While HHS has taken multiple steps toward bringing down spending on prescription drugs (see story below), the agency’s latest proposal — which comes less than two weeks before the midterm elections — has been its most contentious so far. The effort, unveiled Oct. 25 in an Advanced Notice of Proposed Rulemaking (ANPRM), takes aim at “global freeloading” and would bring payments for Medicare Part B closer to what other countries pay for these medications.
In the ANPRM, HHS said that it is seeking comments on a variety of payment changes to Medicare Part B. The agency said it is considering issuing a proposed rule in the spring, with the actual model starting one year later, in spring 2020, running until spring 2025, with changes being phased in during those five years. It would apply to half of the country.
The document, titled Medicare Program; International Pricing Index Model for Medicare Part B Drugs (83 Fed. Reg. 54546, Oct. 30, 2018) was published in the Federal Register on Oct. 30. Comments are due by 5 p.m. Dec. 31.
Currently CMS reimburses Medicare Part B drugs at their average sales price (ASP) plus 6% (although it really is plus 4.3% due to the 2013 budget sequestration). The administration is proposing that CMS instead reimburse these medications based on an International Pricing Index (IPI) based on drug pricing data from not only the U.S. but also 16 other “developed economies: Austria, Belgium, Canada, Czech Republic, Finland, France, Germany, Greece, Ireland, Italy, Japan, Portugal, Slovakia, Spain, Sweden, and the United Kingdom.”
In addition, instead of an add-on payment based on a percentage of ASP — a structure that many argue encourages providers to prescribe higher-priced drugs over lower-priced ones — there would be a set payment amount.
CMS also is proposing an alternative to the buy-and-bill process by which private-sector vendors will negotiate drug prices, take title of them and compete for business from physicians and hospitals — essentially a revival of the Competitive Acquisition Program (CAP) that the agency discontinued nearly a decade ago (see story, p. 11).
Analysis Shows Pricing Discrepancies
On the same day as the ANPRM was unveiled, HHS’s Office of the Assistant Secretary for Planning and Evaluation (ASPE) released a report that analyzed pricing differences among the U.S. and 16 other countries for 27 Part B-reimbursed drugs that represented the top spending among U.S. physician offices and hospital-based outpatient departments. Total spending on these drugs in the U.S. was more than $17 billion in 2016.
Titled Comparison of U.S. and International Prices for Top Spending Medicare Part B Drugs, the report — which was cited in the ANPRM — notes that since 2006, even though there has been low enrollment growth within fee-for-service Medicare Part B, spending on Part B drugs has doubled.
The analysis found that for the 27 drugs, the prices that manufacturers charged wholesalers and distributors in the U.S. were 1.8 times higher than what they were on average in other countries (see chart, p. 13). Six of the products had higher U.S. prices that were within 20% of the average international price. Prices for 20 medications within the U.S. were more than 20% higher on average than those in the other countries. Only one product — Gammagard (immune globulin [human]) from Shire plc — had a lower U.S. price than the average international price.
On a country-by-country basis, of the 27 products, 19 had the highest price within the U.S. For the other eight drugs analyzed, while the average international price was less than that of the U.S. price, at least one other country’s price was more than that in the U.S.
In an Oct. 25 speech at HHS, President Donald Trump maintained that the model was “a bold and historic action to bring down the prices of prescription drugs.”
The U.S. will “begin to confront one of the most unfair practices — almost unimaginable that it hasn’t been taken care of long before this — that drives up the cost of medicine in the United States. We’re taking aim at the global freeloading that forces American consumers to subsidize lower prices in foreign countries through higher prices in our country,” he said. “For decades, other countries have rigged the system so that American patients are charged much more — and in some cases, much, much more — for the exact same drug. In other words, Americans pay more so that other countries can pay less.”
Proposed Medicare Part B Model Poses Array of Questions
Multiple questions exist around the ability of CMS to implement various changes to Medicare Part B as recently floated in an Advanced Notice of Proposed Rulemaking (ANPRM). Proposed adjustments would be implemented in half of the U.S. under a five-year model. Elan Rubinstein, Pharm.D., principal at EB Rubinstein Associates, spoke with AIS Health about some unknowns around the proposal:
“According to the Kaiser Family Foundation, Medicare is projected to be 31% of U.S. drug spend in 2018, going up to 35% in 2025. While this is a very large share of U.S. drug spend and represents significant leverage in the aggregate, will CMS succeed in forcing manufacturers to lower drug prices below the international reference prices, not through direct price negotiation but rather through imposing reduced reimbursement?
“Will model vendors be able to purchase drugs and biologicals sufficiently below their international reference prices, as determined by the IPI [i.e., International Pricing Index] model methodology, so as to support model vendor operating and profit requirements?
“Will model participants be willing to pay drug distribution costs to the model vendors as contemplated in the ANPRM, say for lease and maintenance of on-site automated drug inventory boxes just for model vendor-owned drugs and biologicals?
“Since the model vendor will supply unopened vials of drugs or biologicals, and because the provider may prescribe a dose that is less than 100% of vial content, will the model vendor be compensated for the full vial that it provided to the model participant — because if not, the model vendor will suffer a loss on unused drug that is wasted.
“Because Medicare will pay model vendors the IPI model drug price less a patient’s 20% Part B cost share, how quickly will model participants forward collected cost share payments to model vendors — because the best-case scenario is that model vendors will be under water until those dollars are received.”
Contact Rubinstein at firstname.lastname@example.org.
by Angela Maas
The IPI model, contended Trump, also will “fix a broken payment system where doctors are reimbursed more if they prescribe a much more expensive drug. Under our new proposed payment system, doctors will be paid a flat rate. When you think of it, it’s like being a contractor or anything else. If it’s an expensive drug or a less-expensive drug, it’s the same.…And I think this will be good in terms of the pricing of the drug — it’ll be fantastic for that — but it’ll also be much better for patients, and it very well may be better for doctors.”
If the ANPRM is implemented, “it will have a huge impact on the prescription drug marketplace in the U.S. and will dramatically impact foreign drug markets,” contends Elan Rubinstein, Pharm.D., principal at EB Rubinstein Associates. He tells AIS Health that “the only thing that would have a more dramatic impact on the U.S. prescription drug marketplace would be elimination of the anti-kickback safe harbor for drug rebates, because if those go away, many businesses will need to change strategy — such as PBM drug formulary/tier placement.”
Manufacturer advocacy groups immediately derided the proposal.
“The administration is imposing foreign price controls from countries with socialized health care systems that deny their citizens access and discourage innovation,” said the Pharmaceutical Research and Manufacturers of America. “These proposals are to the detriment of American patients. The United States has a competitive marketplace that controls costs and provides patients with access to innovative medicines far earlier than in countries with price controls, and it’s why we lead the world in drug discovery and development. Americans have access to cancer medicines on average about two years earlier than in developed countries like in the United Kingdom, Germany and France.”
According to the Biotechnology Innovation Organization, “the proposal continues a troubling trend towards undermining the Medicare Part B drug program. This program supports the sickest, most vulnerable Medicare patients and accounts for only a small fraction of all Medicare spending.”
