amp Consequences Presented at 2016 Northern California State of Reform Health Policy Conference Sacramento CA April 6 2015 Shane P Desselle RPh PhD FAPhA Professor Touro ID: 739093
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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., FAPhAProfessor, Touro University College of PharmacyPresident, Applied Pharmacy SolutionsEditor, Research in Social & Administrative Pharmacy
APPLIED PHARMACY SOLUTIONSSlide2
Innovator versus other industries Research and developmentCosts in the U.S. versus those in other nationsSpecific Realities in the
Medication MarketSlide3
Cost transparency (ie, out-of-pocket)Patients SEE AND FEEL the cost of prescription drugsThis is much less so regarding costs of all other health care goods and servicesDrug prices can and are negotiatedPatients do not directly experience negotiated discountsThe need for certain drugs to comprise a formulary
More RealitySlide4
Sometimes the only effective means of treatmentOften the most cost-effective means of treatmentOutcomes/$$ spentQuality of lifeLeading health economist, Uwe Reinhardt, says . . .Still, management of drug therapy is essential and could produce even greater benefit
The Value of Prescription DrugsSlide5
Biop’cal companies largest funder of R&D, with 20% of revenues going into research on new treatments.Typical time & $$ 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.Prescription Drugs In PerspectiveSlide6
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 otherDrug Prices in PerspectiveSlide7
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 shiftingEmphasis 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.Return on Investment and Increased Quality of LifeSlide8
Negotiated manufacturer discounts/rebatesTiered cost-sharingGeneric substitutionTherapeutic interchangeLimited provider networkFormularies“Sticker price” of drugs and biologics must reflect these and other realitiesThese vary in their promotion of cost-savings and quality outcomes for patients
Cost & Utilization Management ToolsSlide9
Effectiveness/efficacyIn soloIn combination with other drugsExtent and scope of trials in efficacy versus effectivenessSafety profileOverallContraindications (food, alcohol, other drugs, lab, disease)
Immuno-compromised patientsRenal or hepatic impairmentChildren, SeniorsGender, ethnicity considerationsTeratogenecity/mutagenicity
Ability of a drug to be used during pregnancyFactors in the Formulary
Decision-Making ProcessSlide10
CostPerspective (patient, sponsor, insurer)OutcomesClinical, economic, humanisticImpact on other health care costsPatient adherence
Side effect profileNature of the diseaseLength of time for cure/effectivenessImpact on quality of lifeEase of use
Ability to be used in a broad populationEase of control or restriction
Factors (continued)Slide11
Treatment for more than 1 disease stateSpecial niche disease stateOrphan drugsPharmacokinetic and bioavailability advantagesAbsorption, distribution, metabolism, excretionAbility to replace a drug already on formularyRelationship to current prescribing habits of physicians
Role of drugs in published guidelines or standards of careFactors (continued)Slide12
Patient demand/satisfactionEmployer preferencesOrganized laborThe role of Academy of Managed Care Pharmacy (AMCP) guidelinesTreatment of symptoms or underlying disease pathology
Factors (continued)Slide13
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
AMCP GuidelinesSlide14
“Specialty” not defined by FDA; defined more by health plan or PBMOften associated with higher costs, biologics, drugs injected or infused, drugs requiring special handling, or available only via a limited distribution networkTreatment 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.The Case of Specialty DrugsSlide15
Treating more diseasesSpurred by advances in biotechnologyTherapeutic proteinsVaccinesCell or gene therapy (pharmacogenomics)As of 2008, 25.3% of total R&D for p’cal companies, totaling nearly $13 millionMoving from treating symptoms to underlying pathologyFormerly part of medical, not often part of pharmacy “carve out”
Specialty Drugs EvolvingSlide16
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 insuredAbout $99 million in 2010Plans & employers have responded with prior authorization, supply restrictions, and limited distribution arrangementsIn 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 drugsSpecialty drug costs ranged from 50% to 67% of total cost of care for these conditionsGleason 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.Specialty Drug ExpendituresSlide17
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 of Cost-Effectiveness of BiologicsSlide18
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 Pharmco2006;13:109-126.
