Specialty pharmaceuticals roundtable: Balancing benefits, cost

March 12, 2015

Read what a panel of distinguished industry experts has to say about the increasingly difficult job of managing specialty pharmaceuticals.

Specialty pharmaceuticals occupy a unique corner of the healthcare world, encompassing breakthrough treatments for patients with complex conditions such as rheumatoid arthritis, multiple sclerosis, hepatitis C and cancer.

But their downside may be steep: Specialty pharmaceuticals require handling and administration outside the purview of the corner drugstore, have unique patient safety profiles, and are the top tier in cost. In fact, this growing class of drugs is utilized by just 1% of the population, but represents 30% of the annual national drug spend.

Balancing access to specialty pharmaceuticals against outcomes and cost is increasingly difficult for health plans and pharmacy benefits managers (PBMs). Questions about offsets, patient responsibility and management were recently explored by invited experts from across the healthcare continuum. Perry Cohen, chief executive officer of Connecticut-based The Pharmacy Group, moderated the discussion. Participants were:

  • Steve Avey, M.S., R.Ph., FAMCP, vice president, specialty pharmacy programs, MedImpact;

NEXT: Cost versus offsets

 

Costs versus offsets

Because specialty drugs take an ever-growing part of the healthcare dollar, Cohen kicked off the exchange by asking panelists to consider what cost-offsets--such as inpatient surgery--might reduce or mitigate their use.

“This question gets to the fundamentals of specialty drug use and how we manage them. We need a better understanding of the real value a new therapy brings,” said Avey. He noted that pre-market pharmacoeconomic (PE) models that are sometimes developed by the manufacturers reflect “the clinical data that they collect before the drug is approved. These models would speak directly to that.” But, he added, most PBMs don’t have access to such vital cost-offset pieces.

Chernov said he isn’t very optimistic about offsets. “I think it would be difficult to do PE analysis for all of the different drugs,” he explained. “And to the extent that offsets are useful, the pricing is such that it makes it difficult to have them match those surging prices.”

Related:Limiting drug insurance not the answer to controlling healthcare costs, study says

Kaddis took a different approach, saying the question has a high-level implication. “What’s the value of specialty pharmaceuticals and what is the value of a cure of a disease?” he asked. He said the costs are justified in the face of offsets such as “improving progression-free survival in patients with a terminal condition like lung cancer, or the value of pain reduction in patients with TNF inhibitors.”

Chernov replied that, “It really requires focus on the specific drugs and specific disease states, and there are examples where the costs of these drugs are justified, and there are examples where the cost of these drugs is questionable.”

Representing the pharmaceutical industry, Leonard said it’s important not to “lose sight of the big picture. Many of these innovative medicines--the specialty drugs we are talking about--are a really good thing and they are changing the lives of patients around the world.

“I think it is important that we look at the drug spend as related to the overall picture of healthcare cost in the United States,” he continued. “The spending on prescription drugs is around 10% of the overall healthcare spend and has been roughly the same for several decades. Over 85% of the total number [of] prescriptions being filled today are generic, so you need to calculate all of these factors into the overall value equation.”

Leonard noted that the offsets--expensive complications, hospitalizations and surgeries--are being avoided by patients staying on their medications. “I think it is also a positive development that we are seeing an increasing level of collaboration with health plans and industry around joint research initiatives,” he noted. “These efforts will hopefully lead to better evidence as to what works for patients within a health plan’s own populations.”

NEXT: The future of biosimilars

 

Avey noted that, while there’s value in curing disease, just 1% of the population is currently driving 30% of the drug spending, and the gigantic cost associated with treating every patient with hepatitis C, for example, “would put the healthcare system under water. Yes, there is value in curing people of hepatitis C, but we need better evidence of exactly what the ultimate cost-offsets and overall value of the medications are.”

Kaddis agreed with Avey that there needs to be more transparency in pricing.

