Five Blues plans launch new for-profit company to lower drug prices

Five Blues plans launch new for-profit company to lower drug prices

Five Blue Cross Blue Shield plans have launched a new for-profit pharmacy solutions company to combat drug costs, which comprise an ever-growing share of their budgets, the insurers announced today.

The Denver-based company, called Evio, will use data from the plans’ more than 20 million members across the U.S. to collect real-world evidence into how drugs actually perform, especially across specific patient types and with certain comorbidities. One of the goals is to get drugmakers to agree to outcomes-based contracts, where the plans pay in accordance with drugs’ effectiveness.

Say a plan member got a Botox shot for migraines, for example, and that same patient was back in the doctor’s office less than 14 days later. In that case, the drug wasn’t as effective according to clinical guidelines and the payment can be tied to that outcome, said Hank Schlissberg, Evio’s CEO.

“We can find ways—if we’re creative and all sides are willing to partner—to tie incentives to those drugs,” said Schlissberg, a former DaVita executive.

All five plans have committed the same undisclosed amount of money to the startup, which they expect to recoup “as soon as possible,” Schlissberg said. The companies involved include Blue Cross Blue Shield of Massachusetts, Blue Cross Blue Shield of Michigan, Blue Shield of California, Highmark Health and Independence Blue Cross. Schlissberg said those companies—all not-for-profits—are the most innovative of the 35 Blues plans and happened to be ready to step forward. If the venture is successful, he said they would welcome other customers.

The precedence for drugmakers signing on to outcomes-based contracts is somewhat limited, Schlissberg admitted. He estimates the five plans forming Evio have up to a dozen such contracts in place.

One of the plans involved, Pittsburgh, Penn.-based Highmark, has formed a handful of value-based contracts with drugmakers because of its strong partnerships with providers, especially the 14-hospital system it owns, Allegheny Health Network. Highmark, which has more than 6 million members, uses insights generated from blinded data on drugs’ effectiveness to manage costs and craft its utilization management policies, said Sarah Marché, Highmark’s senior vice president of pharmacy and clinical market services.

Highmark has had an outcomes-based contract with Boehrigner Ingelheim, for example, since 2018. In December, the companies announced that adults with type 2 diabetes and cardiovascular disease that took the drug empagliflozin had a lower annual total cost of care compared with those prescribed other branded or generic anti-hyperglycemic medications. Highmark has similar contracts with AstraZeneca.

“It’s not for everyone,” Marché said. “We do hope that as we continue to show success, that manufacturers are more willing, but there’s definitely a lot of willing players out there.”

Sandra Clarke, chief financial officer for Blue Shield of California, said when she worked in the pharmaceutical industry, there was lots of interest in outcomes-based contracts among her colleagues because proving their drugs’ value to patients benefited them as well. Most pharmaceutical companies currently don’t offer such contracts, but Evio’s ability to produce data across 20 million patients might be enough incentive to participate, she said.

“I believe there is interest, but it has to be done in a way that is transparent and everyone believes they have an equitable opportunity to be compensated for the value that the drug is bringing,” Clarke said.

Outside of the companies behind Evio, health insurer Cigna struck up outcomes-based contracts with drugmakers Amgen and Sanofi in 2016. The deals held that if Cigna’s members didn’t lower their bad cholesterol levels at least to the level experienced by clinical trial subjects, the drugmakers would discount the drugs. Also in 2016, Amgen signed a similar contract with insurer Harvard Pilgrim concerning the same drug.

Drugmakers are more likely to agree to outcomes-based reimbursement if there are multiple competing choices for the same indication, a 2020 study in the journal Clinical Drug Investigation found. In that case, the companies use the contracts to increase their products’ market share.

Evio’s leaders are most confident they’ll be able to deliver in three areas, at least initially, Schlissberg said. The first is compiling real-world data on drugs’ effectiveness across 20 million patients. Secondly, Evio will build partnerships that leverage innovation happening in the drug space, especially when it comes to transparency, drug efficacy, analytics and new types of supplier arrangements. Lastly, Evio will try to move the pharmacy landscape toward value-based payment.

That sounds a bit like a pharmacy benefit manager, but Schlissberg said Evio is “most definitely not” a PBM, nor will this venture affect the plans’ current relationships with their PBMs, companies that manage drug benefits on behalf of health insurers.

Unsurprisingly, Evio’s most pressing target is high-cost specialty drugs, which the plans involved say have placed growing pressure on their expenses in recent years.

At Highmark, where drugs have grown to comprise close to 30% of overall healthcare spending, roughly half of the drug spend is on specialty drugs, Marché said.

Some of the specialty drugs set to be released in the coming years could get used by up to 7% of the population, said Brian Lobley, chief operating officer and president of health markets with Independence Blue Cross. For Independence, that could mean double digit increases in annual medical spending.

U.S. prescription drug spending is expected to jump at least 8% by the mid-2020s because of just one drug: aducanumab, the recently approved treatment for Alzheimer’s disease that’s of questionable effectiveness.

Lobley said it’s the oncology drugs specifically that he foresees having the biggest impact on costs.

“We wholeheartedly believe they need to come to market,” he said. “They need to be solutions for members. But from a cost basis, it is going to be the highest cost of healthcare if you think three, four, five years out.”

Highmark’s Marché said she thinks Evio will roll out some solutions relatively quickly that members plans will be able to use, especially in the specialty drug space, where spending is high.

“We don’t expect to wait years before we see a return,” she said.

By contrast, Clarke, of Blue Shield of California, said most startups take a few years to gain traction and for investors to see a return, and she would expect Evio to be similar.

“We believe that the opportunity out there is meaningful and significant in the long term, so we are prepared to wait,” she said.

The insurers behind Evio claim they’ll pass along the money they save from the venture to their members, mostly through lower premiums. Blue Shield of California, for example, pledges anything above 2% of its net income against revenue be returned to members, who will eventually see lower premiums if Evio pays off.

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Marie Maynes
Marie Maynes is a Sports enthusiast and writes for the Sports section of ANH.