Judge calls UnitedHealth coverage guidelines ‘tainted’

A UnitedHealth Group subsidiary breached its fiduciary duty by adopting coverage guidelines that did not reflect general standards of care, a federal judge said this week in a ruling that advocates say could help improve coverage for mental health and addiction services in employer health plans.

Judge Joseph Spero of the U.S. District Court of Northern California in the ruling issued Tuesday night sided with patients in a class-action lawsuit that was filed in 2014 against United Behavioral Health (UBH), a subsidiary of the Minnetonka-based health care giant.

At issue were coverage determination guidelines used by the insurer that were “riddled with requirements that provided narrower coverage” for patients, Spero wrote. The judge said the process for developing the guidelines was “fundamentally flawed because it is tainted by UBH’s financial interests.”

The process then resulted in UBH making decisions about guidelines “based as much or more on its own bottom line as on the interests of the plan members, to whom it owed a fiduciary duty,” the judge wrote.

Plaintiffs did not ask the court to determine whether individual class members were actually entitled to the benefits they sought. Instead, they asserted a challenge to the guidelines used by United in making decisions.

Yet to come is the remedy phase of the court proceedings.

“We look forward to demonstrating in the next phase of this case how our members received appropriate care,” UnitedHealth Group said in a statement. “We remain committed to providing our members with access to the right care for the treatment of mental health conditions and substance use disorders.”

United Behavioral Health is one of many health care businesses within UnitedHealth Group, which is Minnesota’s largest company. It also includes UnitedHealthcare, which is the nation’s largest health insurer, and Optum, a fast growing company that sells services to other health insurers. UBH also operates as OptumHealth Behavioral Solutions.

Advocates for better coverage of behavioral health care needs cheered the ruling, saying it could help fulfill the promise of federal legislation that was designed to bring parity in insurance coverage for physical and behavioral health treatments.

“This is a turning point in our efforts to hold insurers accountable for discriminating against those with mental health and addiction challenges,” former U.S. Rep. Patrick Kennedy, who runs a group focused on parity rights, said in a statement. “This is a landmark case that reinforces the need for equity in how health plans cover physical and mental health conditions.”

The lawsuit names 11 out of more than 50,000 plaintiffs in the case, according to the Zuckerman Spaeder LLC law firm. They were beneficiaries of employer health plans where UBH served as a claims administrator. Plaintiffs alleged United denied them or their loved ones coverage for residential or outpatient treatments between 2011 and 2016.

UBH started developing coverage determination guidelines in 2010 in response to the federal parity law. When patients or their health care providers submit a request for coverage, United employees look at whether the prescribed treatment, at the proposed level of care, meets criteria in the applicable guidelines.

During a 10-day bench trial, Spero found the UBH’s expert witnesses “had serious credibility problems.”

“The court found with respect to a significant portion of their testimony each of them was evasive — and even deceptive — in their answers when confronted with contrary evidence,” the judge wrote.

The guidelines deviated from generally accepted standards of care, Spero found, in ways that made it harder for patients to get coverage. Guidelines placed excessive emphasis on addressing acute symptoms, he wrote, rather than treating underlying conditions. They failed to address effective treatment of co-occurring conditions, the judge found, and broke with standards of care in pushing patients to lower levels of care. And they failed to address the different needs of children and adolescents.

Jason Cowart, an attorney with Zuckerman Spaeder, said in a statement that United is not alone “manipulating” internal coverage criteria to increase the number of denied claims.

“Our cases demonstrate that even though the written terms of a health plan may appear adequate and lawful, many insurers make nearly all coverage decisions based on internal guidelines,” Coward said. “The court’s ruling reveals how important those guidelines are.”

Spero found that UBH violated laws in four states by failing to apply criteria that complied with state standards for making coverage determinations relating to substance use disorders treatment. And the judge outlined how the guidelines fit with the company’s financial interests.

Financial concerns were apparent, Spero wrote, in United’s decisions on whether to change coverage guidelines for easier access to an autism treatment called applied behavioral analysis and a treatment called transcranial magnetic stimulation for major depressive disorder.

They were perhaps most obvious, the judge said, in the company’s refusal to adopt a professional group’s criteria for making substance use disorder coverage determinations. Testimony during the trial showed United’s financial department would not provide a “green light” to the change, the judge wrote, due to concerns about the impact on “Ben Ex,” the shorthand for benefit expense.

