Janney Montgomery Scott analyst Yun Zhong said all of uniQure’s programs are on track and that weakness in the shares after earnings is a buying opportunity. Zhong keeps a Buy rating on uniQure shares.
Wednesday, August 8, 2018
AMA: CVS-Aetna Merger Would Reduce PBM Competition, Raise Prices
The American Medical Association is urging the Department of Justice to squash the proposed merger between CVS Health and Aetna.
The combined entity would drastically reduce competition in many pharmacy benefit management (PBM) markets and may raise drug prices for consumers, the physician advocacy group warned in a statement emailed to journalists.
The merger is expected to increase PBM concentration in 30 out of 34 Medicare Part D regional markets, resulting in higher premiums. Ten of those 34 markets would exceed anticompetitive thresholds set by federal antitrust guidelines, the AMA pointed out.
“The CVS-Aetna deal is popularly described as a vertical merger involving two companies that don’t operate in the same markets,” explained AMA President Barbara L McAneny, MD. “But in fact, CVS and Aetna do operate as rivals in some of the same markets, raising substantial concerns that are specific to horizontal mergers.”
“A merger of these two rivals would risk a substantial reduction of competition in the stand-alone Medicare Part D prescription drug plan market and the pharmacy benefit management (PBM) services market.”
Both entities already hold significant power over their respective PBM markets, the AMA added, and combining that influence may preclude new entrants in the field. With fewer competitors, the CVS-Aetna conglomerate could raise drug prices despite national pressure to lower pharmacy costs for consumers.
“There is every indication that extensive vertical integration resulting from the proposed merger would raise prices, reduce choice and stifle innovation in markets for PBM services, health insurance, retail pharmacy, and specialty pharmacy,” said McAneny.
The AMA has taken a firm stance against the CVS-Aetna merger, as well as similar mega-mergers in the past.
The organization was strongly opposed to the proposed 2015 mergers between two sets of large payers: Anthem and Cigna and Aetna and Humana. Both deals were later terminated due to antitrust concerns and other financial issues.
Earlier in August, the AMA praised California Department of Insurance Commissioner Dave Jones for opposing the CVS-Aetna deal following a June hearing in which the AMA stressed the deal’s negative impacts on access, choice, and care quality.
“The AMA agrees with Commissioner Jones that allowing this anticompetitive merger to proceed likely would harm consumers,” McAneny said at the time.
“If left unblocked, there is every indication that the merger would raise prices, reduce choice and stifle innovation in five poorly performing markets: Medicare Part D stand-alone prescription drug plan, pharmacy benefit management services, health insurance, retail pharmacy, and specialty pharmacy.”
The AMA is not the only organization that has voiced concerns over the proposed deal. In March, the American Antitrust Institute (AAI) also cautioned the Department of Justice against allowing the merger to proceed.
Combined with the pending $67 billion merger between Cigna and Express Scripts, the CVS-Aetna merger would “trigger a fundamental restructuring of the US healthcare system” by squeezing competition out of major PBM markets, the AAI said.
“Assuming both mergers move forward, the three largest integrated PBM-insurer systems (i.e., CVS-Aetna, Express Scripts-Cigna, and Optum Rx-United Healthcare) that would dominate the markets would have weak, if any, incentives to compete,” the group added.
“High PBM market concentration and the inability of smaller PBMs to discipline competition increases the risk of input foreclosure and raises barriers to entry to potential entrants in health insurance. Higher insurance premiums, lower quality, and less innovation in relevant health insurance markets would be the likely outcome, to the detriment of consumers.”
In light of the failed efforts of Aetna-Humana and Anthem-Cigna, as well as federal efforts to address skyrocketing drug costs for consumers, the Department of Justice is likely to closely scrutinize the CVS-Aetna proposal for evidence of potentially anticompetitive outcomes.
FDA panel backs approval of Paratek’s antibiotic
A U.S. Food and Drug Administration expert panel on Wednesday voted in favor of approval of Paratek Pharmaceuticals Inc’s antibiotic to treat bacterial pneumonia and skin infections.
The panel voted 17-1 in favor of the drug’s safety and effectiveness in treating acute bacterial skin and skin structure infections, and voted 14-4 for treating community acquired bacterial pneumonia.
The vote comes ahead of a final decision by the FDA on the drug’s approval, which is expected by early October. The FDA typically follows the recommendations of its advisory panels, but is not obliged to do so.
Shares of the company were halted ahead of the panel’s vote.
Bio-Techne Intros GMP Small Molecules for Stem Cell Therapy Development
Bio-Techne has introduced a new range of Tocris Bioscience-branded stem cell research compounds produced to cGMP standards, which are suitable for use as ancillary materials in the development of stem cell therapies.
Bio-Techne has a highly-qualified team who have full control over the cGMP process, meaning we can ensure: a quality assured manufacturing system, guaranteed batch-to-batch consistency, traceability from starting material to final product, and consistency of supply. GMP compounds are synthesized in accordance with relevant sections of ICH Q7 guidelines, and are classified as tier 2 risk in the USP <1043> guidelines. The first compounds to be released in our GMP range are SB 431542 and DAPT, which are widely used in stem cell differentiation and reprogramming protocols; these will be followed by Y-27632, CHIR 99021, and XAV 939.
