease of life.
In 2006, a new DBS trial recruited a group of people with early-stage Parkinson’s disease. This was considered controversial because, at that time, DBS was a treatment of last resort; it was only used if an individual’s symptoms no longer responded to medication.
The study was conducted at the Vanderbilt University Medical Center in Nashville, TN. The findings were recently published in the journal Neurology. The results have the potential to change medical science’s approach to early-stage Parkinson’s.
Can DBS slow progression?
The participants were assigned to one of two groups. One received DBS plus medication, and the other group only received medication.
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They found that those in the medication only group were seven times more likely to develop new rest tremor in the following 2 years compared with the DBS plus medication group.
Similarly, 86 percent of the drug group developed tremor in a limb that was initially unaffected, but just 46 percent of the DBS group did. Also, four DBS patients’ tremor actually improved, and one patient’s tremor stopped entirely.
“The finding concerning tremor progression is truly exceptional. It suggests that DBS applied in early-stage Parkinson’s disease may slow the progression of tremor, which is remarkable because there are no treatments for Parkinson’s that have been proven to slow the progression of any element of the disease.”Senior study author Dr. David Charles
Off the back of these positive findings, the Food and Drug Administration (FDA) have approved a much larger phase III multicenter study. They hope to involve 280 individuals with early-stage Parkinson’s disease.
Dr. Charles is excited about the future of Parkinson’s research but explains that caution is needed.
He says that “[t]he field of DBS therapy for Parkinson’s disease is moving toward earlier stages of treatment, therefore, we must conduct the pivotal trial to ensure patient safety and provide the Parkinson’s community with the best possible medical evidence to guide treatment.”
Meningitis diagnosis often delayed
The first major paper looking at the causes and consequences of meningitis in the UK has found that viruses are now the most common cause of meningitis in adults and a cause of substantial long-term ill health. The paper also found that the management of many patients with meningitis is sub-optimal.
The study by researchers at the University of Liverpool’s Institute of Infection and Global Health, published in The Lancet Infectious Diseases, funded by Meningitis Research Foundation (MRF) and the National Institute for Health Research, studied the diagnosis and treatment of more than 1000 patients with suspected meningitis.
It was found that diagnosis of meningitis is often delayed due to unnecessary brain scans being performed before lumbar puncture—which is the essential investigation to determine the cause of the illness. The majority of patients (81%) had a brain scan and 70% of those took place before lumbar puncture, otherwise known as a spinal tap.
Recommendations in national guidelines* urge doctors to perform a lumbar puncture within the first hour in patients with suspected meningitis unless the patient has particular symptoms which make it unsafe to. Only 12% of patients studied should have had a brain scan prior to lumbar puncture if the guidelines had been followed.
Cases of bacterial meningitis—the life threatening form of the disease—have significantly reduced over the last few decades following the introduction of vaccines against some of the most common types, and the study found that viral meningitis now accounts for the majority of cases. Being able to quickly determine which bacteria or virus is causing the illness is essential for the appropriate treatment of patients. Antibiotics should be given urgently to those with bacterial meningitis, but not viral meningitis, as viruses don’t respond to antibiotics.
Delays in diagnosis mean that antibiotics are often inappropriately used in patients with viral meningitis, resulting in a longer than necessary stay in hospital, which poses a considerable burden on patients and the NHS and potentially also contributes to the problem of antimicrobial resistance.
Patients in the new study who were investigated promptly with lumbar puncture were also more likely to have a specific cause of the meningitis identified, and to spend less time in hospital. Overall, the specific virus or bacteria causing the illness was not identified for 43% of patients.
Dr. Fiona McGill from the Institute of Infection and Global Health. University of Liverpool, said, “This study provides the first estimate of the incidence of viral meningitis in UK adults. It shows that viral meningitis is now a major cause of meningitis, but often the management is not quite right. It’s a concerning finding that so many unnecessary brain scans are taking place and that these appear to be delaying the correct diagnosis.”
Dr. Mike Griffiths, senior investigator on the study, added, “Diagnosing a specific cause of meningitis quickly is key to getting patients on the right antibiotics, if needed, or avoiding unnecessary antibiotics in those with viral meningitis. Once viral meningitis has been diagnosed, efforts should focus on treatment of the symptoms and expediting discharge from hospital which would be less distressing for patients and ease pressures on the NHS.”