In the U.S., Rubinstein points out, “manufacturer drug prices are not negotiated centrally: Rebates are negotiated by individual purchasers such as health plans, PBMs and Part D plans in exchange for drug formulary position and other competitive market advantages. Purchasers, some dominant in their markets and others with national presence, leverage their own covered lives and control methods in price negotiations. On the federal government side, the Federal Supply Schedule relies on centralized purchasing leverage, including excluding access to drugs that are not contracted, and generally achieves low prices relative to other buyers.”
That’s in contrast to the IPI model, also known as reference pricing, which “is a common approach that most industrialized countries use,” says Lisa Kennedy, Ph.D., chief economist at Epiphany, a company that performs health economics, reimbursement and market access studies. “We see this a lot in our international work.”
Rubinstein tells AIS Health that the nations CMS chooses to benchmark prices “will have a huge impact — because prices vary widely in Europe, due in part to the degree of nations’ centralized purchasing leverage, whether hospitals control product choice through exclusive tenders and, possibly also to per capita income.”
According to Kennedy, the “immediate implication” of this approach “is that drug manufacturers will have to include the U.S. in how they consider the order of launch. The U.S. will likely come first, as it is the biggest market, and then you’ll find that other countries see launches after this.” Kennedy says she assumes that CMS “will take some kind of weighted or unweighted average.” She points out that of the potential nations, Austria, Belgium, the Czech Republic, Greece, Ireland and the UK “are generally lower-priced drug markets (especially Greece, UK, Czech Republic and Ireland) and so if a drug manufacturer launches a drug where most of the market is coming from Medicare Part B — say a high-priced immuno-oncology drug — they’d be inclined to weigh up the likely drop in average price from launching in those countries with not launching at all because it would so significantly affect the U.S. market size. So the implications could be difficult in these countries, as there will be less negotiating room unless the countries have a policy such as in the UK whereby there is a ‘confidential negotiation’ on a ‘real price’ that is irrelevant to a high list price.”
Another consideration for manufacturers, she says, “is the interest rate. We saw this in Japan with a drug that Lilly launched a little while ago: They pulled their drug from the reimbursement consideration in Japan for a few months, and then when the drug was reconsidered a few months later in Japan, they were stuck with a much lower price because of fluctuations in interest rates causing the average reference prices to fall. This is going to be important as far as the frequency in which the IPI is calculated.”
Kennedy also points to part of the ANPRM that is concerning with regard to the IPI: “In the absence of international pricing data, CMS could still calculate a model payment amount by applying a standard factor. CMS could, for example, assume the same ratio for the new drug as the IPI, which would be the average volume-weighted payment amount across all Part B drugs included in the model.”
This, she maintains, “is a worry because it looks like they will take the average of all Part B drugs. If that’s the case, then depending on how the average price of Part B drugs across the board compares to a potential ‘market basket’ in other countries, this could affect the launch order, delaying U.S. launch, with companies also launching with high list prices in other countries with actual prices negotiated in confidence (in those countries).”
Trump’s statement that the model “very well may be better for doctors” may be questionable for some participants. As Rubinstein points out, those drugs with reduced net prices due to the IPI will have lower ASPs. And “a lower ASP will result in reduced provider reimbursement for drugs administered ‘incident to’ a physician office visit and paid on a markup of ASP, a problem for providers if they cannot acquire drugs and biologicals below these reduced ASPs.”
On Oct. 30, STAT reported that it had obtained a Q&A by the administration that attempts to deflect much of the criticism. The document also tried to distinguish the current proposal from one that the previous administration attempted to enact.
Trump maintained in his Oct. 25 speech that “this is a revolutionary change. Nobody’s had the courage to do it, or they just didn’t want to do it.”
However, in 2016, CMS under former President Barack Obama tried to implement a multipronged approach to exploring alternative payment models for Part B, including changing the add-on payment to 2.5%, plus a $16.80 per-drug per-day flat fee payment. That proposed demonstration project was met with pushback from an array of stakeholders — including more than 1,300 comments on the proposal, most of them negative — leading the agency to scrap the Part B Drug Payment Model (81 Fed. Reg. 13230, March 11, 2016) later that year.
MD Logistics Could Be Challenging
“Currently, most medical groups and hospital outpatient departments purchase drugs, administer them to patients, bill to third parties and collect patient cost-share as appropriate,” explains Rubinstein. “Providers that participate in the IPI model and that simultaneously serve patients covered by other third-party payers such as commercial, Medicare Advantage and Medicaid will face the logistical complexity and challenge of doing things in one way for fee-for-service Medicare patients, but in other ways for patients covered by other payers.”
Ted Okon, executive director of the Community Oncology Alliance (COA), agrees. “It’s going to be tremendously complicated — in fact, think Rube Goldberg model,” he tells AIS Health. The model would impact Medicare fee-for-service, leaving Medicare Advantage (MA) and private payers, which together make up about 75% of the overall market. That population will continue to be “serviced the way it is now, which is the physician takes title to the drug, has just-in-time inventory for any patient who comes in and needs a change of medication and then bills Medicare and the patient’s insurance.”
The dilemma is around “taking the drug out of the hands of the physician,…which results in two rough scenarios.” In the first one, “some entity basically hands over to the practice an inventory of drugs that they just purchased. Under this scenario, at least the just-in-time aspect of the patient getting their drug is the same, although it’s going to have to be a separate inventory” from drugs used for MA and private payer populations. However, he says, “I do not believe there will be any willing vendor that will basically hand over millions and millions of dollars of expensive drugs on basically some kind of consignment or spec basis — I don’t even know what to call it.”
The other alternative is “some form of white bagging where the vendor will send drugs and will be triggered on a patient-by-patient basis. That is the nightmare scenario we are afraid of because…the complexity of that now is magnified greatly. You’re talking about a separate system from” MA and private payers “that somehow, from a standpoint of ordering software and everything else, you basically have to send it to that vendor, and then they have to send it back. The real concern there, aside from the pharmacy complexity, the operations complexity, is the fact that you’re now letting in a Part D provider.” He contends that practices are “experiencing nightmares on a daily basis in trying to get patients their oral drugs,” be it due to holdups, waste, incorrect therapies or some other reason.
This scenario also removes the just-in-time aspect, which is critical, as providers need the ability to change therapies based on scans and bloodwork conducted when the patient comes into the office. This means the patient will need to come back, which can be challenging for the Medicare population due to issues such as mobility and simply getting a ride to the appointment. “So the complexity ratchets up,” he maintains.
Ultimately, the proposal could have downstream issues. Kennedy asserts that “this changes the equation in decision-making for products in early development. Companies with equal choices on Part B versus Part D drug candidates will favor candidates that would fall under Part D. They might take on work in formulation or abandon drugs that have a less sure path.
“Also, companies could favor drugs for younger patients or populations where there are fewer Medicare eligible patients,” she continues. In addition to companies delaying or even abandoning product launches in certain countries, manufacturers may decide to launch in lower markets “at higher prices with little room for negotiation. So those countries could see delays or see a lack of access all together. Also, these countries will likely enable a system whereby they publish very high list prices but then negotiate confidential lower prices equivalent to one-third or one-fourth of the published price. This will be a problem in Germany as they have started to publish what they negotiate.”
