The Scottsdale, Arizona-based company saw its full year income drop to $24.2 million, a 78% decline year-over-year.
Magellan Health suffered a difficult end to 2018, posting a $28 million net loss in the final quarter and finishing the year with a net income of $24.2 million, according to its Q4 earnings report released Thursday morning.
The for-profit managed care company recorded an increase in revenues, $1.84 billion in Q4 and $7.3 billion for the full year, but those were the lone highlights of its most recent financials.
Segment profit fell to $16 million in Q4, down 83.8% year-over-year, and only reached $228 million in 2018, a 26.7% drop.
Both earnings per share (EPS) and adjusted EPS fell dramatically for the company, including losses in Q4 and declines of at least 58% for the full year.
In explaining the company's challenging end to 2018, Magellan Health CFO Jonathan Rubin stated in the report that the losses were attributable to $50 million in "out-of-period and non-recurring items," adding that he does not expect these circumstances to have a material impact in 2019.
Magellan Health's year-end cash flows from operations were up slightly, totalling $164.8 million compared to $162.3 million this time last year. The company's unrestricted cash and investments were halved during 2018, falling to $130.4 million.
C-suite perspective:
"While 2018 was challenging, we are only mid-way through our work to create a stronger, more sustainable foundation for the Company," Barry M. Smith, CEO of Magellan Health, said in a statement. "For decades, Magellan was the leader in the carve-out specialty and behavioral health space. While these capabilities remain valuable and relevant today, the reality is that the market has changed to a much more integrated model. We recognized this and proactively took steps to transform our business in a significant way. We have made solid progress in shifting our revenue stream into growth markets over the last five years. 2018 will continue to be a year of focused execution for Magellan, and our strategy remains unchanged."
Despite the company's lacking performance in 2018, it is confirming its full year guidance for 2019.
This includes net revenues in the range of $7.2 billion and $7.5 billion, net income between $52 million and $79 million, as well as an EPS between $2.14 and $3.25 per share.
Restricted cash and investments increased $62.3 million to $527.7 million by the end of 2018.
Magellan's pharmacy management segment profit declined $35.5 million during the year, totalling $104.4 million.
CEO Barry Smith added that the company is implementing a multi-year margin improvement plan with the goal of achieving a net income margin exceeding 2%.
Universal Health Services, Inc. (UHS) saw its net income drop to $158.1 million during Q4 2018, down $61.5 million compared to this time last year, with net revenues of $2.75 billion, an increase of 4.2%.
UHS finished 2018 with a net income of $894.4 million, well above its net income of $725.5 million at the end of 2017, while also recording a $2.37 adjusted earnings per share (EPS) in Q4, $0.37 better than the same metric in Q4 2017.
During Q4, UHS repurchased 1.22 million shares at an aggregate cost of $149.3 million, part of a 3.32 million year-long repurchase effort totalling $401.3 million.
In December, the company's board of directors authorized a $500 million increase to the repurchase program, now totalling $1.7 billion.
Looking ahead, UHS projects full year net revenues between $11.2 billion and $11.3 billion, along with an adjusted EPS in the range of $9.70 and $10.40 per share.
ADDITIONAL UHS Q4 EARNINGS REPORT HIGHLIGHTS:
The company's market value of shares classified for sale was affected by a pre-tax unrealized loss of $12.5 million.
During 2019, UHS projects a range for capital expenditures between $675 million and $725 million.
Also included in the company's earnings report was a $62 million aggregate unfavorable after-tax impact.
The telemedicine company produced revenue gains and saw total visits rise while net losses fell.
Teladoc boosted its revenues significantly, riding an uptick in total visits during a robust 2018 and reducing its losses, according to its Q4 2018 earnings report released Wednesday afternoon.
In Q4, total revenues topped $122 million, marking another quarter of growth, amounting to nearly $418 million for the full year, a 79% increase year-over-year.
During Q4, total visits increased 70%, thanks to 155% year-over-year growth in international paid visits, while visits during 2018 rose 88% courtesy of 233% growth in international paid visits.
