JP摩根美股医疗保健行业一个没有政府回扣的世界卫生和公众服务部对医疗保险BD部分的改变2019239

AWorldWithoutGovernmentRebates–HHSChangestoMedicarePartB&DImpactAcrosstheRxChannelfromManufacturerstoPatientsHealthcareTechnology&DistributionLisaC.GillAC(1-212)[e-mail]eendpagesofthispresentationforanalystcertificationandimportantdisclosures,includingnon-USanalystdisclosures.J.P.Morgandoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.Biotechnology–LargeCapCoryKasimovAC(1-212)[e-mail]AmericaEquityResearchFebruary2019Pharmaceuticals–MajorandSpecialtyChrisSchottAC(1-212)[e-mail]edCare&FacilitiesGaryP.TaylorAC(1-212)[e-mail]2OurTakeawaysFromTheNewProposalsFollowingthePartBpricingreformproposalreleasedlastyearandthePartDproposalreleasedearlierthismonth,wewantedtoshareourthoughtsonkeytakeawaysandbroaderimplicationsforourcompaniesacrosstheRxsupplychain…ForPBMs&Distributors:WeseethePartBproposalasmixed.Thedistributorscouldseeanindirectimpactasphysiciansaresqueezed.HoweverifweseeashiftfromPartBtoPartDthiswouldbeapositiveforbothPBMsanddistributorsastheydistributeandmanagespecialtydrugs.AsforPartD,wedon’tseeamaterialdirectimpactonPBMs(PDPs)asthemodelpasses-throughrebatestoday.However,ifthisnewmodelextendstothecommercialmarketwecouldseeheadwindsfromthemodestcommercialrebatesretainedbythePBMs.ForFacilitiesandManagedCare:Wedon’tbelievethePartBproposalwillhavematerialimpactonourpublically-tradeduniverse.WebelievethePartDrebateproposalpresentsmorenear-termtiming/disruption/executionriskthanmateriallong-termmarginorprofitrisk.Infact,webelieverisingPartDpremiumswilldrivehigherMApenetrationandhighernetPMPMprofitsforMAplansovertime.ForBioPharma:WeseethePartBproposalaslargelymanageableforthegroupwitharelativelylimitedimpacttonumbers.Atthesametime,webelievetheimplementationoftheproposedPartDreformwouldrepresentanincrementalpositiveforthegroup.Whiletheeventwouldlikelybeanetneutralfromasalesandearningsperspective,higherpricingtransparencyandlowerpatientoutofpocketcostscouldpotentiallyliftthesectoroverhangcausedbynegativedrugpricingheadlines.3KeyThoughtsonthe2018MedicarePartBProposal4InOctober2018,PresidentTrump&SecretaryAzaroutlinedaproposaltolowerthecostofdrugscoveredunderMedicarePartB;specifically,thisproposalaimsto…1.ReplacetheMedicarePartBadd-onfee(currently4.3%oftheaveragesalesprice)withafixedfee,todissociatepotentialfinancialincentivesfromprescribingbehavior(e.g.,physiciansselectingmoreexpensivedrugsforpatientstoreapahigherfee).2.Charge“privatesectorvendors”withmaintaininganinventoryofPartB-eligibledrugsandsupplyingphysicians,hospitaloutpatientdepartmentsandotherproviders,thusre-directingCMSpaymentstothesevendors(andalleviatingtheburdenonphysicianpracticestomaintaininventoryundertheold“buy&bill”model).3.SetpricesforcertainPartBdrugsatacalculated“targetprice”basedonaninternationalpricingindex(IPI)andthecurrentASP.Thepilotprogramwouldimpact~60%ofMedicarePartBdrugs,applyto50%oftheUSandbephasedinovera5yearwindowstartingin2020.InNovember2018,CMSissuedaseparateproposalthat,whilelargelyfocusedonMedicareAdvantage(MA)/PartD,proposedallowingMAplanstoimplementsteptherapyforPartBdrugswhichcouldputadditionalpressureonhigh-costtherapiesWebelievethattheHHSprogramwilllikelyfacepushbackfromanumberofdifferentstakeholders;theproposalisnowinareviewandcommentperiodbeforeaformalruleisproposedinSpring2019.2018MedicarePartBProposalSource:Companyreports,CMSNationalHealthExpenditureAccounts,KaiserFamilyFoundation,J.P.Morganestimates.5Byourestimate,a~30%cutinspendonPartBdrugsin50%oftheUSisunlikelytohaveameaningfulimpactonindividualPharma/BiotechcompaniesUndertheproposal,PartBdrugswithsignificantUSandInternationalpricingdifferentialswouldfacethelargestimpactfrompricingreforms.CMSestimatesthatthisproposalwouldreducedrugcostsby~30%andgenerate~$17.2bnofsavingsoverfiveyears.BasedonCMS’sfigures,theaveragetop20PartBdrugpriceintheUSwas80%higherthantheinternationalprice(seebelow)andtheproposalwouldlooktoreducethisto26%overa5-yearperiodoftimestartingin2020.Source:Companyreports,CMSNationalHealthExpenditureAccounts,KaiserFamilyFoundation,J.P.Morganestimates.2018MedicarePartBProposal6Approximately40%ofUSrevenuesarepaidforbythegovernment,another~40-45%byprivateinsurersand~10-15%fromout-of-pocketcostsNote:Thisanalysisisbasedonindustrywidepayermix.Individualcompaniesmaybemore/lessexposedtoMedicare/Medicaidpopulations.Source:Companyreports,CMSNationalHealthExpenditureAccounts,KaiserFamilyFoundation,J.P.Morganestimates.OfUSMedicarespend:Medicare31%Medicaid10%PrivateInsurance42%Outofpocket13%Allother*4%MedicarePartD~76%MedicarePartB~24%However,assumingasimi