Member: Spotlight on Market Access

ICER Will Take Different Approach to Assess Short-Term, High-Impact Products

December 2, 2019

As drugs continue to come onto the U.S. market with ever-increasing prices, payers are seeking to determine the value of those therapies as they make coverage decisions. To help do this, many health plans are putting more and more credence into the assessments from the Institute for Clinical and Economic Review (ICER). But the organization, and particularly its use of the quality-adjusted life year (QALY), has just as many detractors as it does supporters. And although ICER has staunchly defended its approach,

As drugs continue to come onto the U.S. market with ever-increasing prices, payers are seeking to determine the value of those therapies as they make coverage decisions. To help do this, many health plans are putting more and more credence into the assessments from the Institute for Clinical and Economic Review (ICER). But the organization, and particularly its use of the quality-adjusted life year (QALY), has just as many detractors as it does supporters. And although ICER has staunchly defended its approach, the organization recently released a report acknowledging that there may be exceptions to the way it approaches assessments.

The report, published Nov. 12, focuses on high-impact single and short-term therapies (SSTs), which it defines as “therapies that are delivered through a single intervention or a short-term course (less than one year) of treatment that offer a significant potential for substantial and sustained health benefits extending throughout patients’ lifetimes.” These include potential cures for conditions and products that can halt illnesses’ progression or “produce sustained major health gains.” The new approach will be applied for therapies to treat conditions “that are near-term life threatening or severely debilitating, or those that would cause a life-long significant disability if left untreated.”

The report notes that “important challenges” are inherent within these drugs’ assessments, “including distinctive types of uncertainty at the time of launch that raise the risk of high unrecoverable costs; questions regarding additional dimensions of value for patients or the health system; time divergence between costs and benefits; and concerns about affordability and fair sharing of any savings created by preventing the downstream costs of expensive chronic treatment. For all stakeholders, it is critical that the methods that guide assessment and recommendations for fair value-based pricing of SSTs are ready for these challenges and are well adapted to guide and support the innovation of new therapies that are affordable to individual patients and to the health system.”

ICER clarifies that “this focus on single or short-term treatments also implies that we do not believe that treatments taken on a chronic basis, even if they may be true cures that eradicate disease, warrant consideration of special assessment methods. We believe that current assessment methods are adequate for these kinds of treatment and that it is the combination of short-term treatment with the potential for substantial long-term gain that generates the key challenges meriting consideration of alternative assessment approaches.”

A handful of innovative one-time therapies have launched over the last couple of years. And while they have shown promise, the products also have turned heads with their high costs.

In May, the FDA approved gene therapy Zolgensma (onasemnogene abeparvovec-xioi) from AveXis, Inc., a Novartis AG unit, to treat spinal muscular atrophy (SMA), an often-fatal condition (SMA 7/1/19, p. 6). The cost for the treatment is $2.125 million. While it’s the only single-dosed drug priced in the millions, others certainly are not cheap. Spark Therapeutics Inc.’s Luxturna (voretigene neparvovec-rzyl), approved in December 2017 for a rare form of blindness, costs $425,000 per eye; Novartis Pharmaceuticals Corp.’s chimeric antigen receptor T-cell therapy Kymriah (tisagenlecleucel), first approved in August 2017, costs $475,000 or $373,000 depending on the type of cancer it’s used for; and Gilead Sciences, Inc. unit Kite Pharma, Inc.’s Yescarta (axicabtagene ciloleucel), also a CAR-T treatment, approved in October 2017 to treat large B-cell lymphoma, costs $373,000.

And these innovative therapies are not anomalies. In January of this year, then-FDA Commissioner Scott Gottlieb, M.D., said the agency expects to be receiving more than 200 investigational new drug (IND) applications for cell-based or directly administered gene therapy by 2020. The agency had more than 800 INDs on file at the time of Gottlieb’s statement. In addition, he said, the agency expects it will be approving 10 to 20 cell and gene products per year by 2025.

Research from the IQVIA Institute for Human Data Science shows that nearly 100 next-generation biotherapeutics that leverage 18 different approaches were in at least Phase II clinical trials in 2018. That total is almost a doubling of therapies since 2014.

Indeed, ICER President Steven Pearson, M.D., mentioned the pipeline for these therapies when unveiling the new report. “We need to think hard about whether the methods of technology assessment and cost-effectiveness analysis are ready to capture the potential for broader benefits of these treatments,” he said in a statement. “We also need to consider whether new methods can better describe for decision-makers the important uncertainties about long-term benefits of short-term treatments. Lastly, some potential cures will offer the promise of preventing massive health care costs over a patient’s lifetime; we need to ask whether the traditional methods of summing up all those cost-offsets and making it a part of a calculation of a ‘fair’ price makes sense for these specialized treatments.”

The group also issued a technical brief on the topic in August that functions as the background for the methods presented in the new report. Both reports are based on information that ICER culled from a variety of both national and international sources over the past year, including the UK’s National Institute for Health and Care Excellence (NICE) and the Canadian Agency for Drugs and Technologies in Health. The organization says it will start applying the model in January.

Elan Rubinstein, Pharm.D., principal at EB Rubinstein Associates, says that ICER’s above-quoted statement of intent in the report “is important. That is, by pursuing this for high value SSTs, ICER acknowledges that its existing value assessment framework does not fully capture such products’ value, that ICER does not have clear and evidence-based approaches that fully address this value, that ICER values the perspectives and experiences of entities in the USA and overseas to inform its thinking on possible solutions and that while the approaches spelled out in this report may not be fully defensible, they constitute first steps and placeholders from which to move forward.”

Pointing to the gene therapy pipeline, Jeremy Schafer, Pharm.D., senior vice president, Precision for Value, maintains that “these changes to the ICER framework are both timely and necessary.” He tells AIS Health that “the release of the revisions in general was somewhat surprising. ICER has done reviews on multiple one-time therapies including CAR-T products and Zolgensma. This could have given the impression that ICER was comfortable with its current approach. However, the release of the revisions shows that ICER is listening to the market and willing to adapt for new evolutions in health care.”

“If you think about ICER’s journey here — with their assessment of CAR-T — I believe that they were pretty excited and also were seeking differentiation in cure valuation, as at the time we heard from payers that ‘ICER always just says ‘no,’ so I believe that ICER was looking to demonstrate a positive review for highly innovative treatments, which together with Luxturna catalyzed a lot of this thinking,” says Lisa Kennedy, Ph.D., chief economist and managing principal at Innopiphany LLC. “Then with the assessment of Zolgensma in SMA, it seems that ICER was criticized for their high valuation of this treatment, which Novartis’s CEO used at JP Morgan last January. So the tone of the initiative changed to one of optimistic methodologies that balance the assessment of value, fair pricing and incentivizing breakthrough cures to ‘a solution to the most egregious prices that would otherwise be recommended by traditional cost-effectiveness methods,’” as stated in the technical brief.

“So essentially what ICER is saying is that the traditional cost-effectiveness analysis that they typically use for chronic disease treatments gives too high valuations for cures and needs to be further ratcheted down with other methodologies,” she tells AIS Health. “And the result is that chronic disease treatments are disproportionately rewarded over cures in these analyses. Yet if the goal is to buy more health per dollar spent agnostic to the intervention (a fundamental tenet for health economic evaluation as part of health technology assessment), then shouldn’t you measure cures on an even playing field with other therapies? Shouldn’t cures be measured with the same ‘yardstick’ as other therapies?”

Kennedy also questions why ICER would use the term “single and short-term therapies.” This wording, she says, “overcomplicates the term — when someone says cure, you get it. If someone says it’s an SST, an ordinary person will have no idea what you’re talking about.”

One of the approaches in the new framework is that ICER will include not only a base case scenario but two additional scenarios — an optimistic and a conservative one — on the benefits of a product. “Questions around the durability of gene therapy effect speak to one of the largest unknowns for payers and health care providers, particularly those trying to determine if the treatment is ‘worth it’ or not,” says Schafer. Including such scenarios “may help address this.”

Rubinstein agrees. Having the various scenarios will allow people on pharmacy and therapeutics (P&T) committees “to understand the range of value around the reported base case value, when key assumptions in the underlying scenario are changed.” He points out that the report says that “‘developing these alternative scenarios will still require judgments to be made. These scenarios will be evidence based and not arbitrary.’ In considering the importance and utility of these alternative scenarios, P&T decisionmakers will want to consider whether they agree with ICER’s choice of assumptions to change and the amount of change in these scenarios.”

According to Kennedy, “this doesn’t look particularly different from the scenario analysis that ICER currently does in their assessments. HTA [i.e., health technology assessment] of cures struggles with durability assumptions, and ICER are trying to address this uncertainty.”

Also in SST assessments, instead of using a traditional parametric curve for a survival analysis, assessments will use a variety of modeling approaches, including cure proportion modeling, to better account for available data. When a product’s price is known, ICER will offer information on how long the product’s benefits must last to achieve a cost-effectiveness threshold. And the assessments will include two hypothetical shared savings scenarios:

(1) A 50/50 shared savings model in which 50% of the lifetime health system cost offsets from a new treatment are ‘assigned’ to the health system instead of being assigned entirely to the new treatment; and

(2) A cost-offset cap model in which the health system cost offsets generated by a new treatment are capped at $150,000 per year but are otherwise assigned entirely to the new treatment.”

According to Schafer, “having multiple scenarios for price justification and cost-effectiveness may help stakeholders, including payers and pharmaceutical manufacturers, understand what cost may be reasonable, especially considering the potential for a lifetime of cost offset.”

Rubinstein tells AIS Health that these scenarios can be seen “as a placeholder to acknowledge the fact and importance of cost offsets, even while proposing an approach for significant uncertainty in their future benefit so as not to overestimate their dollar contribution in the value analysis — that is, to avoid” a situation such as one cited by ICER in the report: “This is a benefit for both patients and the health system, but this traditional approach, when used to calculate cost-effectiveness findings, can suggest value-based prices at extreme levels — for example, more than $80 million for a cure for one severe form of hemophilia.”

However, Kennedy asserts that “the shared saving scenario is a slightly troubling development.” She points to an analysis by Vital Transformation that shows that international reference pricing — which has support in various bills and the administration itself (SMA 11/18, p. 1) — “could take as much as $71 billion per year in revenue, which will irreversibly change the pharmaceutical development landscape.”

Because of this, she says, “we need to be very careful about how we consider and balance HTA with the need to ensure that there is continuous investment in new drugs.”

ICER also retained the 3% discount rate it applies to both costs and health outcomes. Kennedy says, “I would have liked ICER to have revisited the discounting — we know that because society has used heavy discounting in environmental economics, that it could potentially lead to some irreversible environmental changes. Lower discount rates for societal goods need to be applied to cures, and modeling that we’ve done shows that the benefit valuation essentially goes to zero after about 20 years. Again, this means that drugs for chronic conditions are disproportionately valued more favorably than cures.”

Asked if there was anything excluded from the report that should have been addressed, Schafer says that “one area that I think may need more exploration is assumptions on initial uptake of the product and what the initial cost to payers would be. Part of the reason that new drugs for hepatitis C led to such a crisis was that so many patients rushed in to be treated right away. This begat strict policies and a degree of rationing. ICER would serve the payer community well by outlining different scenarios of uptake of these one-time therapies to show budget implications. Having 20% of people with hemophilia get gene therapy in the first year is a very different short-term impact than if 100% got the gene therapy in the first year. For payers with annual budgets, long-term savings are not important if you cannot afford the initial treatment bill.”

An economic review section on uncertainty and controversies will be included in not only SST assessments but all ICER reports going forward. Also being added to all reports, including SSTs, will be three areas of “potential other benefits or disadvantages”:

(1) A potential advantage for therapies that offer a new treatment choice with a different balance or timing of risks and benefits that may be valued by patients with different risk preferences;

“(2) a potential advantage for therapies that, if successful, offer the potential to increase access to future treatment that may be approved over patients’ lifetime; and

“(3) a potential disadvantage for therapies that, if not successful, could reduce or even preclude the potential effectiveness of future treatments.”

Rubinstein says he is “pleasantly surprised” by the fact that ICER addressed these so-called “additional elements of value,” which “may be important for individual patients and in assessment of future value, while acknowledging controversy and difficulty in assessing those factors. ICER says, ‘We have considered these concerns and have decided to propose no quantitative integration of additional elements of value into the value assessment framework for the assessment of SSTs.’ Inclusion is ICER’s acknowledgment of these elements’ important contributions to value even if the ‘how’ is not yet clear.”

So what are takeaways of the report for manufacturers?

“The more influential that ICER becomes, the more that pharmaceutical manufacturers will work with ICER to develop its methods and evaluate the validity of its findings — and, to directly answer the question, the more that manufacturers will allocate resources to build the evidence that ICER requires to drive these analyses of product value,” says Rubinstein.

“While applying resources in this way will increase manufacturer cost,” he says, “if done well, doing this will yield robust and multifaceted aspects of value for its products including from the patient and health plan perspectives.”

Responds Kennedy, “ICER has firmly established itself in the dialogue on drug price and value, and manufacturers will need to continue to engage with ICER and work with other stakeholders to ensure that assessments reflect the fair value that curative therapy brings.”

“Manufacturers need to be ready to respond to questions on both the short- and long-term efficacy of these products,” says Schafer. “Conducting longer-term studies and gathering real-world evidence will be key. In addition, manufacturers should be prepared to offer outcomes-based agreements that accommodate different scenarios of patients response.”

Download the report, as well as other ICER materials on the topic, at https://bit.ly/33itEVO. Contact Kennedy at lisa.kennedy@innopiphany.com, Rubinstein at elan.b.rubinstein@gmail.com and Schafer through Tess Rollano at trollano@coynepr.com.

by Angela Maas

 

As Health Care Consolidation Accelerates, New Entities Make Decisions on Therapies

Pharmaceutical manufacturers and biotechnology companies, faced with an unprecedented wave of consolidation across practically every aspect of the health care industry, must learn new ways of making the business case for their products that addresses the concerns of newly integrated combinations of various stakeholders. Consolidation in the industry isn’t causing all of manufacturers’ problems, but it is exacerbating them. And as a result, manufacturers will need to focus more on their specific core areas, potentially eschewing noncore product lines, industry stakeholders say. They’ll also need to present their products in a way that panels of experts — not individual physicians — find compelling.

“Consolidation across health care is a reaction to the fact that the health care business model that’s been in place for the last 30 years is rapidly becoming obsolete,” says Michael Abrams, managing partner of consulting firm Numerof & Associates. “Health care continues facing a multitude of pressures — reimbursement’s not keeping up with increases in underlying costs, and there’s increasing linkage to measures of cost and quality.” In addition, there are growing demands for price transparency, Abrams tells AIS Health.

“All of that is weighing on hospital bottom lines, and their first reaction is to merge with the hospital across town, working on the assumption that size would be protective,” Abrams says. “But it’s not in the long run. Being bigger makes you slower with change.”

Still, larger consolidated entities can consolidate their purchasing, and “with the larger volume of purchasing, it is possible to wring price concessions from all your vendors, including pharmaceutical manufacturers,” Abrams says, noting, those companies “have been feeling that pain.”

Payers and PBMs “are looking in a very sophisticated way at formulary design and utilization management tools,” says Elizabeth Carpenter, head of advisory services at Avalere Health.

“Consolidation makes it more likely providers will be sophisticated when it comes to health information technology decision support and more and more when it comes to pharmaceutical spend,” Carpenter tells AIS Health. “When you’re a biopharmaceutical company and you’re talking to a consolidated company, [the company] is going to have more data assets and a better understanding of its population and a better understanding of what’s driving costs.”

Most pharma manufacturers do understand the landscape is changing and are thinking strategically about how to leverage opportunities, she says.

And Ashraf Shehata, principal and healthcare leader at KPMG LLP in Cincinnati, notes that “the trends [towards consolidation] are now less about an external force — value-based contracting or the Affordable Care Act or even Medicare for all. We’re seeing mergers and acquisitions around the fundamentals. Bigger is better: It gives you scale. In life sciences, it may be life sciences and traditional pharma manufacturers. On the hospital side, you’re now combining health systems, providers and outpatient facilities.”

Bigger is also advantageous when it comes to a company’s core competencies, Shehata tells AIS Health. “This is an important transition — now they’re doing it around the fundamentals of business. The fundamentals are generally strong, so they’re not doing this as a defensive play — they’re doing this to play offense.”

Pressure on pricing also is driving mergers and acquisitions within the pharmaceutical manufacturing space, and that trend will continue, Shehata says. “As the unit price on the life sciences side becomes a more bipartisan issue, I think you’re going to continue to see continued positioning around getting the best available price, whether that’s Medicare and Medicaid or commercial insurance,” Shehata says.

All this activity means pharmaceutical manufacturers and biotech companies are in a potentially difficult position: “Manufacturers are under pressure now, and that’s not going to get any better — and I’m not even talking about possible [drug price] legislation,” says Abrams.

M&A Activity Is Everywhere

Consolidation is taking on many guises in the health care industry.

✦ Provider consolidation can take the form of hospital-to-hospital mergers and acquisitions (horizontal consolidation) or hospital acquisitions of physician groups and other ambulatory service providers (vertical acquisition). Both types of consolidation have accelerated in recent years. A study on provider consolidation published in October by the Georgetown University Health Policy Institute Center on Health Insurance Reforms reported that in nine out of 10 metro areas, the provider market is considered “highly concentrated.”

✦ Insurers are merging with or acquiring PBMs or are building their own. UnitedHealth Group has its own in-house PBM, OptumRx. CVS Health, which owns CVS Caremark PBM, purchased insurer Aetna late last year in a $69 billion deal, while insurer Cigna finalized its $54 million purchase of Express Scripts Holding Co. in late December 2018. Finally, Anthem Inc. is launching its own in-house PBM, IngenioRx.

✦ Specialty pharmacies have undergone their own wave of consolidation, acquiring each other and being acquired by large PBMs (which may be affiliated with insurers). For example, CVS Health purchased five specialty pharmacies — Apothecary by Design, Central Drugs, EncompassRx, EntrustRx and SimplicityRx, LLC — in 2018. In May, CVS added Premier, Inc.’s 367 specialty pharmacies, located in 367 hospitals in 66 health systems, to its acquisitions as part of a deal worth $22.5 million. Meanwhile, OptumRx purchased Avella Specialty Pharmacy in mid-2018, adding 435 pharmacy locations. Shehata expects specialty pharmacies to continue to be good targets for acquisition.

✦ Insurers and physician groups are combining in various transactions. UnitedHealth’s Optum unit runs OptumCare, which in June completed its acquisition of DaVita Medical Group for $4.9 billion. Humana Inc. last year bought Family Physicians Group, a large Orlando, Fla.-based physician group that provides care through at-risk payment arrangements. In addition, provider-sponsored health plans are on the rise, with a 2018 report from the journal Health Affairs finding that more than 40 provider systems have formed new health insurance companies or acquired existing health plans. And many insurers, including Blues plans, are allying with primary care groups in an effort to control costs.

All this means pharmaceutical manufacturers and biotech companies — who themselves are facing significant consolidation — must improve their game to compete.

“At the highest level, consolidation within an industry produces more sophisticated customers,” Carpenter says, noting that the pharmaceutical manufacturing industry already is under pressure from a pricing perspective. “If you think about consolidation on the health plan side, it also means the customer has much more sophisticated data assets. One of the prime drivers of the recent consolidation on the health plan side is data.”

Consolidation also exacerbates some existing trends, Carpenter says, noting that insurers are more focused on the total cost of care and are investing in wellness and in ways to lower costs for consumers. “Those are all opportunities for biopharmaceutical manufacturers,” she says. Still, she adds, “As the number of formularies goes down, not being on one becomes a bigger deal.”

How Can Firms Articulate Value?

The pharmaceutical and biotech industry does understand the demand for them to better explain the value of their products, particularly new ones, Carpenter says.

However, different health plans and PBMs value different things, she says. That makes it critical for manufacturers to understand the different pressures payers and PBMs face in different markets and to tailor their negotiations accordingly, she says.