The company still has sizable net losses to account for, posting a net loss of nearly $25 million in Q4 and $97.1 million for the full year. However, both numbers were down slightly compared to reported metrics from this time last year.
For Q4, the Purchase, New York-based company reported an EBITDA loss of $8.3 million, an improvement compared to $17.2 million this time last year, with a full year EBITDA loss of $35.3 million, once again an improvement over its $70.4 million loss for full year 2017.
Adjusted EBITDA for Q4 was $5.8 million, a $3.4 million year-over-year increase, while Teladoc's full year adjusted EBITDA went from a $12.5 million loss in 2017 to a $13.4 million gain in 2018.
Teladoc also finished the year with 22.8 million paid U.S. members, up 16% compared to the end of 2017, and beating the low end of its projected membership range between 22.6 to 23.5 million paid members.
C-SUITE PERSPECTIVE:
“We had an exceptional 2018 with solid performance across all of our key financial and operational metrics, enabling us to enter 2019 with significant momentum," Jason Gorevic, CEO of Teladoc, said in a statement. "As virtual care becomes mainstream, we are uniquely positioned across all of our channels as the only global comprehensive virtual healthcare solution. We continue to extend our leadership position by delivering the highest quality care, successfully engaging consumers, broadening our scope of services, and expanding our global geographic reach.”
The company's earnings report was the first one released since its CFO and COO Mark Hirschhorn resigned in mid-December after six years at Teladoc.
Despite the positive financial metrics, Teladoc's stock did not react well to the financial guidance listed in its year end earnings report, falling by nearly 15% in after-hours trading.
The company expects total revenues between $535 million and $545 million, an EBITDA loss in the range of $40 million and $50 million, and a net loss per share of between $1.52 and $1.66.
ADDITIONAL TELADOC Q4 EARNINGS REPORT HIGHLIGHTS:
The company's percent of paid visits from U.S. paid membership fell 9% in Q4 and 8% for the full year.
Total visits for Q1 2019 are projected to be in the range of 950,000 to 1,050,000.
International revenues carried the way in 2018, rising 302% year-over-year.
Major industry leaders defended themselves against accusations of immoral price hikes, telling senators that they intend to provide patients with affordable access to cutting edge medical breakthroughs.
Executives from seven major pharmaceutical companies testified that they remain committed to working with federal lawmakers on ways to address rising prescription drug prices, despite charging that insurers and pharmacy benefit managers (PBMs) are as much, if not more, to blame for the current situation.
The long-awaited Senate Finance Committee hearing on drug pricing featured a lengthy and at times contentious line of questioning from Republican and Democratic members seeking solutions for one of the nation's most expensive healthcare issues.
Pharmaceutical executives agreed with the need to promote price transparency and seemed open to potential regulatory and legislative policies that could achieve such ambitions.
But Senate Finance Committee Chairman Chuck Grassley, R-Iowa, and Ranking Member Sen. Ron Wyden, D-Ore., also pressed pharmaceutical executives to expand on their promises to work with Congress on meaningful answers to rising drug prices, especially in consideration of HHS' recent rebate proposal and several pieces of legislation that would revise the incentive structure for drugmakers.
Below are four key points from the committee's hearing and commentary from healthcare players on what they expect to transpire next.
Who testified:
Richard Gonzalez, CEO of AbbVie Inc.
Pascal Soriot, CEO of AstraZeneca
Giovanni Caforio, MD, CEO of Bristol-Myers Squibb Co.
Jennifer Taubert, Executive Vice President and Worldwide Chairman of Johnson & Johnson's Janssen Pharmaceuticals
Kenneth Frazier, CEO of Merck & Co., Inc.
Albert Bourla, DVM, PhD, CEO of Pfizer
Olivier Brandicourt, MD, CEO of Sanofi
1. Pharma defends medical breakthroughs and needing room for further innovation
Repeatedly, pharmaceutical executives referred to the contributions their respective companies have made to modern medical care through research and development (R&D).
However, they warned lawmakers that excessive governmental interference in these processes may hamper future efforts to innovate and aid consumers.