View the ANPRM at https://bit.ly/2P18yJp. Download the ASPE report at https://aspe.hhs.gov/reports.
Contact Kennedy at email@example.com, Okon at firstname.lastname@example.org and Rubinstein at email@example.com.
by Angela Maas
HHS Doubles Down on Drug Pricing Efforts; How Useful Will Disclosing WACs Really Be?
HHS recently outlined two fairly assertive efforts aimed at pharmaceutical pricing. And while the one aimed at Medicare Part B (see story above) is definitely the administration’s most aggressive, its proposal to require companies to disclose drug prices in television ads has received a good amount of pushback, as well as support. Although the strategy may succeed in providing consumers more information on drugs’ wholesale acquisition costs (WACs), industry experts wonder how effective it really will be in letting consumers know what they will pay for a drug.
The proposed rule would require direct-to-consumer (DTC) television ads for prescription drugs covered by Medicare or Medicaid that have a WAC of more than $35 per month to include that list price in the ad. Specifically, an ad “must contain a statement or statements indicating the Wholesale Acquisition Cost (referred to as the ‘list price’) for a typical 30-day regimen or for a typical course of treatment, whichever is most appropriate, as determined on the first day of the quarter during which the advertisement is being aired or otherwise broadcast, as follows: ‘The list price for a [30-day supply of ] [typical course of treatment with] [name of prescription drug or biological product] is [insert list price]. If you have health insurance that covers drugs, your cost may be different.’”
HHS Secretary Alex Azar unveiled the proposal during a speech at the National Academy of Medicine’s annual meeting Oct. 15. The proposed rule (83 Fed. Reg. 22698, Oct. 18, 2018) was published Oct. 18 in the Federal Register. Comments are due by 5 p.m. Dec. 17.
Per the document, “We are proposing this regulation to improve the efficient administration of the Medicare and Medicaid programs by ensuring that beneficiaries are provided with relevant information about the costs of prescription drugs and biological products so they can make informed decisions that minimize not only their out-of-pocket costs, but also expenditures borne by Medicare and Medicaid, both of which are significant problems.”
The proposed rule notes that “in 2016, CMS and its beneficiaries spent $174 billion on drugs covered under Parts B and D, and $64 billion on drugs covered under Medicaid.”
HHS Maintains List Price Is ‘Relevant’
The agency maintains that people purchasing prescription drugs should be able to price shop in the same way they do “when looking to purchase a new car, a new house, or even a new coffee maker. Price shopping is the mark of rational economic behavior.” HHS acknowledges that different prices for a product exist but contends that “a number of factors make list price relevant across a variety of drug benefit designs, even though the PBM may have negotiated a lower price for the product dispensed to the beneficiary.”
For example, individuals in high-deductible health plans must pay list price for most drugs until they meet their deductible. In addition, negotiated rebates between payers and manufacturers are based on list prices, as are coinsurance amounts for beneficiaries. And people who purchase an off-formulary drug may need to pay its full price.
If implemented, the rule would impact multiple industry stakeholders.
“I think patients and providers will probably experience the most impact at first,” says Jeremy Schafer, Pharm.D., senior vice president at Precision for Value. “These stakeholders have generally been shielded from drug costs and pricing. Seeing the prices for the first time without much context may be surprising for some and concerning for others, especially for oncology and rare disease drugs. Manufacturers may experience some initial blowback from consumers and providers that are concerned on drug costs. Insurers may benefit from demonstrating to patients that insurance covers a significant portion of a patient’s drug costs.”
Multiple industry groups, including the Pharmaceutical Care Management Association, the American Medical Association (AMA) and Families USA, spoke out in support of the proposal. AMA President Barbara McAneny, M.D., said while the agency opposes DTC ads for prescription drugs, “as long as the practice is allowed, the ads should come with at least a small dose of transparency.…While this proposed rule alone won’t remove the often-misleading nature of prescription drug ads, it will give consumers a data point that is currently unavailable. That is a step in the right direction.”
And Frederick Isasi, J.D., M.P.H., executive director of Families USA, said, “Today’s announcement is a welcome step to rein in the cost of prescription drugs. People will be shocked to know how much their drugs really cost….This policy will focus public attention on the abusive prices charged by many pharmaceutical manufacturers.”
How Effective Would Proposed Rule Be?
Others within the industry, however, question how effective the proposed rule, if implemented, would really be.
“Patients do not typically pay a drug’s list price at the pharmacy counter,” points out Elan Rubinstein, Pharm.D., principal at EB Rubinstein Associates. “Showing the average monthly list price in direct-to-consumer advertising may not be meaningful. It could also frighten some people enough not to take prescribed medication as directed, thinking that they would have to actually pay this amount. It is not possible for a manufacturer to show estimated out-of-pocket cost, because this is highly variable. Showing a drug’s list price in direct-to-consumer advertising will not inform patients about either a drug’s total cost nor about the cost-share that they must pay at the pharmacy.” With this in mind, “it is difficult to see what true and useful facts the patient will have learned.”
In addition, he tells AIS Health, a different cost for a drug at the pharmacy than what is shown in an ad may confuse patients, making it likely that they’ll contact their providers’ offices, which will need to take the time to explain the discrepancy.
More broadly, points out Schafer, “between discounts, rebates, assistance programs, etc., neither the patient, employer, nor payer probably pay the list price in full.…The communicated price is likely to not be reflective of the actual cost to any stakeholder.”
Publishing prices is not likely to have an impact on specialty drugs, Bill Sullivan, principal consultant at Specialty Pharmacy Solutions LLC, tells AIS Health. “Patients already know that specialty pharmacy drugs are insanely expensive. Publishing costs for specialty is not going to make much difference especially if the manufacturer and pharmacy are able to level out-of-pocket costs through financial assistance, physician detailing and prime time ads. Patients’ primary ‘purchase’ criteria is a drug’s efficacy for their chronic disease. If they have deductibles and coinsurance, then cost may be a secondary factor, but, again, financial assistance often mitigates that concern. Patients may actually be driven to the costliest product thinking more expensive is better than a cheaper alternative. With many ‘next-generation’ therapies being approved, often at huge price premiums to the older therapy(ies), they are likely to be correct in that assumption.”
According to Lisa Kennedy, Ph.D., chief economist at Epiphany, a company that performs health economics, reimbursement and market access studies, “Transparency in the prices of health care services is always a good thing — but finding the prices of drugs is generally easier for patients to find than other health care services that they get. More importantly, what patients are most interested in is what they personally will pay, and this ruling does not help them.”
Transparency Is Needed for All Services
With individuals’ out-of-pocket costs varying greatly, it is difficult, if not impossible, for them to know from this information what they will owe. “So the efforts to empower patients to make an informed decision on health care shouldn’t be about a disproportionate focus on pharmaceuticals — transparency in the prices of health care services should expand across all health care services,” Kennedy tells AIS Health. “Moreover, government policies should extend towards developing tools that take the guesswork out of patient payments and understanding of their benefits — patients lack understanding of their benefits, which are inordinately complex for them. Even within one in-network hospital visit, a patient will get multiple bills from both in-network and out-of-network providers that cause extensive confusion and consternation.