For example, a Medicare Advantage plan that’s focused on high-cost, chronically ill seniors may look at things differently than a plan with healthier enrollees: The plan with many chronically ill members might value a more expansive formulary with lower cost-sharing in an effort to keep members out of the hospital. And a plan that’s based around an accountable care organization would be focused on meeting the triple aim of cost, quality and patient satisfaction.

In addition, Abrams points out that mergers of insurers, providers and PBMs inevitably puts pressure on pricing. The lines are blurring between payer and provider, Carpenter adds: “Providers are starting to look more like payers.”

Manufacturers can leverage these changing market dynamics to their advantage if they understand them, Shehata says. “I think it’s all about bringing in the provider network and bringing in the appropriate payer segment,” he says. “They [manufacturers] run a portfolio. They’ve got to be able to rep that portfolio in its entirety.”

Certain drug launches need to be addressed in collaboration with provider networks, asserts Shehata. In addition, he says, “there’s some consumer-direct opportunities — the idea of rebating so that consumers can establish the value of the drug for themselves.”

Transparency within the rebate process “has been coming for a while now,” he says, adding, “not even price transparency — rebate transparency.” At the same time, the new provider-payer alliances are looking for pricing incentives that are aligned with the outcomes of a drug. Some of these deals “are groundbreaking,” Shehata says. “Those are working very closely with health plans to deliver the value proposition directly to the provider.” In “this new world around breakthrough drugs,” payers are looking to pay “the right amount” for a product, he says, adding, “you can only do that through scale.”

Uptake Is Far From Certain Now

Consolidation may “buy some time” for the various stakeholders in the industry to keep the status quo, but the health care system inevitably is shifting to one that’s value-based, Abrams says. Pharmaceutical and biotech companies must shift their strategies accordingly, he says.

“There was a time that when you launched a new product, uptake was a near certainty,” Abrams says. “FDA approval is now a checkbox, but it does not guarantee uptake. It used to be all about reach and frequency — your relationships with physicians and office staff were enough to win acceptance. That’s changing, increasingly being driven by consolidation across the health care industry.” When physician practices are gobbled up by hospital systems, it dramatically alters how manufacturers interact with providers, he says.

“With regards to how decisions get made [pertaining] to the purchase of new products, increasingly it is a task force, which has different points of view and different priorities in terms of what they think is best for the hospital,” Abrams says. “They scrutinize every new product that’s on offer: How is this different from the current standard of care? What’s the return on investment? If the product costs more, where do we see the payback downstream? That’s been a wrenching change for some manufacturers — they never needed to do that before. We’re seeing a redefinition of what matters.”

Value-based care is in part driving consolidation, and pharma manufacturers and biotech companies need to understand the move to value-based care by providers, with an eye towards how individual health systems are adopting arrangements governed by the total cost of care, Abrams says: “It’s not as though a manufacturer can use a one-size-fits-all approach.” Instead, he says, companies need varying approaches tailored to how far along a hospital system has gotten on the value-based continuum: “What is the exposure of their revenue to delivering on the cost of care and clinical quality?”

Markets in different states — and often in different cities in the same state — have quite divergent dynamics on this issue, Abrams says. Pharmaceutical manufacturers and biotech companies also are in different phases of acceptance — or denial — on how health care is changing, he says, adding, “I’d estimate 35% to 40% are at various stages of coming to grips with the fact that the old approach they’ve taken to business development is less and less effective.”

Economic and clinical benefits are key to these new, larger purchasers, Abrams says. That means pharmaceutical and biotech companies must tailor their pitches accordingly, he adds. “Manufacturers have to learn how to tell different economic and clinical stories, depending upon the audience for which it’s intended.”

This isn’t a natural fit, to say the least, he explains. “Organizations don’t change unless they have to. It’s a wrenching change for them to look at ‘feet on the street’ [pharmaceutical representatives marketing to individual providers] as something that’s no longer relevant.” And “it’s not just changing their behavior — it’s what they have to present: What are the benefits on the front end, and what are the implications on the front end and downstream?”

Presenting this type of information to a multiperson task force requires different types of capabilities, and some manufacturers aren’t necessarily well-versed in these capabilities, Abrams says: “It calls for a different mind-set with regards to the account. Now it’s about key account management and all of the skills that go along with that.”

How Can Firms Counter Consolidation?

Value-based contracts between payers and biopharma companies have gotten lots of press, and uptake is growing. But they won’t solve all of manufacturers’ problems, including those that are driven or exacerbated by consolidation.

A study from Avalere published in October found that 59% of payers have executed an outcomes-based contract with drug and device manufacturers tying product reimbursement to clinical, quality, utilization or financial outcomes. When Avalere first conducted the survey in 2017, only 24% of health plans had an outcomes-based contract in place.

Some 31% of health plans reported having more than five outcomes-based contracts, compared with 12% in 2017, while 21% had two to five outcomes-based contracts in place, up from 4% in 2017. Nearly 60% of health plans that have executed outcomes-based contracts cited cost savings and clinical improvement as the contracts’ top advantages. The capture of real-world information and improved payer-manufacturer relationships also were “notable areas of growth,” according to the survey.

Abrams notes that there’s pressure on pharmaceutical manufacturers and biotech companies to consolidate around therapeutic areas. “It forces businesses to really consider whether to hold onto smaller chunks of their portfolios,” he says. Both Johnson & Johnson and Pfizer Inc., among others, have closed these types of deals, he notes.

For example, the Janssen Pharmaceutical Companies subsidiary of Johnson & Johnson focuses on six core areas: cardiovascular and metabolism, immunology, infectious diseases and vaccines, neuroscience, oncology and pulmonary hypertension. To bolster its immunology focus, Janssen Biotech, Inc. agreed in May 2018 to pay $1 billion to acquire BeneVir Biopharm, Inc., a biopharmaceutical startup that’s developing oncolytic immunotherapies based on its proprietary T-Stealth oncolytic virus platform.

Pfizer, meanwhile, agreed to acquire Array BioPharma Inc. earlier this year for $10.64 billion in cash to augment its oncology portfolio. Array’s portfolio includes the approved combined use of Braftovi (encorafenib) and Mektovi (binimetinib) for the treatment of BRAF or BRAF-mutant unresectable or metastatic melanoma. The combination therapy also is being investigated in more than 30 clinical trials across several solid tumor indications, including the Phase 3 BEACON trial in BRAF-mutant metastatic colorectal cancer. Pfizer already owns 17 approved oncology medicines, with an additional 19 assets in clinical development.

Focusing on specific clinical areas can result in marketing savings, with a more targeted sales force, Abrams says. “Pretty much up and down the whole product line there are opportunities to cut costs,” he says. Still, he warns pharmaceutical manufacturers and biopharma companies “not to chase products that don’t offer economic and clinical value. You can’t count on uptake unless the value is there.”

Carpenter also suggests focusing on the consumer: “When you look at areas of alignment between the biopharma industry, health plans, PBMs and providers, you’re looking for new ways to engage the consumer to drive health and wellness.”

On the drug distribution side, consolidation occurred a few years earlier, Shehata points out, leaving the top three companies — AmerisourceBergen Corp., Cardinal Health, Inc., and McKesson Corp. — firmly in charge. “Consolidation yielded very large national contracts,” he says. Still, innovations around pill packaging and distribution likely are coming and could result in a “technology sea change” around distribution that pharma manufacturers potentially could utilize.

“The next wave [of consolidation among drug distributors] is going to be much more about how capabilities affect the touch to the consumer,” Shehata says. “We’re moving away from episodic distribution to a more seamless distribution channel” that potentially could distribute the right drugs to patients regardless of whether they’re in the hospital, at home or in a retail location.

“One of the biggest frustrations is ensuring drugs are available at the point of service when they need to be,” Shehata says. “The idea is that the drug should be available at any one of those channels. Being about to adapt to that distribution chain using nontraditional methods may help [drug product] uptake.” There’s room in this new paradigm for partnerships among the various players, he adds.

Ultimately, he says, “I think the health care industry needs to start looking at the individual, not what group they belong to.”

Contact Abrams via spokesperson Matthew Dick at matthew.dick@pinkston.co, Carpenter at ecarpenter@avalere.com and Shehata via spokesperson William Borden at wborden@kpmg.com.

by Jane Anderson

 

Study: NSCLC EGFR-i May Be Fit for Value-Based Contracts

A recently unveiled study shows that one first-line therapy for non-small cell lung cancer (NSCLC) with an epidermal growth factor receptor (EGFR) mutation is substantially more costly than four other competitor therapies. Payers may wish to consider implementing management strategies to help rein in costs, according to the study from Prime Therapeutics LLC.

Researchers presented the study at the Academy of Managed Care Pharmacy Nexus meeting held in National Harbor, Md., Oct. 29 through Nov. 1.

Lung cancer is the second most common cancer for both men and women, as well as the main cause of cancer death in the United States, according to the American Cancer Society. NSCLC is the most common form, affecting 84% of people with lung cancer. Among those, 10% to 50% have an EGFR mutation, according to the American Cancer Society and the National Comprehensive Cancer Network (NCCN).

When the FDA first approved AstraZeneca’s Tagrisso (osimertinib) in 2015, it was as a second-line NSCLC therapy in people with an EGFR mutation, and it launched with an annual wholesale acquisition cost (WAC) of $177,152 — approximately $70,000 more than the first-line EGFR-inhibitors (EGFR-is) that were available at that time.

The other EGFR-is were:

✦ Gilotrif (afatinib) from Boehringer Ingelheim Pharmaceuticals, Inc.;

✦ Iressa (gefitinib) from AstraZeneca;

✦ Tarceva (erlotinib) from OSI Pharmaceuticals, an affiliate of Astellas Pharma U.S., Inc., and Genentech, Inc., a member of the Roche Group; and

✦ Vizimpro (dacomitinib) from Pfizer Inc.

In September 2017, NCCN added Tagrisso to its guidelines for first-line use, and in April 2018, the FDA expanded the drug’s label to include this indication. But the company retained the second-line pricing for the therapy. This, says Jeremy Whalen, Pharm.D., Prime’s specialty clinical program director and lead author on the poster, “mak[es] it important for payers and stakeholders to understand its first-line utilization trend and impact on total cost of care, as well as value-based contracting and management opportunities.”

Prime analyzed integrated medical and pharmacy claims from January 2017 to June 2019 for 15 million commercially insured members to determine Tagrisso’s use among members new to therapy, the total cost of care (TCC) pre- and post-initiation among all the EGFR-is and the discontinuation rates among the EGFR-is. Among those 15 million members, researchers identified 1,020 members with a claim for an EGFR-i.

Among the study findings were:

✦ Tagrisso use among new starts for all EGFR-is rose from 6.9% in first-quarter 2017 to 71.1% in the second quarter of 2019.

✦ The TCC for the six months after treatment initiation for Tagrisso was $37,934 higher than the competitor EGFR-is — which equates to more than $4 million in additional costs for 129 Tagrisso-treated members.

✦ 18.6% of 129 Tagrisso new starts discontinued treatment within six months after initiating it, compared with 33.9% of 171 members who discontinued among the competitor EGFR-is. Various reasons can cause people to discontinue oral oncolytics; Whalen says some of the reasons researchers considered within this specific category were “cost of therapy, toxicities, disease progression or decisions to halt therapy altogether.”

Whalen tells AIS Health that some of that TCC among Tagrisso-treated members “could be attributed to the 15-percentage point higher persistence compared to members utilizing competitor EGFR-is. However, when only persistent osimertinib and competitor EGFR-i utilizers were compared, the TCC six-month difference was $45,054 higher among osimertinib utilizers.”

Value-Based Deals May Be Option

According to Whalen, “osimertinib’s $177,152 annual wholesale acquisition cost coupled with the finding that one in six discontinue therapy during the first six months warrants the need for value-based contacting to recoup the drug cost waste associated with therapy failure.”

Asked how Tagrisso compares with the other EGFR-is in terms of clinical effectiveness and side effects, Whalen says that Tagrisso’s FDA trial showed that it “demonstrated superior efficacy as compared to traditional first-line agents in its class. Tagrisso appears to be well-tolerated, like other EGFR-is. Some questions still persist around the benefit to sequencing therapies, especially around time to initiation of non-EGFR inhibitor therapy and cost of care.”

Sequencing Therapies Could Help

As to whether payers might consider preferencing among the EGFR-is, Whalen says it may be something to consider, but Tagrisso’s first-line indication “makes it challenging. That said, there are still clinical options to consider such as sequencing therapy, which could put Tagrisso back into second-line use. Management strategies will evolve as we better understand the genomic profile of individual tumors.”

Payers interested in value-based contracting for Tagrisso may have a variety of markers on which to base those arrangements, he says. Those include “discontinuation/persistence/adherence, time to disease progression, initiating of a subsequent therapy and impacts on total cost of care.”

Whalen emphasizes the fact that Prime has the ability to analyze integrated medical and pharmacy benefit claims.

“Prime leverages this integrated data to see real- world use and cost of emerging high-cost therapies to prepare our clients for their impact,” he says. “In this case, our ability to see across the pharmacy and medical benefits allows us to provide them with a comprehensive evaluation of total cost of care within specific oncology populations.”

Contact Whalen through Jenine Anderson at jenine.anderson@primetherapeutics.com.

by Angela Maas

This story was reprinted from AIS Health’s monthly publication RADAR on Specialty Pharmacy. Visit https://aishealth.com/product/specialty-pharmacy.

As Step Therapy Use Increases, Federal and State Bills Are Taking Aim at Payer Strategy

November 18, 2019

Step therapy has long been a go-to utilization management strategy for payers, as it is often applied to specialty pharmaceuticals. But as more and more costly drugs come onto the U.S. market, the practice has become nearly ubiquitous, prompting some pushback from various stakeholders, including providers, patients and manufacturers. Spurred by the blowback, many states — as well as the federal government — are taking a variety of steps to address the process with an eye on helping patients access drugs in a timely fashion.

Step therapy has long been a go-to utilization management strategy for payers, as it is often applied to specialty pharmaceuticals. But as more and more costly drugs come onto the U.S. market, the practice has become nearly ubiquitous, prompting some pushback from various stakeholders, including providers, patients and manufacturers. Spurred by the blowback, many states — as well as the federal government — are taking a variety of steps to address the process with an eye on helping patients access drugs in a timely fashion.

Twenty-five states have passed legislation around step therapy, and legislators in both houses of Congress introduced bills this year that target step therapy. Many of their aspects are similar, including bringing more transparency to payers’ appeals process, as well as providing specific instances when patients and providers can circumvent the step-therapy process, which can be a polarizing tactic.

Opinions are all across the board on the strategy’s usefulness. “Step therapy can be a very good method of ensuring that patients always get the treatment that is clinically best for them,” states Lisa Kennedy, Ph.D., chief economist and managing principal at Innopiphany LLC. “In theory it should ensure that they consistently receive the safest, most effective and best tolerated treatment — this could be a biosimilar or an originator product. If you look at many clinical guidelines, they essentially are based around a step-therapy approach, and payer step therapy could theoretically reinforce this.”

Use of step therapy among Prime Therapeutics LLC clients “varies by every plan/payer according to their needs, and there’s an ever-growing number of drugs,” says David Lassen, Pharm.D., chief clinical officer at the PBM, which is collectively owned by 18 Blues plans, subsidiaries or affiliates of those plans. “Step therapy is really only used when there are multiple drugs in a category that treat the same condition and work relatively the same. It’s this competition among equally safe and effective drugs that then allows for examination of savings opportunities for the plan and member.”

According to F. Randy Vogenberg, Ph.D., principal at the Institute for Integrated Healthcare, step therapy “has been used to augment prior approval (PA) processes as a method to control utilization and costs of pharmacotherapy by managed care/third party administrators (TPAs). PA remains the best way to not pay or contain rising costs from a managed care perspective.”

“Health insurers have the responsibility to institute programs that limit health care spending,” points out Kim Diehl-Boyd, vice president of industry relations and government affairs at CoverMyMeds. “Step therapy has long been used by insurers, and supported by regulation, as a means by the plan to ensure that the most cost-effective, clinically appropriate medication is being utilized by the patient at the onset of a diagnosis.”

Larry Kocot, the national leader of KPMG’s Center for Healthcare Regulatory Insight, tells AIS Health that “when used effectively, step therapy can help prevent the use of more costly, unnecessary medications, thereby helping to control overall prescription costs and ensuring that patients receive the most economical and effective treatment for them. Patient affordability is an important aspect of meaningful access, requiring health plans to achieve a careful balance between cost and access when instituting step-therapy policies.”

Indeed, when the current administration reversed a longstanding rule and began allowing Medicare Advantage (MA) plans to use step therapy for Medicare Part B medications as of Jan. 1, 2019 (SMA 9/18, p. 13), CMS cited its reasoning as “introduce[ing] much-needed competition and negotiation into the market for physician-administered and other Part B medications that will result in better deals and lower drug costs for patients.” MA plans that also offer prescription drug coverage may deploy step therapy to have a beneficiary use a drug under Part D before stepping to one under Part B. The policy change applies to new prescriptions only.

Underscoring that declaration is a study by consulting group Visante Inc. that was commissioned by the Pharmaceutical Care Management Association (PCMA) and released in January 2019. Its analysis found that prior authorization can produce savings of up to 50% for certain drugs and therapeutic classes, with step therapy resulting in savings of more than 10% for targeted categories. PCMA is a PBM advocacy group.

“These tools are becoming increasingly important in managing the rapidly growing use of high-cost specialty pharmaceuticals, so the lost savings associated with restrictions on PA and ST [i.e., step therapy] would become greater as specialty drug expenditures grow,” according to the report. “The loss of savings from PA and ST would increase projected drug expenditures by an estimated 4.6% over the next 10 years.” The report also notes that patients and physicians can appeal a prior-authorization or step-therapy requirement, which “safeguards against the use of PA and ST being too restrictive.”

Numerous challenges, however, exist with step therapy, maintain many industry experts. Kocot says there is “some evidence that although step therapy often results in reduced prescription drug spending, outpatient services spending can increase.” He also points out that “exceptions often rely upon clear clinical evidence such as patients’ prescription history.” But with different patient responses to therapies and “unique underlying health factors, granting exceptions can rely in part on physicians’ attestation of those facts. These attestations can sometimes involve subjective assessments of what is best for the patient without underlying data to support the decision.”

One criticism of step therapy is that it gets in the way of physician prescribing, as well as causes administrative burdens for practices. “Step therapy, like other prior-authorization requirements, complicates prescriber decision making and reduces prescriber and office efficiency,” says Elan Rubinstein, Pharm.D., principal at EB Rubinstein Associates. Kocot adds that while the clinical evidence used to establish step-therapy protocols “may be applicable to most patients, it is possible that certain individuals may not have typical responses or protocols.”

Rubinstein points out that generics are typically the first step patients must take, “but when a branded drug is required, one payer’s step-therapy policies may differ from another’s with respect to the branded drugs that must be tried first and failed. Because physicians treat patients covered by many different payers, it is challenging for physicians to efficiently manage different step-therapy requirements, beyond the first commonly agreed generic step.”

“The problem arises when step therapy is applied for cost reasons in the absence of clinical rationale and even worse when there is a financial rebate for drugs on a formulary, requiring patients to step through treatments not because of clinical reasons but because a payer or PBM receives a financial rebate for this (e.g., in commercial plans),” Kennedy says. “Also, a lot of legislation has put thought into only applying this to new patients and equally reducing the amount of time required for a patient to remain on a drug — as these two areas can be very problematic for patients.”

For example, many payers are specifying the duration of each step required for anti-inflammatory biologics (SMA 4/15/19, p. 1). “It’s a growing restriction that we see in immunology,” says an industry expert who asks not to be identified. “There is a hierarchy in immunology, especially in plaque psoriasis, with so many products that are available. There is a pecking order.…You’ve got to go through this and then that and then one of these other things. But that doesn’t get to the question about how long you need to be there.” The source tells AIS Health that a couple of years ago, the practice of “some brands…contracting specifically for step duration to be a certain amount of length” started becoming fairly widespread.