All seven companies reported that R&D budgets exceeded marketing budgets last year, excluding administrative costs, which has allowed them to focus on the goal of bettering clinical outcomes for patients by ensuring a lower need for hospitalizations.
Lawmakers noted these efforts but questioned why pharmaceutical companies have been so protective of patents on widely used prescription drugs, such as Humira in the case of AbbVie, while also making it difficult for biosimilars to enter the market.
Though stating that he supports protections for companies to have exclusivity on a product, Sen. John Cornyn, R-Texas, argued that the longstanding legal feud between AbbVie and Amgen over a biosimilar might require additional input from the Senate Judiciary Committee.
A point that fostered consensus among lawmakers and executives was during an exchange between Sen. Sheldon Whitehouse, D-R.I., and Merck CEO Kenneth Frazier on curbing the growing trend of corporate raiders who utilize off-patent monopolies for profit rather than R&D.
2. Blame goes to PBMs and insurers
Pharmaceutical executives were in agreement that PBMs play a significant role in the high prices faced by consumers, stating that the entities are powerful negotiators against drugmakers.
This narrative was assailed by members of the committee, with Wyden saying that high list prices are under control by drugmakers and accusing them of "stonewalling" on diminishing these prices. He urged drugmakers to focus on what they can do to affect lower prices, adding that PBMs will "have their day."
AbbVie CEO Richard Gonzalez said there are two issues at play when it comes to prescription drug pricing efforts: affordability to system and affordability to patient, arguing that changes need to be made with the consumer's bottome line in mind.
There was some disagreement when it came to expanding the ability for states or Medicare to directly negotiate drug prices like the Veterans Administration, prompting some to see it as a move to maintain the present dynamic.
“The pharma industry wants to keep the current system in place, and it’s succeeding in doing so," David Henka, CEO of ActiveRADAR, a pharmacy benefit solution company, said in a statement to HealthLeaders. "Even after today’s hearing, medication prices will continue to rise at a rapid, unrestricted pace. In the current congress it is very unlikely that there will be any significant movement toward reforming drug pricing.”
All seven executives committed in to looking at lowering prices should the administration finalize its rebate rule, though Frazier added the caveat that this was based on no company facing a financial disadvantage as a result.
Frazier also argued that one factor causing drugmakers to avoid lowering list prices has been the inevitable financial punishment by the market.
Ken Thorpe, PhD, former Deputy Assistant Secretary for Health Policy in HHS during the Clinton Administration, told HealthLeaders that reform to the rebates PBMs rely on is likely to be enacted as lawmakers seek to lower drug prices.
"The problem isn't that PBMs are bad at their job -- securing discounts and rebates from drug manufacturers. In fact, they're quite good at it. Consider that just last year, pharmaceutical companies dished out $153 billion in discounts and rebates to PBMs. This was a 159 percent increase from the discounts they distributed in 2012," Thorpe said. "The problem is that patients don't always benefit from these massive discounts. To ensure that patients see the totality of these discounts, we should remove PBMs from the drug industry rebate equation completely."
Thorpe added that he supports the recent rebate proposal, citing estimates that the policy change would result in savings of nearly $20 billion by 2028.
4. Need to move towards value-based arrangements, stronger biosimilars market
During opening statements and throughout the course of Tuesday's testimony, pharmaceutical executives urged Congress to help improve the biosimilars market and shift toward value-based arrangements.
Under the banner of fixing incentive alignments, Frazier supported a more robust biosimilars market in the U.S., like the one found in Europe.
Sen. James Lankford, R-Okla., discussed the market barriers that are currently in place and harm opportunities for biosimilars to enter the market, soliciting feedback from drugmakers on an approach to fix that.
Bristol-Myers Squibb CEO Giovanni Caforio, MD added that flexibility with a value-based system would be an important strategy for lowering drug prices for patients, as drugmakers would be paid on clinical outcomes for patients rather than simple volume of pills sold.