“UBH’s finance department had veto power with respect to the guidelines and used it to prohibit even a change in the guidelines that all of its clinicians had recommended,” Spero wrote of the decision on substance use disorder coverage. More broadly, the judge wrote that “instead of insulating its guideline developers from these financial pressures, UBH has placed representatives of its Finance and Affordability Departmentsin key roles in the guidelines development process.”

https://www.marketscreener.com/UNITEDHEALTH-GROUP-14750/news/UnitedHealth-Judge-calls-UnitedHealth-coverage-guidelines-tainted-28123058/

ShockWave Medical 5.7M share IPO priced at $17.00

The deal priced above the $14.00-$16.00 range and was upsized from 5.0M shares. Morgan Stanley and BofA/Merrill are acting as joint book running managers for the offering.
https://thefly.com/landingPageNews.php?id=2875539

Embracing new depression drug esketamine with ‘enthusiastic caution’

Patients with major depression who haven’t responded to other treatments will soon have a new option: esketamine, a rapid-acting therapy derived from the long-used anesthetic ketamine.

But the drug’s approval on Tuesday sparked a string of new questions, from how much patients will have to shell out for the drug to how clinicians will be able to accommodate patients who need to be monitored for two hours after every dose.

“This is an extraordinarily exciting time,” said Dr. Robert Meisner, a psychiatrist and the medical director of the Ketamine Service at McLean Hospital in Belmont, Mass. “That said, it’s important to proceed with enthusiastic caution.”

Here’s a look at five key questions as the drug, which will be sold under the brand name Spravato, heads to the market.

How much will it end up costing patients?

The cost of the treatment will depend on the dose used per session and how many sessions a person will need, according to Janssen, the Johnson & Johnson subsidiary that developed the nasal spray.

The wholesale acquisition cost, or list price, will be between $590 and $885 per treatment session. That means the wholesale acquisition cost for the first month of treatment — which includes two sessions a week — will range from $4,720 to $6,785.

Patients who respond well to the treatment during that first month will then move over to maintenance therapy, which means they’ll receive a dose every week or every other week — at a cost of anywhere between $2,360 to $2,540 a month. There’s still a need for more data on how long patients might need to stay in that maintenance phase.

Janssen said those prices are “generally comparable” to other specialty mental health drugs, like long-acting injectables that are used to treat schizophrenia.

Those totals aren’t the amount a patient will pay out of pocket. They don’t include insurance coverage, discounts, or rebates that might be paid to the government and private insurers. But they also don’t account for the cost of seeing a provider to receive Spravato or the two hours of observation needed after each treatment.

Who can provide the drug?

Every provider who wants to offer esketamine has to be certified by Janssen — and every patient who is prescribed the treatment has to be registered in the company’s distribution program. Health care centers that want to provider Spravato will have to have the prescriber on site while the drug is administered and while patients are being monitored. They’ll also have to submit a patient monitoring form for every patient after every dose. Pharmacies, too, will be have to be certified in order to dispense the drug.

Those steps are all part of a robust system to make sure esketamine isn’t misused or diverted.

“Janssen is working quickly to educate and certify centers that wish to administer Spravato, which may include clinics, community mental health centers, hospitals, or integrated health systems, to appropriately monitor the administration of Spravato and address patient needs,” said Kristina Chang, a spokesperson for Janssen.

“Certain safeguards absolutely need to be in place,” said Meisner. He added that the requirements from the FDA and Janssen appear to be “exceptionally good.”

Will providers be able to accommodate the requirements?

Patients will have to visit their provider for every dose of Spravato, which is delivered in a single-use nasal spray. Patients will have to stick around for at least two hours after every treatment while a provider monitors them for sedation, blood pressure changes, and out-of-body experiences known as dissociation.

That presents several big hurdles for both patients and providers. Many health care facilities aren’t set up to have patients wait in the office for several hours under observation. A health care facility also might not have enough staff to properly monitor them.

“It’s going to be an expensive treatment in terms of what’s required for health care providers,” said Dr. Gerard Sanacora, a psychiatrist and the director of the Yale Depression Research Program. Sanacora has been involved in the esketamine trials and has consulted for Janssen.