Vinny Smith, Chief Executive at MRF said, “Meningitis can strike without warning and the bacterial form of the disease can kill in hours. Many survivors have long-term, disabling after effects as serious as brain damage and deafness. It is impossible to tell the difference between bacterial meningitis and a milder viral infection, even for a doctor. This is why it’s crucial not to delay performing the lumbar puncture.
“The findings in this study are really significant. It’s clear that the time it takes to get a correct diagnosis is having serious consequences and the national guideline is not being followed. Around the world, there is a pressing need for improved rapid diagnostic tests for meningitis. We are supporting research to that aim.”
More information: * www.britishinfection.org/files … _published_proof.pdf
The Lancet Infectious Diseases (2018). www.thelancet.com/journals/lan … (18)30245-7/fulltext
Controversial cost watchdog to expose ‘unsupported’ price hikes on old drugs
U.S. drug cost effectiveness organization Institute for Clinical and Economic Review routinely clashes with pharma by arguing that new drug prices are too high. Now, the group plans to spotlight price hikes on old drugs that aren’t supported by new clinical evidence.
ICER plans to convene a group of experts for annual reports on drug price hikes without new data to justify them. Among the experts are representatives from Merck & Co., Regeneron, the Memorial Sloan Kettering Cancer Center and Patients for Affordable Drugs. The first report is expected early next year.
Pharma’s routine price hikes have made countless headlines in recent years, beginning in 2015 with enormous increases from Valeant Pharmaceuticals and Turing, the pharma then led by Martin Shkreli. The controversy’s latest iteration came last month with the Trump Administration’s drug pricing plan.
The administration says it aims to boost pricing negotiations and competition, provide incentives for lower list prices and help lower patients’ out-of-pocket costs. Already, the FDA is highlighting complaints about regulatory abuses that stifle generic competition.
ICER, for its part, wants to expose the rising prices on older meds that drive up U.S. drug spending. Early this year, for instance, Wells Fargo analyst David Maris spotlighted dozens of price hikes from Pfizer, Novartis, AstraZeneca, Eli Lilly, Sanofi and other companies. He predicted one increase—AbbVie’s 9.7% price hike on megablockbuster Humira—would cost the U.S. health system $1.2 billion this year alone.
In recent years, ICER and pharma companies have clashed over prices set on new drugs. The group has said prices for cancer meds, PCSK9 cholesterol drugs and more are too high, while companies hit back by questioning the ICER’s motives and review processes.
But the organization has also endorsed some. It recently found that Amgen and Novartis’ new migraine launch Aimovig, priced at $6,900 per year, is cost effective after “existing preventive treatments, which are far less expensive.” The companies agreed with the assessment but said ICER’s analysis might underestimate Aimovig’s cost-effectiveness.
“Patients have been waiting a long time for an option developed specifically for migraine prevention, and decisions as to who should try Aimovig should be left to the discretion of the physician based on patient need,” an Amgen spokesperson told FiercePharma.
ICER also found that new CAR-T cancer drugs from Gilead Sciences and Novartis—which cost $373,000 and $475,000 per year, respectively—”seem to be priced in alignment with clinical benefits over a lifetime time horizon.” ICER also recently signed off on the price of Roche’s new hemophilia med Hemlibra.
However, ICER has hit back at the stickers for meds to treat osteoporosis, multiple sclerosis and more. Most recently, the group said Vertex’s cystic fibrosis drugs Kalydeco, Orkambi and newly approved Symdeko would need discounts of 77% to be considered cost-effective. Vertex responded in a strongly worded letter that the analysis is flawed.
Hospitals Grappling With Prolonged Painkiller Shortage
There is another opioid crisis happening in the U.S., and it has nothing to do with the overdose epidemic: Hospitals are frequently running out of widely used injected painkillers.
Manufacturing shortages are forcing many doctors and pharmacists to sometimes ration injected opioids, reserving them for the patients suffering most. Other patients get slower-acting or less effective pain pills, alternatives with more side effects or even sedation.
Medical groups are urging regulators to help, saying some people having surgery, fighting cancer or suffering with severe burns are getting inadequate pain control. They also say shortages frequently cause medication switches that could lead to deadly mistakes.
Earlier this month, the American Medical Association declared drug shortages a public health crisis, saying it will urge federal agencies to examine the problem as a national security threat and perhaps designate medicine factories as critical infrastructure.
