Radar on Specialty Pharmacy

✦ Implementation of the most- favored-nation (MFN) model continues to be stalled. Following court rulings in December that temporarily blocked its Jan. 1 enactment (RSP 1/21, p. 8), the U.S. District Court for the District of Maryland issued a joint motion to stay in the case (No. 8:20-cv-03531-GJH) until a final rule that’s based on the MFN interim final rule, which was published in late November, is published in the Federal Register. It requires that the defendants not appeal the preliminary injunction a California court issued and that “the performance period for any final regulation stemming from the MFN Interim Final Rule shall not commence earlier than 60 days” after its publication. View the motion at https://bit.ly/39EfoNw.

✦ A court also has pushed back implementation of the rebate rule until January 2023. The rule would require that drug rebates currently given to plan sponsors would instead be offered to seniors as discounts at the point of sale. It would exclude the rebates given to Part D plans or their PBMs from a safe harbor they now are included in and establish two new safe harbors. However, the Pharmaceutical Care Management Association filed a lawsuit (No. 1:21-cv-00095-JDB) in the U.S. District Court for the District of Columbia against implementation of the rule. On Jan. 30, the court ordered postponement of the provisions set to take effect after Dec. 31, 2021. View the order at https://bit.ly/36zP2uh.

✦ Jan. 14: The FDA granted an additional indication to Pfizer Inc.’s Xalkori (crizotinib) to treat children at least 1 year old and young adults with relapsed or refractory, systemic anaplastic large cell lymphoma that is anaplastic lymphoma kinase (ALK)-positive. The agency initially approved the drug on Aug. 26, 2011 (RSP 9/11, p. 6). The tyrosine kinase inhibitor had breakthrough therapy designation for the newest indication. The recommended dosage of the capsule is 280 mg/m2 twice daily based on body surface area. Website Drugs.com lists the price of 60 200 mg capsules as more than $19,400. Visit www.xalkori.com.

✦ Jan. 15: The FDA gave accelerated approval to the Janssen Pharmaceutical Companies of Johnson & Johnson’s Darzalex Faspro (daratumumab and hyaluronidase-fihj) in combination with Velcade (bortezomib) from Takeda Pharmaceutical Company Limited subsidiary Millennium Pharmaceuticals, Inc., cyclophosphamide and dexamethasone for the treatment of adults with newly diagnosed light chain amyloidosis. The agency initially approved the drug, which is a subcutaneous formulation of Darzalex, on May 1, 2020 (RSP 5/20, p. 8). The recommended dose is 1,800 mg daratumumab and 30,000 units of hyaluronidase. Drugs.com lists the price of an 1,800 mg-30,000 units single-dose vial as more than $7,916. Visit www.darzalex.com.

The level of merger and acquisition (M&A) activity within the specialty pharmacy and home infusion arenas that has been occurring for numerous years has certainly depleted the number of companies available for deals. But that’s not to say they aren’t happening. Last month, Shields Health Solutions unveiled a deal to acquire ExceleraRx Corp. (see story, p. 7). And approximately one month ago, Centene Corp. acquired PANTHERx Rare, LLC, and revealed a deal to acquire Magellan Health, Inc. (RSP 1/21, p. 1). AIS Health spoke with Bill Bolding, a senior analyst for Provident Healthcare Partners, and Michael Patton, managing director at the firm, to get their perspective on M&A trends within those industries.

AIS Health: Did you notice any COVID-spurred M&A activity last year?

Bolding and Patton: Two areas within health care that observed some COVID-spurred M&A activity were diagnostics and telehealth. Interest in testing, lab and diagnostics capacity spurred interest from both capital investors and strategic consolidators. Telehealth, which was undergoing investment and consolidation activity at very attractive valuations even prior to COVID, clearly benefited from potentially permanent adoption at both the provider and patient levels. It’s also important to state that generally speaking, areas of health care that are relatively insulated from the direct effects of COVID benefited in the market due to simple supply-and-demand factors. Private-equity dry powder remains very high, and investors need to deploy the funds they’ve raised, which explains why an industry such as pharmacy could benefit from a valuation perspective.

As more health systems are creating their own specialty pharmacies, two major players in the space are coming together. In mid-January, Shields Health Solutions unveiled a deal to purchase ExceleraRx Corp. for an undisclosed amount. The new company could provide these entities with more leverage when it comes to payer networks and manufacturer distribution.

Shields is a specialty pharmacy integrator that partners with health systems to help them create and grow a hospital-owned specialty pharmacy program. Excelera is a network of specialty pharmacies among its members, which are integrated delivery networks and academic medical centers. Created by Minneapolis-based Fairview Health Services almost a decade ago (RSP 5/14, p. 1), the group now consists of almost 30 members.

As of the beginning of February, the FDA had approved 29 biosimilars. For various reasons, mostly patent litigation by reference drug companies, only 20 of those products actually have launched onto the U.S. market. But as the biosimilars market has yet to demonstrate its full potential, it certainly seems to be picking up steam. In a report released in October, the IQVIA Institute for Human Data Science projected that over the next five years, biosimilars could hit $80 billion in aggregate sales and provide savings in excess of $100 billion in aggregate. AIS Health spoke with a variety of industry experts on what we’ve seen over the past year and what we might expect looking forward.

The available products span seven reference drugs consisting of three supportive care drugs — two biosimilars of Neupogen (filgrastim), one of Epogen/Procrit (epoetin-alfa) and four of Neulasta (pegfilgrastim) — three oncology brands — three biosimilars of Rituxan (rituximab), two of Avastin (bevacizumab) and five of Herceptin (trastuzumab) — and one tumor necrosis factor inhibitor, Remicade (infliximab), which has three biosimilar versions on the market.