Transcript AdvancePCS SpecialtyRx Program

Alan Wright, M.D., M.P.H.
Senior Vice President and Chief Science Officer
The Solution:
Specialty
Benefit
Management
©2003 AdvancePCS
Agenda
 Specialty drugs defined
 Costs in perspective
 Reasons for the focus
 Specialty benefit management
 Health plan experiences
 What’s next for specialty?
©2003 AdvancePCS
Specialty Drugs:
Defined
 Specialty drugs are synthetic or recombinant
versions of natural biologic substances, like cells,
proteins made by cells (enzymes, or antibodies)
or genetic material from cells (DNA or RNA)
 Large complex molecules
 Difficult to produce consistently
 Costly
Source: Mass High Tech, “Lower Costs Pub Generic Biologic Drugs on the Rise” Campbell Evans, P.
March 2003
©2003 AdvancePCS
Specialty Drugs:
Defined
 Biotech in nature
 Injectables
– Requires special monitoring,
handling, and delivery
 Select orals
– Tracleer, Temodar, Thalomid,
Gleevec, Iressa – exceeding
$30K per year
 Expensive therapies
 Costs range from $10,000-$1 MM
annually per patient
 Requires expert clinical services
 Limited to few physician specialists
©2003 AdvancePCS
Costs in Perspective:
Specialty Drives One-third of Health Care Costs
Percent of Patients
Average
Annual
Total Cost
Per Case
90%
High
Frequency
Common
Conditions
9%
Chronic
Conditions
Patients
Key
Distribution
Channels
$1,200
• Acute
• Low-grade chronic
• Worried well
• Retail
$6,600
• Prevalent chronic
(e.g. asthma, diabetes)
• Procedures (e.g.
surgery, childbirth)
• Retail and mail
order
• Rare chronic (e.g.
rheumatoid arthritis,
hemophilia, pulmonary
hypertension, Gaucher
disease, multiple sclerosis)
• Multiple comorbidities
• Specialty
pharmacy
1%
Severe
Unique
Conditions
Total Costs
1/3
Of Total
Costs
$71,600
1/3
Of Total
Costs
1/3
Of Total
Costs
Source: Franklin Health, Chase H & Q
©2003 AdvancePCS
Specialty Therapy Examples
Chronic Condition
Medications
Avg. Annual
Cost (AWP)
Growth Hormone Deficiency
Nutropin, Humatrope, Genotropin, Norditropin
$18,000
Hepatitis C
Rebetron, Pegasys
$24,000
Infertility
Fertinex, Lupron, Gonal F
$18,000-20,000
Multiple Sclerosis
Betaseron, Avonex, Rebif, Copaxone
$15,000
Oncology, BMT, HIV/AIDS
Neupogen, Procrit, Neulasta,
Aranesp, Fuzeon
$5,000-20,000
Hemophilia
Recombinant Blood Factor Products
$150,000 +
Rheumatoid Arthritis
Enbrel, Remicade, Humira
$15,000 +
Gaucher Disease
Cerezyme/Ceredase
$250,000
Pulmonary Hypertension
Flolan, Tracleer, Remodulin
$30,000 -100,000
Lysosomal Storage Disorders
Fabrazyme, Aldurazyme
$175,000 +
Therapies in “red” approved in last 12 months.
071003
©2003 AdvancePCS
Reason for the Focus
on Specialty Drugs
 Specialty therapies will have a direct impact on
drug spend
 High cost
– Drug expense
– Patients using specialty drugs are driving most of your
medical spend
 Growing market
– 8% of spend today
– Moving to 20%
 Difficult to manage medical benefit spend
 Other issues
©2003 AdvancePCS
Reason for the Focus
Specialty is 5th Largest, Fastest Growing Class
$5
Specialty
pharmaceuticals
$4
$3.27
$3
$2.90
$2.99
13%
$2.61
$2.51 19%
$2.17 20%
$2
$1.86
$1.53
22%
$2.03
$1.49 36%
$1
$0
Misc. GI Drugs
Antidepressants
Antilipemic
2000
Source: AdvancePCS Claims Analysis
Antihistamine
drugs
Unclassified
therapeutic
2001
©2003 AdvancePCS
Reasons for the Focus
Specialty Drugs Budget Impact Forecast
Indication
Phase
Budget
Impact
Launch Year
Exanta
(ximelagatran)
The tx & prevention
of venous
thromboembolism
Phase III
High
2004
Fuzeon
(enfuvirtide)
The tx of HIV
infection
Pending
approval
High
2003
Xolair
(omalizumab)
The tx of allergic
asthma in adults
Pending
approval
High
2003
pregabalin
The tx of neuropathic
pain, generalized
anxiety disorder, and
epilepsy
Phase III
High
©2003 AdvancePCS
Reasons for the Focus
Specialty Drug Costs
Medical Budget
~70%
Pharmacy Budget
~30%
Electronic
A
Management
Challenge
Paper
Network Rates
AWP + ???
