Are recent announcements of direct-to-provider contracting arrangements
a bellwether of the direction that value-based care will take in the United
States? Direct-to-provider contracting is a strategy in which a self-insured
entity negotiates a contract directly with a provider of healthcare services
rather than through a third-party administrator (TPA), often with the goal of
driving value-based care. As part of a value-based contract, the provider is
held accountable for improving patient outcomes through achieving key quality,
cost, and utilization metrics on a wide range of services. This provides the
“value” in value-based care for the self-insured entity.
The interest that providers and employers have expressed for direct-to-provider solutions is complicated by the numerous ways these arrangements can be structured. The key challenge is implementing a model that is acceptable to both the employer and the provider. In this article, Milliman’s Andrew Timcheck, Cory Gusland, and Mike Gaal discuss what each stakeholder wants in a direct-to-provider arrangement and how they can make it work.
Pharmacy Briefing is a monthly summary of select U.S. Food and Drug Administration (FDA) approvals and launches, treatment guidelines and research updates, and other newsworthy events that have the potential to impact commercial drug utilization or costs.
- HHS officially
withdraws proposal to remove anti-kickback statute safe harbor protections for
drug manufacturer rebates
- Washington Post
releases comprehensive report detailing the distribution of opioids between
- Reckitt Benckiser
Group settles for $1.4 billion with Department of Justice to resolve
investigation into its role in marketing of opioid addiction treatment Suboxone
FDA Approvals and Launches
- FDA approves first generic formulations of Lyrica (pregabalin), a drug that produced $3.6 billion in US revenue in 2018
- Amgen and Allergan launch biosimilar versions of Herceptin (trastuzumab) and Avastin (bevacizumab)
- Sandoz announces retail launch of Symjepi (epinephrine) auto-injector
- Accrufer (ferric maltol) is approved to treat iron deficiency
- Baqsimi (glucagon) nasal spray is approved to treat episodes of severe hypoglycemia.
- Nubeqa (darolutamide) is approved for the treatment of certain types of prostate cancer.
HHS officially withdraws proposal to remove safe harbor
protections for drug manufacturer rebates
- The Congressional
Budget Office estimated that the proposed rule would increase federal spending
by about $177 billion over the 2020 – 2029 period.
Washington Post releases comprehensive report detailing the
distribution of opioids between 2006-2012
- The report sources
data from a Drug Enforcement Administration (DEA) database that tracks the path
of every controlled substance from manufacturer to point of sale/distribution.
- The report found
that “[t]he states that received the highest concentration of [opioid] pills
per person per year were: West Virginia with 66.5, Kentucky with 63.3, South
Carolina with 58…”
- During this time
period, “the companies distributed enough pills to supply every adult
and child in the country with 36 [pills] each year.”
Reckitt Benckiser Group settles for $1.4 billion with Department
of Justice to resolve investigation into its role in marketing of opioid
addiction treatment Suboxone (buprenorphine/naloxone)
- The settlement
addresses claims that the group improperly promoted the sale and use of the
drug and falsely claimed that the product was less susceptible to diversion and
Department of Health and Human Services publishes “Safe
Importation Action Plan”
- The plan outlines
pathways for the importation of drugs originally intended for distribution in
foreign markets with a goal of providing “safe, lower cost drugs to consumers.”
Trump administration working on a “favored nations” approach to
- President Trump says
the law will ensure Americans “pay whatever the lowest nation’s price is.”
Court of Appeals for Federal Circuit upholds ruling allowing the
sale of generic versions of Suboxone (buprenorphine/naloxone) film
- Alvogen and Dr.
Reddy’s launched “at-risk” generic versions of the drug in February 2019.
