Senators Who Got Biggest Checks From CVS, Humana And Other PBMs Testifying

When executives from five of the country’s biggest pharmacy benefit managers testify before the Senate Finance Committee Tuesday, they’ll be staring down a group of senators who have benefited from their businesses. Political action committees for the companies have donated nearly $1 million to the senators’ campaign committees over the past 10 years, according to a Forbes analysis of Federal Election Commission filings.

The recipients spanned the political spectrum. Only one of the 28 senators on the committee, Maria Cantwell (D-Washington), has never accepted money from the companies’ PACs. In 2012, however, her joint fundraising committee, Cantwell Victory 2012, took in $1,000 from Cigna, one of the companies set to testify Tuesday.

In addition, some of the senators have received personal donations from the executives themselves. Derica Rice, who’s now president of Caremark, CVS Health’s PBM division, contributed $1,000 to the campaign committees of Michael Bennet (D-Colorado), Mark Warner (D-Virginia) and Rob Portman (R-Ohio)—plus $2,250 to the campaign of Todd Young (R-Indiana) between 2014 and 2016, when Rice worked at Eli Lilly.

John Prince, CEO of United Healthcare’s Optum, donated $2,500 in 2015 to the campaign committee of Senator Pat Toomey (R-Pennsylvania). Steve Miller, executive vice president and chief clinical officer of Cigna, has contributed $1,000 to the campaign committees of Toomey and Wyden. The other two executives testifying, Prime Therapeutics interim CEO Mike Kolar and Humana healthcare services president William Fleming have donated only to their companies’ PACs since 2009.

According to a review of contributions from the five companies set to testify (plus Express Scripts, which Cigna acquired in December), the campaign committee of Todd Young received the most of any senator on the committee. Since 2009 Young’s committee has received some $75,000.Others who received more than $60,000 in contributions to their campaign committees include Bob Casey Jr. (D-Pennsylvania), Michael Bennet (D-Colorado) and Bill Cassidy (R- Louisiana).  

Tuesday’s hearing marks the third in a series that Senators Chuck Grassley (R-Iowa) and Ron Wyden (D-Oregon), who lead the Senate Finance Committee, have held this year to examine the high cost of prescription drugs in America. The executives are expected to answer questions on how pharmacy benefit managers, which operate as middlemen between drug manufacturers and health insurers, affect the cost of prescription medications for patients.

Between 2017 and 2018, the PACs of companies like Humana and CVS contributed roughly a quarter of their campaign spending to members of the Senate Finance Committee. Prime Therapeutics, which is based in Minnesota, made very few contributions to this group. Since 2009, Prime’s PAC has made a $2,500 contribution in 2014 and a $2,000 contribution in 2017 to the campaign committee of Senator John Cornyn (R-Texas).

Executives from pharmaceutical firms AbbVie, Bristol-Myers Squibb, AstraZeneca, Pfizer, Johnson & Johnson, Merck and Sanofi testified before the Senate Finance Committee in February, acknowledging a broken pricing system. But rather than commit to lowering prices on their end, they placed some blame on insurance companies and pharmacy benefit managers, or PBMs. The trade group that represents PBMs, Pharmaceutical Care Management Association, has countered in statements since, noting that drugmakers are the only ones with the power to set medications’ list prices.

Forbes also examined campaign contributions before that hearing, finding that the political action committees of the seven companies that sent executives to testify had contributed over $1.5 million to the campaigns of committee members in the last decade.

Ahead of the hearing, there has already been some news about reducing prices for some patients. Last week Cigna’s Express Scripts announced plans to launch a new program capping out-of-pocket costs for some insulin prescriptions. While Senator Grassley praised the news in a statement, he questioned why it’s taken so long for this to happen. “It shouldn’t take bad press and congressional scrutiny to get health plans, their pharmacy benefit managers and pharmaceutical companies to arrive at a fair price for a drug that’s been on the market for nearly a century,” Grassley said.

