This Week in Managed Care: October 12, 2018

The CVS—Aetna merger gets the green light, premiums for employer plans are rising, and the new North American trade deal includes protections for drug makers.

Welcome to This Week in Managed Care, I’m Laura Joszt.

CVS—Aetna Merger Is Approved

On Wednesday, the Justice Department signed off on the $68 billion merger between CVS and Aetna, which could pave the way for bringing more medical services into the retail drug chain. The deal is the biggest consolidation to reshape the healthcare landscape since the Affordable Care Act set off a wave of these transactions in 2010.

However, Aetna does have to sell its Medicare Part D plans to WellCare, according to a Justice Department official, who said: “The divestitures required here allow for the creation of an integrated pharmacy and health benefits company that has the potential to generate benefits by improving the quality and lowering the costs of the health care services that American consumers can obtain.”

Doctors’ groups including the American Medical Association opposed the merger, saying consumers will have fewer choices.

Employer Insurance Premiums Increase

Premiums for employer-sponsored family health plans rose 5% in 2018, while single coverage rose 3%, according to the Kaiser Family Foundation Employer Health Benefits Survey.

Family plans now cost $19,616 dollars per year on average, with the employee paying $5547 dollars. Single coverage costs $6896 dollars, with the employee paying $1186 dollars and the employer paying the rest. Employers said costs are highest in the Northeast, and healthcare costs are rising twice as fast as wages and three times as fast as inflation.

Kaiser’s Drew Altman said, “Health costs don’t rise in a vacuum. As long as out-of-pocket costs for deductibles, drugs, surprise bills, and more continue to outpace wage growth, people will be frustrated by their medical bills and see health costs as huge pocketbook and political issues.”

New NAFTA Would Thwart Biosimilars

President Donald Trump has vowed to cut drug prices, but critics of the new trade agreement with Mexico and Canada say it will do the opposite. The United States-Mexico-Canada Agreement, which updates NAFTA, extends exclusivity for biologic data from 8 to 10 years, which would slow development of generics and biosimilars in those markets.

The Pharmaceutical Research and Manufacturers of America praised the extension of intellectual property protections. Said PhRMA President Stephen Ubl: “IP is the lifeblood of the innovative biopharmaceutical industry.”

But critics of the deal, including the biosimilars industry, said it will stifle competition and could even drive up drug prices in the United States, along with those in Canada and Mexico.

In a statement, the Association for Accessible Medicines, which represents generic and biosimilar manufacturers, said, “The approach extends monopoly protections for manufacturers of brand-name drugs and biologics that will stifle biosimilar competition, hurt American exporters, and decrease patient access to medicines.”

Risks That Increase Cancer Death Disparities

Food insecurity is a key factor in widening disparities in cancer deaths, according to a new investigation in JAMA.

The study, which looked at county-level data from 2014, found that cancer deaths varied significantly depending whether the county had a high, medium, or low median income.

According to the findings:

• Low-income counties, with a median income of $33,445 a year, had 32.9 deaths per 100,000 person years.
• High-income counties, with a median income of $55,780, had 24.4 deaths per 100,000 person years.
• Low-income counties had more residents who were African American, lived in rural areas, and were in poor or fair health.
• Clusters of high death rates from cancer were found in the Mississippi River Delta and Appalachia, in low-income counties.

The researchers identified 3 health risk factors—obesity, smoking, and lack of physical activity—and 2 clinical care factors—unaffordable care and low-quality care, that were tied to high death rates. Other factors were whether there were smoke-free policies and the state’s Medicaid fee index.

But the factors most closely linked with cancer death rates were food insecurity and low-quality care.

The authors wrote that the high share of African Americans in low-income counties with high cancer death rates: “… Highlights the need to dismantle structural racism, which contributes to inequalities in social and economic power and to the segregation of black Americans into area hot spots of counties having disproportionately more cancer deaths.”

Takeaways From the Fall NAACOS Meeting

Addressing social determinants of health was a discussion topic last week when AJMC traveled to Washington, DC, to cover the annual meeting of the National Association of ACOs.

Our coverage looked at whether commercial payers are seeking success with accountable care organizations, and how health systems are reacting to proposed changes to the Medicare Shared Savings Program.

See all our coverage.

For all of us at the Managed Markets News Network, I’m Laura Joszt.

Thanks for joining us.