Oregon institutes new pharmacy benefit manager (PBM) regulations,
signs HB 2185 into law
- Examples of items
addressed in the bill include retroactive “clawback” fees, pharmacy “gag
clauses,” mandatory use of mail-order pharmacies, and the definition of “specialty
Internal Revenue Service (IRS) issues notice expanding list of
preventive care benefits provided by high deductible health plans
- Expands list of preventive
benefits to include low-cost care that maintains health status for patients
with chronic conditions. Examples include:
- Angiotensin converting enzyme (ACE) inhibitors for congestive heart
failure, diabetes, and/or coronary artery disease
- Inhaled corticosteroids for asthma
- Insulin and other glucose-lowering agents for diabetes
FDA limits approved uses of 10mg Xeljanz (tofacitinib), adds Black
Box Warning about increased risk of blood clots and mortality
- 10mg Xeljanz (tofacitinib)
is indicated for the treatment of ulcerative colitis.
- Across all
strengths, the drug produced $1.4 billion in U.S. revenue in 2018.
Mylan and Upjohn, a division of Pfizer, merge to create a new company
- The combined portfolio
of the two businesses will include EpiPen (epinephrine) and several off-patent
brand drugs such as Lipitor (atorvastatin) and Lyrica (pregabalin).
Long-term care (LTC) may not be the first thing individuals or couples think about as they approach retirement, but the costs for those who needs it can disrupt and derail retirement security. A good plan for long-term care requires many decisions over an extended period of time, and well before retirement. In this article, Milliman consultant Robert Eaton discusses the major considerations and options for financing LTC needs in retirement.
Traditionally, health actuaries in the Indian insurance
market used to consider generalised linear modelling (GLM) to be a “black box”
for pricing of health products. However, this perception has changed
significantly over time and health actuaries are now willing to employ this
technique for pricing of health products.
What are the current and potential uses of GLM in the Indian
health market? How is a GLM exercise performed? What are the advantages and
disadvantages associated with GLM?
Milliman’s Joanne Buckle, Ankush Aggarwal, and Pravin Harodia conducted a survey to gather some perspective. Their paper “Use of generalised linear modelling in Indian insurance market for pricing health products” attempts to answer the above questions in conjunction with the results of the survey.
Bacterial resistance to antibiotics and resulting
difficulties in treating and controlling infectious diseases can lead to longer
hospital stays and increased mortality rates. In the long term, an increase in antibiotic
resistance could result in more people becoming seriously ill or dying from
routine illnesses and the ability to perform routine medical procedures could
To date, drug innovation and development have not kept pace
with antibiotic resistance. The need to conduct large trials involving acutely
ill patients who are difficult to identify can make antibiotic development
prohibitively costly and complex. Antibiotics also offer limited opportunities
to generate returns as they are relatively cheap and the newest and most
powerful antibiotics are reserved for patients who do not respond to first-line
treatment. As a result, there are only a handful of companies currently in the
market and the development pipeline is very thin.
In the context of antibiotic resistance, de-linkage of profit and volume through the use of an “insurance model” has been proposed as a potential strategy to stimulate innovation and curb antibiotic resistance through the availability of novel products. In this paper, Milliman’s Tanya Hayward and Emma Hutchinson discuss how actuarial risk management and insurance principles can be applied when considering the de-linkage of price and volume.
Starting in 2017, there has been talk of the possibility of
a death spiral in the individual Patient Protection and Affordable Care Act
(ACA) marketplace. Talk of an ACA death spiral occurred because two of the
death spiral symptoms—high rate increases and falling enrollment—were observed
in 2017 and 2018.
In health insurance, death spirals occur when premium rates rise enough to drive out the healthiest enrollees, leaving the risk pool sicker and more expensive. This, in turn, necessitates that insurers increase premium rates, which then drives out the next-healthiest enrollees and reduces new enrollment. This cycle continues until the risk pool contains only the sickest and most expensive enrollees, with premiums unaffordable for most. Death spirals start slowly and then accelerate, with the primary symptoms being higher than usual rate increases, falling enrollment, and increasing morbidity. In this paper, Milliman’s Erik Huth and Peter Fielek reviewed ACA rate changes, enrollment, and morbidity to determine the likelihood of a death spiral occurring in the ACA marketplace.