Critics point out that step therapy could delay much-needed care for patients. “In cases of rare diseases, conditions of high acuity and time-critical treatment,…step therapy can complicate or delay a patient’s rapid access to the right treatment,” says Kennedy. “If a patient is subject to stepping through treatments, and this delays getting the correct treatment on time, this can have a monumental impact on outcomes and is a perfect example of where misapplied, step therapy can result in sicker patients who suffer more and are placed at greater risk of death.”

Diehl-Boyd notes that “programs like CoverMyMeds that make this process electronic address this challenge, in many instances resulting in same-day determinations, but there is still room for improvement.”

Another challenge, says Vogenberg, relates “to biologics and specialty drugs and the use of copay and coupon programs by manufacturers.” He points to a study he did that “showed limited value from an employer/plan sponsor perspective when taking all plan management factors into account. As the determination of advantages/disadvantages as value swings more to the plan sponsor versus TPA, the value is minimized compared with traditional studies and PBM reports that only take into account their scope of coverage, even before taking outcomes into account. For manufacturer programs to offset step [therapy] and PA by managed care if [drugmakers] are disadvantaged, it’s more of a game that doesn’t really benefit anyone — especially the patient who everyone says they are looking out for. Over time, the base price of drugs coupled with increases in price…reduce the value of those therapies along with affordability by the patient. In addition, this game around management and drug pricing has not helped manufacturers while enriching TPAs/PBMs for no added value to the patient or plan sponsor.”

Bills Have Bipartisan Support

As step therapy becomes more common, legislators on both sides of the aisle are trying to bring some transparency to the process. On April 10, Reps. Raul Ruiz (D-Calif.) and Brad Wenstrup (R-Ohio) introduced H.R. 2279, known as the Safe Step Act. The bill, which had 109 additional co-sponsors as of Oct. 31, has been referred to the Committee on Education and Labor. And on Sept. 25, eight senators, including Sen. Lisa Murkowski (R-Alaska), introduced S. 2546, a companion bill also known as the Safe Step Act. The legislation had two additional co-sponsors as of Oct. 22. It has been referred to the Committee on Health, Education, Labor and Pensions.

Both bills seek to amend the Employee Retirement Income Security Act (ERISA) of 1974 “to require a group health plan (or health insurance coverage offered in connection with such a plan) to provide an exceptions process for any medication step therapy protocol, and for other purposes.” They call for plans to “implement a clear process” for requesting an exception and a maximum of 72 hours for insurers to respond to exception requests. For situations where step therapy “may seriously jeopardize the life, health, or ability to regain maximum function of the participant or beneficiary,” those requests must be granted within 24 hours. They list multiple circumstances that would authorize coverage for a drug without adhering to a step-therapy process.

Those exceptions include:

✦ When the drug or another from the same class has been ineffective,

✦ When a treatment delay “would lead to severe or irreversible consequences” and the treatment is “reasonably expected to be ineffective,”

✦ When required treatments are contraindicated or likely to cause an adverse reaction,

✦ When required therapies are likely to prevent people from performing their job or daily activities, and

✦ When people are stable on current drugs and have received previous approval for them “by any group health plan or health insurance issuer.”

The bills also allow for additional circumstances for exceptions.

According to the National Psoriasis Foundation, 18 states have laws in effect targeting step therapy, and another seven have passed legislation that has not yet taken effect. The laws differ from state to state, but many of them include some of the same components of the federal legislation. For example, many states require insurers to respond to exception requests within 72 hours or 24 hours in the case of an urgent situation. If they fail to do so, the exception is automatically granted. Texas requires plans to notify members of any modifications to step-therapy requirements at least 60 days before they are effective. Some legislation applies specifically to Medicaid. And almost all the states include at least one of the exceptions listed in the federal bills. In addition, many laws targeting electronic prior authorization (ePA) also are in effect, which could accelerate patients’ access to drugs with step-therapy requirements.

Many health plans have language in their pharmacy and medical benefit policies around step therapy that outline their process but only in the absence of a state mandate. “I don’t think that this is at all an uncommon practice,” Kennedy tells AIS Health, adding that this language likely is seen most with payers administering plans for self-insured employers “and to a certain degree Part D drugs, especially for tightly managed therapeutic areas (e.g., diabetes).”

Vogenberg agrees. “Most [payers] all use the same or similar strategies and use many of the same consultants to advise them on clinical pharmacy programs. There has been little to no innovation in this area since biologic and specialty drugs have hit the market, which is part of the problem in running PA/step-therapy tactics designed for earlier generation mass-market drugs.”

However, that’s not to say that the laws’ implementation has been seamless. According to the American College of Rheumatology (ACR), “the ad hoc approach some states take creates barriers to additional reforms.…Practitioners in states that do not have a comprehensive step therapy law often report that there has been no improvement in step therapy override processes or the paperwork associated with getting an override approved. California is perhaps the best example of this phenomenon. The ACR has had substantial feedback from California physicians indicating the paperwork required for step therapy override requests has not been reduced. The enforcement mechanism to punish violators of the statute is also inadequate. California is not alone in problematic approaches to step therapy.”

So to whom does enforcement of the laws fall?

As far as the federal legislation, the Department of Labor (DOL) is responsible for oversight of ERISA, Kocot tells AIS Health. “Although DOL has historically focused oversight primarily on retirement plans, such as 401(k) plans, health plans’ audits have increased as a result of requirements in the Affordable Care Act. DOL investigations and plans’ audits most often occur as a result of beneficiary complaints, rather than through random audits; thus, enforcement traditionally has been primarily reactive, rather than proactive.”

Continues Kocot, “enforcement of state laws may differ significantly depending on how those statutes are written and which state agencies or bodies have jurisdiction. However, in general, beneficiary appeals oversight in the private market is less robust than in Medicare and Medicaid managed care. Providers are the first step in the process for determining whether a patient may be eligible for an exception, although their judgment may rely upon a combination of clinical evidence and other more subjective factors. Collection of evidence to support the health plan’s ultimate decision about acceptance or denial of an exception rests with other members of the care team, including administrative support. Generally only a patient or legal representative or the patient’s physician can formally appeal a benefit coverage decision. At the same time, employers, who are accountable to both investors and markets, are expecting health plans to effectively manage the trade-offs between ensuring appropriate access to medications and controlling costs through benefit designs that prevent unnecessary utilization.”

According to Diehl-Boyd, “adherence to the legislative or regulatory mandates outlined in the various state utilization management rules fall to the plan to ensure adherence. Oversight of compliance to states’ utilization management lies typically within the department of health or department of insurance. However, the provider and patient can play a significant role in ensuring that the regulations are followed by the plans as each state and CMS provide means in which a provider or patient can seek appeals or register a complaint against an insurer if they feel the insurer is not performing in accordance with utilization management laws, including step therapy or other prior-authorization provisions.”

“Providers are caught in the middle while also sometimes contributing to the problem in order to maximize their own revenue stream,” Vogenberg tells AIS Health. “The system as a whole around reimbursement and value across HCP stakeholders needs alignment to the care outcomes being sought by plan sponsors and patients as purchasers of care.”

With payers doing business in several states, some of which may have legislation enacted and some of which may not, how do they make sure they’re complying with the law?

Prime Therapeutics, Lassen tells AIS Health, has “a dedicated team that tracks laws.”

Payers may take a variety of approaches, says Kocot, but “for ease of administration and risk management, some may enact plan policies across all states that comply with the requirements of the state with the most restrictive policies. However, in practice much of the benefit coverage determination process plays out in appeals processes that are not particularly transparent. Payers and providers may have legitimately different views on what constitutes compliance.”

“Payers are brilliant at this — they already have to navigate state-specific laws and requirements, so they’ll just add this to the pile of regulations,” says Kennedy. “Also, unlike some other regulations, this probably is less onerous in that it is simply extending to a new group of patients something that they already apply.”

Diehl-Boyd tells AIS Health that “all states have prior-authorization or utilization management laws that govern how a plan must comply with the variances found within the multiple jurisdictions. Health insurers put significant resources into their compliance programs to ensure they are following the various mandates. Many have codes of ethics that they make readily available on their website.” And for payers in states where laws have passed but not yet taken effect, “along with their compliance and legal departments, plans will coordinate with their vendor partners to ensure timely implementation of any legislative or regulatory mandate related to utilization management,” she says.

“By not addressing these issues, it will leave TPAs/payers in a very problematic situation of their own making,” observes Vogenberg. “This may further hurt consumers through increased costs of doing business and consolidation among TPA/payer entities.”

According to Diehl-Boyd, these utilization management strategies aren’t going away any time soon. “Because specialty drugs and the utilization thereof account for a large and growing percentage of care and the high cost attached to many of the therapies, you can anticipate that the use of step therapy (i.e., prior authorization) will continue as well.”

However, she continues, “there are significant inroads being made in the industry via innovative and technological advances that we can expect the time frames in which a patient has to wait to begin therapy for the specialty medication, even when step therapy is required, will begin to diminish over time.” She cites AMP: Access for More Patients, a technology-driven program from CoverMyMeds and RxCrossroads by McKesson that “fundamentally changes the way patient support for specialty therapies is provided.”

“Utilization management programs are important because they can protect the patient from harm and also save the member money,” maintains Lassen. “However, the traditional processes are not necessarily easy for anyone in the system to use. Prime is making critical investments in technology enhancements to automate the process and work upstream at the point of care so the physician will have all the information about a patient’s benefits and can prescribe them the best medicine for their situation while they’re still in the clinic. This will greatly improve patient experience, and it will take the member out of the middle.”

View information on step-therapy legislation by state at https://bit.ly/2peFhPN.

Contact Diehl-Boyd via Angela Masciarelli at AMasciarelli@covermymeds.com, Kennedy at lisa.kennedy@innopiphany.com, Kocot via Bill Borden at wborden@kpmg.com, Lassen through Karen Lyons at KLyons@primetherapeutics.com, Rubinstein at elan.b.rubinstein@gmail.com and Vogenberg at randy@iih-online.com.

by Angela Maas

 

ICER Releases Report on Drug Price Hikes; Opinions Vary on Its Usefulness, Impact

As the spotlight continues to focus on drug prices and companies’ pricing strategies, an industry watchdog group has published the first of many planned reports on the topics. The Institute for Clinical and Economic Review (ICER) released the inaugural edition of the series last month, offering fodder to critics of the pharmaceutical industry. But others question the findings. Still, the report should give some momentum to the various drug pricing efforts, industry experts tell AIS Health.

The Unsupported Price Increases Report, unveiled Oct. 8, evaluated a list of the 100 drugs with the most U.S. sales revenue during 2018. The data was provided by SSR Health, LLC, a division of independent investment company SSR, LLC. ICER withdrew 23 drugs from the mix that did not have a wholesale acquisition cost (WAC) increase greater than twice the increase in medical consumer price index (CPI) from fourth-quarter 2016 through fourth-quarter 2018.

“For the remaining 77 drugs, we determined, where possible, the increase in spending on these drugs in the US during 2017-18 that was due to increases in net price,” which is the WAC net of discounts, rebates and other price concessions, according to the report. That data was estimated by SSR Health combining “available data on unit sales with data published in manufacturers’ earnings reports on US sales revenue for each drug.”

ICER selected the top 10 drugs. It deleted two — Biogen’s Avonex (interferon beta-1a) and Amgen Inc.’s Enbrel (etanercept) — based on manufacturer-submitted information and added one, Celgene Corp.’s Revlimid (lenalidomide), based on public input.

“The goal of these assessments was to determine whether there was new clinical evidence in the prior three years (2016 through 2018) for the drugs under review,” said the group. “Based either on submissions from manufacturers or an ICER systematic review, ICER reviewed randomized clinical trials, high quality comparative observational studies, and, for low frequency harms, large uncontrolled studies. For drugs with multiple indications, evidence was sought for indications responsible for at least 10% of a drug’s utilization.”

ICER used the system known as GRADE (Grading of Recommendations, Assessment, Development and Evaluations) to evaluate new evidence. That framework rates evidence as very low, low, moderate or high quality. Price increases for products with moderate- or high-quality new evidence were considered increases “with new clinical evidence.” Two drugs — Gilead Sciences, Inc.’s Genvoya (elvitegravir/cobicistat/emtricitabine/tenofovir alafenamide) and Revlimid — fell into this category.

The drugs that ICER found to have price increases that were not supported by new clinical evidence were:

✦ Humira (adalimumab) from AbbVie, Inc., which had a 19.1% increase in WAC and a 15.9% increase in net price.

✦ Rituxan (rituximab) from Biogen and Genentech USA, Inc., a Roche Group unit, which had a 17% boost in WAC and 23.6% in net price.

✦ Lyrica (pregabalin) from Pfizer Inc., which had a 28.3% WAC hike and 22.2% net price rise.

✦ Truvada (emtricitabine/tenofovir disoproxil fumarate) from Gilead, which had a 14.3% increase in WAC and 23.1% increase in net price.

✦ Neulasta (pegfilgrastim) from Amgen, which had a WAC that rose 14.6% and a net price that increased 13.4%.

✦ Cialis (tadalafil) from Eli Lilly and Co., which had a 26.2% WAC increase and 32.5% rise in its net price.

✦ Tecfidera (dimethyl fumarate) from Biogen, which had a 16.7% WAC boost and a 9.8% net price increase.

Of the two excluded drugs, Genvoya’s WAC rose 14.3% and its net price increased 21.7%, while Revlimid’s WAC rose 25.8%. No net price change was included for Revlimid in the report, which said, “because of lack of face validity, we do not show the change in drug spending for 14 drugs that had a net price higher than WAC price in at least one of the eight quarters in which data were captured.”

Per the report, the increase in net prices for the seven top drugs resulted in a rise of more than $5.1 billion in total U.S. drug spending from 2017 to 2018. Humira accounted for more than $1.9 billion of that total.

ICER acknowledged that it “does not have the capacity to perform full economic analyses on the nine therapies evaluated in this report, nor would the time needed to develop full ICER reports (at least eight months) provide information in a useful timeframe for the public and policymakers. Therefore, this UPI report cannot determine whether the price increases for the two drugs that had new clinical evidence are justified or meet an ICER value-based price benchmark. Instead, the analyses focused on whether substantial new evidence existed that could justify a price increase. By identifying whether there is, or is not, new evidence of improved safety or effectiveness for drugs with substantial price increases we hope we have taken an important first step in providing the public and policymakers with information they can use to advance the public debate on drug price increases.”

Payers increasingly are putting more stock into ICER assessments.

For the Managed Care Biologics and Injectables Index: Q2 2019, Zitter Insights surveyed pharmacy and therapeutics (P&T) committee members who work for 49 commercial payers with 173.7 million covered lives between May 30, 2019, and July 20, 2019. Respondents indicated that they expected an increase in their organizations’ looking to ICER as influential or highly influential in their decision making over the next three years (see chart).

AIS Health and Zitter are both owned by MMIT.

P&T member respondents from 29 commercial payers with 69.1 million covered lives and from 21 Medicare payers with 21.1 million covered lives cited supporting risk- or value-based contracting as the main action they used ICER reports for over the last one to three years (see chart, p. 3).

Report Prompts Array of Reactions

Still, ICER has been an organization on which industry experts have a wide array of opinions, and this report was no different.

“If anything, this propelled the list price versus net price issue further into the public eye — most people weren’t aware of this, and so this helped highlight this issue,” says Lisa Kennedy, Ph.D., chief economist and managing principal at Innopiphany LLC. “Also, most products on the list were at the end of their length of exclusivity, so their budget impact had greater impact versus their price rise — and this would be a budget impact that is an empirical reflection of the product’s value.”

“This list of drugs and their net cost impact over two years adds fuel to the fire of Congressional concern with out-of-control drug prices,” says Elan Rubinstein, Pharm.D., principal at EB Rubinstein Associates (SMA 10/7/19, p. 1). “This issue isn’t going to go away … pressure will continue to build as drug prices continue to increase, both at launch and over time, individually and in the aggregate, compared to what other industrialized nations pay.”

He points to an opinion piece in the Nov. 2 New York Times penned by its editorial board that examines the Lower Drug Costs Now Act (H.R. 3) and the savings it could provide: $345 billion in federal spending over seven years and $158 billion in out-of-pocket costs over 10 years. But to realize these savings, “Americans will need to accept a trade-off that other advanced nations have long since come around to: Slightly fewer new drugs will come to market, in exchange for better prices on the medications that already exist.”

This “sobering view…that, because drug prices have become unaffordable for many, reduced innovation may be a price worth paying” is, Rubinstein says, the “first time I’ve heard this opinion expressed in a widely distributed mainstream credible publication.”

Fein: This Is ‘Name-and-Shame Exercise’

However, others doubted the usefulness of the report. Adam Fein, Ph.D., CEO of Pembroke Consulting, Inc.’s Drug Channels Institute and author of the Drug Channels blog, told STAT that “this is another meaningless name-and-shame exercise that tells us nothing about true drivers of health care spending. Some of the data appear to contradict publicly available information about net drug price changes. And I think ICER is being arbitrary in saying that any increase in a drug price must be tied to new clinical evidence. There is no medical product or service in the U.S. for which that is the rule. The cost of things goes up.”

The methodology that ICER used, Kennedy tells AIS Health, “has a few issues in that net price may not have increased at all yet a manufacturer could still end up on the list — that’s a real problem.” However, responds Rubinstein, “yes and no on whether a real problem, because some manufacturers raise WAC and deepen discount, leaving net alone — but the result of doing that is more money in rebates that go into PBM/insurer/employer pockets. It is unfortunately the case that a higher WAC paired with a higher rebate is attractive to these payers.”

Payers May Put Drugs on Radar

Asked what payers can do with the information in the report, Rubinstein says payers may choose to give the listed drugs further analysis and attention. Kennedy points out that “I suspect that many of these treatments are so old with such entrenched contracts with payers that it won’t do much.”

In addition, she says, “I think that price divorced from value is a futile exercise — what we need is a better understanding of the value for money that these products bring.”

According to Rubinstein, “ICER’s objective and the explicit way in which it met that objective is the key takeaway from this report — that is, by calling out particular drugs and dollars, the ICER report turned up the heat on those manufacturers, a shot over the bow to other manufacturers and grist for the mill for the overall pricing debate — at a time when there are many bills pending to address drug prices in the Congress.” The bottom line, he says, echoes the New York Times editorial: “Drugs are becoming unaffordable, and this [editorial] represents initial stirrings for discussion of whether the price that may be paid to ratchet back cost in terms of lower innovation may be worth paying. In my view, this is a debate that we need to have, because the cost of health care in this country, including pharmaceuticals, is multiples of what any other country pays and, depending on your point of view, is not supportable or is not worth supporting.”

What Are Americans Willing to Accept?

So, he continues, “are Americans ready to accept a centralized and powerful (in the sense of being empowered to say that X drug is not payable) system such as U.K.’s NICE [i.e., the National Institute for Health and Care Excellence] to assess acceptable price in context of a particular drug versus its therapeutic competitor value? Or are we willing to skirt the issue of directly doing this analysis, by linking our acceptable drug prices to the prices paid in a market basket of advanced economies,” as seen in the International Pricing Index floated by the federal government and proposed in H.R. 3.

“Since the U.S. drug market dwarfs all others worldwide, this international reference pricing approach would be a bit like an elephant thumbing a ride on the back of a horse,” says Rubinstein. “But the horse is likely to realize that this ride is for the long haul, that it has consequences (e.g., manufacturers aren’t likely to give those referenced countries steep price breaks knowing that those breaks boomerang back to U.S. prices) and decides it doesn’t like it much.”

View the ICER report at https://bit.ly/32Kwzat. For more information on the Zitter data, contact Jill Brown at jbrown@aishealth.com. Contact Kennedy at lisa.kennedy@epiphanomics.co and Rubinstein at elan.b.rubinstein@gmail.com.

by Angela Maas

This story was reprinted from AIS Health’s monthly publication RADAR on Specialty Pharmacy. Visit https://aishealth.com/product/specialty-pharmacy.

