Healthcare Insurers Fighting Back Big Pharma Pricing

Health insurers are pushing to link the cost of specialty medicines to how well they work to improve a patient’s condition, a bid to contain prescription drug prices after decades in which pharmaceutical companies could charge whatever the market would bear.

 

The shift is coming as insurers absorb mounting bills for drugs with eye-popping prices and brace for a slew of new therapies for diseases such as hepatitis C, cystic fibrosis, breast cancer, lung cancer, and leukemia. Those emerging treatments could cost US government-paid health programs such as Medicare nearly $50 billion over the next decade, according to an estimate by an insurance industry trade group, America’s Health Insurance Plans.

Massachusetts biopharma companies are bracing for payment changes, fearful they could cut into profits or dampen the enthusiasm of investors. But they are also hoping to capitalize on the so-called pay for performance trend with a new generation of targeted therapies that can effectively treat a higher share of patients with specific genetic mutations.“Pay for performance is the Holy Grail,” said Genzyme president David Meeker. “The challenge is defining the outcome and being able to accurately track and record it.”Among those leading the drive for new pricing is Express Scripts, a company that bargains with drug makers on behalf of employers and insurers. It is advancing a plan that would offer different reimbursement rates for drugs that treat more than one type of cancer based on how long the drugs extend lives. Insurers, including Harvard Pilgrim Health Care and Blue Cross Blue Shield of Massachusetts, are examining that payment arrangement and others, such as rebates to patients and insurance plans in cases where drugs aren’t effective.

The new payment criteria are likely to emerge slowly and vary widely based on types of medications and payers, which include insurance companies and some government plans such as Medicaid. But proponents agree they need to rein in prices of specialty drugs, which can run up to tens of thousands or hundreds of thousands of dollars a year.

“We’re concerned about the sustainability of the health care system,” said Steve Miller, chief medical officer for St. Louis-based Express Scripts, the nation’s largest pharmacy benefit manager whose customers include Boston-based Blue Cross. “You can’t have double-digit increases in drug prices year after year, especially when you have 7,000 drugs in development.”

Concerns over drug prices were fueled by a popular $1,000-a-pill hepatitis C treatment from Gilead Sciences Inc. of Foster City, Calif., that took payers by surprise last year, curing thousands of patients but inflicting financial losses on Medicaid insurers across the country.

Those worries have been underscored by a string of business deals — such as last month’s $8.4 billion agreement by Connecticut’s Alexion Pharmaceuticals Inc. to buy Synageva BioPharma Corp. — that seemed to be premised on the companies’ plans to sell drugs for rare diseases at exorbitant prices.

“We’re either going to take this into our own hands or it’s going to be done to us,” said John Maraganore, chief executive of Alnylam Pharmaceuticals Inc., a Cambridge company developing a portfolio of rare disease drugs based on the gene-silencing science of RNA interference.

Both insurers and drug makers acknowledge there could be disagreements — over reporting and monitoring systems, and ultimately over prices — when they start to negotiate the new payment frameworks based on paying for value.

Unlike countries in Europe, where government agencies set prices for prescription drugs, US regulators approve therapies on the basis of safety and effectiveness, leaving drug makers to contract with many individual health insurers on price. The largest US payer, Medicare, which insures older Americans, is sidelined by a law preventing it from negotiating prices that might otherwise set a target for bargaining by smaller commercial insurers.

Biogen Inc. of Cambridge, which markets a portfolio of multiple sclerosis medicines, has already signed performance-based pricing contracts in other countries. In the United Kingdom, the company and three competitors are evaluated by the national Department of Health on a number of measures for helping patients with the neurodegenerative disease.

US health insurers, which have long talked about paying for a drug’s value, now see an opening. It remains difficult to quantify value for thousands of medications ranging from acute care drugs like antibiotics to chronic disease treatments for conditions like diabetes and high blood pressure. But advances in information technology are making it easier for doctors, hospitals, and insurers to keep track of patients and how they respond to prescribed therapies.

That will be critical as Express Scripts prepares to roll out its “indication-specific” payment structure. It would reimburse varying amounts to drug companies based on how long medicines prescribed for two different cancers — lung and pancreatic cancer, for example — extend the lives of patients with each disease. But some Express Scripts clients say they would have to upgrade their electronic information and payment systems to track such outcomes.

Blue Cross Blue Shield of Massachusetts, for instance, will probably have to weigh “operational issues” as one factor in deciding whether to initially sign on with the Express Scripts plan, said Tony Dodek, the insurer’s medical director.

“It’s an intriguing idea,” Dodek said. Health “providers, payers, and employers have been trying to put a value on these very expensive drugs, and this could be one way to do it.”

Another way is being considered by Harvard Pilgrim, the Wellesley-based insurer that negotiates directly with drug makers. Chief medical officer Michael Sherman said it is developing a performance-based rebate model that could be applied to treatments such as a new class of cholesterol-lowering drugs. For example, it might require rebates if the drugs don’t lead to a reduction in hospitalization for strokes or chest pain.

“It’s a huge change for the pharma companies,” Sherman said. “They realize their prior argument — that they can’t be held responsible for the [patient] outcome — doesn’t work any more and they have to get with the program.”

