Transcript Conference 2 - The Growing Impact of Biologics - H

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Helen Stevenson
President & CEO, Reformulary Group
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January
nation’s
costly
addiction”
•
A nation’s costly addiction, January 19, 2002, The Ottawa Citizen
– “Canada’s soaring prescription costs are forcing a clash between an aging population’s
insatiable demand for new and better drugs, and society’s ability to pay…that doubledigit growth is, in part, a function of Canada’s stunning drug addiction.”
– “Reports commissioned by Canada’s health ministers have discovered that only a small
fraction (between 1 to 5%) of provincial drug budgets are spent on honest-to-goodness
breakthrough drugs…me-too drugs have overwhelmed provincial drug budgets by sheer
volume…”
– “With so much money already going into health care, Canada does not have the
economic might to swallow continual double-digit increases in its drug bill.”
•
Per capita spending: $360 in 2000+
+ IMS Health, as quoted in The Ottawa Citizen, January 19, 2002
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Private sector spending on prescription drugs keeps increasing: $15.1 billion in
2011, or 6.8% growth over 2010
– Claims that drug spending has slowed only true for public sector plans (government
funded plans), which grew at 2.2% in 2011 to $12.1 billion. Notably, a 1% increase =
$120 million
– Private sector spend in 2010: $14.2 billion; 6.6% growth rate
– Private sector spend in 2011: $15.1 billion; 6.8% growth rate*
* Drug Expenditure in Canada, Canadian Institute for Health Information, 2011
The fact is that employers that sponsor
group benefit plans face the same
crushing cost pressures as have public
plans, but have lagged behind the public
sector in taking action
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Yet
weto
continue
to spend
more
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Canadians are among the most enthusiastic consumers of prescription drugs in
the world
– Per capita spending: $929 in 2011* (Canada has 2nd highest level of total drug
expenditure per capita in the world)
•
Employer-sponsored plans spend $41 million per day, or $288 million per week,
or $15.1 billion per year
•
Growth is coming from increasing use of “biologic” medicines that cost – on
average – 22 times more than ordinary drugs
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Some
of the
products
($) in Canada
Top 15 products represent 19% of total (dollar) market
Chemical
Product
Brand Launch
Date
rosuvastatin
infliximab
clopidogrel bisulfate
etanercept
adalimumab
esomeprazole
oxycodone hydrochloride
ranibizumab
fluticasone/salmeterol
pregabalin
rituximab
titropium bromide
ezetimibe
escitalopram
celecoxib
CRESTOR
REMICADE
PLAVIX
ENBREL
HUMIRA
NEXIUM
OXYCONTIN
LUCENTIS
ADVAIR DISKUS
LYRICA
RITUXAN
SPIRIVA
EZETROL
CIPRALEX
CELEBREX
Feb-03
May-92
Oct-98
Mar-01
Sept-04
Aug-01
Aug-96
Aug-07
Oct-99
Jun-05
Apr-00
Jan-03
June-03
Mar-97
Apr-99
Corporation
Sales $(000's)
Growth
Share of Corp.'s
Revenue
AstraZeneca
J&J
Bristol Myers Squibb
Amgen
Abbott
AstraZeneca
Purdue Pharma
Novartis
Glaxo SmithKline
Pfizer
Roche
Boehringer
Merck Canada
Lundbeck
Pfizer
720,897
498,563
305,566
287,556
287,345
283,892
234,340
228,635
201,963
199,392
185,092
176,698
157,225
155,842
153,883
17.0
17.6
5.6
7.1
23.7
-1.2
3.5
44.2
2.8
14.7
8.6
8.1
6.8
36.9
3.8
42.5
69.2
43.7
49.5
33.2
16.7
60.5
23.2
21.3
12.8
25.4
42.0
14.6
85.7
9.9
Source: IMS Health. Leading products by drugstore & hospital sales, 12 months ending September 2011
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Enter
biologics…
•
Differences between small molecule drugs (aspirin) and biologics are driven by
complexity. Consider a scooter vs. jet
•
Cost of biologics often exceeds $25,000 per patient per year and can reach $1
million per patient per year
– Biologics such as EPREX, NEUPOGEN, NEULASTA, RITUXAN, AVASTIN, HERCEPTIN,
ENBREL, REMICADE, HUMIRA…and ELAPRASE
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No exact generic equivalent
“…new specialty drugs can set back a company’s plan by
tens of thousands of dollars or more annually for an
individual’s single prescription
…While less than 1 per cent of private benefit plan
members use these expensive new drugs, spending on
them makes up 17 per cent of drug plan expenditures
…and it will reach 26 per cent within three years”++
++
“The battle to bottle up drug costs”, The Globe and Mail, August 11, 2012
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Soaring
of biologics
employer plans
Real employer examples
Source: Presentation by Barb Martinez, Mercer, Pharma Pricing, Reimbursement, and Market Access Conference –
Private Drug Plans, May 1, 2012. Mercer client examples
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Future
growth
forecasttitle
of biologic
If you believe industry consultants (such as EvaluatePharma), then half of all drugs will
be biologics, and biologics are up to 20 times more expensive than traditional drugs
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Expect
SEBs…
•
SEBs, or Subsequent Entry Biologics, are biologic products that are similar to and
enter the market subsequent to an approved innovator biologic
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At least 3 SEBs available in Europe; US market evolving
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Omnitrope is 1st SEB in Canada, launched on April 20, 2009 – 1st version of a
previously approved biologic
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Since SEBs are not “interchangeable”, plans cannot mandate substitution via
generic substitution design; better to start new patients on SEBs
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While pricing anticipated to be in range of 70% of price of “brand” biologic,
products are not interchangeable therefore generic pricing rules do not apply
•
SEBs are a good thing, but private plans need to be prepared and develop a
pricing strategy ahead of their entry into marketplace
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The
drug
plans
What is an evidence-based formulary?
•
A formulary that considers clinical and cost evidence for each drug, and, based on
the evidence, recommends the drug as “preferred” or “non-preferred”
– Clinical effectiveness: how effective the drug is
– Cost-effectiveness: the cost of the drug compared to similarly effective drugs
•
Preferred drugs are reimbursed at a higher level, meaning that employees pay less
because the drugs are both clinically and cost-effective
•
Non-preferred drugs are reimbursed at a lower level, meaning that employees pay
more for these drugs because they are either:
– Similarly effective but more expensive
– Less effective and the same price
•
Strategies such as step therapy, special authorization, quantity limits are all
embedded within the evidence-based formulary
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The
drug
plans
Why is an evidence-based formulary a smarter drug plan?
•
Because plans are paying for value
– Employees are encouraged to move to drugs that are effective and cost-effective
– Employers may be confident that they are providing value in their employee health plan
– Employers may also benefit from negotiated discounts on some products
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All publicly funded plans in Canada follow an evidence-based formulary
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Virtually 100% of all plans in the U.S. follow an evidence-based formulary
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What
Reformulary?
The Reformulary is an evidence-based formulary made up of
about 8,000 drugs used to treat numerous health conditions (like
high blood pressure, or diabetes, pain)
Reformulary


Has 3 tiers: Preferred, middle, and non-preferred drugs
Tiers are reimbursed at different co-pay levels (for example, 90%-60%-30% or 80%50%-20%)

Includes brand and generic drugs on all tiers, where appropriate

Features step therapy, special authorization and quantity limits
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How
handle
biologics?
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How
handle
biologics?
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Communicate,
communicate
more, communicate again
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