Related:Demand for price transparency grows

Cohen queried panelists on where they stood on biosimilars in relation to the management of specialty pharmaceuticals, given that there is a price differential between the two agents.

Kaddis noted that the FDA Advisory Panel recently voted 14-0 in favor of allowing the first biosimilar to enter the market. The move “is going to create more competition in the market and in some cases result in deeper discounts on acquisition costs for some products, and additional rebates which will help payers with affordability and specialty drugs,” he said, adding that it will hopefully “help to reduce some of these cost trends we are seeing without sacrificing quality or access.” Kaddis said he didn’t view the change as an anti-brand approach: “There will be manufacturers that are known for producing brand name drugs, innovator drugs, that will also produce biosimilars.”

Leonard noted that the FDA’s action was “the free market at work, and competition in this space or in the overall economy is a good thing.”

Exploring innovative ways to address cost and access issues related to specialty pharmaceuticals was Cohen’s next question, and Avey began by explaining how his system uses a preferred strategy.

“The tier system doesn’t work as well in the specialty space due to the co-pay assistance programs,” said Avey. “Most PBMs will work with a small group of specialty pharmacies that they think have superior service and give the right kind of clinical support.

“These medications have a high upside but they also have potential for significant side effects. We want to make sure patients are being monitored appropriately,” he continued. “We have what we call a best-in-class approach where there are certain pharmacies out there that we think have incredibly high service in a therapy class, and so we like to utilize them.”

Chernov said his organization has an in-house PBM through PRIME, which also has a specialty pharmacy that manages all aspects of specialty drugs. “I think the best strategy for us is a preferred product approach where we can use contracts to create some degree of competition,” he added.

Related:Price transparency: a significant force in healthcare

Leonard noted that “Managing access through preferred products is a relatively new trend.” He explained that by excluding more products from formulary lists, physicians have less control over the choices they can make for their patients’ care. “For example, if a physician has a patient with schizophrenia, he or she might need to ask what insurance or PBM that patient has before making a prescription decision. And that’s a challenge because the patient might not respond best to the only drug that is listed on the formulary,” he said. “We are seeing the physician having less control over treatment decisions with some of these exclusive actions.”

Referencing the Choosing Wisely campaign, which is meant to spark conversations between physicians and patients on appropriate care, Leonard underscored “the goal is to stop spending money on treatments that are of low value, and that way, free up resources for newer innovations or treatments that are high value.”

 

NEXT: Defining the value of specialty pharmaceuticals

 

Defining the value of specialty pharmaceuticals

From drug access and the impact of exclusivity, Cohen then asked panelists for their definition of, and parameters for, determining the value of specialty pharmaceuticals.

Avey, who has been involved in managed care pharmacy for 25 years, said his passion “from the very beginning has been understanding the value of each new therapy, and that is a combination of what the drug does clinically, associated with its cost.

“I said in the beginning that the backbone is pharmacoeconomic modeling, so that we understand exactly what the cost offsets are; what the end result is likely to be; and what we are trying to accomplish with therapy. The value equation is absolutely critical in this world. What happens in real life when the evidence doesn’t show that a specialty product is superior to the other drugs within the class? It comes down to price. If all the agents are going to deliver the same outcome, what I am looking for is the least-expensive option.”

Avey referred again to value in terms of measuring offsets, citing progression-free survival, quality of life and improvements in productivity as “those factors that we can have that show what the value of the product is, but in absence of that kind of information and evidence, it’s going to come down to the price of the product.”

Related:Specialty drugs and the role of managed care pharmacy

Chernov agreed, adding, “I think value comes down to quality over cost. When quality goes up and cost goes down, then value increases. I would use outcomes as a surrogate for quality, things like progression of disease, functional capacity, quality of life. Also, outcomes important to employers, such as disability and loss of productivity, have to be factored in.“

For products that are therapeutically equivalent, Chernov stressed, “We consider the lower- cost drug to be medically necessary.” The real problem, he noted, is, “We really don’t have the tools or the data to make those determinations to the degree of granularity we need to make those kinds of decisions.”

