Editor’s Note: In a recent webinar for PharmaVOICE, Manatt Health revealed the megatrends reinventing the life sciences industry—and how they relate to new thinking by patients, providers and payers. In a new three-part series summarizing the program, we will examine each trend’s trajectory—and how shifts in the patient, provider and payer landscapes will affect life sciences companies, reinventing their business models and relationships. Part 1, below, focuses on the megatrends for patients. In January, we will explore the megatrends for providers, and in February, we will focus on the payer segment.

To view the full webinar free on demand, click here. To download a free copy of the webinar presentation, click here.


Drug Copay Assistance Is Increasingly Threatened

In early 2017, California Assembly member Jim Wood introduced Bill AB-265, banning the use of copay coupons in California when a generic equivalent drug covered by an individual’s health plan exists. Governor Jerry Brown signed the bill into law on October 9, 2017.

There are some exceptions to the law, including HIV and AIDS maintenance drugs and drugs for patients who have completed required step therapy or met other prior authorization requirements. In addition, the bill does leave some things unchanged. Manufacturers are still able to offer products free of charge to patients and/or insurers. Pharmacists can continue to substitute drugs, and patients can still obtain assistance through independent charities. After the governor signed the bill, however, the Pharmaceutical Research Manufacturers Association (PhRMA) issued a statement warning that the law doesn’t ensure patients who need branded products over generics will be able to access those treatments.

On the same day that AB-265 became law in California, Governor Brown also signed Bill SB-17. The new law forces drug manufacturers to give advance warning of and explain price increases. (Click here to read our October “Health Update” article, “Is SB-17 Real Progress on Drug Pricing—or an Illusion?”)

New legislation is not the only threat to patient assistance. There are also an increasing number of investigations targeting patient assistance charities that are jeopardizing patient access to medications.

For example, the Internal Revenue Service is investigating the tax-exempt status of the Good Days patient assistance charity, which was formerly known as the Chronic Disease Fund (CDF). The investigation alleges that Good Days’ copay assistance program gave “impermissible” benefits to its pharmaceutical company donors by returning money donated as payments for drugs the donors manufactured. If the claims are proven true, Good Days could lose its tax-exempt status.

In addition, the U.S. Attorney’s Office for the District of Massachusetts is conducting a separate inquiry into patient assistance groups and their relationship with the drug industry.

At the same time, several life science companies are receiving or have received subpoenas related to various charitable foundations and activities. Among the topics covered in the subpoenas issued in recent years are:

  • Support of 501(c)(3) organizations that provide financial assistance to patients (2017)
  • Payments to charities that help Medicare patients pay for their drugs (2017)
  • Relationship with the Patient Access Network Foundation (PANF) and other nonprofits that offer financial assistance to Medicare patients (2016, 2015)
  • Alleged collusion with PANF and CDF to boost sales of specific products (2016)
  • Funding of copay assistance programs (2016)
  • Contributions to patient assistance programs (2015)

Some of the subpoenas call into question the relationships that enable nonprofits to provide financial assistance to patients who are government-insured and can’t access copay coupons. The threats to patient assistance are coming on all sides—manufacturer-sponsored programs, charitable foundation distributions and copay assistance through copay coupons.

Pharmacy Benefit Managers (PBMs) Are Entering the Drug Discount Space

Against the backdrop of copay assistance programs coming under attack, we see another interesting trend: PBMs are developing a more comprehensive menu of consumer-oriented services to serve as a hedge against cost pressures, create positive press and leverage their unique role in the supply chain. Like pharmaceutical manufacturers, PBMs are increasingly looking for ways to engage patients and reduce costs through better management. Their move to create more comprehensive direct-to-consumer platforms is a key step in that direction—and complements the relationships that PBMs have with payers, pharmaceutical companies and pharmacies.

Two interesting examples highlight ways PBMs are partnering to provide new discount services to consumers:

  • CVS Caremark and Novo Nordisk. In this direct-to-consumer savings program for three Novo insulin products (Novolin R®, Novolin N® and Novolin 70/30®), patients forgo insurance coverage, if they have it, and pay a discounted cash amount completely out of pocket.
  • Optum and AARP. Under the Optum and AARP program, AARP members and their families receive discounts on medications (FDA-approved generic, brand name or specialty drugs) not covered by the patient’s current prescription plan or Medicare Part D.

The Healthcare Industry Continues to Consolidate

As consolidation across the healthcare industry continues, one of the most intriguing deals is CVS Health’s proposed acquisition of Aetna. (Note: After the webinar, on December 3, CVS Health and Aetna announced a definitive merger agreement under which CVS will acquire all outstanding shares of Aetna. The $69 billion transaction is expected to close in the second half of 2018, pending approval by regulators and shareholders. CVS and Aetna call the deal a “natural evolution” as both companies “seek to put consumers at the center of healthcare delivery.”)

We tend to think of CVS Health in terms of in-store pharmacies. CVS also, however, is a PBM through CVS/Caremark, a specialty pharmacy, and a provider through the CVS Minute Clinics. Its acquisition of Aetna could deliver increased options for patients, including providing care to Aetna enrollees more cost-effectively through the Minute Clinics. In addition, the deal could result in cost savings through more efficient formulary design, as well as greater leverage in price negotiations.

Amazon Contemplates Entering the Healthcare Market: An Emerging Frontier

CVS also made news recently when it announced its new next-day drug delivery service (with same-day delivery in New York City). What was the reason behind the announcement?

Many believe that the driver behind the new delivery service—and the Aetna acquisition—is the potential for Amazon to enter the healthcare market, bringing its proven delivery model to prescription drugs. Amazon’s primary customer is between 30 and 45 years old—and the theory is that this demographic will need more drugs as it gets older. The way these customers shop and consume fits squarely into the Amazon model.

In fact, Amazon already is competing with in-store pharmacies on over-the-counter (OTC) medications and is often undercutting competitors on OTC prices. In addition, through its recent acquisition of Whole Foods, Amazon has the opportunity to establish in-store pharmacies with prescription fulfillment through mail order delivery—Amazon’s acknowledged sweet spot. If Amazon were to take that path, it could dramatically change the dynamic of drug fulfillment.


What can pharmaceutical companies expect as they look ahead? Pharmaceutical manufacturer-sponsored patient copayment assistance—through copay cards and charitable giving to foundations—will continue to be scrutinized and threatened. Overlaid on those threats will be state drug pricing transparency legislation (with or without copay bans) that will put greater pressure on traditional methods for helping patients. Concurrently, emerging entities will approach direct-to-patient assistance in new ways, as we are already seeing with PBMs entering the drug discount space, Amazon contemplating a move into the prescription drug market, and the CVS/Aetna deal opening up new possibilities for providing care in local settings at lower costs.

In this new environment, pharmaceutical companies will need to take a two-pronged approach to assisting patients. First, they will need to seek “safe harbors” and design pilots to continue providing traditional models of support. Second, at the same time as they are acting to protect current models, they will need to be designing innovative new approaches for engaging with patients by working through emerging partners.