How hard it will be for a facility to get set up for Spravato depends on the infrastructure they have in place. At McLean’s neurotherapy unit, which already provides IV ketamine and electroconvulsive therapy, “all the basic elements” are already in place, Meisner said.

Being able to receive Spravato also won’t be an easy process for patients. For the first month, they’ll have to commit to at least two hours — likely during work hours — twice a week to go in for a dose. And since patients will be told not to drive until the day after each treatment, many also might have to coordinate transportation after every single appointment.

Will “ketamine clinics” start providing esketamine?

“We are wholeheartedly embracing it,” said Dr. Steven Levine, a psychiatrist and the chief executive of Actify Neurotherapies, a network of clinics that provides ketamine treatment across the country.

Actify’s centers are among the dozens of free-standing clinics that have opened across the U.S. in recent years to provide ketamine to patients who are desperate for an effective treatment for depression. (Ketamine is a combination of two enantiomers, or mirror image molecules. Esketamine is what’s known as the s-enantiomer, or a component of ketamine.)

Typically, ketamine clinics — run by anesthesiologists, psychiatrists, and other health care providers — have offered ketamine off label through an intravenous infusion. Some of those clinics might be particularly well-prepared to start providing Spravato, given that they are accustomed to having patients remain in the office for monitoring during and after an infusion. Levine said Actify plans to apply for esketamine certification and will continue to provide IV ketamine.

“Nasal esketamine and IV ketamine are going to happily co-exist,” he said.

And while the waiting period might be inconvenient for patients receiving Spravato, Levine also sees it as a “boon for more comprehensive treatment.” He said the company plans to create a patient lounge for peer support and set up stations where patients can do digital psychotherapy during the monitoring period.

Will clinicians embrace the treatment? 

In the weeks leading up to the FDA’s decision, the psychiatry field has been buzzing with excitement about the potential new option. But it’s not clear yet how widely the drug will be used. Some in the psychiatry field still aren’t convincedthere’s enough evidence to support the use of Spravato yet. And even for providers who do want to provide Spravato, the lack of space or staff to properly administer and monitor patients after each dose might make it too difficult for some to do so.

But some are eager to start providing Spravato to patients in need of a new option.

“I think this is a tremendous advance for a lot of people, as long as it’s done responsibly,” Sanacora said.

https://www.statnews.com/2019/03/06/esketamine-clinicians-embracing-depression-drug-with-enthusiastic-caution/

CMS creates tool for surveyors to spot healthcare facility dangers faster

The CMS now requires surveyors to complete a template when documenting instances of immediate jeopardy in an effort to better identify and resolve harm against patients at facilities.

In a blog post on Tuesday, CMS Administrator Seema Verma announcedrevisions to the guidance surveyors use to spot immediate jeopardy, requiring them to fill out a three-question template that describes the incident. The template is then shared with the facility so they have the information necessary to resolve the issue immediately.

Verma said the changes come from recent media attention surrounding harm at facilities. “Despite stringent safeguards, alarming stories continue to be reported about people, including some of our most vulnerable individuals, who have experienced harm in healthcare settings that is devastating to these patients and their families.”

In recent months, an employee at a nursing home in Phoenix made national headlines after he was accused of raping a patient in a vegetative state. The facility announced it is closing. And just last month, immediate jeopardy was placed on Johns Hopkins All Children’s Hospital in St. Petersburg, Florida, for deficiencies. Late last year, the Tampa Bay Times reported on the hospital’s above-average death rates for pediatric heart surgeries.

In addition to the template, the CMS made other revisions to the immediate jeopardy guidance. The agency removed “culpability” as a required component for immediate jeopardy and instead the surveyor need only focus on areas of noncompliance. Psychological harm can also now be a consideration used to determine immediate jeopardy.

The CMS is currently offering online training to surveyors on the changes.

https://www.modernhealthcare.com/safety/cms-creates-tool-surveyors-spot-immediate-jeopardy

Senators to boost Trump’s proposed ban on PBM rebates

Senators are developing a set of bills to support the Trump administration’s proposed ban on drug rebates for pharmacy benefit managers.

Now that transparency has become Washington’s buzzword for health reform, anti-rebate fervor — backed by pharmaceutical CEOs during last week’s Senate Finance Committee grilling — is ratcheting up in both chambers.