Small molecules have a wide range of applications in stem cell research including reprogramming, differentiation, maintenance, and proliferation. They can also be used in combination or as replacements for growth factors and other proteins. The use of small molecules offers several advantages over alternative methods, including a rapid and reversible action, cell permeability to target intracellular signalling pathways, and concentration-dependent activity so they can be used in different protocols with different outcomes.
Dave Eansor, President of Bio-Techne’s Protein Sciences Segment, commented, “We are really excited about the launch of these new GMP stem cell compounds. They will enable scientists to easily transition from the pre-clinical to clinical phase of stem cell therapy development. Alongside Bio-Techne’s R&D Systems-branded GMP proteins and antibodies, their use will help advance research into the development of new stem cell therapies.”
Novo Nordisk U.S. Sales Slump in 2Q and Predicts Continued Decline for 2019
Shares of Danish drugmaker Novo Nordisk are down about five percent this morning after the company reported an overall decline in sales during the second quarter of this year. Sales were particularly disappointing in North America, which saw a 10 percent drop, the company said.
Novo reported that for 2019 sales in the United States could face some struggles due to formulary negotiations with pharmacy benefit managers and managed care organizations over the cost of its diabetes treatments. Novo, which is the largest diabetes treatment focused company, said talks with those groups are progressing, but noted that “average prices after rebates are expected to be lower compared with the levels in 2018.” Those lower levels will primarily be due to prices of basal insulin and “changed Medicare Part D coverage gap legislation,” Novo said.
Despite the lagging U.S. sales, Novo said that some of its most popular medications made headway. Sales of Victoza grew two percent in the quarter to 11.7 billion Danish Kronor, or about $1.82 billion. Sales of the weight-loss drug for diabetics Saxenda increased about 35 percent to 1.7 billion kroner, or about $260 million. Diabetes treatment Xultophy saw significant growth during the quarter. Novo said sales grew 154 percent to 720 million kroner, or about $116 million.
Also in the first half of this year, Novo launched its newest treatment, Ozempic, a once-per-week glucagon-like peptide (GLP-1) receptor agonist for type 2 diabetes. Ozempic was approved by the FDA in December 2017 and was launched for commercialization in the U.S. in February. Novo said initial feedback from prescribers and payers has been positive and formulary coverage for the medicine is progressing. The weekly new-to brand prescription market share for Ozempic has reached 14 percent, Novo added.
Since its launch, Ozempic has pulled in about $41 million in sales. PM Live reported that the company has its sights set on taking over market share held by Eli Lilly and its powerhouse drug Trulicity. While Ozempic is gaining some ground, PM Live noted it has a long way to go to catch the Lilly medication, which has generated more than $1.5 billion in sales this year.
“Sales growth in the first half of 2018 was driven by solid performance of our key innovative products: Victoza, Tresiba, Xultophy and Saxenda, and the launch of Ozempic is off to a good start in North America. We are encouraged about the clinical trial results for oral semaglutide and we are looking forward to making the first oral GLP-1 treatment available for people with type 2 diabetes,” Lars Fruergaard Jørgensen, president and chief executive officer said in a statement.
While Novo faced slumping sales in the U.S. during the quarter, the Danish drugmaker pointed to some of its pipeline advances. The company pointed to positive Phase IIIa results from four of the 10 clinical trials in the PIONEER program with oral semaglutide, a new once-daily GLP-1 tablet for people with type 2 diabetes. Novo said the trials showed statistically significant reductions in both HbA1c and weight for oral semaglutide compared to empagliflozin, sitagliptin and Victoza.
Despite the decline in sales for the quarter, Novo continues to project positive sales growth of three to five percent for 2018. Sales growth and operating profit growth reported in Danish kroner are now expected to be five and seven percentage points lower than in local currencies, respectively, the company added.
Insider Trading Charge for Rep. Collins, Innate Immunotherapeutics Director
A New York Republican Congressman and his son have been charged with insider trading. U.S. Rep. Chris Collins was a board member for Australia-based Innate Immunotherapeutics. The government charged he used that information to help his son make timely trades.
Collins, along with his son, Cameron and the father of Cameron’s fiancée, Stephen Zarsky, all face charges of insider trading, CNBC reported. According to the indictment, Collins “passed nonpublic information” about Innate’s drug trials to his son in order to help him “make timely trades in Innate stock and tip others,” CNBC reported. Information was provided to Zarsky, who in turn shared that information, CNBC said.
Collins turned himself in to the government this morning, Axios reported. However, Collins’ attorneys have promised a vigorous defense to clear the Congressman of the charges, CNBC said. The defense team said the indictment does not suggest that Collins himself traded Innate stocks and believes that will lead to his vindication, CNBC reported.