“I really dislike the focus on just drug prices in this proposed rule,” she continues. “Let’s focus on improved health — that’s what people need. More alignment of financial and nonfinancial incentives among providers, manufacturers, commercial insurers and patients will facilitate greater health, and if payment follows health improvement, then prices of products that have unproven value are less likely to be used in favor of better products.”
In addition, said the Pharmaceutical Research and Manufacturers of America (PhRMA), “any such requirement would raise significant legal issues, including First Amendment concerns.”
However, the proposed rule states that “when the government requires accurate disclosures in the marketing of regulated products under appropriate circumstances, it does not infringe on protected First Amendment interests.”
Schafer says that whether the rule is a violation of the First Amendment “remains to be seen. Government bodies already dictate a fair amount of what drug manufacturers can communicate in advertising (safety warnings, etc.), as well as in product labels and promotional materials. I am not sure it is a radical departure for the government to require communication of another piece of information connected to a drug.”
In May, FDA Commissioner Scott Gottlieb, M.D., said that his agency had formed a working group to consider the issue. Asked about the change in agency on the issue during an Oct. 15 media call, CMS officials remarked that it is “well within our authority” to be the agency to issue the proposal. In response to another question about whether the agency needed to secure any funding or consideration from Congress to implement the rule, officials replied, “No, we don’t believe we do.”
The proposed rule notes that “although Congress has not explicitly provided HHS with authority to compel the disclosure of list prices to the public, Congress has explicitly directed HHS to operate Medicare and Medicaid programs efficiently. Promoting pricing transparency, and thus efficient markets, for drugs funded through those programs falls within the scope of that mandate.”
However, Schafer points out, “the only reason CMS is launching this effort was because the Durbin-Grassley amendment [to a Defense-Labor-HHS-Education appropriations bill] that would require basically the same price disclosure did not survive the House and Senate reconciliation. It does make one wonder why the Senate acted at all if this power was within CMS’s control from the beginning. However, the legal issue will need to be settled by courts, should it get to that point.”
PhRMA Offers Different Approach
On Oct. 15 before Azar’s speech, PhRMA unveiled an alternative approach to bringing transparency to drug costs. All of the group’s member companies agreed that their TV ads will “direct patients to information about medicine costs, including the list price of the medicine, out-of-pocket costs or other context about the potential cost of the medicine and available financial assistance. The biopharmaceutical industry will also launch a new platform that will provide patients, caregivers and providers with cost and financial assistance information for brand-name medicines, as well as other patient support resources.”
PhRMA’s board made the change through updating its voluntary DTC principles for prescription drugs. The board agreed to add the following statement: “All DTC television advertising that identifies a medicine by name should include direction as to where patients can find information about the cost of the medicine, such as a company-developed website, including the list price and average, estimated, or typical patient out-of-pocket costs, or other context about the potential cost of the medicine.”
The change is effective April 15, 2019, but the group said that member companies would begin implementing the approach “in the coming months.” Firms agreed that their CEOs and chief compliance officers would verify annually that their policies and procedures complied with the updated principles.
Move Will Be ‘Big Change’ for Firms
“Our member companies are taking a new approach to how they communicate about medicines in DTC television advertisements to make it easier for patients to access information about medicine costs,” said Stephen J. Ubl, president and chief executive officer of PhRMA, in a release unveiling the new approach. “The Administration and Congress have called on our industry to provide cost information in DTC advertisements, and our members are voluntarily stepping up to the plate.”
According to Ubl, the approach “represents a big change for our companies and it will require significant operational changes for individual companies to implement. But we believe this is the right thing to do and is an important step toward providing patients with the information they want.”
In response to the PhRMA announcement, CMS Administrator Seema Verma replied, “CMS appreciates the pharmaceutical industry’s action to increase transparency, but additional steps are required to ensure that patients have all of the information they need when they are learning about a medication.”
Azar’s response was a bit more pointed: Although he acknowledged that the PhRMA action “is a small step in the right direction,” he contended that “the drug industry remains resistant to providing real transparency around their prices, including the sky-high list prices that many patients pay.”
Schafer tells AIS Health, though, that “there could be value to this effort [by PhRMA] if the information was simple to find and provided adequate background information and context. However, it would be unlikely that all manufacturers would participate, so I don’t think the government saw the effort as adequate. Manufacturers may still want to proceed even if the rule is imposed, as it could be a useful way to educate patients and providers on the nuances of drug pricing.”
Move Follows Other Changes, Proposals
According to Verma, because of the administration’s efforts to lower the prices of prescription medications, “Americans are seeing results.”
Earlier this year in May, HHS issued the American Patients First blueprint, which contained multiple suggestions aimed at lowering medication prices and reducing costs for consumers (SMA 6/18, p. 1). Among proposed changes is lowering the add-on percentage of certain Medicare drugs that are based on WAC (SMA 8/18, p. 9).
Among actions already implemented, in late August, CMS told Medicare Part D plan sponsors that they can begin using indication-based formularies in contract year 2020 (SMA 10/18, p. 10). And earlier that month, CMS rescinded a 2012 memo and issued new guidance allowing Medicare Advantage plans to use step therapy for Part B drugs as of Jan. 1, 2019 (SMA 9/18, p. 13). According to HHS, “CMS is acknowledging that the use of step therapy is a recognized utilization management tool. The allowance of step therapy practices for Part B drugs will help achieve the goal of lower drug prices while maintaining access to covered services and drugs for beneficiaries.”
At least one plan sponsor already has signaled that it will indeed implement this tactic next year. In its October 2018 Network Bulletin, UnitedHealthcare said that as of Jan. 1, it would require step-therapy prior authorization for Part B covered items that are not preferred for new starts. Among the therapeutic classes are the immunomodulators; United will prefer biosimilars Inflectra (infliximab-dyyb) and Renflexis (infliximab-abda), classifying reference product Remicade (infliximab) as nonpreferred. And for the erythropoiesis-stimulating agents, the plan will prefer biosimilar Retacrit (epoetin alfa-epbx) over Procrit (epoetin alfa) and Aranesp (darbepoetin alfa). The bulletin notes that Epogen (epoetin alfa) and Mircera (methoxy PEG-epoetin beta) are not subject to the step-therapy requirement.
Rule Would Impact Marketing Efforts
If the rule requiring pricing information in DTC television ads is implemented, it obviously will impact manufacturers’ marketing efforts.
“The biggest change will be the inclusion of the pricing message itself,” maintains Schafer. “Realistically, a 30-second DTC ad is too short to delve into a detailed explanation of the many nuances in U.S. drug pricing. As a result, pharma manufacturers may want to consider launching a broader educational campaign directed at providers, patients and the general public on some of the factors in drug pricing. Manufacturers may also want to do more to show where the money from drug sales goes, including the development of new drugs.”
An additional challenge is the fact that “since the proposed rule calls for the most up-to-date list price to be communicated, manufacturers will need to update the price in the DTC every time the price changes,” he notes. “Astute patients or providers may notice when the drug price increases. Drug prices are one of the few products in the marketplace that progressively increase over time, and with more patients being responsible for a percentage of drug price whether by coinsurance or deductible, seeing increases may upset these stakeholders. Manufacturers will need to consider this potential issue when deciding on whether to change a drug’s price.”