Recent Evidence (cont’d)Slide19
Employers indicate managing specialty pharmacy is a high priorityEmployers are implementing cost-sharing strategies & use of high-deductible plansNat’l Employer Initiative on Specialty Pharmacy launched an education campaignFocused 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 drugsOnline employer toolkit focused on helping stakeholders to understand specialty pharmacy and ID innovative approaches to plan designPilot projectEducating consumersSpecialty drugs can provide real valueManaging 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)256-7.Survey of the Midwest Business Group on Health & Institute for
Interated Health Care (MBGH-IIH
)Slide20
“J” and “Q” codes of the Healthcare Common Procedure Coding System (HCPCS)Less specific than NDC codesDo not allow payers to track and manage product utilizationContracting with NDC of vial on CMS 1500 and prior auth/certification written inTiered cost-sharing with maximum OOP costsNeed to improve clinical mgmtEducation program guidelinesCoordination with careGeneric biologics
PSG. Op cit.Challenges and Emerging TrendsSlide21
“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.The Need for Transparency and
Scientific
Data in Decision-MakingSlide22
Cost-Minimization AnalysisCost-Benefit AnalysisCost-Effectiveness AnalysisCost-Utility AnalysisTypes of Pharmacoeconomic
StudiesSlide23
Simplest to perform in conceptCan only be used when the outcomes of medicines or interventions are entirely the sameOften used inappropriately, for example . . . Antibiotics with different spectraPain medications with different side effect profilesDrugs with disparate impacts on health-related quality of life
Cost-Minimization AnalysisSlide24
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 sameExamples:$$/decrease in A1C$$/hospital admission averted
Average vs. incremental cost-effectiveness ratio“Domination” versus “trade-off”Cost-Effectiveness AnalysisSlide25
Transcends use in pharmacy/medicine, and what we use to make “everyday decisions”All costs & benefits expressed in $$Useful for drugs or programs differing in outcomesOutputs include:Net benefitReturn on investmentBenefit: cost ratio
Cost-Benefit AnalysisSlide26
Modification of cost-effectiveness analysis Adjusts for quality of life, specifically quality-adjusted life years (QALYs)Very important outcomes to patients and their loved onesCost-Utility AnalysisSlide27
Cost of Illness analysisCost “types” to considerDirect costs (meds, med monitoring, pt counseling, hospitalizations, clinic visits, ER, nursing services)Direct non-medical costs (travel, child care services)Indirect costs (loss of productivity, premature mortality)Intangible costs (pain & suffering,
presenteeism, anxiety)Cost of death???Willingness-to-pay (WTP)—patients put a HIGH value on positive medication effects!!Other Calculations and ConsiderationsSlide28
The most “important” outcomeQuality-adjusted life years (QALYs)General measuresMOS-SFQWBSIP
Disease-specificBPH Impact Index, Functional Assessment of Cancer Therapy (FACT), Arthritis Impact measure Scale, Living with Asthma Questionnaire, Diabetes-Specific QoL Instrument, Functional Assessment of HIV InfectionHealth-Related Quality of LifeSlide29
Formulary, ubiquity of usePatent life and expirationProduct life cycleMarginal revenue and marginal costsDifferent for innovator firmsPharma vs. venture capitalist and non-innovator entitiesPrices of generics
Additional Considerations in Clinical
Trials and Costs/Price-SettingSlide30
Opportunity costsMarketingProvision of informationEducation of stakeholdersTotal health care dollarIf ½ of industry profits are removed, you would reduce health care expenditures by only 0.5%
Additional Considerations (cont’d)Slide31
U.S. takes a leadRegulatory and approval costs more expensiveSome subsidizing of costs for drugs in developing nationsPharmaceutical assistance programsComplex interaction of lifestyles, environmental, social, political, economic, and still unaccounted for forcesMost innovation accomplished through manufacturersWellness of patients like my daughter, Brittney
The Need to InnovateSlide32
Brittney Desselle Diagnosed with Ulcerative Colitis (UC) at age 14Receives an infusion of Remicade
every two monthsHad 4 blood transfusions in a span of just 2 months; is still anemicNow 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 curesSlide33
Helen BerhaneJonathan KhakshooyYewande SamuelTrang TranAcknowledgementsSlide34
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