 

Reality Check: Narcolepsy

 

Our Point of View

First-line treatment for narcolepsy generally involves stimulant medications such as methylphenidate, amphetamines or modafinil/armodafinil, says Mesfin Tegenu, R.Ph., president of PerformRx. Some stimulants are available in generic form, and “many plans may require trial(s) of an available generic product prior to payment of a brand-only formulation, or trial of less costly alternatives to higherpriced generic items if there’s a significant price difference,” he says. April Kunze, Pharm.D., senior director, clinical formulary development and trend management strategy at Prime Therapeutics LLC, says that “plans can choose to implement a step-through-generics program for narcolepsy medications to ensure generics are used first line. Additionally, some plans may choose to exclude higher-cost products in favor of the generics.”

 

Coverage


Drugs

Under the pharmacy benefit, more than 66% of the covered lives in commercial formularies have utilization management restrictions. Across all drugs, more than half of the lives under Medicare pharmacy benefit formularies are not covered for at least one of the drugs.


Payers

For 75% of the  covered lives, payer pharmacy benefit formularies do not require step therapy (ST). Of the lives that require ST, 41% require multiple steps. More than 67% of payer-controlled pharmacy benefit covered lives require prior authorization, with 16% consisting of policies that are restrictive as compared with a product’s FDA-approved label.

 

AIS Health’s View

The older medications for the condition, which affects around one in every 2,000 people in the U.S., don’t always work, and tend to lose their effectiveness over time even if they were successful at first. But two newly approved narcolepsy medications offer novel, possibly more effective options to people for whom older drugs aren’t working well: The FDA in March approved Jazz Pharmaceuticals’ Sunosi (solriamfetol), the first dual-acting dopamine and norepinephrine reuptake inhibitor, for adults with narcolepsy or obstructive sleep apnea. In August, the agency approved Harmony Biosciences, LLC’s Wakix (pitolisant), a selective histamine 3 receptor antagonist/inverse agonist that works to increase histamine in the brain. Sunosi was launched in July, and Wakix is expected to be launched later this year.

 

Trends From AIS Health


Health Plans Wait for More Data on New Narcolepsy Medicines

Two newly approved narcolepsy medications offer novel, possibly more effective options to people for whom older medications aren’t working well, but most plans are requiring patients and providers to try generic alternatives first. The older medications for narcolepsy, a condition that affects around one in every 2,000 people in the U.S., don’t always work, and tend to lose their effectiveness over time even if they were successful at first.

Subscribers to AIS’s RADAR on Drug Benefits may read the in-depth article online


Datapoint: New Narcolepsy Drug to Compete With Xyrem

Harmony Biosciences last week won its first-ever FDA approval for its narcolepsy drug Wakix. The drug will be a direct competitor to Jazz Pharmaceuticals’ Xyrem, which currently holds preferred status in the pharmacy benefit for 11% of covered lives, growing to 23% with prior authorization and/or step therapy.

Via AIS Health


FDA Approves Harmony’s Wakix

The FDA approved Harmony Biosciences, LLC’s Wakix (pitolisant) for the treatment of excessive daytime sleepiness in adults with narcolepsy. The product is a first-in-class medicine, a selective histamine 3 (H3) receptor antagonist/inverse agonist. The company says Wakix will be available in fourth-quarter 2019.

Subscribers to AIS’s RADAR on Specialty Pharmacy may read the in-depth article online

 

Key Findings


Market Events Drive Changes

Multiple agents in the pipeline include several Phase III agents, one of which is a once-daily product that is the same chemical as Xyrem.

Pharmacy Benefit Implications

Nearly all products are covered but almost exclusively restricted by prior-authorization policies. The pharmacy benefit is dominant, and Xyrem provides the largest coverage variance with its Risk Evaluation and Mitigation Strategies program. Analeptics (Nuvigil/Provigil) are first line in the treatment pathway as they are available generically. Following that, generic immediate-release central nervous system stimulants are often second line, with Xyrem reserved for third line due to costs and safety.

 

AIS Health’s View

Treatment guidelines for narcolepsy generally call for both pharmaceutical and non-pharmaceutical approaches to be used together. For example, proper sleep hygiene at night — with a regular sleep schedule and around 7.5 to eight hours of sleep per night — may help patients avoid falling asleep during the day. Some patients also benefit from scheduled naps, and physicians urge an exercise program for patients, particularly young patients. Still, Tegenu says he doesn’t know of plans that encourage or require non-pharmacologic approaches to narcolepsy prior to or in addition to drug treatment as part of drug utilization management.

 

Precision Medicine Hits N of 1 Milestone but Still Faces Many Cost, Regulatory Obstacles

November 4, 2019

Truly personalized or precision medicine — the idea that every treatment is matched to a patient’s unique genetic characteristics — moved closer to reality recently as researchers announced the first custom drug created to treat a genetic disease: milasen, named after its sole patient Mila Makovec, who suffers from a rapidly progressing deadly neurological disorder called Batten’s disease.

But Mila’s so-called “N of 1” success story, detailed last month in the New England Journal of Medicine and covered in various other publications,

Truly personalized or precision medicine — the idea that every treatment is matched to a patient’s unique genetic characteristics — moved closer to reality recently as researchers announced the first custom drug created to treat a genetic disease: milasen, named after its sole patient Mila Makovec, who suffers from a rapidly progressing deadly neurological disorder called Batten’s disease.

But Mila’s so-called “N of 1” success story, detailed last month in the New England Journal of Medicine and covered in various other publications, also spotlights the potential pitfalls in therapies developed in part based on genetics: They’re very expensive, the companion diagnostics needed to make them work also are very expensive, and the groups of patients who might benefit are small. In Mila’s case, the drug — a splice-modulating antisense oligonucleotide drug — is designed to work only for her.

“The cost of development and limited funding are certainly the top challenges facing development of personalized drugs,” says Sudhir Agrawal, D.Phil., visiting professor in the Department of Medicine, University of Massachusetts Medical School, Worcester, Mass., and a founder and former CEO of Idera Pharmaceuticals, which is pursuing nucleic acid-based therapies.

“In addition, clear guidance on regulatory paths and nonclinical safety support are needed to advance the drug candidate,” Agrawal tells AIS Health. He also notes that diagnostic and genetic tests to pinpoint the underlying cause of the disease must be developed.

Still, now that it’s clear the therapies hold potential, they should be pursued, says Art Krieg, M.D., founder and chief scientific officer at Checkmate Pharmaceuticals. Checkmate is developing cancer immunotherapies that would be used to treat large numbers of patients, but Krieg has worked in the oligonucleotide field for more than 20 years, including running oligonucleotide therapies at Pfizer Inc. and serving as chief scientific officer at Sarepta Therapeutics, Inc.

“Mila is the first patient to have received an individualized oligo therapeutic for a unique genetic mutation,” Krieg tells AIS Health. “I believe that there are thousands, and probably tens of thousands, of children like Mila with rare diseases who could potentially benefit from therapy with an individualized oligo. We owe it to these children to do everything that we can to make these drugs available to them, especially when their diseases are likely to be rapidly progressive and fatal.”

Drugs Can Treat One Patient or Many

Although the terms “precision medicine” and “personalized medicine” generally are used interchangeably to mean treatments developed for patients based on genetic, environmental and lifestyle factors, the National Research Council prefers “precision medicine” to the older “personalized medicine.” Still, both terms are in use.

Precision drugs may be developed for just one person — as in Mila’s case — or may be developed for a large subset of patients who share genetic characteristics. Medications range from targeted small molecule drugs such as Novartis International AG’s Gleevec (imatinib), which is used to target a gene in chronic myelogenous leukemia, to monoclonal antibody Herceptin (trastuzumab), from Roche Group unit Genentech USA, Inc., which targets a protein called HER2 that is overexpressed by tumors in around 30% of breast cancer patients.

Agrawal says he also would consider chimeric antigen receptor T-cell (CAR-T) medicines as personalized drugs, even as they’re expanded to a wider patient population. And the antisense oligonucleotide drug used in Mila’s treatment is the ultimate precision drug.

According to the Personalized Medicine Coalition, medicines that include labeling identifying the patients who are most likely to realize outsized benefits or experience fewer side effects have accounted for more than 20% of FDA approvals for the last five years (see chart, p. 10). These personalized medicines set a record in 2018, topping 40% of approvals, according to a report published in February 2019 that credits policies recently advanced by the FDA for “fostering a favorable environment for innovation that has accelerated this trend toward personalized medicine.”

Still, the report says, providers and payers continue to make decisions based on data from population averages, instead of embracing personalized medicine. The group notes that the Trump administration is encouraging Medicare Advantage plans to implement step-therapy policies that require patients to try less expensive treatments before gaining access to more expensive options under Medicare Part B.

This “ignores the documented trend toward therapies that have information in their labels about the populations they will likely benefit,” the coalition said. In fact, it’s counterproductive, the report argues, since by the time a patient who is likely to respond to a personalized therapy first completes a less expensive, one-size-fits-all course of treatment for a disease like cancer, the disease may have progressed so far that the personalized treatment can no longer help.

Better-Fitting Treatments Offered

Personalized drugs have multiple potential benefits, and “it’s hard to choose the top two or three,” says Nadia Atallah Lanman, a research assistant professor in Purdue’s College of Veterinary Medicine who manages the Collaborative Core for Cancer Bioinformatics (C3B), a shared facility between Indiana University Melvin and Bren Simon Cancer Center and Purdue University Center for Cancer Research. “However, if I had to pick, I suppose it would be to be able to better prevent diseases, to enable clinicians to pick the most effective drug or drugs possible to treat the patient with and to improve early disease detection.”

C3B aims to integrate and accelerate cancer discovery, drug discovery, precision medicine and training, Lanman tells AIS Health. Some of the benefits of personalized medicine are being realized already, she says. “For example, there are a number of targeted cancer therapies, and for some types of cancer, genomics can be used to determine whether a patient is a candidate for a particular treatment based on whether they have an appropriate target for the drug. Genetic screening is also often done prior to conception to predict the risk of passing on genetic disorders.”

C3B has worked on 312 projects since its inception and has generated 33 peer-reviewed publications, Lanman says. For example, she says, C3B supported an investigation into Apexian Pharmaceuticals, Inc.’s APX3330, a compound being studied in several different types of solid tumors and in pre-leukemia.

In another project, C3B aims to use pet dogs as a model in which to study cancer, Lanman says, since dogs spontaneously get cancer, present similarly to human patients, and, for some cancers, treatment in dogs mirrors that in humans. “We have a project where we can predict from pre-chemotherapy mRNA levels whether the patient will respond well to chemotherapy or whether they will be resistant,” she says. “We essentially integrated biodynamic imaging data with RNA sequencing data and used this to identify differences between dogs who respond well and dogs who do not respond well to chemotherapy.”

Diagnostic Testing May Be Roadblock

Precision medicine tends to alter the timing of drug development, since researchers need to know more precisely what they’re trying to treat before beginning the process. Of course, pinpointing a disease process down to the molecular or genetic level involves potentially expensive diagnostics. “The diagnostic/genetic test is the key to identifying the underlying disease,” Agrawal says. “Once the proper diagnosis has been made, only then a successful drug could be developed or an approach can be taken.”

Therein lies a potential barrier: Diagnostic testing can cost as much as or more than a dose of the drug, and payers may balk. In oncology, for example, diagnostic and biomarker testing has become integral in drug development and direct patient care, but there frequently are gaps in coverage for these tests.

In the case of personalized medicines designed to treat rare genetic diseases, the companion diagnostic likely is whole genome sequencing — which was what clinicians used in Mila’s case, Krieg says, adding that the cost is “not trivial.”

And it’s not always successful, either. The Harvard University-based Undiagnosed Diseases Network (UDN) has been performing whole genome sequencing for select patients, Krieg says, “and I think that even in that expert network the success rate for identifying a mutation causing a patient’s disease is only around 30%, maybe less. Right now, all the UDN can do is to tell patients they have found a diagnosis. I would guess that the UDN is excited about the potential for personalized medicines to provide real hope for their patients.”

Bill Would Streamline Testing Process

Legislation pending in Congress would streamline the diagnostic process, at least for children on Medicaid. The bipartisan bill, called the Advancing Access to Precision Medicine Act, would establish a pilot program within Medicaid to cover genetic and genomic testing in children with unresolved conditions that have suspected genetic causes. The bill also would fund research into how testing can improve health outcomes, potentially reducing Medicaid spending. Its sponsors, who include Rep. Eric Swalwell (D-Calif.), believe that if the Medicaid pilot program is successful, private insurers would begin to pay for testing.

The diagnosis and drug development process in extremely rare diseases may begin with motivated parents whose child is suffering from an unidentified genetic disease. This then can lead to drug discovery, Agrawal says. “Patients, along with interested researchers and patient foundations, mostly take the lead in conducting the initial work, which allows biotech or pharma to participate, furthering the development,” he says.

Obviously, patients with rare diseases for which there is no current therapy want new drugs that might help them, Krieg says. Therefore, he says, researchers should focus on a more efficient, cost-effective method of targeting these rare conditions, which he believes should involve oligonucleotide therapeutics. Oligos “inherently are closer to a rational drug design,” Krieg says, because they are designed to specific gene sequences like the one Mila has.

“Because the drugs are made of modular components that are ready to assemble by a series of very efficient chemical reactions, the entire drug discovery process can be accelerated to a matter of months and the cost brought down to around $2 million or less, depending on the specific complexities of the target,” he says. This is in contrast to around $20 million before human trials begin for a small molecule, he says, and perhaps $8 million before new biologics, such as antibody therapeutics, can go into the clinic.

The process moves very quickly, Agrawal says. “In the recent case with Mila, genetic analysis pinpointed the defect, the antisense approach was prioritized, the antisense drug was designed and evaluated using patient cells, and treatment was initiated in under one year,” he says.

“The cost of development of a drug is always high,” Agrawal adds. “However, development of personalized drugs should be faster and would have a higher probability of success.

In addition, if the potential benefits are not being observed, further development could be discontinued sooner rather than later. This needs to be communicated by participating parties to the payer.”

Still, oligonucleotides can’t treat all patients, Krieg says, since only certain types of tissues — such as those in the liver or in the central nervous system — will uptake the drugs into cells. The type of genetic defect also matters, of course. “Only certain types of genetic defects can be corrected with oligo therapies, and perhaps less than 10% of patients with [a] rare disease might possibly benefit,” Krieg says. “Or maybe the true percentage is under 1% — nobody really knows right now.”

Krieg says he expects the development of oligonucleotide therapies to be funded by philanthropic organizations or perhaps by families who are able to build the necessary donor networks and raise significant amounts of money through crowdfunding.

In Mila’s case, Boston Children’s Hospital hired manufacturers to produce supplies of a drug custom- designed to fix the error that causes her form of Batten disease. Her treatment, the cost of which remains undisclosed, was paid for in part by Boston Children’s, in part by research grants and in part by private foundations.

“As we streamline the process of developing these therapies, I hope that we can industrialize this process to the point where it becomes economically feasible for our society to pay for it,” Krieg says. “For example, the cost of care for many children with rare diseases is on the order of $400,000 per year. If the cost of developing an oligo drug to treat that condition is under $2 million, then at some point it becomes cost-effective to have society pay for that development. I hope we will reach that point.”

Beyond Cost, Other Challenges Remain

Cost isn’t the only potential roadblock to the widespread adoption of precision medicine. There also are regulatory issues, plus access issues that are unrelated to the price of the therapy itself.

In fact, regulatory issues abound, Agrawal says. “The FDA or other regulatory agencies have to clearly define the regulatory pathways for the patient population, diseases and stage of diseases to be treated,” he says. “There has to be clear guidance from regulatory authorities of what type of nonclinical safety data package would be acceptable to initiate dosing.”

Study design also is key, he asserts. If personalized drugs are designed to treat one patient or a cohort of patients, “what clinical endpoints would be acceptable if placebo-controlled studies are not being conducted?” Agrawal asks. “For many rare diseases, there are no appropriate preclinical disease models. Regulatory authorities need to provide guidance on what type of preclinical proof of concept data would be acceptable to advance personalized treatment.”

An additional potential concern with precision medicine involves ethical and legal issues, Lanman says. “Patients and participants in research need to have a good understanding of patient data, while still enabling it to be useful to biomedical researchers,” she says. “And in general, managing data and integration of data with electronic health records is challenging. We need to improve platforms for data integration, while protecting patient data.”

Even interpretation of the data can be a challenge, she notes, “so we additionally need to ensure that this data, once integrated, is not misinterpreted. Thus, training and education [are] important to increasing the availability and benefits of precision medicine to patients.” Finally, Lanman points out, it can be challenging in the case of rare diseases to find enough patients to make adequate sample sizes for studies.

Still, cost and access may be the biggest issues. “Access due to geography can be a challenge for individual patients. Treatments can be very expensive, and the interplay of drug manufacturers and insurance companies can lead to patients’ being unable to afford even standard-of-care treatment,” Lanman says.

Of course, she points out that the problem of cost isn’t limited to precision medicine, but she says she believes that manufacturers of precision drugs owe it to the public to keep the cost of diagnostics and treatment as affordable as possible. “Likewise, insurers should work to ensure patients have access to these diagnostics and treatments. I think insurers should aid patients as best as they can, in ways such as accepting copay assistance cards and also facilitating patients in understanding what options for personalized diagnostics and treatment are available.”

Finally, precision drugs can’t do it all, Lanman warns. “It’s important to remember that precision medicine is not just about making new pharmaceuticals,” she says. “It also involves prevention and changing our lifestyles to avoid disease or to perhaps alter the progression [of] disease. Additionally, precision medicine can involve identifying patients who benefit from less invasive procedures.”

And in the case of Mila and patients like her, precision drugs — even the N of 1 oligo drug developed just for her — will not repair damage already done. For Mila, the drug stopped her seizures.

In addition, they won’t cure the genetic diseases, nor will they repair damage already done. “I should point out that if they work, these therapies are expected to block, or at least delay, the progression of disease, but they are very unlikely to heal damage to tissues that has already progressed beyond the point of irreversible damage. The hope would be that as these therapies become established, therapy could be offered at a much earlier stage of the disease, before there is extensive irreversible damage,” Krieg says.

Read the Personalized Medicine Coalition report on genetically targeted therapies at https://bit.ly/2VVQC1Y. Contact Agrawal at sudhir.agrawal@umassmed.edu, Krieg at akrieg@checkmatepharma.com and Lanman at natallah@purdue.edu.

by Jane Anderson

 

Health Systems Can Reap Multiple Benefits By Offering Specialty Pharmacy Capabilities

As the specialty pharmacy space continues to grow, more entities within the health care system are boosting their capabilities in this area. Various health systems are implementing some form of a specialty pharmacy, often coordinating this effort through various partnerships. One such example of this is North Memorial Health and Trellis Rx, which began working together in 2018. The two companies spoke with AIS Health about the experience and the outcomes the collaboration has produced.

The Minnesota-based North Memorial Health system includes two hospitals, 26 specialty and primary care clinics, urgent and emergency care offerings and medical transportation services, and has more than 350 care providers and more than 6,000 team members. Trellis Rx, which started in 2016, partners with health systems in order to finance, build and operate specialty pharmacies.

The health system began offering specialty pharmacy services in 2009 though North Memorial Health Cancer Center. A patient advocate was placed in the clinic with a goal of providing support, including financial assistance, to patients requiring intravenous chemotherapy. That focus eventually expanded to include oral oncolytics, explains Paul Krogh, Pharm.D., system director of pharmacy services and infectious diseases at North Memorial Health.

Another person was added in 2015 to help support customers on additional specialty drugs. This expansion, he says, was because “many of our customers struggled to afford these therapies, and our providers spent numerous hours on prior authorizations and other required paperwork. Adding another financial advocate allowed us to provide comprehensive support to patients prescribed IV and oral oncolytics.”

Other specialists began asking for similar support, Krogh tells AIS Health, but “unfortunately, we didn’t have the capacity to extend services to other customers at the time.”