Injected opioid shortages have happened before, in 2001 and 2010, but they weren’t as acute and long-lived, experts say. This one started almost a year ago and is expected to last into next year.
“It’s definitely the most severe I’ve seen in tracking drug shortages for 17 years,” says Erin Fox, a University of Utah Hospitals pharmacist. She tracks national medicine shortages and recalls two patients dying due to medication errors during the 2010 shortage.
Such shortages steal time from patient care, increase hospitals’ costs and affect just about every department, including operating rooms, emergency departments and cancer clinics. Doctors occasionally find opioids missing from emergency carts and surgery supply trays, “borrowed” by colleagues needing them for other patients.
The shortages started hitting hospitals last summer, after the Food and Drug Administration found sterility and other serious problems at a Pfizer factory in Kansas. The company, which makes 60 percent of the country’s injected opioids, had to slash production to fix the problems.
By January, shortages were so bad hospitals started creating teams to manage their supplies, said Michael Ganio, director of pharmacy practice at the 45,000-member American Society of Health-System Pharmacists.
The group’s April survey of 343 hospital pharmacists found 98 percent had dealt with moderate or severe shortages of the key opioids for treating serious pain: morphine, fentanyl and hydromorphone, better known as Dilaudid. Many hospitals were completely out of at least one.
Shortages of generic injected drugs have become normal. Profit margins are tiny, so only a handful of companies make them, and none can dramatically increase production when a rival stops manufacturing.
With the opioid shortages lingering, hospitals and medical groups have set guidelines for stretching supply, including transferring injected painkillers from large vials into several smaller ones or syringes.
Some worry such workarounds invite mistakes.
Michael Cohen, president of the Institute for Safe Medication Practices, an independent group that compiles voluntary error reports, says mix-ups also occur when nurses or pharmacists substitute unfamiliar painkillers or ones with different concentrations than normal.
Cohen recently received several reports of surgical patients who stopped breathing. Some had overdosed when fentanyl wasn’t available and they mistakenly were given the same amount of much stronger sufentanil. Those patients were saved.
Hospitals also are grappling with shortages of regional anesthesia — local injections of lidocaine, bupivacaine and a third painkiller standard for eye surgery, orthopedic procedures and knee and hip replacements.
Dr. Ruth Landau, director of obstetric anesthesia at Columbia University Medical Centerin New York, says maternity wards for months have faced a critical shortage of the fast-acting version of bupivacaine.
That’s risky because if a woman in labor starts bleeding or her baby isn’t getting enough oxygen, obstetricians must perform an emergency cesarean. Anesthesiologists sometimes have had to use a slower-acting bupivacaine version, which may delay delivery and could harm mother or baby.
“We’re playing with fire,” worries Landau, a vice president of the Society for Obstetric Anesthesia and Perinatology.
In the emergency department at Massachusetts General Hospital in Boston, Dr. Ali Rajarecently had an appendicitis patient who needed intravenous morphine or low-dose Dilaudid. Instead, he had to resort to fentanyl, which wears off quickly, so additional doses were needed frequently.
“He was lucky. The nurses were free to do it, and so he wasn’t in more pain,” Raja recalls.
He tells patients he’ll try pain pills first and switch to IV medication if they don’t work, but “by then, the patient has had pain for longer.”
That’s not an option for the many hospital patients who are sedated, intubated, vomiting or too frail to swallow pills. And because pills can take 45 minutes to start working, they’re a poor choice for patients with broken bones, internal infections and stabbing or gunshot wounds.
Often, patients need a slightly higher opioid dose than one vial holds, but opening a second vial requires discarding the unused portion to avoid contamination.
“Having to choose between underdosing the patient or not having a medication to treat another patient later that day is incredibly frustrating,” Raja says.
At MD Anderson Cancer Center in Houston, palliative care specialist Dr. Ishwaria Subbiah now devotes extra time to choosing painkillers as availability changes. She says already-distressed advanced cancer patients need reassurance when she is forced to take them off a scarce injected painkiller that was working.
“Cancer pain can be absolutely excruciating, more than what a pill can manage,” Subbiah notes.
At Salt Lake City-based Intermountain Health Care, outpatient surgery facilities and cancer clinics are as affected as acute-care departments, and which painkillers are scarcest varies constantly, said chief pharmacy officer Sabrina Cole.