Bittersweet industry reaction
"While today's hearing won't lead to any concrete legislative changes in the present - Democrats and Republicans will continue to spar over the details of any real policy - it will be a PR nightmare for the industry," Tom Kottler, CEO of HealthPrize Technologies, told HealthLeaders in a statement. "In an environment in which 73% of Americans want the government to do more to control the cost of prescription drugs, pharma would be wise to course correct now and develop enterprise-level responses around medication adherence, before the course is corrected for them."
Stephen J. Ubl, CEO of Pharmaceutical Research and Manufacturers of America (PhRMA), issued a press statement emphasizing the commitment of drugmakers to improving the drug pricing situation in America.
"During today’s Senate Finance Committee hearing, our member companies demonstrated the industry’s commitment to working with members of Congress on both sides of the aisle on policies to transform our health care system," Ubl said. "Significant reforms aimed at changing the marketplace will be disruptive for our industry, but we believe they are necessary to improve patient affordability and lower costs."
Additional notes from the hearing:
Sen. Debbie Stabenow, D-Mich., was among the most vocal members when it came to criticizing the large amount of federal grants for pharmaceutical R&D.
Unanimous response: all seven drugmakers account for public outcry in making drug pricing decisions but do not account for a potential congressional hearing, and support the CREATES Act.
Sen. Bill Cassidy, R-La., urged implementation of the international pricing index under consideration by the Trump administration, saying it's not perfect but adds some level of "reasonableness" to the process.
Sanofi CEO Olivier Brandicourt, MD countered Cassidy by saying that the index would end up comparing U.S. drug prices against countries where prices are imposed, which would not be ideal.
Sen. Cardin says American consumers are paying higher prices to pay for R&D that goes to medical innovation in other countries, which he views as a disconnect.
The congressional Democratic proposal for advanced notification of price increases received support from the seven executives though some stated that consistency in enforcing the policy was necessary for its success.
Sen. Maggie Hassan, D-N.H., chastised the executives for heralding medical breakthroughs that most consumers can't afford.
Hassan also highlighted Johnson & Johnson's promotion of pseudoaddiction as a way to promote the sale of opioids for maximum profit, adding that it was difficult to take the company's promise to promote good health seriously given its prior behavior.
One quarter after reporting $9 million in losses attributable to shareholders, the Dallas-based healthcare company improved slightly but still found itself in the red. Tenet's net loss did show a significant improvement over its $229 million net loss in Q4 2017.
For the full year, Tenet's net operating revenues were $18.3 billion, a 4.5% slip, while achieving a net income of $466 million, a turnaround from the $320 million loss in 2017. Additionally, the company's adjusted earnings per share (EPS) were $1.86, beating the highest range of the Tenet's estimates at $1.83 per share.
A point of emphasis for Tenet during Q4 was growth in its hospital operations, a segment which produced an adjusted EBITDA of $1.4 billion during the quarter. Similarly, same-hospital net patient revenue rose 3.6% throughout 2018, despite a 1.7% dip in overall admissions.
C-SUITE PERSPECTIVE:
"We delivered strong results in the fourth quarter and beat consensus expectations for revenue, Adjusted EBITDA and Adjusted EPS," Ronald Rittenmeyer, CEO of Tenet, said in a statement. "2018 was a year of significant change for the company. We meaningfully improved our financial results, and made significant progress to create a more efficient, agile enterprise with new leadership helping to reshape strategy and drive consistency in execution. We expect to make additional progress in each of our business segments in 2019 in line with our plan to deliver long-term sustainable growth."
Tenet enacted a number of organizational changes to address hospital operations following a difficult Q3, naming a new COO and eliminating the president of hospital operations position three weeks after its last earnings report.
Another area of notable growth was Tenet's ambulatory care segment, which saw its revenue rise 5.1% for the full year, though its Conifer segment experienced a 4% decrease in revenues during the same period of time.
As with fellow for-profit hospital operator Community Health Systems, Tenet continued the process of divesting some of its assets, ending the year with four less hospitals including its remaining presence in the Chicago area.
Tenet's cash and cash equivalents registered at $411 million, down from $500 million at the end of Q3. Also down was Tenet's Q4 adjusted EBITDA, which dropped 34.6% to $352 million.
