Transcript Shane Desselle - State of Reform

Specialty Pharma: Costs, Benefits, &
Consequences.
Presented at: 2016 Northern California State
of Reform Health Policy Conference,
Sacramento, CA, April 6, 2015
Shane P. Desselle, R.Ph., Ph.D., FAPhA
Professor, Touro University College of Pharmacy
President, Applied Pharmacy Solutions
Editor, Research in Social & Administrative Pharmacy
APPLIED
PHARMACY
SOLUTIONS
Specific Realities in the
Medication Market
 Innovator versus other industries
 Research and development
 Costs in the U.S. versus those in other nations
More Reality
 Cost transparency (ie, out-of-pocket)
o Patients SEE AND FEEL the cost of prescription drugs
o This is much less so regarding costs of all other health care
goods and services
 Drug prices can and are negotiated
 Patients do not directly experience negotiated discounts
 The need for certain drugs to comprise a formulary
The Value of Prescription Drugs
 Sometimes the only effective means of treatment
 Often the most cost-effective means of treatment
o Outcomes/$$ spent
o Quality of life
 Leading health economist, Uwe Reinhardt, says . . .
 Still, management of drug therapy is essential and
could produce even greater benefit
Prescription Drugs In Perspective
 Biop’cal companies largest funder of R&D, with 20% of
revenues going into research on new treatments.
 Typical time & $$ for new drug to be brought into
market is 10 years and $2 billion, respectively.
 Much of the progress made on research in last 2
decades is for chronic disease, and for conditions
previously untreatable and those otherwise requiring
extraordinary costs (ER, hospitalization, monitoring).
 Nearly 10 million patients put on patient assistance
programs sponsored by biop’cal companies since 2005.
Drug Prices in Perspective
 Drug costs in U.S. not much or any higher than other
countries when considering % of income & wealth of
patients.
 Drug access often denied in other countries, even
developed ones. Life expectancy might be equivalent,
but HRQoL is often not.
 Drug prices a reflection of typical macroeconomic
(supply and demand) principles.
 Figures you hear on drug spend often include meds
received in hospital/tertiary care under Medicare B, C,
and other
Return on Investment and Increased
Quality of Life
 Through the use of innovative therapies, cancer death rates
have fallen 23% since their peak in early 90s, & death rate
from heart disease has fallen by 46%.
 $1 spent on drugs for diseases like CHF, HBP, diabetes, & high
cholesterol saves $3-$10.
 Spending on drugs has stabilized and is projected to remain
stable; balance of expenditure by TYPE of therapy or
medication is shifting
 Emphasis on drugs that treat disease itself while promoting
high quality of life for patients to maintain their “normal”
social roles.
 The high cost of regulation of the pharmaceutical industry to
ensure safety, effectiveness, and transparency.
 Marketing is MUCH more than promotion/advertising, but
plays an important role of informing society.
Cost & Utilization Management Tools
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Negotiated manufacturer discounts/rebates
Tiered cost-sharing
Generic substitution
Therapeutic interchange
Limited provider network
Formularies
“Sticker price” of drugs and biologics must reflect these and
other realities
 These vary in their promotion of cost-savings and quality
outcomes for patients
Factors in the Formulary
Decision-Making Process
 Effectiveness/efficacy
o In solo
o In combination with other drugs
o Extent and scope of trials in efficacy versus effectiveness
 Safety profile
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o
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Overall
Contraindications (food, alcohol, other drugs, lab, disease)
Immuno-compromised patients
Renal or hepatic impairment
Children, Seniors
Gender, ethnicity considerations
 Teratogenecity/mutagenicity
 Ability of a drug to be used during pregnancy
Factors (continued)
 Cost
o Perspective (patient, sponsor, insurer)
 Outcomes
o Clinical, economic, humanistic
 Impact on other health care costs
 Patient adherence
o Side effect profile
o Nature of the disease
o Length of time for cure/effectiveness
o Impact on quality of life
o Ease of use
 Ability to be used in a broad population
 Ease of control or restriction
Factors (continued)
 Treatment for more than 1 disease state
 Special niche disease state
o Orphan drugs
 Pharmacokinetic and bioavailability advantages
o Absorption, distribution, metabolism, excretion
 Ability to replace a drug already on formulary
 Relationship to current prescribing habits of physicians
 Role of drugs in published guidelines or standards of
care
Factors (continued)
 Patient demand/satisfaction
o Employer preferences
o Organized labor
 The role of Academy of Managed Care Pharmacy
(AMCP) guidelines
 Treatment of symptoms or underlying disease
pathology
AMCP Guidelines
The Format (for Formulary Submission) supports the
informed selection of pharmaceuticals, biologics and
vaccines by pharmacy & therapuetics (P&T) committees
 Requires projections of product impact.
 Requests information on value creation.