Valerie Jensen, FDA’s head of drug shortages, said the shortages triggered by Pfizer’s problems may ease slightly in the next few months.
The three much-smaller makers of injected opioids — Fresenius Kabi, West Ward and Akorn — have begun making more. They’re putting factory workers on overtime, adding more shifts and switching some manufacturing lines from less-crucial medicines to injected opioids.
The FDA has been expediting approvals those companies need to make more opioids, including allowing new product formulations.
The agency also let Pfizer distribute some glass syringes prefilled with opioids that were held back because of possible particle contamination and cracks in stoppers. Hospital pharmacists have to examine each syringe closely and then filter the contents in a complex, multi-step process.
Meanwhile, Pfizer Inc. doesn’t expect to have most of its injectable opioids back in full supply until the first quarter of 2019, says John Kelly, the firm’s head of manufacturing quality.
The New York-based company acquired the McPherson, Kan., factory when it bought the drugmaker Hospira in 2015. To fix the plant’s troubles, Pfizer decided to replace production lines and other technology, particularly huge equipment-sterilizing machines called autoclaves that can take two years to build, install and test.
It’s spent more than $300 million so far.
Planned shutdowns last summer to start upgrades took longer than expected, FDA inspectors found other problems that needed fixing, and product demand rose, triggering shortages, Kelly said. He said production now is increasing somewhat each week.
CVS May Be Less Vulnerable to Amazon’s Healthcare Attack Than Walgreens
Not all companies are equally at risk from the Amazon.com (AMZN – Get Report) juggernaut.
CVS Health Corp. (CVS – Get Report) may be better-equipped than Walgreens Boots Alliance Inc. (WBA – Get Report) to handle Amazon.com Inc.’s (AMZN – Get Report) move into the pharmacy business — at least according to an RBC Capital Markets analyst.
Amazon on Thursday, June 28, said it was buying venture capital-backed online pharmacy PillPack, sending shares of drug store companies and drug distributors plunging. Terms of the deal were not disclosed, but the Wall Street Journal reported that the price tag was about $1 billion.
In a note on Friday, RBC analyst George Hill said the diversified assets of the pending CVS-Aetna Inc. (AET – Get Report) combination “on a pro forma basis should enable CVS to better weather the risk that Amazon is able to grab pharmacy market share versus WBA.” CVS in December agreed to acquire Aetna for $69 billion.
Hill lowered his price target on CVS to $84 from $91 on the heels of Amazon’s PillPack deal, but said it will not be easy for Amazon to squeeze pharmacy margins in the near- to medium-term. He pointed to factors such as the “the stickiness of payer/pharmacy relationships, decreasing share of mail order, and PillPack’s tiny market share.” On Friday, CVS shares were down 1% to $65.07 after having dropped 6% on Thursday after Amazon’s deal was announced.
If Amazon does take market share and squeezes margins in the medium-term, Hill wrote that CVS is the better-equipped pharmacy to continue growing earnings before interest and taxes.
“Front-end revenue, where we view Amazon as posing a continual obstacle to growth, is just ~7.5% of our CVS/AET [estimated 2019 pro forma revenue], whereas it is ~19% of our WBA [estimated 2019 pro forma revenue],” Hill wrote.
PillPack, founded in 2013, delivers medications in pre-sorted dose packaging and coordinates refills and renewals. It is available in 49 states.
Co-founder and CEO TJ Parker, a second-generation pharmacist, said in a Medium post in November that PillPack expected to generate more than $100 million in revenue in 2017.
Walgreens CEO Stefano Pessina said on an earnings call Thursday said his firm is “not particularly worried” about Amazon’s PillPack acquisition, but added that Walgreens is “not complacent.” He also reiterated that the role of physical pharmacies “will continue to be very, very important in future.”
A CVS spokeswoman said in an email on Friday that CVS believes it is “well-positioned in the market and ahead in this area.” She noted that CVS has multi-dose packaging capabilities and offers its ScriptPath Prescription Schedule, launched last fall, for patients managing multiple prescription medications.
Shares of Walgreens, which plummeted 9.9% on Thursday, were down another 0.5% to $59.42 on Friday. Amazon shares were flat on Friday afternoon after rising 2.5% on Thursday.
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