 

Dr's Getting Kickbacks Should This Be OK??

 

Drug and medical-device companies paid at least $3.5 billion in kickbacks to U.S. physicians during the final five months of last year, according to the most comprehensive accounting so far of the financial ties that some critics say have compromised medical care.

 

The figures come from a new federal government transparency initiative. The 2010 Affordable Care Act included a provision dubbed the Sunshine Act, which requires manufacturers of drugs and medical devices to disclose the payments they make to physicians and teaching hospitals each year for services such as consulting or research. The Centers for Medicare and Medicaid Services compiled the records into a database posted online Tuesday, though the agency said that about 40% of the payment information won't identify the recipients because of data problems.

The push for greater transparency was driven by concerns that doctors' prescribing decisions are tainted by the hundreds of millions of dollars that the physicians collectively receive each year from companies. Supporters expect the transparency initiative to provide useful information to patients about the relationships their doctors have with industry and to curb the influence of payments on medical care.

"The financial relationships between doctors and drug companies and medical-device companies are a source of conflicts of interest," said Allan Coukell, director of the Pew Prescription Project, which has supported the Sunshine Act. "They have the potential to influence the care that patients get and so they're a matter of interest both to individual consumers and to policy makers."

Companies have defended their payments to physicians as necessary to conduct research and communicate how products should be used. "I welcome these disclosures," said John C. Lechleiter, chief executive of drug maker Eli Lilly& Co., which was mandated to report physician payments on its website as part of a 2009 settlement with the government over illegal-marketing allegations.

The payments and so-called transfers of value to an estimated 546,000 doctors and 1,360 teaching hospitals include such items as free meals that company sales representatives bring to physicians' offices, fees paid to doctors to speak about a company's drug to other doctors at restaurants, compensation for clinical trial research and consulting fees.
 

Some doctors have earned tens of thousands of dollars annually from drug companies by flying to various cities to give paid speeches, while some surgeons have received even larger amounts from medical-device makers, partly from royalties on products they helped develop.

 

Ed Silverman and Tom McGinty contributed to this article.

Stephani LeFlore Takes On CVS Pharmacy

CVS Pharmacy's Medicaid Fraud

 

 

CVS pays $17.5 Million to settle Medicaid Fraud
CVS, the giant retail pharmacy chain, has agreed to pay $17.5 Million to settle a whistleblower lawsuit accusing it of Medicaid fraud (“welfare fraud”).

THE FRAUD
According to her False Claims Acts lawsuit, CVS pharmacist Stephani LeFlore of Minnesota brought evidence to the government that CVS used a billing system for years that was designed to overbill Medicaid on prescription charges. Ms. LeFlore is represented by Minnesota attorneys Neil Thompson, Brian Wojtalewicz, Robert Christensen, and James VanderLinden, with local counsel Aaron Halstead of Madison, Wisconsin, where the case was filed in federal court.
It was done in relation to dual-eligible customers – those legitimately on Medicaid who also maintained their private health insurance coverage. The insurance coverages required CVS to charge the insurance company a smaller amount for prescriptions, and limited co-pay from the customer. When a person is allowed Medicaid coverage, the government always obtains an assignment of the person’s rights under their private health insurance coverage. The government essentially takes over the citizen’s rights under the coverage. This includes the common right to pay a smaller co-pay amount on prescriptions.
Ms. LeFlore claimed in her federal and state lawsuits that CVS should only have billed the Medicaid program the same limited co-pay on prescriptions that it would have normally billed the customer under the insurance plan. She alleged that CVS designed a billing software program for its pharmacies that consistently overcharged Medicaid on these co-pays. She claimed that these overcharges occurred on hundreds of thousands of prescription sales for well over five years.
The $17.5 Million settlement covers over-billings by CVS in the states of Minnesota, California, Massachusetts, Michigan, Florida, Indiana, Alabama, Nevada, New Hampshire and Rhode Island.
Ms. LeFlore first complained internally, but she was told by a supervisor that “corporate took care of the billing” and that she need not be concerned. She then retained her attorneys and commenced the False Claims Acts (qui tam) lawsuit in September, 2008. The lawsuit stayed under seal (non-public), according to the False Claims Acts and court orders, until the announcement of this settlement.
Ms. LeFlore and her attorneys will receive $2,595,460.00 as the reward under the federal and state False Claims Acts. They are also entitled to receive attorney fees from CVS.

Walgreens Agrees to $80 Million Settlement Over Distribution of Painkillers



Walgreens has reached a settlement with the federal government that will cost the company about $80 million. The DEA charged that  Walgreens was committing an “unprecedented” number of record-keeping and dispensing violations of the Controlled Substances Act. Walgreens was said to have negligently allowed controlled substances such as the narcotic oxycodone and other prescription painkillers to be distributed to abusers and sold illegally on the black market.

 

The Centers for Disease Control and Prevention (CDC) reported that the U.S. death rate from drug overdoses has more than tripled since 1990. It said prescription painkillers, also known as opioid or narcotic pain relievers, were involved in more than 15,500 overdose deaths in the United States in 2009. Walgreens had previously set aside $80 million for a settlement, including $25 million in its fiscal third quarter, which ended May 31st.