The inquiries into drug pricing are only expanding. On Wednesday there will be a hearing in the House E&C Committee questioning executives from the three biggest insulin manufacturers: Sanofi, Novo Nordisk and Eli Lilly, as well as other executives from CVS Health, Express Scripts and Optum.

https://www.forbes.com/sites/michelatindera/2019/04/09/these-senators-received-the-biggest-checks-from-cvs-humana-and-other-pharmacy-benefit-managers-testifying-tuesday/#2eafc82e7d5d

Alkermes’ ALPINE data an incremental positive, says Piper Jaffray

After Alkermes (ALKS) reported this morning that its ALPINE trial met its primary endpoint and that Aristada showed similar efficacy to the current market leader, Invega Sustenna, at all time points assessed, Piper Jaffray analyst Danielle Brill said she views the data as an incremental positive. However, she thinks it will be challenging to capture share from Johnson & Johnson (JNJ), telling investors that she is “not sure these data will be enough to move the needle.” Brill maintains a Neutral rating on Alkermes.
https://thefly.com/landingPageNews.php?id=2890407

Amgen BLA for Evenity approved by FDA

A post to the FDA’s website indicates that Amgen’s Biologic License Application, or BLA, for Evenity was granted approval on April 9

https://thefly.com/landingPageNews.php?id=2890410

Cerner operational initiatives, expanded buyback encouraging, says Baird

Baird analyst Matthew Gillmor said he is encouraged by the operational initiatives and expanded stock buyback program announced by Cerner, stating that shareholders have been advocating for changes similar to those the company will implement in its agreement with activist fund Starboard Value. While stating that skeptics will argue this is a one-time step up in EPS power and that a revenue mix shift will continue to drag on margins, Gillmor counters that Cerner has "ample capacity" to keep buying back stock even after completing the program announced this morning. He keeps an Outperform rating on Cerner and raised his price target on the stock to $71 from $67.
https://thefly.com/landingPageNews.php?id=2890389

PrEP use linked with increased STD risk

Pre-exposure prophylaxis use to protect against HIV infection was associated with higher infection rates of other sexually transmitted diseases, according to a new study.

An analysis in Australia found more than 2,900 sexually transmitted infections were diagnosed in nearly half of the study’s participants from when they started using PrEP. Nearly 3,000 gay and bisexual men were given access to the medication. The study found infections per participant ranged from zero to 12.

The study, published Tuesday in JAMA, found 25% of study participants had multiple infections that accounted for 76% of all infections diagnosed. The incidence of infections increased among participants who already had been tested for STIs.

Researchers found that patients at greater risk of sexually transmitted infections tended to be younger, had used PrEP prior to the trial, and reported having a higher number of anal sex partners and greater participation in group sex compared with those who did not get infected.

The study did not find a significant increase in risk based on the frequency with which patients used condoms, indicating that there was not a clear association between consistent condom use and decreased risk of infection.

Condom use has historically been strongly associated with decreasing the risk of STIs. But the study found no significant difference between those who reported using condoms more than half of the time they had sex, compared with those who used them less than half of the time, all of the time, or never using them at all during sex with casual partners. Researchers deduced that could stem from study participants’ low consistent condom use.

“Findings suggested that STI prevention campaigns should not focus solely on condom use but also on reducing the time to STI diagnosis and treatment by promoting easy access to frequent testing,” the study concluded.

In an accompanying editorial, Drs. Monica Gandhi and Matthew Spinelli, both from the University of California at San Francisco’s medicine department, and Dr. Kenneth Mayer of the Fenway Institute in Boston, cautioned that the study’s results should be viewed in context with, and not outside of, current trends among gay and bisexual men—increases in sexually transmitted infections that have been occurring within that group even prior to the availability of PrEP in 2012.

The writers also stressed the importance of condom use. They said evidence has shown concerns among clinicians about whether patients who take PrEP would begin to engage in riskier behavior has led some not to offer the medication. A 2018 report in the journal Clinical Infectious Diseases found increasing rates of sexually transmitted infections among PrEP users who were engaging in unprotected sex.

