Sunday, October 18, 2015

Specialty Drug Management

Last week, I attended an excellent MidAtlantic Business Group on Health Meeting on Specialty Drugs. I suspect most benefit plan managers have been really paying attention to drug costs since the release of the new Hepatitis C medication that cost $84,000 per treatment. That led to fretting over the cost of the new PCSK9 treatment for high cholesterol -- $14,000 a year (compared to $600 for generic statins.) Then, we hear about a former hedge fund manager with more brains than ethics who bought up rights to an old drug and raised the price from $13.50 a tablet to $750 a tablet overnight. (If you missed that story, see the links below.) No surprise, that this was the best attended MidAtlantic Business Group on Health meeting I've seen.


So, what's a specialty drug? There is no uniform definition. Len Nichols said he prefers "complex to manufacture, can be difficult to administer, may require special patient monitoring, and sometimes have FDA mandated strategies to control and monitor their use." (See his paper below for the source.) Medicare and other payers often just set a cost threshold e.g., if it's more than $600 a month it's treated as a specialty drug. 

Brenda Motheral, PhD kicked off the day with an overview of the landscape. I appreciated her practical advice even before I realized I was listening to a fellow Gamecock. Here are few noteworthy things she shared. Despite the high cost, many speciality drugs offer value that's comparable to that of much less expensive traditional drugs.

The new PCSK9's that are getting a lot of press cost about $1,000,000 per avoided event. That's rather stunning when you compare it to existing statins that cost $20,000 to $60,000 per avoided event. Too often, these types of studies aren't even conducted. Of the 153 drugs approved from 1999 to 2011 only 58 had cost effectiveness studies completed.

There is a significant amount of waste and errors in the use of all prescription drugs, but the impact is greatly magnified if the drug costs $1,000 a day. For example, Sovaldi is used to cure Hepatitis C. It has to be combined with other antiviral medications to be effective and taken consistently over a three month period. It costs $1,000 per pill. Eight percent of the time it's used alone and, therefore, ineffective. Three percent of the time it's taken for too long. In 10 to 20 percent of cases, patients don't adhere to the regimen. These are expensive mistakes.

Len Nichols, PhD gave a presentation, "Pharmaceutical Pricing and the US Dilemma" that was a real crowd pleaser. In our efforts to encourage innovation in the pharmaceutical industry in the U.S., we've discouraged competition by granting companies exclusivity and costs have soared. It's clearly time to rethink that balance and Dr. Nichols walked us through some of the economic back story and then gave us some quick comments on the proposals of the various presidential candidate to address the problem. His presentation was really interesting. So much so, I came home and looked him up at George Mason University. I'd like to take his class. You can read about a lot of what he shared with us in his briefing paper below.

Panels were thoughtfully put together to represent all the different perspectives on the issue -- employers, health plans/PBMs, health care providers and finally drug manufacturers. I sat on the employer panel with Rob Krouse from AARP, John Bowe from Bon Secours Health System and Todd Allen from WSSC. I was pretty sure that John Miller, the Executive Director of the MidAtlantic Business Group on Health, was desperate to find a smaller employer because I had far more questions than answers to offer and declined at first. John convinced me to participate and I was surprised to learn that we are pretty much in the same place as other area employers when it comes to how we handle specialty drugs.

As employers, we have no control over the cost of these new medications and everyone I have spoken to wants their employees to have access to life saving medications even if they are expensive. What we can do is start to control some of the waste. Brenda Motheral suggested these strategies which are listed in order of effectiveness as well as the five things we can do now in the image.
  1. Site-of-care programs redirect patients and medications to the most clinically appropriate and lowest-cost settings. Drugs administered in a hospital outpatient setting are often significantly more expensive than if they're administered in a doctor's office or at home. Encouraging people to use less expensive settings can save $40,000 per patient.
  2. Put good clinical management programs in place. Too often medications are provided with no supporting diagnosis. Some of the clinical programs routinely applied in pharmacy benefits are completely lacking when drugs are obtained though medical benefits. Ask these questions:
    1. For what specialty drugs do you offer prior authorization programs?
    2. Is the prior authorization policy enforced through pre-certification?
    3. Can you share the prior authorization criteria?
    4. Can you share your denial and savings experience? Do you have program reporting?
    5. What are the fees for the prior authorization program and the expected ROI?
    6. What are the implementation steps?
    7. What prior authorization/step therapy programs are available that I have not already implemented?
    8. What are my savings from my current programs?
    9. Are you requiring documentation submission to approve prior authorizations?
  3. Apply claim edits such as prior authorization, step therapy and quantity limits that are commonly used in pharmacy benefits administration to medical benefits to help minimize waste. Also, confirm that these edits are being applied consistently by your pharmacy benefit vendor. 
  4. Coordinate care across benefits. Systems may not integrate medical and pharmacy data well which can create gaps.
  5. Pharmaceutical clinical management programs can increase patient compliance and reduce waste. You want to get the right therapy and the right drug to people in the right quantity. For example, split fills on new medications can reduce waste. This means a small amount of a medication is approved initially and when it is confirmed that the patient can tolerate the medication normal quantities are approved. Step therapy is also common. 
  6. Negotiate the best pharmacy pricing. Contracts can be set up with traditional (spread) pricing or with pass-through (transparent) pricing. One is not necessarily better than the other and both types of contracts require oversight. When pharmacy is included with the medical carrier, there may be no pharmacy language in the Administrative Services Agreement (ASA) allowing the carrier to charge any amount for specialty drugs.
Specialty drugs are unique in that they can be delivered through your PBM or your medical provider. When you request drug reports, you may see your spending through your PBM without seeing what was spent through your medical coverage. You have to request both and look at your spending across channels, then come up with a plan to address your organization's needs. 

Recommended Reading:

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