Looking forward to 2019, Tenet has issued a financial guidance of operating revenues between $18 billion and $18.4 billion, net income between $15 million and $115 million, and an adjusted EBITDA between $2.65 billion and $2.75 billion.
ADDITIONAL TENET Q4 EARNINGS REPORT HIGHLIGHTS:
Total outpatient visits declined 9.5% year-over-year in Q4.
Net patient revenues grew in every area except for Medicare, which saw a 1.4% decrease.
Total selected operating expenses rose 3.1% in Q4.
Tuesday's highly anticipated Senate Finance Committee hearing on drug pricing will feature the CEOs of all seven major drug manufacturers.
At the Senate Finance Committee hearing on prescription drug pricing last month, none of the invited leaders of the major prescription drug companies appeared before the committee.
However, the CEOs of AbbVie Inc., AstraZeneca, Bristol-Myers Squibb Co., Johnson & Johnson, Merck & Co., Inc., Pfizer, and Sanofi will publicly testify Tuesday about the high cost of prescription drugs in America.
Committee Chairman Sen. Chuck Grassley, R-Iowa, was visibly agitated by the collective no-show last month and Ranking Member Sen. Ron Wyden, D-Ore., tweeted out his invitation soon after with the caveat that the leaders would appear before the committee "one way or another."
Lowering the cost of high prescription drugs has become an unexpected bipartisan lightning rod on Capitol Hill, galvanizing support in both chambers of Congress as well as turning into one of the Trump administration's primary healthcare missions.
This comes at a time when the pharmaceutical industry has dealt with growing opposition and criticism in Washington, D.C., as longtime industry supporter Orrin Hatch retired from the Senate this year, replaced by equally longtime critic Chuck Grassley, while industry-friendly Democrats like Sen. Cory Booker have sustained critiques for being too cozy with the lobby.
Tuesday's hearing will be an early indication of how the new Congress plans to pursue action to effectively lower drug prices and what roles the pharmaceutical manufacturers see themselves playing in the process going forward.
The blame game
Earlier this month, HHS announced a proposal to eliminate PBM rebates, which received a divided reaction among industry players but earned praise from the Pharmaceutical Research and Manufacturers of America (PhRMA).
Some have seen pharmaceutical companies following a strategy of passing the blame for higher drug prices to other involved players, such as PBMs or the health insurers. It's to be expected that this line of defense will appear during Tuesday's hearing, as drugmakers pin the responsibility for high drug prices on the rebate proposal insurance executives oppose.
In a recent statement to The Washington Post, Sanofi argued that savings are not always passed down to patients "in the form of lower co-pays or insurance." Additionally, a PhRMA spokesperson said the status quo in drug pricing needed to change but urged the need to "address the right problem."
Now, focus shifts to what pharmaceutical executives will do to assist in the fight towards reducing the heightening financial burden placed on American consumers seeking to get their prescriptions filled.
President Trump called on drugmakers to list the prices of medicines in television ads as a way to promote price transparency, which was heeded by Johnson & Johnson earlier this month after industry-wide hesitation.
Late last week, Grassley and Wyden initiated an investigation of the three major insulin producers, looking into information related to substantial price increases.
But while both Republicans and Democrats have expressed a common interest in reducing prescription drug prices, the favored tactics between the two sides remain near polar opposites.
During his second State of the Union address, Trump expressed a desire to end "global freeloading" of prescription drugs, a signal of support for Grassley's drug importation bill. This is a stance that has traditionally been shot down by Senate Republicans but has earned the endorsement of a sitting president and one of the most influential senators in the chamber.
Trump's focus on ending "global freeloading"also earned public praise from his two top health officials, HHS Secretary Alex Azar and CMS Administrator Seema Verma.
Despite the Trump administration's repeated calls for action on the pharmaceutical industry and tough stance on PBMs for their role as "middlemen" in the equation, Democrats have roundly stated that the efforts have not gone far enough to adequately address the issue.
Another rough quarter marked an end to a challenging 2018 for the for-profit rural hospital operator.
For the second quarter in a row, Community Health Systems (CHS) posted a net loss of more than $325 million, this time despite an increase in operating revenues, according to the company's earnings report released Wednesday afternoon.