Many experts see increasing the use of PrEP among high-risk individuals as one of the key factors toward achieving the Trump administration’s pledged goal of reducing new HIV infections by 90% by 2030.

PrEP was first approved in 2012 to prevent HIV transmission and has an efficacy rate of about 97% when taken consistently. But use has been relatively low among the population that it could benefit most. Of the estimated 1.1 million Americans identified in 2015 as possibly benefiting from taking PrEP, only 90,000 prescriptions were filled that year, according to the Centers for Disease Control and Prevention.

Encouraging greater use of PrEP was what prompted the U.S. Preventive Services Task Force last year to recommend clinicians offer PrEP to patients at high risk for contracting HIV.

“To continue to achieve the population-level influence on HIV incidence through PrEP that appears imminently achievable, PrEP will need to be available for and used by the populations that can benefit the most, including those having condomless sex,” the commentary stated.

https://www.modernhealthcare.com/safety-quality/prep-use-linked-increased-std-risk-study-shows

CMS proposes expanding coverage for blood pressure test

The CMS on Tuesday proposed expanding Medicare coverage for ambulatory blood pressure monitoring, a diagnostic test that tracks a patient’s blood pressure over a period of days rather than at a moment in time.

The agency said the test may measure blood pressure and diagnose hypertension more accurately. The current national coverage determination for ambulatory blood pressure monitoring, issued in 2001, covers the test only for Medicare patients who are not being treated for high blood pressure but are suspected to have “white coat hypertension,” meaning their anxiety causes their blood pressure to spike while at the doctor’s office.

The CMS is proposing to extend coverage to patients suspected of having “masked hypertension,” which occurs when the blood pressure measurements in a doctor’s office are lower than outside a doctor’s office. It also is proposing to lower the blood pressure threshold from the current policy of 140/90 to 130/80 to align with the latest medical society recommendations.

“With the prevalence of chronic diseases, including high blood pressure, increasing among Medicare beneficiaries, it is critical that our agency closely monitor the evidence for interventions that could improve health outcomes for patients with these conditions,” CMS Administrator Seema Verma said in the announcement. “Today’s proposal to expand coverage of ambulatory blood pressure monitoring is supported by many years of evidence and would help ensure that beneficiaries have their blood pressure measured accurately, so they can receive the care that is best for them.”

The American Heart Association and the American Medical Association requested last year that CMS extend coverage of ambulatory blood pressure monitoring to more patients.

Federal data show that up to 55% of the Medicare population has hypertension, including nearly 40% of disabled Medicare beneficiaries. Patients with high blood pressure rack up inpatient costs at 2.5 times the rate of patients without high blood pressure and incur almost double the outpatient costs, according to the American Heart Association. Average inpatient and outpatient costs can be as much as $5,400 annually, according to AHA.

The CMS said it is seeking comments on the proposal for the next 30 days. A final decision will be issued no later than 60 days after the comment period ends.

https://www.modernhealthcare.com/payment/cms-proposes-expanding-coverage-blood-pressure-test

Urgent need for new revenue streams to shape healthcare providers’ strategies

Building alternative revenue sources will play a bigger role in healthcare providers’ strategies, according to a new study.

Ninety percent of hospital and health system executives surveyed indicated that new revenue streams were an urgent priority expected to yield a return in the next three years, a new study from Boston-based Partners HealthCare and healthcare private equity firm Fitzroy Health found. Every participant acknowledged the need to diversify revenue.

A crescendo has been reached because of the downward revenue pressure, said Chris Coburn, Partners’ chief innovation officer and president of Partners HealthCare International. But there is no one-size-fits-all approach, he said.

The study looked at more than 1,400 novel revenue streams—defined as any revenue that is not based on traditional reimbursable medical services, government support or non-operating investments like securities and real estate—across 74 academic medical centers and large health systems. It broke them down into three parts: bringing care model innovations to market; transforming cost centers into profit centers; and increasing royalties from drugs, devices and diagnostics.