Collins’ ties to the Australian biotech have been under investigation for some time. He, along with former U.S. Secretary of Health and Human Services Tom Price, were early investors in the company. Investments held by Collins and his family amounted to about 21 percent and gave them a significant voice in the company. As a majority stakeholder, Collins has been key in urging other powerful U.S. lawmakers to invest in the company. Price later sold his shares of Innate prior to being sworn in as HHS Secretary due to potential conflicts of interest. CNBCnoted that during Price’s confirmation hearings, he was grilled by the Senate over the Innate tip he allegedly received from Collins.
Not only did Collins reportedly encourage Price to invest, but at least four other Republican lawmakers acquired stock following Collins’ lead. Last year it was reported that Collins bragged about how many millionaires he had made of people due to their investments in Innate.
That braggadocious claim, though, got the Congressman in hot water with his colleagues. Last year, the U.S. House Committee on Ethics initiated a probe of Collins and his involvement with Innate. CNBC noted that “in October 2017, the committee found there is a substantial reason to believe that Representative Collins shared material nonpublic information in the purchase of Innate stock.”
Last summer, Collins lost more than $16 million in a single day when Innate shares plunged following the failure of its lead candidate MIS416. In a mid-stage study, MIS416 failed to show clinically or statistically significant effects in patients with secondary progressive multiple sclerosis.
Collins faces seven counts of securities fraud, conspiracy to commit wire fraud, wire fraud and making false statements. Cameron Collins faces these same charges, and Zarsky faces four counts of securities fraud, conspiracy to commit wire fraud, wire fraud, and making false statements.
Big employers more ‘activist’ on health costs, push back on high-deductible plans
Employers have begun playing an increasingly “activist” role in curbing healthcare costs, a trend that is expected to accelerate next year, according to the latest survey from the National Business Group on Health (NBGH).
Nearly half of all companies polled for the annual Large Employers’ Health Care Strategy and Plan Design Survey said that they are doubling down on driving delivery system changes, using narrow network delivery models such as accountable care organizations, direct contracting and high-performance networks to shift healthcare costs. Nearly 60% plan to use these strategies by 2021.
In a surprise shift, fewer employers (30%) plan to offer consumer-directed—or high-deductible—health plans as the only option for their employees compared to 39% in 2018. The survey results were based on responses from 170 large employers representing coverage of 19 million employees and their dependents conducted between May and June 2018.
Brian Marcotte, president and CEO of the NBGH said he believes the growing interest in consumer-directed health plans was driven in part by employer’s concerns about the Affordable Care Act’s Cadillac Tax to go into effect in 2018. But that tax has been delayed twice by Congress and isn’t expected to go into effect until 2022.
“There’s a view it may continue to be kicked down the road. So I think employers are relaxing from that perspective,” Marcotte said.
But there may also be additional reasons, he said.
“Are we at a tipping point in terms of cost sharing? Although employers do contribute to health savings accounts, on average $500 for an individual and $1,000 for a family, high deductible plans are a challenge,” he said. “We also have very low unemployment so is a war for talent playing a role in this as well?”
Recent moves by Congress to expand the flexibility of health savings accounts may be a factor in reversing that trend toward consumer-directed health plans in the future, Marcotte said.
“Employers are very interested in adding more flexibility into these plans,” Marcott said. He pointed to what consumer health plans did to reboot plan design and the key role of health savings accounts in making them work.
“There’s a lot of rigidity in what you can do and what you can’t do if you have a health savings account,” Marcotte said. “Building back in flexibility, employers would like to cover more value-based services and provide a higher level of coverage. Whether it’s chronic condition management or preventative services or Centers of Excellence, there is a real opportunity to get back into design based on value.”
Overall, the survey of employers found that they project their healthcare benefit costs are expected to rise about 5% for the sixth year in a row, reaching $14,800 per employee in 2019 compared to the $14,099 employers project in costs per employee in 2018.
The survey also found:
- Drug costs: Half of the employers (49%) said they believe the drug supply-chain model needs to be overhauled and simplified and 75% said they do not believe drug manufacturer rebates are an effective tool to drive down drug costs.
- PBMs: Employers expressed concern about industry consolidation between health plans and pharmacy benefit managers, with 56% indicating they are skeptical the consolidation will lower costs or improve quality and customer experience.
- Mental health coverage: Employers are upping the ante on mental and behavioral health services. That includes 58% offering self-directed online resources for mental health benefits next year compared to 53% in 2018, as well as 39% offering flexible work schedules to allow employees to seek care during regular business hours compared to 33% in 2018.
- Opioids: The vast majority of employers said they were concerned or very concerned about the inappropriate use of opioids with one in four indicating the biggest impact has been in pharmacy costs followed by absenteeism (16%) and the death of an employee or dependent (12%). About 80% said they approve of using limited supplies, as well as implementing CDC prescribing guidelines and covering alternative therapies (32%).
- Digital tools: More than half of companies said they believe virtual care will play a significant role in health delivery moving forward and 43% believe artificial intelligence will play a major role.
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