CHS posted a net loss attributable to shareholders of $328 million in Q4 2018, down from a net loss of more than $2 billion during Q4 2017, while recording net operating revenues of $3.5 billion, an increase of nearly $400 million year-over-year.
For the full year, CHS recorded operating revenues of $14.2 billion, down from $15.3 billion in 2017, and a net loss of $788 million, less than a third of the $2.5 billion loss in the year prior.
In Q4, the Franklin, Tennessee-based for-profit hospital operator did manage to significantly reduce its net losses per share down to $2.91 per share, whereas a year ago it was a loss of $17.98 per share.
This trend held true for the full year as well, with the company showing a net loss per share of $6.99 in 2018 as compared to $22 per share in 2017.
The financial results come as CHS continues to divest its hospitals in an effort to reduce its debts, finishing 2018 with 12 less hospitals than it began with.
“Our fourth quarter marked a strong finish to the year," Wayne T. Smith, chairman and CEO of CHS, said in a statement. "During 2018, our market leaders made significant progress across areas such as our patient safety and connectivity, competitive position in core markets, and operational efficiency. These strategic investments and our solid execution drove enhanced same store performance during 2018. In 2019, we believe that we have a number of opportunities to further leverage these strategic initiatives to drive incremental growth, and achieve additional progress as we further strengthen our core portfolio and reduce our debt.”
CHS also posted an adjusted EBITDA of $419 million in Q4, up $10 million year-over-year, though its full year adjusted EBITDA declined by $61 million from 2017.
Admissions continue to be a troublesome spot for CHS, as adjusted admissions fell 15% year-over-year and patient days dropped 15.3% over the same period of time.
ADDITIONAL CHS Q4 EARNINGS REPORT HIGHLIGHTS:
CHS finished 2018 with $274 million in net cash provided by operating activities, down from $773 million at the end of 2017.
As a result of reducing its hospital ownership, CHS' licensed bed count at the end of 2018 totalled 18,227 beds, down from 20,850 beds in 2017.
The provider's net cash used in operating activities reached $165 million in Q4 2018, up from $156 million during Q4 2017.
The megamerger with Aetna considerably impacted CVS Health's bottom line in Q4 2018 and for the year overall.
CVS Health's $70 billion acquisition of Aetna, which closed last November but is still subject to review by a federal judge, drove revenue growth last year but also resulted in a significant net loss, according to the company's latest earnings report released Wednesday morning.
Net revenues totalled $54.4 billion for Q4, an improvement of more than $6 billion year-over-year, contributing to total revenues of $194.5 billion for the full year, itself a nearly $10 billion increase.
However, CVS suffered a net loss of $421 million in Q4, a $3.7 billion year-over-year drop, while posting a $596 million loss for the overall year, a $7.2 billion decline.
Additionally, the company's operating income for Q4 was $824 million, a decline of $2.3 billion, as the full year operating income fell to just over $4 billion, a $5.5 billion drop.
To top it off, CVS also expects its earnings per share (EPS) for 2019 to be lower than originally projected, posting in a range between $4.88 and $5.08 per share.
The company's adjusted EPS guidance for 2019 is set between $6.68 and $6.88 per share, down from the guidance included in Q3 which ranged between $6.98 to $7.08 per share.
"With the completion of the Aetna acquisition, we have set the stage for CVS Health to excel in a market that is rapidly transforming," Larry Merlo, CEO of CVS Health, said in a statement. "We strongly believe in the long-term value that the full breadth of our capabilities can provide. Our unique combination will drive above-market growth going forward across all of the enterprise. Maintaining our focus on communitylevel products and services will drive meaningful value for both consumers and payors, while improving our bottom line and the value we return to shareholders. Ultimately, our open platform model allows us to meet the needs of all payors with newly created products and services. We’re more excited than ever about the opportunities that lie ahead."
CVS' Health Care Benefits segment, which accounts for the former Aetna Health Care segment, recorded $5.5 billion in revenues, $276 million in operating income, and membership of 22.1 million from the time of the merger closing on November 28 through the end of 2018.
