To truly compare cost of care, more pharma studies are needed

April 1, 2005

Biologics evaluated for cost effectiveness.

AS WE CONSIDER the management of injectable costs to payers, we need to think through how decisions are made at the pharmacy and therapeutics, and medical policy committees at commercial payers. While developing a process to select preferred injectable products, several inputs are considered. In particular, clinical efficacy, outcomes data such as quality of life and provider or member satisfaction, and cost of care should be included. While the comparison of clinical and outcomes data for injectables is relatively straight forward, this may not be the case with cost of care comparisons.

As we have discussed previously, injectable therapeutic classes may be thought of as those where the product is the same from each manufacturer, such as recombinant hemophilia factor or growth hormone, or as different chemical entities such as products for multiple sclerosis, rheumatoid arthritis and anti-emetics. As you can imagine, most payers will evaluate the cost of therapy as either a cost-minimization approach, where the outcomes are assumed to be the same, or as a cost-effectiveness approach, where the outcomes are not assumed to be the same.

EVALUATION APPROACHES In general, cost-minimization evaluations are used for products that have the same biologic active ingredient, and cost-effectiveness analyses are considered for therapeutic classes where chemical entities are different, or where the method of administration is so different that patient compliance or satisfaction may differ.

Let's review an example of such an approach that was recently completed at a managed care plan. The plan's health economist wished to test the cost-effectiveness of various injectable anti-emetic therapies. One product had a higher average wholesale price, but also a much longer duration of action. Prior to designing and conducting a full cost-effectiveness study, which is more costly and data intense, the plan performed a cost-minimization study.

Utilization data were collected, and to make the comparison realistic, the price of all products and services were discounted to reflect physician and pharmacy reimbursement rates at the plan.

The cost minimization analysis showed that palonosetron (Aloxi) was the least expensive to achieve complete response. The average cost per arm was as follows: $355 for Aloxi, $404 for ondansetron (Zofran), $763 for dolasetron (Anzemet) and $420 for granisetron (Kytril). This example shows the need for pharmacoeconomic modeling as an integrated part of the injectable formulary decision process. Other plans have evaluated therapies for conditions such as multiple sclerosis, rheumatoid arthritis, and oncology. It is prudent to consider such an approach to comparing injectable therapies at your place of practice as well.