Licensing intellectual property, like Geisinger Health System licensing its patient-care management model to Epic Systems Corp. and Cerner Corp. for their clinical-decision support systems, would fall under the first category. Researchers also point to the University of Colorado Health’s digital health co-development fund and its partnership with RxRevu, which manages and measures medication prescribing patterns. An “outside-in” partnership between a health system and early-stage company can boost the market value of a venture through product development or proof of impact, according to the study.

The second track involves internal departments that serve external customers, like clinical-trial management support services. There are also wholly owned subsidiaries, such as Bon Secours Mercy’s revenue cycle service company Ensemble Health Partners, as well as independent companies like Prodigo Solutions, a supply chain management spinoff from the UPMC system.

A number of organizations have built massive ecosystems that offer the gamut of functions in healthcare, said James Stanford, a managing director at Fitzroy. As margins wane, many health systems’ have since outsourced services that aren’t part of their core businesses, he said.

“But for those that have developed commercial-grade offerings, there is a big opportunity and slice of revenue that would be going to other vendors,” Stanford said.

As for royalty generation, the study cited Children’s Hospital of Philadelphia’s spinoff of gene therapy company Spark Therapeutics, generating more than a $450 million return. Also, investment firm Deerfield Management has committed nearly $500 million to early stage drug research—including oncology, gene therapy and central nervous system treatments—at academic institutions, giving universities a financial buffer while allowing them to own the intellectual property.

The cost of failure has traditionally been so high and the probability of success has been so low that academia typically hasn’t been willing to produce novel therapies on their own, said James Flynn, a managing partner at Deerfield.

“But as science validates these treatments and cheaper pathways form, these institutions and investors will become more engaged,” he said.

There is more happening in therapeutic innovation involving efforts like mapping the human genome than ever before, Coburn said.

“This is a historic time we are in,” Coburn said, adding that alternative revenue sources should play a more prominent role in bond ratings given all the activity.

Health system operating margins hit 10-year lows in 2018 as costs outpaced revenue, according to a 2018 Moody’s Investors Service report. While its uncertain whether that pressure will subside in 2019, hospitals will likely have to pursue a combination of cost-cutting and revenue growth as they seek sustainable financial footing.

Non-operating income has buoyed providers amid the financial headwinds. But 2018 demonstrated how tenuous that dynamic was. Ninety-seven percent of the Partners-Fitzroy study participants excluded investment income from their budgets given the volatility.

“Inpatient admissions are declining, length of stay is declining—health systems have to adapt and find alternatives,” Beaumont Health Chief Operating Officer Carolyn Wilson told Modern Healthcare in March after the system announced a new commercial real estate venture.

This requires a mindset shift, said Lyndean Brick, CEO of healthcare consultancy Advis Group.

“Is healthcare a business? Yes of course,” she said. “But a lot of institutions have a hard time saying that it is a business. It is a business with a big social purpose.”

But it also requires a balance. Generally, new endeavors should align with organizations’ broader mission. It shouldn’t overburden a company’s core business as resources are reallocated, experts said. The portfolio of alternative revenue streams should also distribute risk, return and timing. That mindset shift also requires well-equipped personnel who can juggle consumer marketing, automated data analysis and venture capital management while keeping healthcare’s broader mission in perspective.

If a health system is contemplating spinning out a company, executives need to weigh whether the offering is more valuable as a product marketed externally or as a closely held source of proprietary differentiation, researchers recommended. Executives need hard data to determine if the endeavor fits within its target market. They also need to address the potential friction of the spinoff selling services at market rates back to the system, the extra work for senior leaders, new hires, or a potential exit if the relationship sours.

The more sophisticated organizations clearly define upfront what they want from each investment and set up milestones accordingly, Stanford said.

There will be more opportunities to partner and invest in new ventures. The hard part is realizing when strategies don’t align and saying no, Coburn said.

“Saying yes is the easy part of the business,” he said.

https://www.modernhealthcare.com/finance/urgent-need-new-revenue-streams-will-shape-providers-strategies