That same year, the health system began serving its employees taking specialty drugs through its retail pharmacies. “We became the preferred specialty pharmacy for our employees in May and captured 72% of these prescriptions within just six months,” he says.

Prior to the partnership, North Memorial Health served its cancer patients and employees via three on-site retail pharmacies, supplementing them with 340B contract pharmacies for limited-distribution drugs.

In November 2018, North Memorial Health unveiled its partnership with Trellis Rx. Initially available within the oncology and infectious disease spaces, the model expanded the existing offering to include “direct, in-clinic access to pharmacists and patient liaisons” to help with the coordination, education and support of people on specialty drugs. It also helps acquire insurance authorization and locate financial assistance.

Trellis Rx provided an experienced team to work in North Memorial Health clinics, including a program manager who oversees day-to-day operations. It also integrated a specialty pharmacy technology solution with the health system’s electronic health record system and “implement[ed] customized strategies to gain access to payer networks and limited-distribution drugs,” says Krogh, which previously had been “a major challenge.” Trellis Rx, he says, helped the system quickly gain access to five limited-distribution drugs. “Their support was also pivotal to us gaining access to Blue Cross Blue Shield of Minnesota this fall.” In addition, Krogh states, Trellis Rx shifted “all financial and operational risk away from us: They offer a 100% performance-based business model that aligns their incentives to ours and greatly reduces our related operating expenses.”

“Partnering with Trellis Rx has allowed us to rapidly extend high-touch, personalized specialty pharmacy services to more customers who require these therapies to manage chronic and complex conditions,” says Krogh. Since its start, the model has expanded to four clinics and added six on-site specialty pharmacy team members. “In our first 10 months, we supported over 600 patients and grew specialty pharmacy revenue by almost 100%,” he says. “Most importantly, we have addressed many barriers to medication access and adherence. As of August, we have connected patients with over $600,000 of financial assistance and reduced turnaround time from around 14 days to just 1.9 days.”

Other outcomes based on data from November 2018 through August 2019 include:

✦ 98% average adherence based on proportion of days covered.

✦ 100% hepatitis C treatment completion rate.

✦ 127% improvement in the Net Promoter Score, which measures people’s willingness to recommend a company’s services, from -62 to +65.

“We attribute these results to Trellis Rx’s fully integrated model,” says Krogh. Critical to the health system’s success, he contends, are the on-site program manager, pharmacists and pharmacy liaisons and Trellis Rx‘s Arbor technology. “Our pharmacists and pharmacy liaisons work as part of our customers’ care teams, just like doctors and nurses, and have access to our customers’ EHRs [i.e., electronic health records]. Being clinic-based makes it easy for them to establish strong trust and easily communicate with both customers and providers. Ultimately, this allows us to offer personalized, proactive care that is needed to improve access and adherence to specialty medications.”

In fact, North Memorial Health is “expanding one of our pharmacies to better accommodate home delivery and cold-chain shipments,” Krogh tells AIS Health, as well as “exploring options to launch a pharmacy specifically for specialty pharmacy and employee mail order within the next two to three years.”

In the management of people taking specialty therapies, pharmacists “are increasingly being recognized as critical care team members — something we’ve always believed,” says Tony Zappa, chief solutions officer at Trellis Rx. With the high costs and adherence issues among specialty drugs, “clinic-based pharmacists add value by helping providers select the most appropriate specialty medications for patients and then monitoring the clinical impact of these therapies over time. If a specialty medication isn’t having the desired clinical impact, pharmacists can flag this for providers sooner and recommend alternative therapies. Pharmacy liaisons also help address the financial toxicity that prevents many patients from accessing these therapies.”

Zappa points out that health systems offering clinic-based specialty pharmacy services is a trend that continues to grow. “This model was primarily used by academic institutions at first, but now we’re seeing community and rural health system like North Memorial Health successfully adopt it too,” he says, adding that his company sees five trends that are driving the adoption of the model.

First, “vertical integration of health plans, PBMs, and retail providers…is forcing health systems to differentiate their outpatient clinics to compete with retail providers,” says Zappa. “It’s also driving health systems, especially those in at-risk and value-based contracts, to find innovative ways to partner with health plans.”

Krogh echoes that point: North Memorial Health is “entering more risk-based contracts with payers, so the ability to offer more comprehensive care and control the total cost of care for our customers is very important to us. Being able to support our customers across the care continuum, including their specialty medication experience, is critical to improving health outcomes and preventing avoidable medical events.”

Second, as reimbursement for specialty drugs shifts from the buy-and-bill model within the medical benefit to the pharmacy benefit, health systems can provide more comprehensive patient care if they can fill and administer not only medical benefit drugs but also those adjudicated under the pharmacy benefit, he points out. In addition, being able to provide therapies regardless of their benefit gives the health system a “financial advantage.”

Having the ability to access integrated pharmacy and medical records allows for a comprehensive approach to health care. By having its own specialty pharmacy, North Memorial Health is “able to offer the highest level of care to customers,” asserts Krogh, adding that patients’ experiences with external specialty pharmacies often are “confusing and uncoordinated.”

Customer care is at the heart of the third trend: a “heightened focus on patient experience to differentiate” health systems from their competitors, says Zappa. “As ‘consumerization’ increases in the health care industry, health systems must differentiate themselves by providing a convenient, data-driven and personalized experience to attract and retain patients. A hospital specialty pharmacy program creates a superior patient experience that can build loyalty and brand equity,” he maintains.

Indeed, says Krogh, North Memorial Health “is one of the only remaining independent health systems in the Minneapolis area. As consolidation has increased in our market, we’ve focused on differentiating ourselves by offering the best customer experience and service. Offering clinic-based specialty pharmacy services is one way we can provide concierge-style care to our customers, while also improving access and adherence to specialty medications in order to enhance clinical outcomes.”

Zappa explains that “providers often spend up to two hours per day managing administrative tasks required for specialty medication prescriptions, adding to the current burnout epidemic.” With specialty liaisons on site to handle administrative work, an internal specialty pharmacy can “reduce the burden of specialty medications on our providers, which boosts their satisfaction,” says Krogh, who cites a recent study that estimates physicians spend almost 853 hours annually on tasks related to prior authorization.

Finally, Zappa tells AIS Health, “as health systems invest in outpatient services to combat inpatient revenue declines and improve margins, offering on-site specialty pharmacy services can bolster this strategy. In addition to creating a multimillion-dollar revenue stream, a specialty pharmacy program can improve a health system’s bottom line by attracting more patients to its outpatient clinics and reducing the total cost of care.”

Zappa contends that there are multiple key advantages for health systems with their own specialty pharmacy as opposed to using an outside company. Face-to-face interactions with patients allow clinic-based personnel to get to “know patients personally and can build credibility and trust via in-person interactions. Being on-site also allows clinical pharmacists and pharmacy liaisons to communicate more effectively with patients, which enables them to develop solutions to access and adherence barriers more quickly.”

 


Source: Some Misconceptions Exist Around Health System Specialty Pharmacies

As more health systems implement in-house specialty pharmacies, some misunderstandings potentially could pose an issue for this approach. Tony Zappa, chief solutions officer at Trellis Rx, which partners with health systems in order to finance, build and operate specialty pharmacies, says his firm encounters some common misconceptions.

The first is that these specialty pharmacies are more expensive for payers and patients. “Health system specialty pharmacies generally accept the same reimbursement rates as other specialty pharmacies, including those owned by PBMs and health plans,” he maintains. “And clinic-based programs help make specialty medication therapies more affordable for patients by securing financial assistance from patient advocacy groups, drug manufacturers and other organizations.”

Another is that such specialty pharmacies are not as good at improving patient outcomes. Counters Zappa, “health systems with clinic-based specialty pharmacies are well-positioned to enhance outcomes compared to external specialty pharmacies. This is because health system specialty pharmacies are uniquely able to (1) coordinate communication between patients, providers and specialty pharmacy team members, and (2) manage patients’ care holistically by embedding pharmacists and pharmacy liaisons into care teams and combining pharmacy dispense data with patients’ medical records.”

A third misperception is that health system specialty pharmacies are unable to access payer contracts and limited-distribution drugs. While this may be one of the biggest challenges for these entities, “it is possible for health systems to access payer contracts and limited-distribution drugs. However, doing so requires thoughtful planning and ongoing execution.…Health systems can overcome this barrier by demonstrating outcomes improvements and developing and executing a tailored strategy.”

Contact Zappa through Savannah Matthews at smatthews@mergeworld.com.

by Angela Maas


 

In addition, with a clinic-based approach, patients can get more coordinated care. “Pharmacists and pharmacy liaisons work directly alongside doctors, nurses and other health system team members,” he says. This helps streamline communication among all the health care professionals, “allowing the health system to provide the highest level of clinical care.”

Health systems with an on-site specialty pharmacy get can a total patient profile, allowing them to “holistically understand their patients’ care,” Zappa contends. “An in-house program allows hospitals to merge pharmacy dispense data with patients’ medical records. This means providers have visibility into whether or not patients are picking up and refilling prescriptions — information that can be difficult to track down when working with an external pharmacy.”

Increased revenue is another advantage, he says. “A specialty pharmacy service line can make pharmacy a revenue-generating department instead of a cost center. Health systems participating in the 340B drug pricing program significantly benefit from bringing specialty pharmacy services in-house. Depending on a health system’s 340B structure, a program can create a multimillion-dollar revenue stream.”

That revenue, Krogh says, can be reinvested “in programs that allow us to extend care and offer more comprehensive services to underserved customers in our community.” He explains that “offering specialty pharmacy services helps us achieve our mission. That’s why specialty pharmacy is now one of our organization’s five strategic priorities.”

But with all the advantages, some challenges still exist. “Gaining access to payer networks and limited-distribution drugs was a major challenge before partnering with Trellis Rx,” says Krogh (see box, p. 4). When the system was looking to expand the program, it faced the issue of “getting the resources we needed to grow. It’s very difficult for pharmacy leaders to ask their health system’s executives to invest more in a program prerevenue, but those resources are critical to growth. Trellis Rx eliminated this challenge — they hire and manage the specialty pharmacy team, though we have a lot of control over this process.”

Asked what advice he would give to a health system considering implementing a specialty pharmacy, Krogh replies, “consider what kind of support you will need to be successful. Are you looking for a consultant, or are you looking for a partner that will fully implement a specialty pharmacy for you? Ensure you understand the different options and the amount of resources needed for each option. Choosing the appropriate partner is the most important step to ensure you meet the needs of your customers and your business. Leverage at-risk share and accountable care contracts. Keeping more of a patient’s care in-house through expanded specialty pharmacy offerings aligns with and helps supports care models being built to support customers covered on these at-risk plans.”

Zappa recommends that when health systems are trying to decide whether to self-develop their own specialty pharmacy versus partnering with a specialty pharmacy services firm, that they evaluate their organization first. Specific needs, he says, include organizational capabilities — “risk tolerance, access to start-up funding, a collaborative culture with strong cross-functional partnership, and staffing and recruiting competency” — as well as certain pharmacy competencies: “specialty pharmacy expertise, an integrated technology solution, specialty physician practice structure and leadership, a current retail network and a dedicated pharmacy leader to oversee the program.”

According to Zappa, “a specialty pharmacy initiative must be an enterprise effort, not a pharmacy program. As a result, health systems need both organizational capabilities as well as pharmacy-specific ones to succeed. A lack of necessary pharmacy-specific and organizational competencies can delay or, worse, inhibit a program’s success. It may also cause health systems to miss opportunities to enhance clinical outcomes and improve patients’ experiences with their brands.”

Contact Krogh and Zappa through Savannah Matthews at smatthews@mergeworld.com.

by Angela Maas

 

IL-17 Use in Psoriasis Grows As Adherence, Outcomes Rise

For many years, the psoriasis treatment landscape was dominated by tumor necrosis factor (TNF) inhibitors. But with the FDA’s approval of three interleukin-17 (IL-17) inhibitors — as well as other drugs with different mechanisms of action — for the condition, those therapies are becoming more common among treatment regimens. An AllianceRx Walgreens Prime study shows that not only are people switching to IL-17s from another biologic, but many are starting on them as their initial biologic. Patients who switched had better adherence to treatment, and almost half reported that their symptoms were better on an IL-17 inhibitor.

The first IL-17 inhibitor on the U.S. market was Cosentyx (secukinumab) from Novartis Pharmaceuticals Corp., which the FDA approved for plaque psoriasis Jan. 21, 2015. The next therapy was Taltz (ixekizumab) from Eli Lilly and Co., approved for plaque psoriasis March 22, 2016. Then on Feb. 15, 2017, the agency approved Siliq (brodalumab) from Ortho Dermatologics, a division of Bausch Health Companies Inc.

Researchers examined pharmacy records from a national specialty pharmacy database to find people starting on an IL-17 from January 2016 through December 2017. They also looked at the members’ biologic regimens over the previous 12 months. Members were followed for 180 days after initiating on an IL-17.

A study sample of 5,215 members showed that 2,218, or 42.5%, switched from a prior biologic, while 2,997, or 57.5%, started on an IL-17 as their first psoriasis biologic.

Among those who started their biologic regimens on an IL-17 inhibitor, 2,266 started on Cosentyx, followed by 725 who initiated on Taltz and six who started on Siliq.

Among those members who switched to an IL-17:

✦ 793 switched from AbbVie Inc.’s Humira (adalimumab).

✦ 425 switched from Johnson and Johnson unit Janssen Biotech Inc.’s Stelara (ustekinumab).

✦ 821 switched from Amgen Inc.’s Enbrel (etanercept).

✦ 179 switched from another medication.

The IL-17 inhibitor that patients most often switched to was Cosentyx, dispensed to 1,705, or 76.2%, of patients. Next was Taltz, to which 511, or 23.7%, of people switched. Only two people moved to Siliq.

When researchers asked patients why they switched to an IL-17, the most common reason was that the prior therapy had been ineffective, cited by 64.7%. The next most common response was that they were uncertain why they had switched, cited by 8%. Other reasons included side effects, preference, drug interaction, lab abnormalities, inconvenience and administration.

Researchers also examined 180-day adherence outcomes among members who switched to an IL-17 inhibitor from another biologic, as determined by proportion of days covered (PDC). The mean PDC increase after moving to an IL-17 was 6.4%. An 8.4% increase in adherence also was seen after people switched to an IL-17 inhibitor. Patients who were receiving care from a rheumatologist also had better adherence than those treated by other non-dermatology providers.

Among those moving to an IL-17, 45.7% said their outcomes were better, 26.5% said they were the same, 5.3% said they were worse, and 22.6% said they were inconsistent.

Results of the study were presented at the 2019 National Association of Specialty Pharmacy’s (NASP) seventh annual meeting, which was held in Washington, D.C., from Sept. 9 through 12.

According to Renee Baiano, Pharm.D., clinical program manager at AllianceRx Walgreens Prime and the lead author of the poster, the main takeaway for payers is that “by [the] last quarter of 2017, IL-17 inhibitors may have gained clinical acceptance in the treatment of psoriasis, given the increase in patients prescribed as their first biologic.” She adds that “it is important for payers to be aware they may see more of their members being prescribed IL-17 inhibitors and will need to determine the appropriate placement of these newer agents within their formulary.”

Baiano says the slow uptake for Siliq — which didn’t launch until July 27, 2017, almost five months before the close of the study period — could be due to a few factors: First, it’s indicated for people “who have failed to respond or have lost response to other systemic therapies.” Cosentyx and Taltz both are approved as first-line treatments. Second, Siliq is available only through a Risk Evaluation and Mitigation Strategy known as the SILIQ REMS Program. That means “health care providers and pharmacies must be registered in this program in order to prescribe and dispense Siliq; patients must also sign a Prescriber-Patient Agreement Form before receiving Siliq,” she explains. And third, the therapy was the most recent IL-17 to gain FDA approval.

Findings Reinforce Ones of Earlier Study

AllianceRx Walgreens Prime also presented a study on members switching to Cosentyx and Taltz at the 2018 NASP annual meeting. That study showed that providers may be comfortable prescribing one of the drugs as a first-line biologic. Asked how the newer findings relate to that study, Baiano says that they “support or reinforce the data previously presented. In the newer poster, we were able to augment the prior poster with more data. This allowed for a better analysis of the utilization patterns of the IL-17 medications included in the study.”

According to Baiano, people with psoriasis may switch biologics due to efficacy, safety and tolerability. She says that the side effect profile of the IL-17s is similar to other biologics for psoriasis.

As far as the improved adherence outcomes after switching, she says those “could possibly be attributed to patients experiencing improved outcomes (as 45.7% of patients reported they felt better for at least two consecutive months following the start of their IL-17 inhibitor). Favorable dosing frequency (once or twice monthly) could also be a factor.”

The study did not evaluate the effect of provider specialty on adherence, Baiano tells AIS Health, but “a potential reason a provider specialty can impact adherence may be due to having more experience in treating patients with a specific illness (e.g., psoriasis). This could lead to proactive education of the patient on the importance of adherence at the initiation of therapy. This proactive provider education may also be reinforced through a specialty pharmacy specializing in the management of psoriasis patients. The complementary support provided by both the provider and the specialty pharmacy may lead to improved adherence. This is an interesting hypothesis that will require research to validate.”

Contact Baiano through Adrienne Foley at adrienne.foley@alliancerxwp.com.

by Angela Maas

This story was reprinted from AIS Health’s monthly publication RADAR on Specialty Pharmacy. Visit https://aishealth.com/product/specialty-pharmacy.

Manufacturers Must Address Challenges in Paying for, Showing Value of New Therapies

October 21, 2019

As innovative new therapies — many of them expensive one-time treatments — come onto the U.S. market, they are sparking a discussion around pharma reimbursement. With the drug pipeline full of many novel treatments, questions exist around whether traditional payment systems are appropriate for the products, and many experts maintain that new approaches are needed. In addition to making sure effective and efficient models are in place, drugmakers must be able to convey the value proposition of these new therapies.

As innovative new therapies — many of them expensive one-time treatments — come onto the U.S. market, they are sparking a discussion around pharma reimbursement. With the drug pipeline full of many novel treatments, questions exist around whether traditional payment systems are appropriate for the products, and many experts maintain that new approaches are needed. In addition to making sure effective and efficient models are in place, drugmakers must be able to convey the value proposition of these new therapies.

In May, the FDA approved gene therapy Zolgensma (onasemnogene abeparvovec-xioi) from AveXis, Inc., a Novartis AG unit, to treat spinal muscular atrophy (SMA) (SMA 7/1/19, p. 6). The cost for the one-time treatment is $2.125 million. While it’s the only single-dosed drug priced in the millions, others certainly are not cheap. Spark Therapeutics Inc.’s Luxturna (voretigene neparvovec-rzyl), approved in December 2017 for a rare form of blindness, costs $425,000 per eye; Novartis Pharmaceuticals Corp.’s chimeric antigen receptor T-cell (CAR-T) therapy Kymriah (tisagenlecleucel), first approved in August 2017, costs $475,000 or $373,000 depending on the type of cancer it’s used in; and Gilead Sciences, Inc. unit Kite Pharma, Inc.’s Yescarta (axicabtagene ciloleucel), approved in October 2017 to treat large B-cell lymphoma, costs $373,000.

These innovative therapies are not anomalies. Research from the IQVIA Institute for Human Data Science shows that almost 100 next-generation biotherapeutics that leverage 18 different approaches were in at least Phase II clinical trials in 2018 (see chart below). That total is almost a doubling of therapies since 2014.

Cigna Corp.’s Express Scripts PBM unveiled its Embarc Benefit Protection program through which plans pay per member per month for Luxturna and Zolgensma, and members have no out-of-pocket costs. Express Scripts is executing the model through coordination among its Accredo Specialty Pharmacy, CuraScript SD distributor and eviCore unit, which provides medical benefit management, to help offer comprehensive care.

“I do think that this is going to be something that employers will want to know more about,” says David Dross, managed pharmacy practice leader at the consulting firm Mercer.