“The whole rebate thing just looks kind of — well it’s hard to understand how the consumer benefits from that,” said Sen. John Cornyn (R-Texas). “They claim that they sort of spread the benefit in terms of insurance cost, but then it’s hard to get the facts and see exactly where the money goes. I’d prefer a system that’s a little less of a Rubik’s Cube and that’s a little more straightforward.”

Cornyn and Sen. Catherine Cortez Masto (D-Nev.) of the Senate Finance Committee are discussing legislation to push transparency in the rebate system through reporting requirements, according to aides.

In addition, Sen. Bill Cassidy (R-La.), who sits on both the Senate Finance and health committees, has sent 7 to 10 scenarios for reforming the rebate system to the Congressional Budget Office, and the agency is analyzing them now.

And freshman Sen. Mike Braun (R-Ind.) dived headlong into the debate on Tuesday with a proposal to extend the administration’s proposed ban to the commercial market. Braun sits on the Senate health committee.

HHS proposed a rule in January would effectively block manufacturer rebates from going to PBMs and redirect them to the patient at point of sale.

Rep. Peter Welch (D-Vt.) of the House Energy and Commerce health panel said Republicans and Democrats could agree the rebate system as a whole and the pharmacy benefit managers who govern it need more transparency.

“There’s a lot of concern about PBMs,” Welch told reporters Tuesday. “You know, the PBMs are totally obscure, so nobody knows how much the rebates are or what’s in the formulary.”

PBMs will also be the next target for a Senate Finance Committee probe in a hearing to be held next month, Senate Finance Committee Chair Chuck Grassley (R-Iowa) said.

Grassley told reporters after last week’s grilling of top pharmaceutical CEOs that he didn’t have any details on rebate-related legislation.

But the issue continues to spur enthusiasm in the upper chamber. Cassidy has characterized the Trump administration’s proposed rebate rule as one of the most aggressive proposals.

“Their rebate rule would kick in 2020 — that is aggressive,” Cassidy told reporters late last week as he gave the administration an “A” grade for effort on its work on drug pricing. “Eleven months from now, they would do away with rebates. That’s incredibly aggressive. If 40% of list prices is related to rebates, imagine suddenly your price comes down by 40%. That is aggressive.”

In an Atlantic LIVE event last Wednesday, Senate health committee Chair Lamar Alexander (R-Tenn.) also put his weight behind rebate legislation. Without rebates, the senator said, “we’d see more clearly where the dollars were going, and that could lower prices for patients.”

Industry is falling into their expected lanes on the issue, as pharmaceutical manufacturers signal support for a rebate system overhaul and the PBMs brace for a fight.

Last week, two pharmaceutical CEOs told the Senate Finance Committee they would lower their list prices if the Trump administration’s proposal were extended to the private market.

“If rebates are removed from the commercial sector, we would definitely lower list prices,” AstraZeneca CEO Pascal Soriot said.

But JC Scott, president and CEO of the Pharmaceutical Care Management Association (PCMA) which represents PBMs, criticized Braun’s bill just after it was introduced. He defended PBMs as the “primary advocates for consumers in the fight to keep prescription drugs accessible and affordable.”

“We are concerned that [Braun’s] legislation designed to require a specific use for prescription drug rebates in private-sector health plans would dictate coverage options,” Scott said.

He added that the bill “appears to do absolutely nothing to address the root cause of the problem: high list prices that only the drug manufacturers have the power to set.”

The law firm Foley Hoag released a white paper early this week arguing that the administration’s proposed rule may not pass the savings on to patients as promised if Congress doesn’t amend current antitrust laws.

“Absent such careful consideration, including revisions to existing antitrust laws by Congress that have the current practical and legal effect of limiting and/or reducing the amount of upfront discounts offered by manufacturers, any efforts to modify the current rebate system may result in increased net drug prices, in contravention of the goals of the administration and the proposed rule,” the white paper said.

In other words, a strategist with a drug pricing advocacy group contended, manufacturers could refuse to pass on the discounts to patients citing a potential antitrust violation.

Meanwhile messaging on the rebate debate has gone beyond Congress and hit the airwaves in a campaign to the public.

