Pharmacy-Benefit Managers Under Pressure

via Barron’s

High-priced drugs have everyone ticked off this year. And for good reason. While health-care spending in the U.S. is growing faster than the economy, pharmaceutical costs are growing faster still. New treatments for arthritis and cancer certainly merit a premium, but pharmacy bills can’t grow unchecked.

A whole industry exists to keep drug bills in check, of course, namely pharmacy-benefit managers, or PBMs. Leaders like Express Scripts Holding and the pharmacy-benefit units of CVS Health and UnitedHealth Group have rung up big profits in recent years while promising to slow the upward trend in drug prices. But the relentless rise raises questions about their effectiveness.

There are other reasons for investors to wonder about the prospects for PBMs. After rising four times more than the market in the past decade, shares of Express Scripts (ticker: ESRX) got knocked for a loop early this year when the company’s largest commercial client, health-insurer Anthem (ANTM), claimed in a lawsuit that Express Scripts was overcharging it by $3 billion a year. Express Scripts disputes the claims, and the stock has begun to recover. But analysts fear that the PBM will lose Anthem’s business and, with it, as much as 20% of its earnings.

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Tackling Workers’ Mental Health, One Text at a Time

via Wall Street Journal

Companies want employees to seek mental-health treatment when needed, so they are turning to a tool already in workers’ pockets: their smartphones.

As employers seek to reduce the costs of untreated mental illness among staffers, more companies are trying mobile apps that help workers easily find and receive treatment. Some apps mine data about employees’ phone usage, or medical and pharmaceutical claims, to determine who might be in need of care. Others allow workers to text and video chat with therapists—in what are being called “telemental” health services.

By downloading these apps, employees grant permission to be contacted with care recommendations, though some may not be aware of the full extent of the apps’ data collection, which is laid out in the programs’ privacy statements and other communications workers receive. Employers don’t receive data on individual workers. In some cases those offering these tools hold general meetings with employees to discuss how the services work.

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UnitedHealth’s Profit Jumps on Health-Services Growth

via Wall Street Journal

UnitedHealth Group Inc. on Tuesday posted strong earnings for its latest quarter as revenue continued to surge in its pharmacy-services business. The company, which is the biggest U.S. health insurer, also gave a slightly rosier full-year outlook.

But amid the positive news, there was one abiding dark spot: Affordable Care Act plans, which UnitedHealth will almost completely stop selling next year. The insurer booked another $200 million in full-year ACA-plan losses in the second quarter, bringing its projected total loss for the year to about $850 million. About $245 million of that was included in 2015 results and $605 million this year.

ACA-plan enrollments were larger than expected, including more limited attrition. Also, costs mounted because enrollees were even sicker than projected, with more chronic conditions than last year, including AIDS, hepatitis C, diabetes and chronic obstructive pulmonary disease.

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Justice Department to Challenge Two Health-Insurance Mergers

via Wall Street Journal

The U.S. government is close to challenging two proposed mergers between four of the nation’s largest health-insurance companies, according to people familiar with the matter, in what would represent strong push back against consolidation in the industry.

The Justice Department as soon as this week could challenge Anthem Inc.’s proposed acquisition of Cigna Corp. and Aetna Inc.’s planned combination with Humana Inc. Antitrust lawsuits against the planned mergers would be the culmination of concerns the Justice Department has had about the deals from the outset. During a yearlong review of the mergers, the department’s skepticism hasn’t subsided, people familiar with the matter said.

The Wall Street Journal previously reported the mergers were in trouble at the Justice Department, with antitrust enforcers worried the deals would reduce competition and harm consumers.

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Starbucks Widens Workers’ Health-Insurance Options

via Wall Street Journal

Starbucks Corp. on Monday became one of the most high-profile employers to switch its employees to a private health insurance exchange.

Instead of the one health insurer and three medical coverage levels they have now, U.S. employees from Chief Executive Howard Schultz to store baristas working at least 20 hours a week will be able to choose from among up to six national and regional carriers, and five levels of medical plan starting in October.

In recent years, several large companies including Walgreen Co.,Sears Holdings Corp. and Darden Restaurants Inc. have moved employees onto private exchanges, which are essentially online marketplaces where employers can have their workers choose health plans.

But they haven’t caught on as quickly as insurers once expected. Consulting firm Accenture PLC had estimated that 40 million Americans would be getting insurance through private exchanges by 2020, but only about eight million people have done so.

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Calpers Reports Lowest Investment Gain Since Financial Crisis

via Wall Street Journal

The largest U.S. public pension posted its lowest annual gain since the last financial crisis due to heavy losses in stocks. The California Public Employees’ Retirement System, or Calpers, said it earned 0.6% on its investments for the fiscal year ended June 30, according to a Monday news release.

It was the second straight year Calpers failed to hit its internal investment target of 7.5%. Workers or local governments often must contribute more when pension funds fail to generate expected returns. Calpers oversees retirement benefits for 1.7 million public-sector workers.

Calpers’ annual results are watched closely in the investment world. It is considered a bellwether for U.S. public pensions because of its size and investment approach. Many pensions currently are struggling because of a sustained period of low interest rates.

“This is a challenging time to invest,” Ted Eliopoulos, Calpers’ chief investment officer, said in the release. The last time Calpers lost money was during fiscal 2009 when the fund’s holdings fell 24.8%.

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Pace of U.S. Health Spending Increased in 2015, With Further Rise Expected

via Wall Street Journal

WASHINGTON—Growth in U.S. health-care spending quickened slightly in 2015 and will continue to rise at a moderate pace over the next decade, but not at the fast clip seen in the 20-year period before the recession, federal actuaries said Wednesday.

Spending on all health care is estimated to have grown 5.5% in 2015 compared with 5.3% growth the previous year. Growth is expected to dip to a slightly lower rate of 4.8% in 2016, according to actuaries at the Centers for Medicare and Medicaid Services. Their report, published in the journal Health Affairs, projects spending growth will reach 6% in 2025.

The pickup in the past two years follows five consecutive years in which average spending growth through 2013 was less than 4% annually, the lowest rates since the government began tracking health-care spending in the 1960s.

The acceleration is largely attributed to a stronger economy, faster growth in medical prices and an aging baby boom generation. Spending growth in 2014 and 2015 was also driven by expanded coverage under the Affordable Care Act because it means more people are using health services.

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