Kaddis pointed to the disparate data sources that add to the challenge, explaining that sorting them out is a dilemma. “We have health plans that have medical data on patients but the pharmacy benefit is carved out to a PBM, and they don’t have access to that pharmacy benefit information. You may have pharmacy benefit managers that are doing a great job managing the pharmacy benefits for a client, but that same client won’t share the medical data with them. Then, when it is shared, there are a lot of gaps in the data.”

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On the need for decision-making models, Kaddis went a step further: “I would also say that, in addition to pharmacoeconomic models, what we also need to look at is comparative effectiveness studies with specialty pharmaceuticals. We need this to be done by various organizations so we can answer the question as to whether products are providing value, first of all, and then, how they compare to each other, or how a new product compares to the standard of care.” All of these, he concluded, are needed to make informed decisions.

Cohen asked Leonard to describe the type of matrices that could be used to determine the value of pharmaceuticals. “This is the crux of this whole conversation, isn’t it? How do you determine [the] value of pharmaceutical products, healthcare interventions and what we are talking about today, new medications or specialty medications? It depends on who you ask, and patients definitely need to have a voice in the value equation,” he replied.

Using the successful trajectory of HIV/AIDS therapy as an example, Leonard added, “This disease was a death sentence not that long ago, and now people are managing this condition, thanks to the medications they are on. If you were to ask people with HIV about value, I think you will hear a story that’s very positive.”

Leonard also raised the theme of “measuring value over a longer time horizon versus just looking at value in the short term--a one-year budget window versus the life cycle of the patient.”

Avey said he is optimistic about collaborations that establish value. “More pharmaceutical companies come to us in phase 3 trials asking what evidence we need to show value of their pharmaceuticals. We were both operating separately...kind of in a vacuum. Now we are seeing a lot more communication.”

 

NEXT: Exploring patient responsibilities

 

Exploring patient responsibilities in care

Panelists were asked to consider what role a patient should play in managing their care, and whether adherence and financial incentives had an appropriate place at the table. “What is the patient’s responsibility? Should there be consequences for noncompliant patients and financial incentives for compliant patients? Could a price point for therapy trigger such financial strategies?” Cohen asked panelists.

Describing recent steps, Avey said that some health plans and self-funded payers were “asking patients to sign a contract where they pledge that they will remain adherent [to] their therapy throughout treatment, a trend we are going to see more of when you see these very expensive therapies.”

He explained that the premise of these contracts is to act as an incentive for patients to take medications as directed. In situations where adherence becomes problematic, refills would not be authorized. While evidence shows cost can be a deterrent and co-pays can be a barrier for patients, Avey noted that “the average member will pay 25% to 30% of the cost of non-specialty medications. But in the specialty space, the average patient only pays 1.8% of the cost. So the co-pays are reasonable for what the patient is receiving.”

Related:Should patients be held responsible for poor health choices?

Chernov disagreed with the approach, saying, “As a physician, this kind of strategy makes me uncomfortable. I am skeptical about the effectiveness of that approach and I think it’s a slippery slope. We need to find ways for this to work without making patients the ‘bad guys’ and holding guns to their heads.” Chernov added that while he understands that the enormous costs of specialty drugs are resulting in pressure to employ punitive strategies, “I just don’t know where you draw a line to determine fairness. I see this as a last resort management strategy.”

Concerned with the same level of potentially punitive measures, Kaddis added, “I think in the end, it’s actually going to hurt more patients than help payers.” He offered co-pay assistance as an alternative strategy. “We have seen directly that offering co-pay assistance significantly improves compliance to therapy.”

Moreover, Kaddis said he preferred one-on-one patient interactions because they are an important key to adherence. “Regular contact with the patient, talking person-to-person [through] a care manager [or] care coordinator who is reaching out to the patient on a regular basis--assessing any side effects, any issues they may be having, reminding them or educating them on the importance of taking medication and how that could improve their health--these types of interactions, from our perspective, have resulted in a significant increase in compliance without having to reduce co-pays or put in any sort of financial penalties.”