To avoid running afoul of the legislation, manufacturers simply should “follow the guidance as written,” he says. “Fortunately, the guidance seems relatively straightforward with the required message and minimal exceptions.”
If the rule is implemented, “some manufacturers may move away from DTC,” Schafer says, “but I am not convinced that will be widespread and long-lasting. Manufacturers are aware of the benefits of increasing patient and provider awareness, and it may be better in the long term to benefit from DTC even if there is some initial blowback on pricing.”
View the proposed rule at https://bit.ly/2q2qAfo and the United bulletin at https://bit.ly/2Og5d3I.
Contact Kennedy at firstname.lastname@example.org, Rubinstein at email@example.com, Schafer via Tess Rollano at firstname.lastname@example.org and Sullivan at email@example.com.
by Angela Maas
Pharma, Payers Are Using RWE To Inform Value-Based Deals
The strategic use of real-world evidence (RWE) has important — but different — implications for multiple stakeholder groups in health care. As drugmakers strive to demonstrate the value of their products — and hopefully attain a favorable position on payer formularies — and value-based arrangements become more widespread, RWE can be particularly beneficial to payers and pharma alike.
“Many payers have research groups that are looking at RWE and comparative-effectiveness studies and using them to guide formulary decisions based on what they’re seeing in the real world,” says Sarah Alwardt, Ph.D., vice president of health informatics and health economics and outcomes research operations at McKesson Corp. “This is the biggest shift we’ve seen over the past five years in how we think about coverage and access.”
“The use of RWE to improve outcomes-related product differentiation and demonstrate economic value can help drugmakers gain favorable formulary placement and possibly thwart it for emergent competitors,” adds Camie Britton, senior director, real-world data services, Parexel International.
“The ability to assess a drug’s full clinical impact often needs longer time horizons than what was available in the trial. [Outcomes-based] agreements let payers and drug developers share the risk,” adds Sumeet Bakshi, MBBS, MBA, vice president, real world data solutions at Analytica Laser, a Certara company. “To make it possible, you must use modeling and simulation to predict clinical outcomes over time based on evidence that is available at the time of launch (such as trial data, RWE from competitor products and other sources of information).”
“As costs rise and there’s intense scrutiny over drug pricing in many therapeutic areas, the main objective of value-based pricing arrangements is to identify key product attributes that drive value as perceived by various stakeholders and then elucidate the requisite evidence to support those value claims,” says John Doyle, senior vice president and general manager, real-world & analytic services, IQVIA, and faculty member, department of epidemiology, Mailman School of Public Health, Columbia University.
“Payers really need to understand the value of today’s costly therapy options, beyond just the cost but rather in terms of real-world efficacy and long-term outcomes, and outcomes-based contracts that are highly dependent on RWE provide both opportunities and challenges,” Alwardt says.
“Payers really want to understand outcomes and benefits for patients in the real world — and not just the ‘super patient’ who was enrolled in the clinical trial,” adds Zhen Su, M.D., chief medical officer for North America at EMD Serono, Inc.
Outcomes-based agreements started to make headlines in 2015, when United Healthcare signed an OBA with Gilead Sciences, Inc. for its hepatitis C therapy Harvoni (ledipasvir/sofosbuvir), and in 2016, when Cigna established value-based contracts with Amgen Inc. for Repatha (evolocumab) and Sanofi/Regeneron Pharmaceuticals, Inc. for Praluent (alirocumab). Those latter deals tied favorable pricing and reimbursement of the companies’ PCSK9 inhibitors — which were more costly than other treatment options — and used RWE to validate that anticipated clinical benefits were, in fact, being realized by patients in real-world settings, by monitoring the patient’s “bad cholesterol” LDL-C levels over time. With those OBAs, when the PCSK9 inhibitors were able to yield LDL-C reductions that were better than or equal to what was demonstrated in the trials, the negotiated price and reimbursement terms would apply, but if Cigna patients taking the drugs were not able to reduce their LDL-C levels to those target levels, the two drugmakers would absorb additional costs through deeper discounts to the insurer.
Similarly, Aetna has established value-based pricing and reimbursement agreements with Merck & Co., Inc. for its type 2 diabetes medications Januvia (sitagliptin) and Janumet (sitagliptin plus metformin). Under the agreement, Merck’s rebates on Januvia and Janumet will be based in part on those products’ contributions to helping Aetna’s commercial member populations with type 2 diabetes achieve or maintain treatment objectives, according to the insurer.
Some Drugs Are Better Suited for Deals
Drugs that are most amenable to such innovative contracting strategies include those that already face strong competition in crowded therapeutic areas and those for which RWE related to actual clinical outcomes can be collected and used to demonstrate how the drug is working in terms of relevant outcomes, such as cure, management of long-term chronic conditions, progression-free survival, long-term survival and avoidance of other costly health care interventions.
OBAs tend to make strategic sense for not just those therapies that are competing for market share in a crowded therapeutic space, but also for those products that either have a high cost per treatment or large overall budget impact for the payer, as well as innovative treatments that have as-yet-undefined clinical benefit in large, real-world patient populations.
According to Billy Amzal, MSc, MPA, Ph.D., senior vice president, real world decision & data analytics, Analytica Laser, in addition to the already-stated deals, other examples show that OBAs have already emerged across several therapeutic categories, with a variety of insurers:
✦ Non-small cell lung cancer: Avastin (bevacizumab) from Genentech USA, Inc., a Roche Group Company, and AstraZeneca’s Iressa (gefitinib);
✦ Leukemia: Novartis Pharmaceuticals Corp.’s CAR-T therapy Kymriah (tisagenlecleucel) and Tasigna (nilotinib);
✦ Multiple sclerosis: Bayer’s Betaseron (interferon beta-1b), EMD Serono’s Rebif (interferon beta-1a) and Biogen’s Tecfidera (dimethyl fumarate);
✦ Diabetes: Eli Lilly & Co.’s Trulicity (dulaglutide) and Novo Nordisk’s Victoza (liraglutide); and
✦ Heart disease: Entresto (sacubitril/valsartan) from Novartis, Eli Lilly’s Effient (prasugrel) and AstraZeneca’s Brilinta (ticagrelor).
When it comes to negotiating and executing large-scale use of OBAs, a variety of challenges remain, according to Amzal. These include:
✦ Assessing the risks up front related to uncertainties around real-world prescribing and use of costly, complex therapies;
✦ Managing the lack of control over proper prescribing, proper dosing, proper administration and sustained adherence from patient to patient — all of which directly impact clinical outcomes over time;
✦ Defining adequate time horizons in a fragmented, multiplayer market;
✦ Managing the resources required to set up and adjudicate RWE compared with traditional rebates and discounts;
✦ Creating and leveraging a data-collection infrastructure that can appropriately measure and monitor relevant outcomes; and
✦ Modeling and predicting outcomes in the health plan population and negotiating contractual terms that are acceptable to all stakeholders.
“All medicine is about intervention, so the ability to comprehensively incorporate real-world evidence to inform drug development, change the disease trajectory, improve the patient’s life and health, and save money on health care costs allows for better, data-driven interventions,” Su says.