The conservative political action committee American Conservative Union released a pro-President Donald Trump ad specifically targeting rebates. The ad praises Trump for “fixing the broken system driving higher prices on prescription drugs.

“He’s taking on the insurance middlemen, exposing the secret rebates insurers use to overcharge seniors,” the ad says.

https://www.modernhealthcare.com/payment/senators-boost-trumps-proposed-ban-pbm-rebates

CMS wants advice on facilitating insurance sales across state lines

The CMS is asking the public for advice on how it could make it easier for health insurers to sell coverage across state lines.

The agency issued a request for information on Wednesday for recommendations on eliminating barriers and enhancing insurers’ ability to sell individual insurance coverage from state-to-state. The request, which the CMS said is meant to promote competition and choice for consumers, follows President Donald Trump’s October 2017 executive order on the issue.

In particular, the CMS said it is interested in feedback about how states could use Section 1333 of the Affordable Care Act, which allows insurers to enter into a “healthcare choice compact” to sell out-of-state coverage if state regulators agree.

“Americans are in desperate need of more affordable health insurance options,” CMS Administrator Seema Verma said in a statement. “Eliminating the barriers to selling health insurance coverage across state lines could help provide access to a more competitive and affordable health insurance market.”

She continued, “We are looking for information and ideas from the public on how to create a more dynamic health insurance market with more insurers participating and competing to meet the needs of the American people just like we see in markets for so many other products and services that enhance our daily lives.”

In its request for information, the CMS explains that states are the primary regulators of their insurance markets and are able to facilitate the sale of insurance by out-of-state companies through legislation, but few have taken advantage of this. The agency wants to know why, and how it could help get the ball rolling. Section 1333 would allow the government to establish a regulatory framework to enable two or more states to enter into a compact in which a health insurer could offer one or more qualified health plans in any of those states, it said.

The health plan would be subject to the laws and regulations in the state where it is written, while subject to market conduct, network adequacy and consumer protection rules in the state where the policyholder resides, according to the request for information. States still must pass legislation to allow such compacts.

But the agency also asks if there are other mechanisms beyond Section 1333 that would help insurers sell across state lines. It also wants information on how out-of-state sales would affect premiums and people. It will accept comments for 60 days.

Trump often touted the idea of selling insurance across state lines as his main ACA fix while on the campaign trail. But health policy experts argue that allowing insurers to do so would lead them to set up shop in states with the fewest regulations and offer inexpensive plans with little coverage to healthy people, while less healthy people face higher premiums.

Experts say it would do little to lower health insurance premiums. According to the American Academy of Actuaries, savings would be limited because premiums are driven by the local cost of care, regardless of where the care is purchased.

It would also be difficult for out-of-state insurers to negotiate and establish provider networks in a new area. There are questions about which state would regulate the insurer. The National Association of Insurance Commissioners noted that sales across state lines would eliminate the ability of state regulators to help their residents.

https://www.modernhealthcare.com/insurance/cms-wants-advice-facilitating-insurance-sales-across-state-lines

Another voice takes Bristol execs to task as they try to shore up Celgene buyout

Brad Loncar is not a big fan of the executive teams at either Bristol-Myers Squibb $BMY or Celgene $CELG.

Today, as Bristol-Myers scrambled to win investors’ backing, the Loncar Cancer Immunotherapy ETF outlined why it would line up with the growing — though still marginal — opposition that has gathered around the mega-buyout since Wellington, with 8% of Bristol’s shares, said it would be voting against the deal. Loncar joins the activists at Starboard Value who have planted their flag with the rebellion.

Rather than boil it all down, we’re running the fund’s full statement below, which explains in precise detail why Bristol-Myers Squibb should steer clear of Celgene after experiencing its own, likely self-induced, R&D wounds. And Celgene execs come in for some tart language as well.

For quite a few analysts, the idea that critics could derail an M&A deal of this size is almost unthinkable. But it’s less and less so with every new vote against the deal.

Bristol-Myers’ shares ended the day down 2%.

CNCR ETF’s Position on Bristol-Myers Squibb’s Proposed Acquisition of Celgene
After careful consideration, today the Loncar Cancer Immunotherapy ETF (Nasdaq: CNCR) announces its opposition to the acquisition of Celgene by Bristol-Myers Squibb. CNCR ETF has been a Bristol shareholder for more than three years and plans to vote its shares against the deal on behalf of CNCR’s shareholders. The fund has no position in Celgene currently. View all current holdings in the CNCR ETF.