 For comparison of alternatives regarding clinical
outcomes, value, and economic consequences for the
entire health care system
 Info weighed in the context of equity & social justice
The Case of Specialty Drugs
 “Specialty” not defined by FDA; defined more by health plan
or PBM
 Often associated with higher costs, biologics, drugs injected
or infused, drugs requiring special handling, or available only
via a limited distribution network
 Treatment for cancer, rare genetic diseases, multiple
sclerosis, rheumatoid arthritis, & other auto-immune
diseases like Crohn’s and Ulcerative Colitis
 “Specialty pharmacy mgmt” defined as “comprehensive &
coordinated system of p’cological care in which pts w/chronic
illness & complex med conditions receive expert therapy
mgmt services tailored to meet their unique needs.”
Pharmaceutical Strategies Group (PSG). Understanding Specialty Pharmacy Management and Cost Control,
2010.
Specialty Drugs Evolving
 Treating more diseases
 Spurred by advances in biotechnology
 Therapeutic proteins
 Vaccines
 Cell or gene therapy (pharmacogenomics)
 As of 2008, 25.3% of total R&D for p’cal companies, totaling nearly
$13 million
 Moving from treating symptoms to underlying pathology
 Formerly part of medical, not often part of pharmacy “carve out”
Specialty Drug Expenditures
 In 2011, 25% of drug spend, with predictions of 50% by 2018.
 1% of prescriptions but 17% of total spending among working
individuals who are privately insured
 About $99 million in 2010
 Plans & employers have responded with prior authorization, supply
restrictions, and limited distribution arrangements
 In 2010, approximately 5, 5, 3.5, and 1.7 per 1,000 members
diagnosed with IBD, RA, Psoriasis, & MS, respectively
 Specialty drugs used to treat in 35.4%, 13.7%, 24.3%, and 71.8%,
respectively, with annual costs ranging from $3k to $20k for the specialty
drugs
 Specialty drug costs ranged from 50% to 67% of total cost of care for these
conditions
Gleason PP, Alexander GC, Starner CI, et al. Health plan utilization and costs of specialty drugs within 4 chronic conditions.
J Manage Care Pharm 2013;19(7):542-8.
Recent Evidence of Cost-Effectiveness
of Biologics
 For Hep C, cost per treatment might be increasing, but COST PER
CURE IS DECREASING!
 Daclatasvir (Daklinza) + sobusfuvir (Solvaldi) most cost-effective
treatment for concurrent HIV & Hep C (but with the “cost” of
longer life for the patient!)
 Treatment promoting sustained virologic response (SVR) in Hep C
patients produces better long-term clinical outcomes, economic
benefits, and quality of life
 Cost-effectiveness of apixiban (Eliquis) much better than that of
warfarin
Sharfran SD. The hepatitis C genotype 1 paradox: Cost per treatment is increasing, but cost per cure is decreasing. Can J
Gastroenterol Hepatol 2015;29:46-48.
McEwan P, Ward T, Webster S, Kalsekar A, et al. Modeling the cost-effectiveness of all oral, direct-acting antiviral regimens . . . Value in
Health 2015; 15(628).
Smith-Palmer J, Cerri K, Valentine W. Achieving sustained virologic response in hep C: a systematic review . . . BMC Inf Dis. doi 10.1186s/12879-015-0748-8.
Kamal H, Easton JD, Johnston SC, Kim AS. Cost-effectiveness of apixiban vs warfarin for sec stroke prevention in atrial fib. Neurology 2012;79:1428-34.
Recent Evidence (cont’d)
 Infliximab (Remicade) cost-effective for Ulcerative Colitis and
Crohn’s (about $60k/QALY).
 Treating Hep C (early, with biologics) is effective, with $$/QALY
under $30k.
 Adding adilimumbab (Humira) to methotrexate reduces cost/QALY
from over $100,000 to under $30,000 for RA.
 Cost per significant adverse event avoided using amifostine (Ethyol)
in patients with lung cancer.
Ung V, Xuan N, Wong K, Kroeker KI, et al. Real-life treatment paradigms show infliximab is cost-effective mgmt of UC. Clin Gastroenterol Hepatol
2014;12:1871-8.
Harinder SC, Marseille EA, Tice JA, et al. Cost-effectiveness of early tx of HCV by stage of liver fibrosis in a US treatment-naïve population. JAMA Int Med
2016;176:65-73.
Stephens S, Botterman MF, Cifaldi MA, van Hout BA. Modeling the cost-effectiveness of combo therapy for the tx of RA by stimulating the reversible and
irreversible effects of the disease. BMJ Open. 2015; doi:10.1136bmjopen-2014-006560.
Toucette JR, Stevenson JG, Jensen G. Cost-effectiveness analysis of amifostine in patients with non-small cell lung cancer. J Ageing Pharmco
2006;13:109-126.
Survey of the Midwest Business Group on
Health & Institute for Interated Health
Care (MBGH-IIH)
 Employers indicate managing specialty pharmacy is a high priority
 Employers are implementing cost-sharing strategies & use of highdeductible plans
 Nat’l Employer Initiative on Specialty Pharmacy launched an education
campaign
 Focused on factors that employers can control (benefit design, contracting)
versus those they cannot (drug cost)
 Calls for a more effective strategy for coverage & reimbursement of specialty
drugs
 Online employer toolkit focused on helping stakeholders to understand specialty
pharmacy and ID innovative approaches to plan design
 Pilot project
 Educating consumers
 Specialty drugs can provide real value
 Managing cost must be taken holistically (medical AND pharmacy benefit)
Larson C, Vogenberg FR. Guiding employer management of specialty drugs. Am Health Drug Benefits 2015;8(5)2567.