Related:Overcome personal barriers to address patient accountability

Leonard noted that “Most of the evidence shows that the carrot approach works better than the stick approach,” and emphasized that “everybody wins if the patient is compliant and sticks to the medication.” He explained that the healthcare team--physician, PBM, physician assistant, health plan, and even the manufacturer--all can be engaged in the design of innovative medication management programs at the patient level. “The points we just made are referring to regular contact with the patient, reminders [to] take your medications today. That’s the kind of high-touch program that can work. I think that’s the direction that we should all be looking,” Leonard concluded.

Avey said he viewed the patient contract “as a pledge that says ‘Okay, I get it, this is really important for me to take my medication as prescribed and I will.’” He added that relatively few health plans have adopted the draconian measure of refusing to refill a prescription in non-adherent situations.

 

NEXT: Who is the optimum player to manage the process?

 

Who is the optimum player to manage the process?

Panelists then were asked to choose which stakeholder--the physician, pharmaceutical company, specialty pharmacy, health plan, or PBM---is in the best position to provide overall clinical management and measure health outcomes.

“From my perspective, the specialty pharmacy should take the lead,” said Avey. “They know the refill patterns, they are contacting the patient, they known them, and my concern right now is, we have too many chefs in the kitchen.” He said that some patients are getting frustrated because they are being called by too many stakeholders. His organization, he notes, tries “very hard to coordinate who calls patients on a regular basis.”

Chernov’s pick was the health plan because “a health plan has direct relationships with pharmacy through a PBM with patients, with doctors, hospitals and other providers. I think the health plan is in the best position to pull everything together.” He added that he would like to see plans leverage their capacity to be “the catalyst to develop what I would call patient-centered collaborative partnerships that involve all stakeholders.”

Leonard’s choice was the physician, noting he or she is on the front lines with the patient “treating their disease.” He added that if “the health plans or the PBMs or the specialty pharmacies had tools that they could provide the physician, this is probably the best of both worlds.”

Related:Building successful payer-provider partnerships for cost reduction

Calling his decision a “no-brainer” Kaddis was emphatic that “the physician is in the best position to provide overall clinical management and measure health outcomes. They need help from all the stakeholders, but this is between the physician and the patient, with everybody else being the support mechanism.”

In contrast, Avey pointed out that “physicians do not have the time, the data and the refill information to be able to appropriately manage these complex situations for each patient.”

NEXT: What does the future hold?

 

In conclusion, Cohen asked participants to speculate on the future of specialty pharmaceuticals, including the possibility of a new benefit model developing down the road.

“For example,” Cohen said, “I have heard there are specialty ACOs (accountable care organizations) now around certain diseases. Is this a trend, a third rail, if you will, beyond medical and pharmacy benefits?”

While Avey said it’s “too early to tell,” he added that “there are those that are proponents of moving drugs out of the medical benefit in the pharmacy, but in having discussions with a lot of our health plan clients, they tell us that it’s nearly impossible to do that.”

Chernov was on board with keeping management within the pharmacy, and he questioned the value of having yet another administrative function to support and manage. “I think it just creates more complexity. I am unable to see how that really adds value, at least within our structure,” he said.

Kaddis agreed with the idea of retaining a two-benefit model. “Creating a third benefit is going to be extremely confusing, but having said that, there could be a bridge,” he said. He explained that having the PBM and specialty pharmacy partner manage both sides of the benefit house is possible, but keeping them separate “is the right way to go at this time.”

Leonard made the decision unanimous. “We should not add a third [benefit] as having two is probably complex enough.” Instead, said Leonard, the industry should focus on reducing complexity and “move toward a more holistic approach that focuses on payment for the full value versus payment for volume, which of course is part of the Triple Aim.”

Compiled by Barbara Hesselgrave, a freelance writer in Baltimore, Maryland.