Indeed, “employers are looking for solutions like that from their health plan partners and the PBMs,” says Steve Wojcik, vice president of public policy for the National Business Group on Health, which represents large, self-insured employers. Other companies also exploring possible approaches include CVS Health Corp. and its Aetna unit and Anthem, Inc. and its PBM, IngenioRx.

So far, deals struck between manufacturers and payers for the CAR-T and gene therapies have focused on outcomes-based deals and pay-over-time arrangements, although payers may turn to different approaches (see box, p. 7). For example, AveXis is offering two Zolgensma payment deals for payers: a five-year pay-over-time option that it is executing via Accredo, and a five-year outcomes-based deal. Cura- Script will be the sole distributor of the drug.

“As the market transitions to one based on value, there will need to be some connection between money paid and the outcomes provided,” says Jeremy Schafer, Pharm.D., senior vice president, director, access experience team at Precision for Value. “We are starting to see this in gene therapy and CAR-T agents already where outcomes agreements are providing discounts or refunds if the drugs don’t work. Payments over time may be an option as well to reduce up-front cost and improve affordability.”

Payments that are made over time, though, won’t work for drugs given on a chronic basis, says Elan Rubinstein, Pharm.D., principal at EB Rubinstein Associates: “That’s intuitively obvious by thinking of payments spread out over X number of years. The drug must be administered chronically, so the payer and patient are faced with new and multiple streams of extended payments, one for each drug administration, that pile up over time, never get fully paid off and bury both parties both financially and administratively. The manufacturer would see the mirror image of this.”

But with these payment approaches, Wojcik says, “just financing the medications and the therapies doesn’t really get at the real issue, which is the broken pricing model.”

Indeed, contends Winston Wong, Pharm.D., president of W-Squared Group, “spreading payments across a period of time does not make the product more affordable. It merely spreads out the liability, but the liability is not lessened. In some cases, the liability is higher since financing interest may be added.

“The only way to make any product more affordable to the payer is to lower the cost,” he continues, which may be accomplished via a traditional rebate or a value-based contract. “Under a value-based contract, if the product produces the clinical benefit as anticipated, then the full cost of the product is paid. If the product does not produce the full clinical benefit, then a lower cost is paid, if anything is paid at all. In some proposals, full refunds have been offered in treatment failures. In the end, if the product provides its full clinical benefit, then there is no change to the affordability. What is saved is the cost of ineffectiveness. In the end, we are willing to pay for effectiveness, but does that make the product more affordable? In my mind, no.”

Wong maintains that traditional rebating doesn’t make a product more affordable either: “Yes, we can negotiate X% rebate on a very expensive product. Yes, in our minds, we can link the rebate to a lower cost, but at the end of the day, does it make the product more affordable? Most likely not. This is also assuming that everything is transparent in terms of rebate tracking as well. Reality tells us that rebating does less to make a product more affordable.…We know that the rebate strategy by a manufacturer is already included in the overall cost of the medication so that the net profit margin at the end is achieved. If the rebate has to increase, then the cost of the medication increases. The interesting case study here is to see what would happen if the ability for CMS to negotiate rebates is passed. CMS might see reduced cost, but the rest will most likely see higher costs.”

It may be easier said than done to not only implement these reimbursement models but also have them operate effectively.

When it comes to oncology, outcomes-based arrangements are “theoretically possible, but the administration of outcomes arrangements, given the numbers of patients and variety of cancers, can be daunting,” says Ira Studin, principal at Stellar Managed Care Consulting, LLC. Also, he points out, manufacturers and payers must agree on outcome standards with such deals, “and that is not an easy thing to do.”

Schafer agrees. “Outcomes must be measurable and reportable. For some conditions, an outcomes agreement is relatively simple. For example, when paying for cholesterol drugs, the goal is to reduce heart attack or stroke. Both heart attack and stroke are objective and appear in claims data at the payer. However, for an oncology drug, disease progression may be the outcome. Disease progression can be somewhat subjective and does not appear in claims data.”

“The big challenges are largely around transparency of prices/costs and having the tools to effectively analyze the cost of care and measuring outcomes,” Ashraf Shehata, national sector leader for KPMG’s Healthcare & Life Sciences practice, tells AIS Health. “This takes a great deal of collaboration between the payers, providers, pharma and specialty pharmacy. Data and analytic capabilities can get people on the same page about what to measure, and that needs to feed into the organization that negotiates contracts.”

Another challenge, says Schafer, is that “outcomes arrangements may require payers to marry medical and pharmacy claims data, which can be difficult. The remedy will be the continued integration of health systems and payers along with improvements in technology to better capture data.”

According to Lisa Kennedy, Ph.D., chief economist and managing principal at Innopiphany LLC, “health care isn’t yet ‘digitally literate’ enough to measure the outcomes required for these payments over the length of time required as patients move from payer to payer. Take gene therapy — we don’t know the durability of some of these treatments — what do you do when a patient’s treatment gets financed up-front to secure the treatment and then moves to another insurer? Does the original insurer continue to make the payment? The new insurer?”

Eric Althoff, a Novartis spokesperson, clarifies that the Zolgensma “pay-over-time model provides payers with a choice to pay for Zolgensma over a period of up to five years regardless of patient response.” As far as what would happen if a patient changes health insurers during that time, he tells AIS Health, “we don’t expect plan switching to be a significant issue for Zolgensma patients, as research shows that families of children with rare diseases remain on commercial health plans longer than average.” AveXis sponsored that research, which was published in the February 2019 issue of the Journal of Managed Care & Specialty Pharmacy. But on the occasion that switching does happen, “currently, there is no portability for the payment installments — so the original payer will be responsible for the cost of treatment, whether or not they retain the patient, for the duration of the payment plan.”

But what about a situation where a payer reimburses for the treatment up front and then will need to be reimbursed at some point based on a patient’s outcomes? Wong tells AIS Health that for most contracts today, the main way that refunds are administered is “via a modified rebate provided during the next measurement period. Hence, the refund is realized over a period of time. There is difficulty in tracking the refund, as well as the refunds being timely. Payers will then require the sophistication in their systems to track the refund back to the payer source, be it the insurer in a fully insured situation or an employer in a self-funded situation. Also, in both the fully insured and self-insured markets, the payer will need to process a refund back to the patient for their share of the cost represented by the co-insurance. In most cases, patients would have already been required to pay the required co-insurance portion of the cost before receiving services.

“Until these logistical issues are worked out to a smooth-running process, then we are stuck with the negotiated discount off list price,” he says.

This model also poses risk for manufacturers in terms of revenue generation, points out Schafer.

“Instead of receiving the money up front, the manufacturer is getting smaller payments and may be bearing more risk if the drug stops working or a payer refuses subsequent payments. For providers, any payment system used by the payer will impact reimbursement to the provider. A provider or health system cannot pay $1 million for a drug up front and then be reimbursed over five years at $200,000 per year and stay viable.”

An additional provider risk is seen with the CAR-Ts. People must undergo chemotherapy before treatment and then must remain in the hospital for a period afterwards due to the risk of suffering a potentially fatal side effect known as cytokine release syndrome. Treatment of the condition differs depending on its severity, and in severe or life-threatening cases, the administration of Roche Group subsidiary Genentech, Inc.’s Actemra/RoActemra (tocilizumab) is recommended, which itself is not inexpensive. Additional provider costs “could be in the hundreds of thousands on top of the treatment itself,” points out Kennedy. “How is this reimbursed? Also, how can a provider take on the economic risk with securing such an expensive treatment? It presents some tricky financial challenges that require careful navigation to manage risk for all parties.”

 


What Are Other Reimbursement Models for Novel New Therapies?

While most reimbursement approaches for costly treatments have focused on outcomes-based deals and pay-over-time arrangements, other approaches may be possible but have limitations as well, particularly when it comes to oncology.

“Some opportunities may arise in bundling payments for the medicine with other services to address the condition,” says Ashraf Shehata, national sector leader for KPMG’s Healthcare & Life Sciences practice.

A subscription model, as seen with some Medicaid plans for hepatitis C drugs (see story, p. 1), “is innovative, but oncology does not lend itself to the concentration of lives that model requires” with so many different cancers and treatment options, says Ira Studin, principal at Stellar Managed Care Consulting, LLC. He tells AIS Health that indication-specific arrangements “are probably the cleanest to implement” with conditions that have at least two treatment options. “But the brute fact is that until a cancer product faces competition, the manufacturer has little reason to contract under any payment model, and the health plan has little leverage to enforce one.”

“Today, the costs of end-stage renal disease and of certain other catastrophic diseases are nationalized for those who meet eligibility criteria,” points out Elan Rubinstein, Pharm.D., principal at EB Rubinstein Associates. The Social Security Administration’s Compassionate Allowances program helps reduce the time it takes to identify people who meet its standards for disability benefits, qualifying them for the Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) programs. People approved for SSDI can receive Medicare benefits two years after approval, while SSI recipients receive Medicaid benefits immediately in most states.

“In order to keep self-insured employers from experiencing unaffordable health benefit costs and to stabilize the health insurance system, both with respect to the growing burden of the increasing number of super high-cost prescription medications, certain categories of patients’ costs should be nationalized — perhaps via extension of the ‘compassionate allowance,’” says Rubinstein. “Certainly very large (not $1,000s/year, but surely over $100,000s/year) recurring chronic drug costs should qualify patients for compassionate allowance.

“It may be possible to manage cost for huge one-time curative therapy through the private sector, via annuity, pooling or bond payment mechanisms, with outcome guarantees,” he continues. “In itself nationalizing patients with huge recurring chronic drug costs is not the same as controlling those costs. But by increasing the federal government’s role in payment for those with huge recurring chronic drug costs, the likelihood increases that the government will implement price control mechanisms for those products, as is commonly done in other industrialized nations and as was recently proposed” by House Speaker Nancy Pelosi (D-Calif.) (SMA 10/7/19, p. 1).

Contact Rubinstein at elan.b.rubinstein@gmail.com, Shehata through Bill Borden at wborden@kpmg.com and Studin at istudin@stellarmc.com.

by Angela Maas


 

And what if that patient changes insurers during that time? “Even if one insurer has an adequate system, there is no guarantee the next one will, nor that the systems will be compatible, nor that these insurers will agree on the terms of the handoff of payments due and outcome guarantees made,” says Rubinstein. So if treatment was initiated under one insurer but failed under another, “does the pharmaceutical manufacturer make good on its guarantee (assuming a partial refund) to that last patient insurer? Will that last patient insurer contractually agree to reimburse the prior two insurers on a failed outcome guarantee paid by the manufacturer, and if so, on what basis? And what if the manufacturer reneges on the guarantee payment — is the third insurer held harmless by the other two insurers, even though the product failed its guarantee?”

Wong maintains that systems are not in place to track and process installment billing, as well as to track patients. “The inability to track members after they have left the health plan will be a major obstacle to overcome for any value-based agreement where payment will be depended upon continued efficacy of the therapy.”

Studin agrees. “A snapshot of this point in time suggests the science is more advanced than the business,” he tells AIS Health. Asked what entities should be responsible for tracking patients, he replies, “the need for scale, customization and precision suggests an entirely new industry entity may need to evolve.”

According to Shehata, “specialty pharmacies, health care payers, providers and drugmakers can track how patients respond through electronic health records or claims data.” Such information, particularly with highly complex conditions, he says, can show “patterns of care, medication adherence and outcomes. The bigger issue is around coordination of care, and the medical specialist, a primary care physician and the pharmacy need to be on the same page.”

With Zolgensma, Jennifer Luddy, an Express Scripts spokesperson, tells AIS Health that since Accredo is the dispensing pharmacy, it can track a patient over time. “In this set-up, Accredo pays the drugmaker, and then the plan reimburses Accredo per the contract.”

As payers grapple with the challenges posed by these therapies, manufacturers need to make sure they convey the value proposition of the products, which can be done in various ways. “Payers are most interested in trial data that demonstrates clinical benefit,” says Studin. “For oncology, that includes response rate, complete response, progression free survival, event free survival, overall survival and remission.”

“The clinical story needs to resonate first,” agrees Schafer. “Manufacturers should focus on deficiencies with the prior standard of care and how the new therapy improves upon it. Manufacturers with data on overall survival impact or superiority to current agents via comparative studies should lead with these elements. A net decrease in total cost of care is often not achievable with new cancer drugs, but manufacturers should provide data on how a new drug helps avoid use of supportive care drugs, potentially reduces health resource utilization or helps patients return to work.”

“We speak to payers a lot about this, and what they’ve articulated to us is that they are looking for a fairly priced product with good demonstrated clinical data with well-designed studies and ideally a strong associated biomarker that predicts response,” Kennedy tells AIS Health. “Payers also frequently state the need for non-manufacturer health economic analyses and supporting studies (outside of clinical trials). Moreover, payers are also looking for information that is directly relevant to their own beneficiary population.” She notes that payers are looking to use more alternative payment models, particularly ones with two-sided risk for providers, to address rising health care costs, as seen with CMS’s Oncology Care Model (SMA 7/15,19, p. 1). Such models, she says, “could potentially be pretty disruptive in oncology.”

According to Shehata, “the issue of value creates some hard questions about comparative effectiveness of these treatments. When it comes to cancer, it is a matter of looking at some factors outside of economics, such as quality of life and how the condition is responding to treatment. With cardiology, you can have a pretty good sense about how a patient will respond after a stent is used, and there is a set of medications to use after the procedure. With orthopedics, a knee or hip replacement has a fairly defined set of protocols around treatment and helping with recovery. With cancer, some tumors will shrink under a course of treatment or some won’t respond to treatment, and the doctor and patient are battling time to find treatments that are effective.”

“Payers are looking for more than an incremental benefit,” says Wong. As an example, he points to Spinraza (nusinersen), which was developed by Ionis Pharmaceuticals, Inc. and Biogen and licensed to Biogen. It’s approved to treat SMA in pediatric and adult patients; its first-year price is $750,000, and subsequent years cost $375,000. Four types of SMA exist, with the deadliest being Type 1, which is usually evident before a child is six months old.

With Type 1 SMA, “there is evidence of significant improvements in QoL [i.e., quality of life] and motor function as a result of treatment with Spinraza and Zolgensma. That improvement in QoL and motor function is not as clearly demonstrated in the Type III/IV and pre-symptomatic patients. It is in this subpopulation that we need to see more definitive evidence of improvement in QoL and motor function through more analysis of the natural history of the disease state and impact of treatment. At this point in time, we just simply do not have the data.

“In some respects,” Wong continues,” we are in need of more real-world data and real-world experience. The issue we face here is that RWD and RWE is really still a concept and not well defined in my mind, even though the FDA has endorsed the concept,” he tells AIS Health.

Manufacturers should ensure they are providing payers with the data they actually want as opposed to what pharma thinks payers want. This can be done, says Studin, by getting payer feedback “before finalizing endpoints for pivotal Phase III trials.” Adds Schafer, “It is easier and more scientifically accurate to gather data on planned endpoints rather than going back retrospectively for the data, if even possible, after the trial is done.”

Wong observes that “manufacturers are still not really opening up pre-launch due to FDA guidelines. I believe the FDA has opened up about this topic, but manufacturers are still interpreting what they can and cannot talk about” (SMA 8/18, p. 1).

According to Kennedy, “besides all the excellent things that manufacturers already do, there is the increased opportunity to develop and use data lakes [i.e., repositories of raw data] for continued understanding of treatment durability, subgroups, quality of life and patient-reported data, adherence, biomarkers, etc. Clinical trials are only the start, and given all the advances (mainly we see advances in other industries before health care) with data, there is a huge opportunity to work with payers in real-world evidence analysis.”

Contact Kennedy at lisa.kennedy@epiphanomics.co, Rubinstein at elan.b.rubinstein@gmail.com, Schafer through Tess Rollano at trollano@coynepr.com, Shehata through Bill Borden at wborden@kpmg.com, Studin at istudin@stellarmc.com and Wong at w2sqgroup@gmail.com.

by Angela Maas

 

Louisiana Took Long Path to Modified Subscription Model for Hepatitis C Drugs

As of July, Louisiana has been able to treat hundreds of people who were waiting to receive a cure for hepatitis C thanks to an innovative “modified subscription model” in which the state pays a fixed amount to a manufacturer for a drug, up to a spending cap, and in return gets unlimited access to the therapy for Medicaid beneficiaries.

But the road to get there was long and difficult, according to Rebekah Gee, M.D., secretary of the Louisiana Department of Health, who, during a July 22 event hosted by the Brookings Institution, detailed the challenges she faced in trying to get a costly curative therapy to more people while facing down a $2 billion budget deficit.

Along the way, Gee noted, “we were told ‘No’ at least 50 times from a variety of people, whether it was the industry, or policymakers or individuals at the CDC…because it had never been done before.”

Back in 2016, Gee’s boss, Democratic Gov. John Bel Edwards, took office and inherited a state budget “in shambles,” Gee said, explaining that Louisiana was then facing the prospect of making “draconian” cuts to vital programs. At the same time, Gee received letters from CMS and patient advocates urging her to provide more drugs to hepatitis C patients — something the state couldn’t afford. (When the first breakthrough hepatitis C drug, Gilead Sciences, Inc.’s Sovaldi (sofosbuvir), debuted in 2014, it cost about $84,000 for a 12-week course of treatment.)

So Gee decided the state had to find a creative way to pay for the life-saving therapies.

“The pitch was always this: It was never about a slightly better price or a better deal — it was that here we are in this country…with a disease that kills tens of thousands of people; it is a leading infectious disease killer of our time; and through in large part the innovation of Americans, our research institutions, we have a cure,” she said. “And it’s unacceptable that in this day and age we cannot provide it, and we have people suffering, bleeding internally and dying unnecessarily because of the price.”

After much deliberation, Gee and Louisiana officials got together with other governors to ask the pharmaceutical industry and payers what they thought would work — and critically, came across a subscription model developed by the National Academy of Sciences, she said. Under a true subscription model, a state negotiates with a pharmaceutical manufacturer on an up-front, lump sum for an unlimited number of treatments, thus increasing access to the drug while offering the manufacturer more revenue, according to Neeraj Sood, a professor at the University of Southern California, who helped develop the model and explained its components in a presentation at the Brookings event.

Ultimately, the Louisiana Department of Health issued a formal solicitation for offers on Jan. 10, seeking to develop a public/private partnership with a hepatitis C drug manufacturer that made such a subscription model a reality. In its response to the state’s solicitation, Asegua Therapeutics LLC, a subsidiary of Gilead, beat out Merck & Co., Inc. and AbbVie Inc., which also responded, AIS Health has reported.

Initially, Asegua envisioned its pact with Louisiana as a true subscription model, “which we couldn’t do because I can’t write a check to a company,” Gee said. Louisiana also didn’t have time to get a Medicaid waiver — as its governor would be up for re-election, and there was a “moral imperative” to give patients access to hepatitis C cures — so it looked at what it could do under existing policy, she said.

Therefore, the state settled on a modified subscription model that makes use of supplemental rebates, which are exempt from Medicaid’s “best price” rule requiring manufacturers to offer the lowest price for a drug they negotiate with any other purchaser to all states in the Medicaid program.

Under Louisiana’s pact with Asegua, the state will have unrestricted access to the authorized generic of Epclusa (sofosbuvir/velpatasvir tablets) at a fixed, negotiated price — which the state has not disclosed — until a predetermined spending cap is reached, after which the state receives the drug free of charge. The state’s proposal calls for its annual spending on the drug not to exceed what it spent for the fiscal year that ended June 30, 2018: $30 million for Medicaid enrollees and $5 million for its incarcerated population.

Model Poses Some Risk to Pharma Firm

From Gilead’s perspective, meanwhile, the challenge was how to provide a predictable expenditure for Louisiana and spread the budget impact of paying for the authorized Epclusa generic over time — while still providing an incentive for the state to continue finding patients and curing them, said Rekha Ramesh, the firm’s executive director of public policy.

“We believe in what Louisiana is doing, and it does pose a bit of risk on behalf of the company,” she said of the model that they decided on, “but we’ve tried to mitigate that, obviously, as we’ve had conversations.”