Challenges and Emerging Trends
 “J” and “Q” codes of the Healthcare Common Procedure
Coding System (HCPCS)
 Less specific than NDC codes
 Do not allow payers to track and manage product utilization
 Contracting with NDC of vial on CMS 1500 and prior
auth/certification written in
 Tiered cost-sharing with maximum OOP costs
 Need to improve clinical mgmt
 Education program guidelines
 Coordination with care
 Generic biologics
PSG. Op cit.
The Need for Transparency and
Scientific Data in Decision-Making
“To change that culture [of resistance to use of REAL
pharmcoeconomic data] requires a concerted effort at
education, and education requires openness about the
rationales for managed care plan’s decisions.”
- Daniels N, Sabin JE. The ethics of accountability in managed care reform. Health Affairs . 1998; 17(5):50-64.
Types of Pharmacoeconomic Studies
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Cost-Minimization Analysis
Cost-Benefit Analysis
Cost-Effectiveness Analysis
Cost-Utility Analysis
Cost-Minimization Analysis
 Simplest to perform in concept
 Can only be used when the outcomes of medicines or
interventions are entirely the same
 Often used inappropriately, for example . . .
o Antibiotics with different spectra
o Pain medications with different side effect profiles
o Drugs with disparate impacts on health-related quality of
life
Cost-Effectiveness Analysis
 Measures outcomes in natural units (eg, mmHG, cholesterol
levels, symptom-free days)
 Can be used to evaluate outcomes of 2 or more
drugs/interventions so long as the “type” of outcome is the
same
 Examples:
o $$/decrease in A1C
o $$/hospital admission averted
 Average vs. incremental cost-effectiveness ratio
 “Domination” versus “trade-off”
Cost-Benefit Analysis
 Transcends use in pharmacy/medicine, and what we
use to make “everyday decisions”
 All costs & benefits expressed in $$
 Useful for drugs or programs differing in outcomes
 Outputs include:
o Net benefit
o Return on investment
o Benefit: cost ratio
Cost-Utility Analysis
 Modification of cost-effectiveness analysis
 Adjusts for quality of life, specifically quality-adjusted
life years (QALYs)
 Very important outcomes to patients and their loved
ones
Other Calculations and Considerations
 Cost of Illness analysis
 Cost “types” to consider
o Direct costs (meds, med monitoring, pt counseling,
hospitalizations, clinic visits, ER, nursing services)
o Direct non-medical costs (travel, child care services)
o Indirect costs (loss of productivity, premature mortality)
o Intangible costs (pain & suffering, presenteeism, anxiety)
 Cost of death???
 Willingness-to-pay (WTP)—patients put a HIGH value on
positive medication effects!!
Health-Related Quality of Life
 The most “important” outcome
 Quality-adjusted life years (QALYs)
 General measures
o MOS-SF
o QWB
o SIP
 Disease-specific
o BPH Impact Index, Functional Assessment of Cancer Therapy
(FACT), Arthritis Impact measure Scale, Living with Asthma
Questionnaire, Diabetes-Specific QoL Instrument, Functional
Assessment of HIV Infection
Additional Considerations in
Clinical Trials and Costs/Price-Setting
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Formulary, ubiquity of use
Patent life and expiration
Product life cycle
Marginal revenue and marginal costs
o Different for innovator firms
 Pharma vs. venture capitalist and non-innovator entities
 Prices of generics
Additional Considerations (cont’d)
 Opportunity costs
 Marketing
o Provision of information
o Education of stakeholders
 Total health care dollar
o If ½ of industry profits are removed, you would reduce
health care expenditures by only 0.5%
The Need to Innovate
 U.S. takes a lead
 Regulatory and approval costs more expensive
 Some subsidizing of costs for drugs in developing
nations
 Pharmaceutical assistance programs
 Complex interaction of lifestyles, environmental, social,
political, economic, and still unaccounted for forces
 Most innovation accomplished through manufacturers
 Wellness of patients like my daughter, Brittney
Brittney Desselle
• Diagnosed with Ulcerative Colitis (UC)
at age 14
• Receives an infusion of Remicade
every two months
• Had 4 blood transfusions in a span of
just 2 months; is still anemic
• Now raises awareness about UC and
inspires patients in many ways,
including her blog “kickin it to colitis”
• Advocates for better access to
treatment, medicines and cures
Acknowledgements
 Helen Berhane
 Jonathan Khakshooy
 Yewande Samuel
 Trang Tran
Questions?
I do not like to end my presentations with a cutesy
cartoon or pithy quote in order to make it appear as
though I’m more clever or funny than I really am.
APPLIED
PHARMACY
SOLUTIONS