CARE MANAGEMENT

Addressing the Opioid Crisis

MAY 18
Opioid addiction is in the news every day, arguably after a too-long period when not enough attention was being paid. Our wake-up call was during the 2016 Super Bowl, when AstraZeneca and Daiichi Sankyo decided that an ad for a medication to treat opioid-induced constipation made financial sense, at a reported price of $10M.

Since then, we have been on the lookout for news about the epidemic as well as possible solutions. News is not hard to come by, with recent CDC reports estimating opioid deaths in this country at nearly 100 per day – more deaths than from motor vehicle accidents and more than were caused by HIV/AIDS at the peak of that epidemic in the mid-1990s. The reality might be even worse: recent research suggests that this estimate may be understating the real total by as much as 50%, due to lack of clear definition about what constitutes an overdose.

There are a lot of players in this crisis, and there are roles for the pharma industry, state regulators, the medical community, and non-profits all to play. It seems to us that possible solutions provided by for-profit healthcare companies are likely to fall into one of at least three areas.

Prevention
A series of Pulitzer Prize-winning articles in the Charleston, WV Gazette Mail were published late last year that found that 780 million opioid pills were sent to West Virginia over six years, including 9 million pills to a single pharmacy in a town of 392 people.

On the heels of this coverage, there is a renewed energy on stopping prescription drug abuse before the pills can leave a pharmacy. Forty-nine states are now using some form of electronic prescription drug monitoring programs (“PDMPs”—Missouri is the only outlier) to help prevent things like doctor shopping when patients seek prescriptions from multiple physicians.

Appriss Health, a division of data and analytics company Appriss majority owned by Insight Ventures, is now working in at least 43 states with solutions to identify and stop prescription substance abuse. Its NarxCare analytics product integrates with clinical data to try and identify potential risk factors for abuse.

AxialHealthcare is another, having raised $16M in 2016 from Oak HC/FT and others to roll out its pain benefit management solutions for employers and payers. Axial’s solutions provide pain-specific, evidence-based approaches to managing spending, in ways similar to other large specialty benefit management companies like Magellan or eviCore.

Acute Treatment
With the rise in addiction problems, private equity sponsors have rushed in to make investments in businesses that treat these issues. Even with uncertainty about where federal healthcare legislation will ultimately land, many investors believe that the high profile nature of the opioid crisis provides assurance that the fundamentals are solid in an extraordinarily fragmented market. The velocity of transactions in this space seems to back this up, with one estimate that about 60 substance abuse investments or deals were completed in 2016, up five-fold from 2010. Large publicly-traded platforms such as Acadia Healthcare and the behavioral health division of Universal Health Services will likely continue to be active acquirers of businesses that are aggregated by financial sponsors.

Widespread addiction has introduced a host of other problems and opportunities, such as the rate of newborns with neonatal abstinence syndrome (“NAS”) or opioid withdrawal symptoms. New research has found that the rate of NAS in the U.S. has increased nearly five-fold during the past decade, with some rural areas seeing rates as high as one out of every ten children born dependent on heroin or another opiate.

In response, one young company called 180 Health Partners raised funding from Frist Cressey Ventures and is now rolling out its programs with various health insurance payers. 180 Health Partners is focused on ensuring that pregnant women seek out and receive care that will provide help in a stigma-free environment.

Recovery
A number of experiments and approaches to recovery are being used in the market, from mobile apps to medication substitutes. One recent survey looking at relapse rates found that only 46 percent of people who attend residential drug treatment stay in recovery. The cost of recidivism is high, and insurers are adjusting their approach to look at how post-care follow-up is managed by providers, one that fits in a larger “value-based” rather than “fee-based” context.

Medication substitutes such as methadone have long been a standby of recovery treatment. Newer treatments such as Suboxone and Vivitrol (a long-lasting naltrexone) are getting new attention, and have even sparked a recent argument in the media between the recently ousted Surgeon General and the new HHS Secretary.

Other approaches are focused on technology solutions to long-term recovery. One seeing some early success was developed by CHESS Mobile Health, which offers a mobile phone app that measurably reduces frequency of relapse. Their solution offers a number of features, including a psychology-based approach that measures daily “abstinence confidence” as well as geofencing that sounds alerts or summons coaching interventions when a user gets too close to locations self-identified as high risk (such as where he or she usually buys drugs).

We are watching this space closely and would love to hear what you think.

Conor
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Conor Green