CNCR ETF’s mission is to support cancer immunotherapy research and improved care for patients while giving investors exposure to one of the most innovative segments within the biotech industry. We take the responsibility that comes with this seriously. While we have no doubt Bristol’s management team is well intentioned, our opinion is that the acquisition is not in the best interest of cancer research, patients, or Bristol shareholders. The following five points bring us to this conclusion:

1. Bristol’s executive team is currently not suited to manage a larger organization.
In multiple cancer indications (particularly lung cancer), Bristol’s development plan for the immunotherapy drug Opdivo has been outclassed by its competitor Merck. Merck’s Keytruda and Bristol’s Opdivo are similar medicines (so much so that Bristol’s own management once described them as “Coke and Pepsi”), and it appears as though Opdivo’s recent development shortcomings are largely due to trial design and other management decision errors. Our confidence in the team’s ability to effectively manage Bristol-Myers Squibb has been reduced lately – let alone managing a much larger organization that would potentially include Celgene. As such, we believe that management has not earned the right to place this large bet with so much on the line.

2. Bristol should focus on making the investments it has already made a success.
Bristol has spent billions over the last few years on partnerships that it hopes will help regain its leadership position in immunotherapy. For example, one year ago it paid $1.85 billion up front and potentially billions more to partner with Nektar Therapeutics on NKTR-214. The companies have said they will soon commence 18 registration trials covering 12,000-15,000 patients, after testing the drug in only dozens of patients in early studies. Drug development is difficult and requires strict attention to detail. Given its recent struggles in the immunotherapy space, Bristol needs to focus on maximizing the investments it has already made and ensure these programs are positioned to have the best possible chance to succeed.

3. The deal will result in cuts to research and development (R&D) that we do not support.
Bristol has highlighted $2.5 billion in annual run-rate synergies as a key value driver of the deal, 35% of which will come from research and development (R&D). This type of cost cutting is not good for either company or the industry in general. While Bristol has said the synergies are mostly about reducing overlap, we are concerned that important research will not get funded because of it. Furthermore, we also believe the disruption that comes with integrating two organizations of this size is underappreciated and can set back research for years. We do not support such a large deal that will likely have a broad, negative impact on research.

4. We do not support Celgene’s past business practices and do not want to see Bristol go down the same path.
The cancer medicine REVLIMID accounts for over 60% of Celgene’s net product sales and the company has resorted to raising its price to an excessive degree. It did so an incredible three times in 2017, once in 2018, and once again at the beginning of 2019. This is outrageous and aggressive. We are concerned that Bristol will be motivated to keep REVLIMID’s revenue stream going for as long as possible in order to make the financials of the deal work. REVLIMID’s patent life is scheduled to expire in the coming years. It is not in the best interest of patients nor Bristol for the company to inherit an incentive to aggressively protect and promote the REVLIMID franchise.

5. Celgene’s poor stewardship of recent acquisitions suggests there is more risk in its pipeline than what is being presented at face value.
Celgene has a history lately of making major acquisitions and then seeing problems arise and stories change. The $7.2 billion acquisition of Receptos and $9 billion acquisition of Juno Therapeutics are two high-profile recent examples of deals that have experienced meaningful delays and turbulence soon after Celgene acquired them. We have a hard time agreeing with Bristol’s optimism about Celgene’s pipeline and the potential blockbusters they see coming to market. Given Celgene’s acquisitive history, there could be more risk to these programs succeeding than what is currently being presented at face value.

After a thorough review of the facts and careful consideration, we do not think Bristol-Myers Squibb acquiring Celgene is in the best interest of cancer research or for Bristol shareholders. Our fund has a responsibility to take an active interest in this matter and vote in a way that is consistent with our mission. While we appreciate the intentions of Bristol management, they have not fully illustrated they are capable of making the acquisition succeed or that Celgene is the right acquisition target. As a result, the CNCR ETF will be voting its shares AGAINST the deal.

https://endpts.com/another-influential-voice-takes-bristol-myers-top-execs-to-task-as-they-scramble-to-shore-up-the-big-celgene-buyout/