“When RWE developed from actual clinical practice can help to tease out additional findings related to which patients respond best to which types of therapies, the insight has broader implications, as well, because it can help to inform the next generation of drug development — something that is essential for health care as a whole and for the sustainability of the life sciences industry,” states Su.
This article was contributed by Suzanne Shelley of Pharmaceutical Commerce. For more information, visit http://pharmaceuticalcommerce.com.
Prime and Janssen Enter Into Value-Based Deal for Stelara
Prime Therapeutics LLC recently signed a value-based agreement with the Janssen Pharmaceutical Companies of Johnson & Johnson for autoimmune therapy Stelara (ustekinumab) as part of Prime’s CareCentered Contracting program. With that therapeutic class at the top in terms of spend among most payers, understanding whether a medication is being taken appropriately is critical to knowing whether a product is providing value.
The FDA has approved Stelara to treat moderately to severely active Crohn’s disease in adults, moderate or severe plaque psoriasis in people at least 12 years old and active psoriatic arthritis in adults. The agency first approved the interleukin-12/23 inhibitor in September 2009.
“The development of Prime’s value-based contracts is an iterative process, so it’s more about identifying therapeutic areas or drugs of interest and then collaborating with select manufacturers,” explains Kim Gwiazdzinski, R.Ph., senior director, trade relations, value and outcomes contracting for Prime, in response to a question about how the deal came about. “Because autoimmune is one of our costlier therapeutic areas, it made sense to explore a contract in that category.”
Prime, which serves more than 27 million members, is owned by 18 Blues plans, subsidiaries or affiliates of those plans. According to Gwiazdzinski, the autoimmune class of medications was the biggest driver of spend among specialty drugs for Prime’s commercially insured members in 2017. Specifically, the category was 14% of spend and 23% of trend. In Prime’s Fall 2017 Mid-Year Update, released Oct. 12, 2017, Stelara was ranked No. 9 among the top 10 individual drugs driving drug spend, at 1.2% of spend.
“While not the highest in utilization among commercial members, Stelara use is growing, and we want to ensure that members taking Stelara are continuing therapy to be able to maximize the benefits of the drug,” Gwiazdzinski tells AIS Health.
Prime Will Analyze Persistence
Under the arrangement, which already has started, Prime will analyze both pharmacy and medical claims data in order to track how long members remain on therapy. Gwiazdzinski clarifies that “this contract measures persistence, which is more about continuing to take a medication for the intended duration, as opposed to adherence, which is taking it as prescribed.” The PBM explains that “this measure is important as it’s only when patients continue to take their medications for the prescribed amount of time that they obtain the intended benefit from the therapy.”
Asked what length of persistence Prime is looking for as part of the contract and whether the companies would analyze other benchmarks, Gwiazdzinski replies, “Persistency is a foundation for the contract and a good starting point for both parties to enter into a value-based agreement. Prime’s objective is to subsequently build on these contracts and move toward agreements that measure the impact of a product on the overall cost of care, rather than one single outcome.”
According to Gwiazdzinski, “As we advance our efforts in value-based contracting, looking at drugs like Stelara that are covered under both the medical and pharmacy benefit can provide insights such as member adherence levels and differences based on which benefit (medical or pharmacy) it is covered” in.
“Our clients invest in specialty medications, and if members don’t continue to take them, no one realizes the value of the investment,” says Susan Scheid, vice president of pharmaceutical trade relations for Prime. “Prime uses insights from its value-based contracts to build clinical programs to improve member health outcomes.”
Gwiazdzinski declined to respond to questions about whether the contract applies only to new starts on the drug, as well as whether Prime has any other value-based deals with Janssen.
The agreement is part of Prime’s CareCentered Contracting program, a value-based contracting program that the PBM launched in 2010. Asked how many value-based contracts that Prime has as part of the program, Gwiazdzinski says that “while the number of contracts fluctuates at any given time, we have entered into more than a dozen value-based contracts since the program’s inception.”
Prime’s first two contracts were with Warner Chilcott Co. for osteoporosis drug Actonel (risedronate sodium) and with Merck & Co., Inc. for its diabetes drug Januvia (sitagliptin). That was followed by an agreement with EMD Serono, Inc. for its multiple sclerosis drug Rebif (interferon beta-1a).
In response to a question about how the program has evolved, Gwiazdzinski tells AIS Health that “the CareCentered Contract signed in 2010 has provided valuable learnings regarding the operational aspects of these contracts. In addition, we now have several data points to measure impact on outcomes over time. We intentionally ramped up our strategy in the last two years, and our focus moving forward is on agreements that are measurable and meaningful, looking beyond adherence to broader clinical outcomes.”
Most Contracts Are for Specialty Drugs
Outcomes-based contracts are critical strategies within today’s health care environment, and more and more payers have been entering into these deals. Although it’s unclear exactly how many of these contracts exist because some companies do not publicly disclose them, a report from the IQVIA Institute for Human Data Science says that from 2013 to 2017, there were 24 new U.S. publicly unveiled contracts negotiated with both payers and providers. The company estimates there will be 65 new ones from 2018 to 2022, with most of them for high-cost specialty drugs. According to the report, titled 2018 and Beyond: Outlook and Turning Points, “These contracts come with challenges for both the manufacturer and the party they negotiate with, whether that is a payer or a provider. Key to any successful contract will be the use of easily captured data, adjudicated and verifiable independently, often informed by biomarkers or test results. Some contracts have an ongoing measurement of per patient outcomes, however the administrative burden is high. Other contracts set an annual, or longer, timeframe for the assessment of the value, where the discounts are applicable for the entire timeframe.”
The report maintains that “ensuring access for breakthrough drugs will require balancing the concerns and priorities of all stakeholders. Patients could be overburdened with costs, particularly if there are no means-testing mechanisms in place. Providers could face significant financial pressures if they pay up-front for a medicine before uncertain reimbursement and payers’ ability to control premiums and the overall rise of healthcare costs stretches their predictive powers when faced with high individual cost per patient. Manufacturers should be able to achieve a reasonable return on their risky investments. Mechanisms to adjudicate value and ensure access will be important for all stakeholders, and linking outcomes to payment is increasingly the option of choice.”
“Payers, employers and patients invest significant dollars on medications, and it’s important that we demonstrate the value we’re getting for that investment,” contends Gwiazdzinski. “While clinical trials demonstrate the safety and efficacy of a drug, they don’t show what happens in the real world — but value-based contracts do. It’s important that we continue to work with manufacturers to demonstrate that their product is bringing value to our clients.”
Contact Prime’s Jenine Anderson at firstname.lastname@example.org.
by Angela Maas
This story was reprinted from AIS Health’s monthly publication Radar on Specialty Pharmacy. For more information, visit https://aishealth.com/product/specialty-pharmacy.
Doctors May Be Using IL-17 Inhibitors as First-Line Drugs
Within the specialty drug space, the autoimmune class boasts one of the largest arrays of therapeutic options. And although some providers in general may tend to prescribe older medications that they have more familiarity with, a recent study shows that this may not necessarily be the case within this class. The study, led by AllianceRx Walgreens Prime, found that among analyzed patients, providers may be comfortable with prescribing a newer type of autoimmune biologic as a first-line treatment.
