Transcript One Beat, One Vision

CBI Rare Disease Leadership Summit
December 7, 2006
Building An Effective Reimbursement
Plan for Orphan Drugs
Lessons From Medicaid and Private Insurers
Agenda
I.
Private insurance environment
II. Medicaid
III. Distribution considerations
IV. Recommendations
~ Medicare discussed by Jayson Slotnick, BIO ~
Tag & Associates Overview
• U.S. reimbursement planning and problem
solving
• Payer research; competitive analysis
• Strategic planning; reimbursement
forecasting
• Advocacy with major payers
Orphan Drug Involvement
• Betaseron®
• Prolastin®
• CytoGam®
• Bexxar®
• Botox®
• Immune globulin
• Remicade®
• INOmax®
I. Private Insurance
Environment
No Reimbursement Incentives
• Orphan drug development is
encouraged by legislated economic
incentives, but …
• There are no national or state
government Orphan drug
reimbursement incentives
– Unlike cancer, HIV/AIDS, ESRD
• Just another expensive drug that may
or may not be misused
Implication
• As coverage becomes more dependent
on evidence, rare disease patients may
not be able to access the treatments
that manufacturers are given incentives
to develop
– E.g. 7 NORD “High Priority Access
Problem” drugs
http://www.rarediseases.org/pdf/Final_ltr_CMS_011006_V2
.pdf
Off-Label Coverage?
• What if a patient’s diagnosis is
“slightly” off-label for an Orphan
drug?
Betaseron® Example
• Labeled for relapsing MS
• At launch, clinicians did not agree on
diagnosis terminology
• An MS patient whose physician used
terminology that differed even slightly
from labeling would almost always be
denied Betaseron® coverage
Bexxar®/Zevalin® Example
• At Oxford, no prior authorization
needed for relapsed or refractory lowgrade, follicular, or transformed B-cell
non-Hodgkin's lymphoma, in patients
with rituximab-refractory follicular NHL
as a single course of treatment
• Coverage usually denied for every other
use
Payer Cynicism
• Some medical and pharmacy
directors believe the Orphan
Drug Act is being abused to
gain undeserved advantage
for drugs that would be
marketed in any event
• Orphan drugs that present
an economic threat because
of broader use will be tightly
controlled
Recent Examples
• Vidaza™ (azacitidine)
– Approved 2004 for myelodysplastic
syndrome (MDS)
– Coverage policies prohibit use in sickle cell
anemia, solid tumors, other cancers
– See e.g.
http://www.bcbst.com/MPManual/Azacitidine.htm
Recent Examples
-2
• Apokyn® (apomorphine)
– Approved 2004 for treating Parkinson's
during episodes of "hypomobility," socalled "off periods" in which the patient
becomes immobile or unable to perform
activities of daily living
Recent Examples
-3
• Apokyn restrictive coverage policies
– Limit drug quantity
– Require prescribing by neurologist
– Require fail first with other (less expensive)
Parkinson’s treatments
– See e.g.:
http://www.bsneny.com/content/neny_prov_guid
_Apokyn.pdf
http://www.tuftshealthplan.com/providers/pdf/ph
armacy_criteria/Apokyn.pdf
Recent Examples
-4
• Retisert™ (fluocinolone acetonide
intravitreal implant) for the treatment of
chronic non-infectious uveitis
– Not covered by some insurers
– “Reliable evidence does not support efficacy
compared to standard treatment”
http://www.tuftshealthplan.com/providers/pdf/Retisert.pdf
– Cost is $22,000 vs. $45 for 30 months of steroid
treatment http://www.pswi.org/irx/FAIImplant.pdf
The Value of Evidence
• Revlimid® (lenalidomide) approved for
MDS
• Covered by Cigna for multiple myeloma
before FDA approval for that indication
on strength of 2 studies
http://www.cigna.com/health/provider/pharmacy/coverage_posi
tions/ph_6120_coveragepositioncriteria_lenalidomide_revlimid.p
df
P & T Committee Review
• National and larger regional plans are
likely to have P & T review of an Orphan
drug eligible for Rx benefit
• Smaller plans may not
– Too few patients
• Medical benefit drugs are
often not given P & T review
– Medical Director decides
Medical Director Is Key
• MCO Pharmacy Directors
are less involved with
Orphan drugs than most
others
– If medical benefit, it is
usually the Medical
Director’s decision
– If Rx benefit, may never
get to P & T
Gleevec® and Orfadin®
• Two of the few Orphan drugs subject to
formulary control (oral)
• 3rd or 4th tier with prior authorization
– 4th tier = coinsurance % = affordability
barrier
• Use limited to label
Payment
• For clinician administered drugs,
typically 80% AWP
• Specialty providers often paid less via
negotiated contracts
• AWP will be going away
– Replaced by ???