One aspect of Louisiana’s model that is helpful in this regard is the state’s commitment to treat a certain number of people with hepatitis C, Sood noted — which allows the drug manufacturer to be more confident that it can expect a certain amount of revenue in the future. (The state’s Department of Health has said its goal is to treat at least 31,000 people with hepatitis C by the end of 2024.)

In addition, there’s no price barrier to accessing the drug beyond the hard spending cap, Sood said, which encourages the state to invest in linking more hepatitis C patients to care.

For Gee’s part, she said she hopes Louisiana’s model spreads elsewhere, asserting that “success for us is replication.”

Indeed, Washington won approval in June from CMS for a state-plan amendment that allows it to negotiate under a subscription model with manufacturers of hepatitis C drugs. The state is working with AbbVie on its model.

For states that want to successfully replicate what Louisiana has done, not only do they need a solid partnership with CMS, but they also must understand that price is not the only barrier to expanding treatment, Sood said.

“Even if you make the price zero, you have to figure out how to test everyone, link them to care, make sure they adhere to therapy — and that’s no small task,” he said.

It’s also important to note that such a model cannot work in a non-Medicaid market under current laws because it would change the Medicaid best price, Sood said. “So if United[Health Group] made a deal, what would happen is, United will pay up front to a company and after that the price of the drug is going to be zero, and Medicaid best price would say, ‘All Medicaid programs should get the price to be equal to zero,’” he explained. To fix that, he advocated for changing the statute so that innovative models like Louisiana’s receive an exception.

The model can work for other drugs, though, if there is an access problem with the drug due to affordability, if the scope for moral hazard is minimal — meaning it won’t be misused or overprescribed if the price of the drug drops to zero — and if there is some competition among manufacturers producing the drug, according to Sood.

“One example of where all these conditions are kind of met is insulin — it’s been in the news, insulin prices are rising, a lot of people can’t afford it, and there are several firms competing in the market,” he said.

Cures ‘Are Coming Faster Than Before’

To Rena Conti, an associate professor of markets, public policy and law at Boston University, it’s going to be necessary to find innovative ways to pay for expensive, curative medicines. “We are living in an unprecedented time in American medicine,” she said. “The cures are coming faster than before.”

Many of the diseases being targeted by pharma companies — such as hemophilia, sickle cell anemia and mental illnesses — affect working-age people and children, who are largely insured either by the state (through Medicaid) or employer-based insurance, she explained. And unlike the federal government, states and employer plans don’t have the luxury of expanding their budgets without asking taxpayers to foot the bill or raising premiums. “Instead, they really do have to figure out where that money is going to come from,” she said.

View a replay of the Brookings Institution event at https://brook.gs/2Jw7w3N.

by Leslie Small

This story was reprinted from AIS Health’s biweekly publication RADAR on Drug Benefits. For more information, visit https://aishealth.com/product/drug-benefits.

 

Reality Check: Acute Myeloid Leukemia

 

Our Point of View

Since April 2017, the FDA has approved eight therapies for acute myeloid leukemia (AML). Most of the treatments target a specific biomarker, so it’s critical that people diagnosed with the condition undergo genetic testing to determine whether they fall into a particular patient subgroup. “AML is associated with characteristic nonrandom chromosomal abnormalities and genetic defects that are used to classify AML and that are associated with response to therapy and prognosis,” says Winston Wong, Pharm.D., president of W-Squared Group. “Continued research into the genomic aspect of AML is resulting in a constant redefining of risk stratification and development of targeted therapies. At this time, the new targeted therapies are being given in addition to the aggressive chemotherapy when the specific genomic mutation is present. There is no doubt that as we continue to gain insight to the presence of other genomic mutations, we can expect to see further refinement of the treatment options, as well as additional novel targeted treatment options developed.”

 

Coverage


Pharmacy Benefit

Under the pharmacy benefit, almost 60% of the lives under commercial formularies are covered with utilization management restrictions. Around 20% of the lives under health exchange and Medicare pharmacy benefit formularies are not covered for at least one of the drugs.


Medical Benefit

Only Mylotarg and Vyxeos are covered under the medical benefit. About 44% of the lives under commercial policies are covered with utilization management restrictions, while more than 83% of Medicare beneficiaries have access to the medications without restrictions.

 

AIS Health’s View

Multiple policies exist on the pharmacy side, particularly for the newer targeted therapies. Payers want to make sure these drugs are given to the appropriate patients at the appropriate point in therapy. “Payers often require prior authorization of these therapies due to safety, concern for off-label usage and cost,” says Mesfin Tegenu, R.Ph., president of PerformRx, LLC. A variety of drugs are used offlabel for certain patient populations, he notes. In addition, says Wong, “past disease history also plays a part in treatment decisions. Hence, utilization management defaults to the usual confirmation of the indicated use, e.g., an FLT3 inhibitor in the presence of an FLT3 mutation. In cases where off-label utilization is requested, management consists of confirmation that there is adequate medical evidence [about] the benefit of the off-label use in this indication, e.g., Nexavar in the presence of an FLT3 mutation.”

 

Trends From AIS Health


AML Therapy Class Has Seen Boom Over Past Couple of Years

The FDA has approved nearly 10 therapies for acute myeloid leukemia (AML) over the past couple of years. Because most of them target a specific biomarker, it’s critical that people diagnosed with the condition undergo genetic testing to determine whether they fall into a particular patient subgroup.

Subscribers to AIS’s RADAR on Specialty Pharmacy may read the in-depth article online

 


FDA Approved Astellas Pharma Inc.’s Xospata

The FDA approved Astellas Pharma Inc.’s Xospata (gilteritinib) for the treatment of adults with relapsed or refractory AML with an FLT3 mutation as detected by an FDA-approved test. The agency gave the drug priority review, as well as orphan drug and fast track designations. Website BioCentury reports that the tablet’s 30-day wholesale acquisition cost is $22,500.

Subscribers to AIS’s RADAR on Specialty Pharmacy may read the in-depth article online


FDA Issued Accelerated Approval to Venclexta

The FDA gave accelerated approval to Venclexta (venetoclax) in combination with a hypomethylating agent or low-dose cytarabine for the treatment of people with newly diagnosed acute myeloid leukemia who are at least 75 years old or for those ineligible for intensive induction chemotherapy. Website Blink Health lists the price of 30 100 mg tablets as more than $2,900.

Subscribers to AIS’s RADAR on Specialty Pharmacy may read the in-depth article online

 

Key Findings


Market Events Drive Changes

In November 2018, the FDA gave accelerated approval to AbbVie Inc. and Genentech, Inc.’s Venclexta in combination with a hypomethylating agent or low-dose cytarabine (LDAC) for the treatment of people with newly diagnosed acute myeloid leukemia (AML) who are at least 75 years old or for those ineligible for intensive induction chemotherapy. That same month the agency approved Pfizer Inc.’s Daurismo in combination with LDAC for the treatment of newly diagnosed AML in people at least 75 years old or who cannot undergo intensive induction chemotherapy, as well as Astellas Pharma Inc.’s Xospata for adults with relapsed or refractory AML with an FLT3 mutation as detected by an FDA-approved test.

Medical and Pharmacy Benefit Implications

Coverage for drugs in this indication is good and processes through both the pharmacy and medical benefits. Idhifa, Venclexta, Daurismo, Tibsovo, Xospata and Rydapt are oral and will always process through the pharmacy benefit, while the injections Mylotarg and Vyxeos will be mainly through the medical benefit.

 

AIS Health’s View

According to Tegenu and Wong, many drugs are in the AML pipeline. On June 21, Daiichi Sankyo Company, Ltd. said that the FDA had issued a complete response letter (CRL) for its new drug application for quizartinib for the treatment of adults with relapsed or refractory FLT3-internal tandem duplication (ITD) AML. The company said it is evaluating the CRL and “will determine next steps in the U.S.” Jazz Pharmaceuticals, Inc. has several drugs in phase I, II and III trials, says Tegenu. In early September, Forty Seven, Inc. said the FDA had granted fast track designation to its magrolimab for AML and myelodysplastic syndrome based on initial data from a Phase Ib trial. The agency also gave the therapy orphan drug designation in AML. Wong notes that compounds being studied focus on mutations and pathways already targeted, as well as new ones. Researchers also are studying targeted follow-on therapies that are better tolerated in terms of side effects, he says.

 

Will Various Drug Pricing Efforts Endanger Innovation Within Pharma? Opinions Vary.

October 7, 2019

As drugmakers continue to gain insight into biomarkers and how to drill down into subsets of diseases, they are producing an astonishing array of novel new therapies. But innovation does not come cheap in the pharmaceutical industry. For example, the IQVIA Institute for Human Data Science reports that the median annual cost of new oncology drugs in 2018 was almost $150,000. At the same time, there has been a flurry of activity aimed at bringing down drug prices.

As drugmakers continue to gain insight into biomarkers and how to drill down into subsets of diseases, they are producing an astonishing array of novel new therapies. But innovation does not come cheap in the pharmaceutical industry. For example, the IQVIA Institute for Human Data Science reports that the median annual cost of new oncology drugs in 2018 was almost $150,000. At the same time, there has been a flurry of activity aimed at bringing down drug prices. And while efforts to make treatments affordable certainly are needed, those approaches should be such that they don’t hamper manufacturers’ research and development tactics, caution some industry experts.

One of the proposals is the International Pricing Index (IPI), an effort by HHS to bring payments for Medicare Part B closer to what other countries pay for these drugs, unveiled in October 2018 through an Advance Notice of Proposed Rulemaking (SMA 11/18, p. 1). Among the provisions is one to change Part B reimbursement from average sales price plus 6% to instead an approach 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.”

The administration has said that it still plans to move forward with the effort.

Among other proposals is one requiring that direct- to-consumer television ads for certain prescription drugs contain their wholesale acquisition cost (SMA 11/18, p. 1). That effort recently was deemed invalid by a judge in response to an industry lawsuit (SMA 8/5/19, p. 1); the administration is appealing. Another strategy would have done away with the safe-harbor protection in the anti-kickback statute for rebates negotiated between manufacturers and PBMs (SMA 2/18/19, p. 1). Following the Congressional Budget Office’s projection that the rule would increase federal spending by approximately $177 billion from 2020 to 2029 (SMA 5/20/19, p. 1), the administration withdrew the rule.

Uncertainty Surrounds Bills

But the efforts haven’t all been from the administration. Both the Senate and the House have proposed sweeping efforts to target drug prices. The Senate’s Prescription Drug Pricing Reduction Act (PDPRA) of 2019, introduced in July, proposes multiple changes to Medicare Part B and Part D, as well as Medicaid (SMA 8/5/19, p. 1). The Senate Committee on Finance passed the legislation, but it’s unclear whether Senate Majority Leader Mitch McConnell (R-Ky.) will allow a vote on the Senate floor.

However, McConnell’s stance on the House’s drug pricing bill, unveiled in September, was crystal clear: In an interview with Politico, he maintained that “socialist price controls will do a lot of left-wing damage to the healthcare system. And of course we’re not going to be calling up a bill like that.” The bill proposes, among other things, requiring HHS to negotiate the prices of up to 250 drugs in Medicare without competitors. Companies not coming to an agreement would be subject to financial penalties.

Drugmakers have vociferously pushed back on many of the proposals, with one of the arguments against them being that the efforts would have a chilling effect on pharma R&D. But opinions run the gamut on what kind of impact — if any — the moves would have on innovation.

“Empirical evidence” exists to support the idea that “lower spending on pharmaceuticals will lead to lower R&D spending and lower yield of innovative drugs,” says Elan Rubinstein, Pharm.D., principal at EB Rubinstein Associates. But “there isn’t enough evidence either way” to say whether “there aren’t policies besides spending that can impact innovation.”

“Additional patent protections and favorable tax treatment of R&D expenditures for drugs designated to treat ‘orphan’ indications appears have resulted in a large push among manufacturers and investors to bring those products to market,” he points out. “And those efforts succeeded, although sometimes at astronomical price points.”

Indeed, a July Health Affairs blog concluded that “the connection between high drug prices and innovation is more nuanced than commonly discussed. Reducing drug revenue (a combination of net prices paid for their use and quantity) would almost certainly reduce R&D investment and the yield of important new drugs. However, it may be possible to mitigate the negative effects of reducing high prices—one part of revenue—by simultaneously implementing other policies to promote drug use and reduce R&D costs. Finding a better balance between robust innovation incentives and high prescription drug prices should inspire aggressive information gathering, drive focused empirical experimentation, and embolden reforms already underway.”

A 2017 Health Affairs blog acknowledges the validity of the argument that strategies to reduce drug prices will result in less R&D investment. However, wrote the authors, “we question the premise that more innovation is always a good thing. A central tenet of economics is the law of diminishing returns. In this case, additional resources going into innovation inevitably yield fewer important breakthroughs. At some point, perhaps already reached, the yield from additional resources going into R&D no longer justifies what society is paying in the form of higher prices to support this.”

“Indeed, it is possible that the current magnitude of innovation in pharmaceuticals is already too high in the sense that resources going into it might be better used for infrastructure, education, housing and other priorities,” they wrote, noting that because the government already pays a high portion of increased drug prices through Medicare and Medicaid, as well as via tax subsidies, “higher drug prices inevitably lead to either higher taxes or cuts in spending for other priorities.”

According to Rubinstein, “it seems to me (as a non- economist) that there are two decisions that investors make: (1) whether to invest in R&D vs something else, and (2) whether, once deciding to invest in R&D, that R&D investment should go into pharmaceuticals. The issue is what other investment opportunities those dollars could go to where they could yield better future risk-adjusted returns. It seems to me that while pharmaceutical R&D is costly and risky, the payoff for success is potentially huge, as the marginal cost of production is quite low relative to the net market price, and given multiyear patent protection. So if the net market price is reduced due to government action to control drug prices or due to fewer policy protections and benefits, the key question remains: Even if margins and protections are lower, might that scenario still be better compared to other investment opportunities? It seems to me that this question depends on moment to moment comparative dynamics across industries and internationally, so [it is] not so easy to answer categorically. Another way to put it: How outsized need the investment opportunities be, relative to other opportunities, to continue investors’ preference for pharmaceutical R&D?”

The federal proposals, says Winston Wong, Pharm.D., president of W-Squared Group, “are all over the place, ranging from what seems to be outlandish, to totally ineffective. They all come and go, and none of them are really clear as to what the details are. I suspect they never get that far into the discussion. Hence, it is difficult to know what the true impact will be on innovation and drug development.”

Overall, he says, most of the proposals are targeting drug costs “mostly from a transparency and negotiations standpoint. In the end I doubt there will be much impact upon innovation because innovation is a vital component of the life cycle to keep the industry moving. I would be more concerned if there was a direct correlation between the cost of research and development and the cost of the medication, as opposed to pricing being driven by what the market will pay, which is any list price under the current environment. The EU does not stop innovation.”

Jeremy Schafer, Pharm.D., senior vice president, director, access experience team at Precision for Value, maintains that the two proposals posing the “biggest initial threat” to manufacturers are the IPI and PDPRA. If either is implemented, he tells AIS Health, “the government will have to consider developing alternative incentive schemes, or exceptions to the law, to encourage manufacturer investment in rare and complex diseases that have small patient populations. Without those incentives, manufacturers may not pursue drugs in those disease states.”

However, says Ashraf Shehata, national sector leader for KPMG’s Healthcare & Life Sciences practice, “just because legislation is passed, that doesn’t mean drugmakers will stop making medicines. Pricing regulations, however, create a whole new equation about what medicines can afford to be developed.” In the absence of action impacting R&D costs, “pricing regulations create a higher hurdle for drugmakers to make a profitable product, and that could slow the number of medications in the pipeline. Affordability of medications is a big issue, but we also need to address the costs of verifying that a compound under development is safe and effective.”

According to Lisa Kennedy, Ph.D., chief economist and managing principal at Innopiphany LLC, “the biopharmaceutical industry is responsible for approximately 70% of all innovation within health care — that is to say that the majority of R&D happens within the pharmaceutical industry. Price fixing of pharmaceuticals has been shown in several studies to have a knock-on effect on innovation.” In addition, she says, “price controls have been directly linked to decreases in life expectancy. So sure — price controls in the pharmaceutical industry will definitely reduce the pace of new drug development. And what is one of the most productive and exciting areas of innovation in biopharmaceuticals? Oncology. Cancer is the largest pharmaceutical therapeutic category, with U.S. sales estimated to grow from $39 billion in 2017 to $70 billion by 2023. So oncology could be hit particularly hard.”

“If enacted, it is reported that at least some of the proposed drug pricing legislation has the potential to pull upwards of $100 billion from the pharmaceutical industry over a 10-year period. It stands to reason that lost revenue will impact innovation,” says Ira Studin, principal at Stellar Managed Care Consulting, LLC. “Two angles appear particularly vulnerable. Big pharma could be less inclined to pursue more challenging research programs, focusing instead on areas where incremental gains appear more certain. Also, small, non-public biotech start-ups could find it more difficult to raise capital because the future market is now less attractive.”

Also potentially impacting these small start-ups are “efforts to erode protection in things like the Orphan Drug Act,” says Kennedy, spurred by debates around whether the statute promotes innovation or allows companies to take advantage. Small start-ups, she says, “are responsible for a huge number of promising oncology products, and they require the Orphan Drug Act incentives and tax breaks to secure angel and venture investments. We could see large numbers of oncology drugs lost without these protections.”

Legislation could also negatively impact bioclusters, geographically concentrated groups of biosciences-focused organizations interacting and collaborating in areas such as research and innovation, Kennedy tells AIS Health. “As lessons from Japan and other parts of the world have shown, it is really hard to build up a biocluster — the years of expertise, infrastructure and development aren’t something that once they decline can be immediately reversed. It can take decades to get it back to where it was.”

Because of this, she stresses the importance of people understanding “intimately the impact of this type of legislation: These are issues with a lot of nuance and complexity that are hard for individuals to understand and require really thoughtful measures to balance affordability challenges with the need to keep innovation intact.”

The U.S., she notes, “drives pharmaceutical innovation” through the National Institutes of Health and “a strong bench-to-bedside excellence from the biopharmaceutical industry. Government has the tendency to overcorrect, and sometimes the results of these actions cannot be accurately measured for very long periods, and then it is hard to reverse these overcorrections.”

“Many people have grown tired of the argument that higher-priced drugs are connected to the R&D cost,” says Kennedy, “and while it is true that there are some elements of price adjustments that need to be balanced with value and affordability, it doesn’t erase the link between price reductions and reduced funding for R&D investment at some level.”

Contact Kennedy at lisa.kennedy@epiphanomics.co, Rubinstein at elan.b.rubinstein@gmail.com, Schafer via Tess Rollano at trollano@coynepr.com, Studin at istudin@stellarmc.com and Wong at w2sqgroup@gmail.com.

by Angela Maas

 

Visibility Into Cost, Coverage Information Is Key for Providers, but Progress Is Slow

Health plans, PBMs and the pharmaceutical industry itself long have wanted to design user-friendly information technology systems that give prescribers coverage and cost information on medications at the point of prescribing.

Creating visibility into cost and coverage could help all system stakeholders as denials drop and adherence improves, experts agree. If the information available included details and eligibility for financial assistance programs provided by drug manufacturers, it would be even more useful.

However, providing coverage and cost data at the point of prescribing is turning out to be a difficult needle to thread. Analysts agree that the best approach is to fully integrate data into electronic medical records — prescribers want it at their fingertips as they’re meeting with their patients, and if they have to switch systems, they probably won’t bother.

The Advisory Board Company, an arm of UnitedHealth Group’s Optum consulting practice, recently held a summit with key stakeholders on adherence that touched heavily on transparency issues and how to get key cost and coverage data to prescribers, says Lindsay Conway, managing director.

“The single biggest takeaway was the importance of factoring in physician workflow into any solution you bring,” says Brandi Greenberg, managing director, life sciences, the Advisory Board Company. “You can have a great solution, but if it isn’t yet integrated into a physician’s EHR [i.e., electronic health record] or they have to log in and log out, it’s not a great solution.”