The study, whose findings were presented as a poster at the National Association of Specialty Pharmacy annual meeting, held in Washington, D.C., in late September, assessed the use of two third-generation biologics, Novartis Pharmaceuticals Corp.’s Cosentyx (secukinumab) and Eli Lilly and Co.’s Taltz (ixekizumab), in the treatment of psoriasis. The FDA approved Cosentyx in January 2015, with Taltz’s approval coming about a year later, in March 2016.
Psoriasis is characterized by lesions on the skin that can be painful and itchy. People with these raised patches have more of a protein called interleukin 17A (IL-17) — which causes inflammation — than those without lesions. Cosentyx and Taltz are within the newer class of biologics known as interleukin-17 inhibitors.
Researchers analyzed the records of 5,547 patients with psoriasis who changed from a different biologic for psoriasis to either Cosentyx or Taltz from 2016 to 2018 and had their prescriptions filled at AllianceRx – Central Specialty. “AllianceRx Walgreens Prime has five central specialty dispensing locations,” explains Rick Miller, R.Ph., vice president, clinical services, professional practice and accreditation, AllianceRx Walgreens Prime, who was one of the study’s co-authors. “Data was aggregated across those five sites — and are all included in the definition of ‘one national pharmacy.’”
Claims were for the pharmacy benefit only, and patient-reported data also were collected. Researchers studied the proportion of days covered (PDC), which is defined by the total of the days the medication was available divided by the total number of days — 180 — in the observation period. People under the age of 18 and off-label use were excluded from the analysis.
Most Said They Had Not Switched
Most of the patients on an IL-17 inhibitor — 4,301 — were on Cosentyx, with 1,246 on Taltz. Of those on one of the two drugs, 1,696 switched from another biologic — but 3,851 reported not having switched from another biologic. The study found that patients who switched had been on one of three biologics prior to the switch: AbbVie Inc.’s Humira (adalimumab), Bausch Health’s Ortho Dermatologics’ Siliq (brodalumab) and Stelara (ustekinumab) from the Janssen Pharmaceutical Companies of Johnson & Johnson.
“The prior medications were based on prescriptions filled at AllianceRx Walgreens Prime 12 months prior to the new/switched medication and were exclusive to the indication/diagnosis of psoriasis,” says Miller. “For patients who were new to AllianceRx Walgreens Prime — with no prior dispensing history — the prior medication(s) utilized to treat psoriasis was based upon patient-provided information — which is a known limitation of the study.”
Asked if it was surprising that no one in the study reported being on Enbrel (etanercept) prior to switching, Miller replies that “while AllianceRx Walgreens Prime dispenses etanercept, most of those patients were not prescribed etanercept for psoriasis, and for those who were prescribed etanercept for psoriasis that switched biologic agents, those patients did not switch to one of the study medications.”
The mean PDC for a six-month period among switching patients prior to moving to an IL-17 inhibitor was between 44.4% and 52.8%. For the six-month period after switching, the mean PDC ranged from 64% to 84.7%.
Based on patients’ reporting, the main reason for switching was that the prior biologic was ineffective, cited by 68.9%. Slightly more than 10% were uncertain of the reason for the switch, and 8.6% reported it was due to side effects. Other reasons included drug interaction (1.5%), lab abnormalities (0.7%), administration difficulties (0.7%) and inconvenience (0.4%). Respondents could cite more than one reason. Among the 304 patients who reported outcomes, 119 said their outcomes were better on Cosentyx or Taltz, 105 said they were the same, nine said they were worse, and 71 had inconsistent responses.
Conditions Have High Biologic Use
As far as the motivation behind the study, Miller tells AIS Health that “psoriasis and disorders within the inflammatory disease category comprise a large portion of patients on specialty medications — in particular, biologic medications. Little is known about the rates and reasons for patients switching prescribed biologic medications utilized to treat psoriasis.”
“Based on patient reporting, the majority of the patients were started on one of the study IL-17 medications instead of switching biologics,” wrote the study authors. “This may indicate that prescribers are becoming comfortable with prescribing IL-17 biologics as first-line agents for psoriasis.”
The study’s findings indicate that payers, says Miller, “should expect, and not be surprised, to see prescribers initiate patients on these newer, third-generation biologic medications for psoriasis — which may impact benefit design and prior-authorization/utilization management criteria.”
Contact Miller through Adrienne Foley at email@example.com.
by Angela Maas
This story was reprinted from AIS Health’s monthly publication Radar on Specialty Pharmacy. For more information, visit https://aishealth.com/product/specialty-pharmacy.
Is Medicare Part B Market Now More Conducive to Use of CAP?
HHS’s recently published Advanced Notice of Proposed Rulemaking (ANPRM) on changes to the Medicare Part B program may have elicited a sense of déjà vu among industry stakeholders (see story, p. 1). That’s because some of the proposals are similar to ones seen before, including a Competitive Acquisition Program (CAP). An alternative to buy and bill, the mandatory model would feature private-sector vendors that will negotiate drug prices, take title of products and compete for business from physicians and hospitals.
The agency is considering numerous third-party entities that could fill this vendor role — and which would be billed by model participants, which currently bill Medicare for the drugs — including group-purchasing organizations, “wholesalers, distributors, specialty pharmacies, individual or groups of physicians and hospitals, manufacturers, Part D sponsors, and/or other entities to perform the role of model vendor as long as they could satisfy the vendor qualification requirements.” In the initial CAP, only specialty pharmacies met vendor criteria.
CMS Proposed Similar Idea in 2016
Most recently, CMS floated the idea of a CAP-like alternative in a 2016 Part B proposed demo that the agency eventually scrapped. The first — and, so far, only — iteration of CAP was mandated by the Medicare Modernization Act in 2003. It launched July 1, 2006, with specialty pharmacy BioScrip, Inc. as its sole vendor. But CAP was under fire throughout its duration, mainly from specialty pharmacy providers and physicians for what they saw as problems with potential income and operations.
A little more than two years after the program’s start, BioScrip — citing “unacceptable profit risk” — said it would not re-sign with CMS as a CAP vendor. And even though the agency said that other companies submitted “several qualified bids” for vendor contracts, “contractual issues with the successful bidders” prompted CMS to indefinitely postpone the program at the end of 2008. Since then, the agency has sought comment on it, including through Open Door Forums.
When the idea was revisited in 2016, Stephen Cichy, founder of and managing director for Monarch Specialty Group, LLC, who worked at BioScrip while it was the CAP vendor, told AIS Health that “on the surface, the program made sense in the context of 2005/2006, but the program was significantly flawed due to onerous program operating rules, restrictions [that] did not follow physician flexibility when it comes to treating patients, and unacceptable profit risk, among other factors. The program was intended to leverage competitive bidding by multiple pharmacy vendors to lower drug costs for Medicare, similar to Medicare Part D, while substantially reducing the role of physician practices as middlemen in the system. Fifteen vendors expressed interest in participating when CMS set proposed rules in 2004; however, ultimately only one vendor (BioScrip) signed a contract with CMS.”
No Mechanism to Protect Vendors Exists
Elan Rubinstein, Pharm.D., principal at EB Rubinstein Associates, points out that “it is interesting that the ANPRM does not provide a mechanism to protect the model vendor, despite that IPI [i.e., International Pricing Index] model operation is dependent on the viability of the business model for the model vendor, and profitability concerns were key to failure of the” initial CAP.