While CVS' revenues were the positive highlight of the Q4 earnings report, the company stated that these were boosted by "increased prescription volume and branded drug price inflation" while seeing an offset resulting from a combination of reimbursement challenges and new generic drugs on the market.
To that end, total prescription volume on a 30-day basis grew 8.6% during Q4 and 8.8% for the full-year 2018.
Another area of headwinds for CVS has been the longterm care (LTC) business, which derived 23% of total revenues from front store prescription drug revenues.
CVS stated that industry-wide challenges have continued to plague the LTC market, which the company entered through its acquistion of Omnicare in 2015. However, the company stated in its earnings report that this was not above the level of challenge they had originally expected to face when the acquisition closed.
Medicare per-member-per-month spending more than doubled its five-year average while Medicaid actually declined by 2%.
The commercial per-member-per-month (PMPM) spending rate increase on medical pharmacy totalled 18% between 2016 and 2017, 4% higher than the five-year average, according to a new report from Magellan Rx Management released Tuesday morning.
Spending trends between Medicare and Medicaid markets were split, as Medicare spending grew by 12% in the previous two years of reporting, more than doubling the 5% annual average since 2013. Meanwhile, Medicaid spending grew at -2% between 2016 and 2017, well behind the same five-year average of 5%.
The average medical pharmacy allowed amount PMPM in the last two reported years rose to $29.97 for the commercial market, a $4.48 increase; $52.19 for Medicare, a $5.63 increase, and $8.29 for Medicaid, a $0.17 decrease.
In all three categories, specialty drug spend accounted for more than 91% of overall drug spend, while the payer cost share was above 92%.
Oncology and immunotherapy are cited in the report as the most significant drivers of higher spending, though oncology's impact is felt the largest. It accounted for between 43% to 58% of PMPM spending among all three categories and substantially impacts the biosimilars market.
Payers have reacted strategically to the recent spending trends, with 51% requiring their members to use a biosimilar prior to accessing the reference product. Additionally, 64% of payers stated that the price of biosimilars impacted reimbursement decisions the most.
According to the report, three of the largest oncology spend agents, Rituxan, Herceptin, and Avastin, are expected to launch biosimilars this year.
Additional highlights from the Magellan report:
In 2017, 15% of patients drove 94% of commercial PMPM medical pharmacy spending.
During the same period of time, 21% of Medicare patients contributed to 95% of PMPM spending, while 14% of Medicaid patients drove 91% of spending.
The number of billion-dollar drugs is expected to rise from 34 drugs in 2017 to 43 drugs in 2022.
Over that five-year stretch, autoimmune PMPM spending is expected to increase 90%.
Growing exponentially faster will be CAR-T, which is expected to increase by 530%.
The Providence-based system achieved its fourth consecutive quarter of gains from operations.
Care New England Health System (CNE) saw its Q1 2019 revenues rise year-over-year as it continues to explore a merger with Partners Healthcare, according to its latest earnings report.
The health system's obligated group, which only excludes Memorial Hospital, reported gains from operations totalling $1.6 million, a reversal from the $8.7 million loss this time last year. Additionally, the Providence-based system achieved an overall gain of $700,000 from operations instead of a budgeted loss of $4.6 million.
For its part, CNE recorded revenues of $282.6 million in Q1, an increase of $4.4 million year-over-year. Partners, meanwhile, saw its net operating revenue for Q1 2019 decline by nearly $5 million year-over-year.
C-suite perspective:
“We continue to remain highly focused on the work at hand," James E. Fanale, MD, CEO of CNE, said in a statement. "While pleased with the results and increasing consistency in our improving performance, we are committed to executing our action plans and key strategies, while always looking to further improve how we care for our community which includes moving forward with our acquisition process."
CNE's bid to merge with Partners has been in place since last May, though the deal has come under close regulatory scrutiny and been affected by the sudden retirement announcement from Partners CEO David Torchiana, MD, late last month.
In addition to its CNE merger plans, Partners had pursued partnerships with Lifespan Health System and Harvard Pilgrim Healthcare as well but both deals were ultimately called off.