There’s an opportunity for the pharma manufacturing industry to fill some gaps, says F. Randy Vogenberg, Ph.D., principal, Institute for Integrated Healthcare in Greenville, S.C. “Manufacturers would like to have their product availability and coverage better known at the time of prescribing,” Vogenberg says. “They can utilize sales or clinical field personnel in addition to account managers to help get the information made available or known by clinicians.”

Slow Movement Toward Visibility Exists

Several companies — representing health plans, PBMs and parts of the pharmaceutical supply chain — have taken steps to improve prescriber visibility into costs and coverage.

For example, Humana Inc. said in June that it would integrate its Real-Time Benefits Check tool, IntelligentRx, directly into Epic, the most widely used EHR system, in order to deliver real-time pharmacy data to providers. By doing so, Humana will help to ease administrative burdens for providers and surface quality and cost information to providers as they make referral decisions at the point of care, Humana said. It also should help to improve medication adherence by presenting treatment alternatives with cost information to providers while they’re making prescribing decisions, said the insurer.

In January, Cerner Corp. announced a collaboration with CoverMyMeds, a wholly owned subsidiary of McKesson Corp. Under the pact, Cerner’s ePrescribe tool will partner with CoverMyMeds’ RxBenefit Clarity tool, delivering patient payment and benefit information at the point of prescribing. Nearly 1,600 clinics use Cerner’s EHR.

Surescripts boasts that 80% of prescribers have access to its price transparency tool, called Real-Time Prescription Benefit, via their EHRs. When combined with Surescripts’ electronic prior authorization tool, the two solutions allow providers to review patient- specific drug prices before prescribing, evaluate clinically relevant and preferred therapeutic alternatives based on individual patients’ characteristics, compare drug processes across channel options such as mail order and retail and complete prior authorizations “only when necessary,” allowing providers to streamline their workflows.

Finally, the federal government under the Trump administration is pushing the pharmaceutical industry towards price transparency. However, the administration’s proposed rule that drugmakers disclose prices in television ads was sidetracked in July by a federal judge who said Congress must act to give HHS permission to promulgate such a rule (SMA 8/5/19, p. 1). In addition, no federal solution on drug price transparency has been envisioned that would reach the granular level of detail needed for a physician to tell a particular patient how much her out-of-pocket spending might total.

Still, multiple significant barriers remain, Vogenberg says. “The lack of transparency and easy access to coverage status — good or bad — remains a conundrum for all key stakeholders in the U.S. health care system,” Vogenberg tells AIS Health. “IT limitations, contractual requirements or supply limitations and inefficiencies among the number of supply chain partners all contribute to issues at the point of decision-making by clinicians with their patients.”

Progress on integrated systems that would provide meaningful information at the point of prescribing has been slow and inconsistent, Vogenberg says. “There have been several efforts over the years by multiple parties to improve visibility into payer coverage on their formularies,” he says.

“Pharmacy benefit managers and other third-party payer organizations have created more links and improved their own websites or digital platforms, but have not tied directly into health system/hospital EHRs per se,” Vogenberg explains. “GoodRx [a consumer-facing startup that tracks prescription drug prices and offers coupons] and other consumer-centric entities and advocacy organizations have done similar actions to get information out in provider or consumer hands. Overall, speed of improvement has been slow and incomplete.”

Data Varies by Product Type

Health systems and PBMs generally are aware of the transparency problem and how it can affect overall costs and adherence. Vogenberg says health systems are working to capture real-time coverage information and include it in EHRs, “but experts say it will take many more years to achieve that goal, along with total system interoperability.” Maintaining the information on different platforms also can be challenging, he says, since there could be “errors, bugs or inaccurate information due to lag times or interoperability problems.”

Currently, it’s not clear how many physicians have ready access to payer drug coverage and formulary information at the point of prescribing, but it’s likely a small percentage and varies by the type of practice, clinic ownership and other systems running. A larger group of physicians may have access to some information at the point of prescribing, but that access may be limited and difficult to use.

The information available differs by types of products. Conway says that infused and injectable drugs that are administered in providers’ offices tend to offer the most visibility regarding cost and coverage, since providers have an incentive to determine whether patients are covered.

The data could be a two-way street: Vogenberg adds that most specialty and biologic drugs “typically have tight supply chains that include extensive reporting of data back to the manufacturer. Such data may be required by a REMS [i.e., Risk Evaluation and Mitigation Strategy].”

In the case of infused and injectable drugs, “the prescriber will probably hand off the patient to an insurance specialist or a financial counselor to check whether the drug is covered and what the estimated out-of-pocket would be,” Conway says. In this case, the pharmaceutical manufacturer’s role could be to provide financial assistance to patients who need it, she adds, although “health plans have a very uneasy relationship with pharma providing financial assistance and are not always excited about promoting it.”

Some providers may help patients determine coverage and cost issues for specialty medications that are dispensed through specialty pharmacies. Although “this category’s a bit fuzzy,” providers who typically care for patients who use many high-cost medications — for example, rheumatologists — are more likely to have staff members who help patients work through these financing issues, Conway says, adding, “my sense is that any physician who’s routinely prescribing high-cost medication is going to be attuned to coverage.”

Still, she says, “the difference is they [the providers] don’t have money on the line — it’s unreimbursed time for them.” In addition, many patients are taking multiple medications from different prescribers, which complicates both the clinical and financial pictures, she says. “I think when we get fragmentation of different specialists, and also patients trying to navigate different programs, it can be very overwhelming from the patient or physician perspective to try and optimize and take advantage of the programs out there.”

Prescriptions that are fulfilled by a third-party specialty pharmacy and more common drugs that are covered under the pharmacy benefit tend to have less visibility and transparency for providers, she says.

Conway also says physicians’ attitudes are changing on how much they want to know about various drugs’ costs and coverage. “A decade ago, not only did physicians not know what drugs were covered by a particular health plan — they didn’t want to know. They wanted to make clinical decisions unsullied by cost,” she says. “This is changing. Physicians are interested in managing the total cost of care. So this is an interesting transition period.”

Tools Vary in Usefulness

All major PBMs and a lot of smaller ones have created tools to help providers determine coverage and out-of-pocket costs of drugs they prescribe, Conway says. She notes that “the tools have been shown to be very effective in terms of getting patients on a drug that’s covered more quickly.”

However, these tools are not always completely user-friendly, Greenberg says; in many cases, prescribers need to log out of their EHRs and into a separate system to look up a drug, and then log out of that system and back into their EHR once they’re done looking up drugs, she says. In a focus group convened by the Advisory Board, “this came up as one of the biggest challenges — it’s not neatly integrated into the physician workflow, they have to log in and log out, and not all tools work with all EMRs.”

Of course, getting information to physicians about the cost and coverage of different pharmaceutical products is only one piece of the puzzle, Conway says. The second piece is “equipping providers to have that conversation with their patient. It takes time and sensitivity, and it’s a hard topic.”

Physicians dealing with complex medical conditions frequently delegate this task to a staff member, she says. For example, “in oncology, by and large the community has decided it’s not the best use of the oncologist’s time [to discuss financial issues], so it’s delegated to another member of their team.”

In addition, primary care physicians who are practicing in a patient-centered medical home may have a social worker or other staff member available who can deal with financial and drug coverage issues, and return quickly to the physician if a change in a prescription is necessary, Greenberg says. A medical home may even have a pharmacist available for consultation, she says, noting, “it’s a team-based approach.”

In those cases, representatives of pharmaceutical manufacturers should consider speaking to lower-level staff members at physician practices, instead of going “up the ladder” to higher-level clinicians, Greenberg says.

Some pharma companies are embedding documents or reminders about financial assistance programs into EHRs, Greenberg says, adding that she first started hearing about this practice three or four years ago. “Very often, this goes hand-in-hand with organizations that have invested in key accounts programs,” she says.

OptumRx Touts Adherence

PBM OptumRx offers a program called PreCheck MyScript, which consolidates what medications are covered; highlights any clinically appropriate, lower-cost options; and calculates exactly how much the options will cost individual patients. The technology is embedded within the provider’s existing EHR system and also includes a trial claims function to help both providers and members make informed decisions based on actual cost and coverage information in real time.

The tool works to improve adherence while also helping to save members money, according to a white paper OptumRx published in January.

In a series of studies consolidated and analyzed in the white paper, Optum reviewed more than 13 million transactions for 2.6 million members involving more than 110,000 health professionals from July 2018 through November 2018. The researchers looked at the costs associated with each step of the prescription process, including physician and pharmacist time, member costs and member adherence.

The white paper analysis showed that on average, physicians who used PreCheck MyScript chose a lower-cost alternative at least 24% of the time, leading to savings of $11.75 per prescription. In addition, physicians who used PreCheck MyScript saw fewer prior authorization/medical necessity rejections and denials, reducing work for themselves. The researchers estimated that avoiding prior authorization and formulary rejections reduced providers’ per-patient time by 27 to 31 minutes compared with providers not using PreCheck MyScript.

Finally, adherence rates rose modestly, the white paper found. The researchers identified a 4% improvement in medication adherence for diabetes, a 4% improvement for statins and a 2% improvement for hypertension after the PreCheck MyScript system was implemented.

OptumRx spokesperson Andrew Krejci tells AIS Health that more than 188,000 physicians have used PreCheck MyScript in the past year, and the system is generating more than 3.5 million transactions per month. Specialty drugs covered under the pharmacy benefit are included in the tool, he says. The entire tool is seamlessly embedded within the EHR as part of the e-prescribing process flow, he says.

“We currently partner with a wide variety of cloud-based EHRs that have automated (push) deployment systems resulting in immediate scalability,” Krejci says. “We also partner with several server-based EHRs that require a health system-centric focus, as many contract with their own IT departments.” PreCheck MyScript currently is deployed to Allscripts, Athena, Cerner, Dr. First, Epic, Meditech and NewCrop, among other EHRs, he says.

“Increasing provider access is a top priority for OptumRx,” Krejci adds. “We are focused on expanding adoption with doctors, continuing to provide accurate and valuable information that helps providers and consumers better engage with prescription decisions and enhancing the solution to ensure we deliver value and exceptional experiences for consumers and providers.”

Pharma Can Step Up

Greenberg tells AIS Health that “there’s an opportunity for pharma.” She notes that “we get a lot of questions from life sciences leaders about who else [beyond physicians] should we be talking to. More often than not, we find it’s a very effective strategy when they go down the ladder to social workers. They consistently undervalue the opportunity to share tools and resources with the provider’s care team.”

The more progressive pharmaceutical manufacturers have figured this out, Greenberg says. “A lot of it depends on how long they have had their key accounts program and how much they’re willing to invest in skills and competitiveness surrounding their key accounts people. We’re seeing a trend towards more investment, but there still are a lot who are not” investing.

Of course, Conway warns, this approach won’t work with many physician practices, since most of them don’t have a social worker as part of the team or another lower-level staff member who’s designated as the person to deal with patient coverage and financial issues.

Over the last two years, Greenberg says, she’s seen a growing interest from various stakeholders in greater pharmaceutical price and coverage transparency, coupled with growing trust and a sense of collaboration. But she says there’s still a long way to go.

“What I come back to is, I don’t believe that any one part of the industry is going to be able to solve this by itself,” says Greenberg. “Interest extends not just to contracting but to just breaking down some of the barriers. There is a growing recognition that certain problems will require cross-industry solutions, and we are still taking baby steps.”

Contact Conway and Greenberg via Advisory Board spokesperson Pete Simpkinson at SimpkinP@advisory.com, Vogenberg at randy@iih-online.com and Krejci at andrew.krejci@optum.com.

by Jane Anderson

 

Payers’ Coverage Factors for Rozlytrek Will Go Beyond Cost

The FDA’s August approval of Genentech, Inc.’s Rozlytrek (entrectinib) marked the third drug approved for a tissue-agnostic oncology indication. And while one of those two legacy drugs will compete directly with the newcomer, which is priced at a much lower point, payers and providers should make coverage determinations based on more than cost alone.

On Aug. 15, the FDA approved Rozlytrek for the treatment of adults with ROS1-positive metastatic non-small cell lung cancer (NSCLC). The agency also gave the drug from the Roche Group unit accelerated approval for the treatment of people at least 12 years old with solid tumors that have a neurotrophic tyrosine receptor kinase (NTRK) gene fusion without a known acquired resistance mutation; are metastatic or where surgical resection is likely to result in severe morbidity; and have progressed after treatment or have no satisfactory alternate therapy.

The first therapy to receive a tissue-agnostic indication was Merck & Co., Inc.’s Keytruda (pembrolizumab), to which the FDA gave accelerated approval on May 23, 2017, for use in all people with unresectable or metastatic microsatellite instability-high or mismatch repair deficient solid tumors that have progressed after treatment and do not have satisfactory treatment options, as well as people with MSI-H or dMMR colorectal cancer that has progressed after treatment with certain chemotherapies.

Then on Nov. 26, 2018, the FDA gave accelerated approval to Loxo Oncology, Inc. and Bayer Corp.’s Vitrakvi (larotrectinib) for the treatment of adult and pediatric patients with solid tumors that have an NTRK gene fusion without a known acquired resistance mutation; are metastatic or where surgical resection is likely to result in severe morbidity; and have no satisfactory alternative therapies or that have progressed after treatment (SMA 1/7/19, p. 6). Following Eli Lilly and Co.’s Feb. 15 unveiling of its planned purchase of Loxo, Bayer exercised its option to obtain exclusive licensing rights for the global development and commercialization of Vitrakvi and BAY 2731954 (LOXO-195), another TRK inhibitor.

Vitrakvi and Rozlytrek will compete directly for this indication. For the ROS1-positive metastatic NSCLC use, Rozlytrek will compete with Pfizer Inc.’s Xalkori (crizotinib), which also is indicated for NSCLC that is anaplastic lymphoma kinase (ALK)-positive.

The monthly price of Rozlytrek is $17,050 for adults. In pediatric patients, dosing varies based on body surface area.

That price is half of Vitrakvi’s $32,800 per month — but in line with Xalkori’s. An article in STAT points out that “in 51 patients [with ROS1-positive tumors], Rozlytrek had a response rate of 78%, compared to Xalkori’s 66%.”

According to Winston Wong, Pharm.D., president of W-Squared Group, “there is some indication that Xalkori is actually more effective in patients that exhibit both the ALK-positive and ROS1-positive mutations. This is currently being investigated under a breakthrough approval process. Should this approval become reality, I would anticipate…Rozlytrek to be used behind Xalkori, although there are indications that Rozlytrek has not been found to be effective in Xalkori failure in except in cases where there is a metastasis to the brain.” According to Roche, tumors in up to 40% of people with ROS1-positive NSCLC have spread to the brain.

Both Rozlytrek and Vitrakvi offer programs to help patients get the medications. With Vitrakvi, in a situation where a patient does not have a clinical benefit within 90 days of starting the drug, the cost of up to two months of the drug will be refunded to each entity that made a payment for the drug — patients, payers and third-party organizations — through the Vitrakvi Commitment Program. The Roche press release makes no mention of a similar program, and the company did not respond to an AIS Health request for comment on whether it is offering any value-based deals for Rozlytrek.

What are considerations for payers when it comes to coverage of Vitrakvi and Rozlytrek? “At the highest level, payers will look at efficacy, safety, and cost in making their determinations for coverage and ultimately formulary status,” says Wong. “Certainly, for the single common indication of treating advanced or metastatic NTRK gene fusion-positive solid tumors, the lower cost of Rozlytrek surely gives good justification to look to prefer the use of one product over another. The additional indication for Rozlytrek will also make it easier to justify the use of Rozlytrek over Vitrakvi. Given these two points, it seems that the decision is an easy one from a strategic care management standpoint.

“However, one then needs to ask why is Rozlytrek being marketed at nearly 50% of the cost of Vitrakvi, especially in this day and age of price inflation for novel products?” he continues. “One answer might be the overall efficacy of Rozlytrek. While Rozlytrek is observed to shrink a ROS1-positive NSCLC tumor in approximately 78% of the patients, Rozlytrek was only able to shrink the NTRK gene-fusion positive advanced/metastatic solid tumors in 57% of patients, compared to an overall response rate of approximately 75% for Vitrakvi.” This lower efficacy, he says, “will hinder a preferred status of Rozlytrek over Vitrakvi.”

Less-Frequent Side Effects Favor Vitrakvi

In addition, he points out that the drugs have similar adverse effects in terms of the ones most frequently reported. “However, when looking at the less frequent, more severe adverse effects, the profile is in favor of Vitrakvi,” says Wong. “Specifically, Vitrakvi’s label warns of neurotoxicity, hepatotoxicity and embryo-fetal toxicity. Rozlytrek shared the warning of hepatotoxicity and embryo-fetal toxicity but, in addition, warns of congestive heart failure, central nervous system effects, skeletal fractures, hyperuricemia, QT interval prolongation and vision disorders. When you are treating a patient in an already compromised clinical state, you do have to be cognizant of the risk of adverse effects.”

“Finally, given that both of these medications were fast-tracked, the evidence for long-term durability of the clinical benefit is minimal, as well as for any evidence of adverse effects associated with long-term use,” he continues. “Because Vitrakvi was released into the U.S. market last year, the experience with Vitrakvi is relatively longer than the experience with Rozlytrek, but neither agent has any extensive long-term use. In short, given the lower efficacy for advanced/metastatic NTRK gene fusion-positive tumors and the less favorable adverse effect profile and the relative short time of being on the market here in the U.S., there would be enough questions to lead a payer to allow for parity coverage and simply let the oncologists gain experience with both medications and allow the market dynamics to play itself out. The other point to be considered is that many states now have regulations in place that require coverage for any cancer treatment if it is supported by the FDA-approved indication, NCCN [i.e., National Comprehensive Cancer Network] guidelines or compendia.”

Ultimately, says Wong, “I would envision payers [will] utilize their normal prior-authorization process to insure the medications are being prescribed to the approved indication, which will include verification of the specific NTRK gene fusion-positive identification and for the ROS1 mutation with the cancer type being advanced or metastatic non-small cell lung cancer. I would not anticipate [a] UM [i.e., utilization management] program beyond the approved indication.”

Launch Is ‘in Line With Expectations’

During its July 30 conference call to report second-quarter earnings, an analyst asked about how the Vitrakvi launch was going, including patient numbers. Stefan Oelrich, a member of the Bayer board and head of the company’s pharmaceutical division, responded, in part, “we’re progressing fine. This is going according to our plans. We’re not disclosing the number of patients that we have on product for the time being, but the uptick is exactly going according to plan and we’re happy.” He added that it’s “in line with expectations.”

“My gut tells me that the population meeting the criteria is too small to drive any type of preferred UM program, unless Roche is offering a major rebate on top of the lower cost (which would go against their philosophy in the past),” Wong tells AIS Health.

Both Firms Are Developing CDxs

Interestingly, Bayer is working with Roche-owned Foundation Medicine on a companion diagnostic for Vitrakvi, while Genentech/Roche are working with that same company on a companion diagnostic for Rozlytrek.

In its press release announcing Rozlytrek’s approval, Genentech said that it “is leveraging its expertise in developing personalized medicines and advanced diagnostics, in conjunction with Foundation Medicine, to help identify people with ROS1 and NTRK gene fusions. Foundation Medicine will submit FoundationOne CDx to the FDA for approval as a companion diagnostic for Rozlytrek.” The companion diagnostic is approved in Japan for NTRK fusion detection but not for ROS1.

According to the Xalkori website, there are three FDA-approved ALK companion diagnostics, including FoundationOne, and one approved for ROS1, the Oncomine Dx Target Test from Thermo Fisher Scientific Inc. Various processes are available to confirm an NTRK fusion, but so far, the FDA has not approved a test for this use.

Roche did not respond to an AIS Health request for comment on whether its companion diagnostic for Rozlytrek, if approved, could be used for Vitrakvi as well.

“I am assuming that the Foundation Medicine NTRK test will not be specific for Rozlytrek only, but is actually applicable for both medications,” says Wong.

Contact Wong at w2sqgroup@gmail.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.