•
•
•
•
Incorrect billing and payment
Missed discounts
Multiple vendors, multiple rates
Confusing J and ICD9 codes
©2003 AdvancePCS
Specialty Benefit Management
Addresses the Challenge
 Provides an effective integrated solution, bridging
both pharmacy and medical benefits
 Improves patient health
 Lowers costs
 Reduces administrative workload
©2003 AdvancePCS
Specialty Benefit Management
Components
©2003 AdvancePCS
Specialty Benefit Management Benefit:
Improves Member Health
 Increases appropriate drug
utilization
 Improves compliance via utilization
and education programs
 Lowers the potential for drug
interactions with comprehensive
screening
 Minimizes emergency room, doctor
visits, hospital stays and other
medical expenses
©2003 AdvancePCS
Specialty Benefit Management Benefit:
Lowers Costs for Health Plans
 State Blue Cross Blue Shield plan with 375
members using specialty drugs billed under
medical benefit
 Recommendations included:
 Transitioning specialty drug spend from medical benefit
to PBM-based claims processing and reporting
 Moving from multiple suppliers to a single-source
pharmacy service to lower cost
 Reduced annual specialty drug spend from $8.9M
to $7.4M
Provided a savings of $1.5M or 17%
©2003 AdvancePCS
Specialty Benefit Management
Uncovering Specialty Costs: One Client’s Findings
$0.40
Rheumatoid
Arthritis
Ovary/breast
Cancer
PMPM
$0.35
$0.30
Prostrate
Cancer
$0.25
$0.20
Lymphoma
$0.15
$0.10
$0.05
$0.00
Infliximab
injection
Paclitaxel
injection
$1,532/claim
$724/claim
Leuprolide
acetate
suspension
$495/claim
Rituximab
cancer trmt
$2,334/claim
©2003 AdvancePCS
Specialty Benefit Management
Example of Lowering Costs
 Large national health plan faced problems providing Flolan
therapy to 75 pulmonary hypertension (PH) patients
 Contracted on patient-by-patient basis and paid 25-50% more than
necessary
 Faced customer service issues
 Struggled to identify patients for proper clinical support because
of coding and procedure issues
 Recommendations included establishing:
 One national rate for specialty drug pricing
 Standard claims processing and coding procedures
 Case management support and patient education
 Reduced annual specialty drug spend from $7.5M to $5.25M
Provided savings of $2.25M or 30%
©2003 AdvancePCS
What’s Next for Specialty Drugs?
Going Generic
Conventional Drugs
Biologic Drugs
Regulated by FDA
Regulated by Center for Biologics
Evaluation and Research (CBER)
Generics overseen by the Centers for Drug
Evaluation and Research (CDER)
Hard to prove bioequivalence of complex
biologic molecules
Abbreviated new drug application (ANDA)
expedites approval for generics
No expedited process for generics
Generics proven equivalent to brands. If
equivalent, generics not required to show
safety and efficacy
Generic biologics must conduct full safety
and clinical trials
©2003 AdvancePCS
Generics Seek To Break into Biotech
as Patents Expire
Drug
Intron A
(interferon
alfa 2b)
Epogen
(epoetin
alfa)
Procrit
(epoetin
alfa)
Neupogen
(filgrastim)
Avonex
(interferon
beta 1a)
Company
Schering
Plough
Amgen
Johnson
& Johnson
Amgen
Biogen
Conditions
Leukemia,
Hepatitis B
and C
Anemia
Anemia
Neutropenia
Multiple
Sclerosis
2000 Sales
$1.4
Billion
$2.03
Billion
$1.72
Billion
$1.22
Billion
$761
Million
Patent
Expiration
2002
2004
2004
2006
2011
Source: ABN Amro, as cited in The Wall Street Journal, August 26, 2002
©2003 AdvancePCS