• Pricing driven by reimbursement
II. Medicaid
Medicaid Orphan Drug Policy?
• November 2006 survey of 20 states
– AK, AL, CA, GA, MA, NC, ND, NE, NH, NJ,
NM, OH, PA, SC, TN, UT, VA, WA, WV, WY
• No special treatment for Orphan status
– Though cancer, mental health, HIV are
often exempted from prior authorization
Informal Policy
• However, there is often recognition of
urgency and willingness to adapt
– If state has 6 month wait (NH) they may waive if
asked
– “It isn't so much that drugs in orphan status are
treated differently than other drugs, but rather
that the upfront work to determine how and
under what circumstances a drug is to be
covered, is discussed and, hopefully, handled in a
straight forward manner with the manufacturer”
Medicaid Pharmacy Director
Determine If Special Controls
Apply
• High cost populations often receive
special management
– Where “high cost” = high cost (rather
than specified diseases), Orphan drug
patients will be included
Payment
• Follows the usual formula for that state
• Typically AWP minus 12% - 14%
– For all state formulas, see
http://www.kff.org/medicaid/upload/State-Medicaid-OutpatientPrescription-Drug-Policies-Findings-from-a-National-Survey2005-Update-report.pdf
Rebates
• January 2007: Manufacturers must pay
Medicaid rebates (15.1%+) on drugs
administered in Dr. offices and hospital
O/P dept’s.
– Good: Makes Orphan drugs more
affordable to cash-strapped Medicaid
programs
– Bad: Some manufacturers have not
recognized and budgeted for this
III. Distribution
Considerations
Specialty Distribution
• For Orphan products, a two-edged
sword
• Very helpful, almost essential for many
products, but …
• Can cause conflict with some payers’
distribution/patient management
programs
Specialty Distribution
-2
• Distributors typically press for
exclusivity
• For reimbursement, manufacturer is
often best served by having several
distributors
IV. Recommendations
In General
• Expect no reimbursement “break” from
Orphan status
• Orphan status does not obviate the
need to prove the drug’s value
• What would a payer want to see/need
to know to pay your asking price?
– Find out (market research)
– Target Medical Directors
Assume Private Payers Will Be
Skeptical At Best
• If you are developing an Orphan drug
primarily or exclusively for a rare
disease, you must make a special effort
with payers to show them the limits
• If Orphan status is a technical
advantage to help develop a product for
broader use, expect access restrictions
until value is proven
Patient Assistance
• Insured patients may need cost sharing
assistance
– If medical benefit, coinsurance could be
20% +
– If Rx benefit, may be 4th tier
• % coinsurance rather than $ copay
Plan Conservatively
• Your market is defined by the label
– Carefully consider the reimbursement
implications of every limiting phrase
• Marketing an Orphan drug beyond its
Orphan indication will create payer
backlash
– Research, analyze, plan
Medicaid
• Build Medicaid rebate into revenue
projections
– Be sure you have signed rebate
agreement that covers this drug
• If state has post-marketing waiting
period, ask whether it can be waived
based on Orphan status
Distribution
• Single-distributor arrangements should
be avoided unless you are confident
that all payers will deal with the only
game in town
Final Word
• Beware of killing
the goose
• Yesterday’s FDA price and market
strategy view unlikely to be shared by
payers
• NORD, BIO and other stakeholders
should consider the risk to rare disease
patients of blockbuster profit from
Orphan drugs
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