Another potential complication is tied to the fact that the ANPRM says CMS may review vendor claims quarterly to ensure they match participant claims. “If model vendor claims do not match with model participant informational claim (i.e., patient, date, drug, administered dose), then I assume that CMS will retroactively deny those model vendor claims — resulting in total loss of drug ingredient cost, shipping and other operational costs associated with that supplied drug,” Rubinstein says. “This was a major problem in the drug competitive acquisition program — a nonstarter for someone contemplating becoming a model vendor.”
According to Cichy, “At the peak of the CAP program, approximately 3,500 physicians in roughly 1,100 practices participated; however, oncologists made up less than 10% of these participating physicians. The physician practices that did participate were mostly smaller practices, especially small-size allergy and rheumatology groups that relied on patients needing injectables compared to large-practice oncology groups with patients who required multiple injections or complex infusions.”
The market, though, has since changed. During an Avalere Health webinar held just prior to the unveiling of the ANPRM, Matt Brow, Avalere president, noted that “what you had in 2003-2004 was a marketplace that looked pretty much like 80% to 85%” of physician prescribers were administering the drug in a provider office, with 15% of physicians working for hospitals. But there has been “a significant shift in consolidation in this marketplace” since then, putting it closer to 50%/50% between independent provider practices and hospitals.
In addition, he said, smaller practices have consolidated into larger groups that are more willing to take on financial risk through buy and bill.
Also during the webinar, Lance Grady, an Avalere vice president, maintained that since the initial version, “we’ve seen drastic changes in the marketplace,” including “the introduction of sequestration,…specialty pharmacy and cold-chain capabilities have grown rampantly on the commercial side,” and “25% to 30% of oncology spend is either moving through brown bag or white bag in the commercial sector.”
Brow said that if a revived CAP were to be mandatory, that would mean that all of those institutions and practices currently administering drugs through Part B and are fine with buying and billing medications either “would have to decide that they’re going to do it anyway and participate,…or a very large portion of the physician-administered drug delivery system would have to be replicated.” The latter option, he maintained, “is a pretty big deal.”
Contact Rubinstein at firstname.lastname@example.org.
by Angela Maas
Reality Check: Epilepsy
Our Point of View
Multiple market events have driven changes within the epilepsy space. In June 2018, the FDA approved GW Pharmaceuticals plc’s Epidiolex for the treatment of seizures associated with two rare forms of epilepsy: Lennox-Gastaut syndrome and Dravet syndrome. It is the first drug that contains an active ingredient derived from marijuana that the agency has approved. In September 2017, UCB, Inc.’s Briviact was approved as a monotherapy treatment for epilepsy; it was originally used as an adjunctive therapy for partial-onset seizure patients. In 2016, the FDA approved Aprecia Pharmaceuticals, LLC.’s Spritam for epilepsy treatment, and UCB’s Vimpat was successful in renewing its patent.
A review of market access for epilepsy shows that payer pharmacy benefit coverage varies by channel. Almost half of the lives under commercial formularies and Medicare programs are unrestricted, while just about 7% of the lives under commercial formularies are not covered for at least one of the epilepsy drugs.
For more than 80% of the covered lives, payer pharmacy benefit formularies do not require step therapy (ST). Of the lives that require ST, 60% require multiple steps. About 39% of payer controlled pharmacy benefit covered lives require prior authorization (PA), with 44% consisting of policies that are restrictive.
AIS Health’s View
Continual challenges for payers when it comes to antiepileptic drugs include ensuring patients are adherent to their medications and identifying the best product for individual patients, according to Beckie Fenrick, Pharm.D., a senior partner at consulting firm RemedyOne. There are also some concerns about off-label use of anticonvulsants, she tells AIS Health. In fact, gabapentin — which Pfizer Inc. sells under the brand Neurontin — is becoming a factor in the opioid epidemic, as it enhances the euphoric effects of heroin and can produce a marijuana-like high when taken alone in high doses, according to Stateline. To address those concerns, payers typically employ their “standard toolbox” of utilization management strategies to ensure antiepileptic medications are being appropriately used, Fenrick says. “It could be prior authorization, it could be step therapy, it could be quantity limits, it could be other programs that are done retrospectively, [for example] a retrospective utilization review,” she adds.
Trends From AIS Health
How Will Plans React to Marijuana-Derived Epilepsy Drug?
When a pricey, unique medication for two rare forms of childhood-onset epilepsy comes onto the market — which could happen later this year — payers are likely to cover it but will probably subject the drug to prior authorization, experts tell AIS Health. The drug in question is Epidiolex (cannabidiol), which in June became the first FDA-approved treatment that contains a purified drug substance derived from marijuana. Subscribers to AIS’s RADAR on Drug Benefits may read the in-depth article online
Current Market Access to Epilepsy Medications
The FDA in June approved Epidiolex (cannabidiol) oral solution for the treatment of seizures associated with two rare and severe forms of epilepsy in patients two years of age and older. This is the first FDA-approved drug that contains a purified drug substance derived from marijuana. Subscribers to AIS’s RADAR on Drug Benefits may read the in-depth article online
The FDA approved GW Research LTD.’s Epidiolex (cannabidiol)
The FDA approved GW Research LTD.’s Epidiolex (cannabidiol) oral solution for the treatment of seizures associated with two forms of epilepsy, Lennox-Gastaut syndrome and Dravet syndrome, in people at least two years old. It is the first drug that contains an active ingredient derived from marijuana that the agency has approved. Subscribers to AIS’s RADAR on Specialty Pharmacy may read the in-depth article online
Many Generics Exist
Many generic options are used in the treatment of seizures. New players have emerged but big Rx sales are illusive in comparison with previous generic and brand antiepileptic drugs (AEDs). Significant restrictions are observed for the most recently launched products in this class.
Pharmacy Benefit Implications
AEDs are one of the protected Medicare classes, so management of name brand products is restrictive but less so than other classes. AEDs are also included in some state carve-out plans, such as Michigan’s. When PA is defined, diagnosis and trial and failure of generic AEDs or use as adjunctive therapy will be required. Coverage of this class is under the pharmacy benefit.
AIS Health’s View
In September, the FDA rescheduled Epidiolex from a schedule I controlled substance to schedule V, putting it on the lowest level of controlled substances. Fenrick says payers have likely been preparing for the launch of Epidiolex, even as it awaited rescheduling. “Health plans in general, they don’t wait until the last minute to start considering these things; they know what’s in the pipeline, they know what to expect for certain medications,” she says. Mesfin Tegenu, president of PerformRx, LLC, a Philadelphia-based PBM subsidiary of the AmeriHealth Caritas Family of Companies, agrees. “I think most plans knew that a reclassification by the DEA was likely so that didn’t come as a big surprise nor change the overall strategy,” he says. As for how payers will handle Epidiolex, which has an average annual gross price of $32,500, he points out that “plans are naturally cautious regarding any new medication to market.” Because the FDA approved it for two specific forms of seizures, Tegenu notes that “off-label use may be a concern, so most plans are likely to place a prior authorization on the medication to ensure appropriate use.”