NYBGH
Pharmacy Management
Conference
Bill Resnick
Dr. Aran Ron
July 22, 2010
Agenda
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Introductions
Current and future state of specialty
medications
Financial impact of specialty medications
Strategies plan sponsors can adopt to control
cost and adherence of specialty medications
Wrap Up/Q&A
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Who is SBG
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A boutique consulting firm with a specialty practice in
pharmacy benefits management
50+ years of experience with a team of seasoned
professionals with complementary skill sets in all aspects
of pharmacy and health care management
Areas of expertise include:
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insider knowledge of the PBM business model and pricing
tactics
procurement/contract negotiations
clinical expertise (Medical Advisor on staff)
plan design modeling
ongoing management
financial performance audits
SBG currently provides PBM consulting services for over 850,000 commercial
members and over 30M additional members through our work with a
combination of regional and national health plans across the country
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Current State of Specialty- Why it’s so Unique?
• Evolving
definition-usually a large molecule injectable
– but increasingly a small molecule oral drug (more
than just a biologic)
• Drug that targets a disease with unmet medical need
for relatively small populations and include one of the
following:
 Premium price (very high cost medicines)
 Coverage under the medical benefit but
increasingly under the pharmacy benefit
 Generally prescribed by a relatively small number
of physicians
 Specialized pharmacists/care coordinators
 Often requires special handling and storage
 Very few generic alternatives availableexpectations of development of “bio-similars” or
follow-on protein products
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Trends in Specialty That Impact Growth
Expanded indications for currently approved
therapies
• Expansion of adjunctive therapies for multiple
disease states
• Growing number of oral therapies, particularly
Cancer
• Biotech’s being prescribed earlier in disease
progression
• New FDA drug safety program “REMS” ( Risk
Evaluation & Mitigation Strategies)-to ensure
benefits of drug outweigh the risks
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Latest Trends
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In 2009 specialty drug spending increased 19.5%, and is expected to grow at
rates of 20% and higher in each of the next three years.
Here’s a look at how traditional medications compared to specialty medications
Traditional
Specialty
Total
Overall
4.8%
19.5%
6.4%
Prevalence
3.5%
5.7%
3.7%
Cost/Unit
5.3%
11.6%
6.0%
Units Per Rx
0.4%
-1.1%
0.2%
Patent Expirations
-2.4%
0.0%
-2.1%
0.3
1.5%
0.5
Intensity
0.6%
-1.0%
0.4
Mix
-2.9%
2.7%
-2.3%
New Drugs
Prevalence-changes in the % of patients taking meds, Cost Per Unit -changes in ingredient cost+taxes+admin
fees-rebates, Units/Rx-changes in the # of units prescribed per fill, Patent Expirations -the impact of branded
medications expiring, New Drug Entrants -the impact of new branded drugs in 2009 on spend, Intensitychanges in utilization among those using drugs, Mix-changes to lower cost or higher cost products
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Source: ESI 2009 Drug Trend Report
Common Specialty Drugs and Avg. Cost
Drug
Average Cost
Per Month
Enbrel
Rheumatoid Arthritis
$1,800
Copaxone
Multiple Sclerosis
$2,800
Avonex
Multiple Sclerosis
$2,400
Humira
Rheumatoid Arthritis
$1,800
Cellcept
Transplant
$1,300
Xolair
Asthma
$1,900
Betaseron
Multiple Sclerosis
$2,900
Gleevec
Cancer
$4,900
Amounts above are averages based on SBG client sampling
•On
average 1% of population will utilize these Meds—and can skew the
average PEPY cost of $1500 to easily $2500+ in the next few years
•Average cost of a traditional medication is $67 vs. $1867 for specialty
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Top Specialty Products
Top 10 Specialty Drugs dispensed during the first
quarter of 2010 for SBG Sample Client
Label Name
Disease Claims
State
ENBREL
HUMIRA
COPAXONE
GLEEVEC
AVONEX
LOVENOX
REBIF
BETASERON
TRACLEER
THALOMID
RA/Ps
RA
MS
Cancer
MS
MS
MS
MS
MS
PPH
Cancer
417
269
134
46
83
174
60
39
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Ingredient
Cost
Member
Copay
$750,089
$483,275
$373,219
$224,662
$199,352
$160,714
$155,127
$114,515
$112,137
$109,866
$20,711
$14,015
$3,853
$1,115
$2,518
$4,454
$1,755
$4,623
$2,515
$446
ICST Per
Rx
$1,798.78
$1,796.56
$2,785.22
$4,883.96
$2,401.83
$923.64
$2,585.45
$2,936.28
$5,339.84
$5,782.44
Member Member
Copay Cost %
Per Rx
$49.67
2.76%
$52.10
2.90%
$28.75
1.03%
$24.24
0.50%
$30.34
1.26%
$25.60
2.77%
$29.25
1.13%
$118.55
4.04%
$119.76
2.24%
$23.47
0.41%
Member Contributions are generally immaterial in relation to the price
of the product, however, member cost must be balanced against the
risk of non-compliance
Average Member Cost share is 24% for Generic and 16% for Brand
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Specialty Drugs Unique Clinical Characteristics
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Can be highly effective treatment – move from
control of symptoms to slowing disease and
potentially achieving remission
Mechanism of action includes immune
modulation, targeted protein synthesis and other
unique focused functions
Disease states include
• Rheumatoid arthritis, oral oncology, multiple
sclerosis, hepatitis C, infused oncology,
transplants, growth deficiency, blood cell
deficiency, respiratory conditions, infertility,
pulmonary hypertension
Oncology accounts for half of the specialty drug
expenditure – cancer treatment as a chronic
disease with declines in cases and deaths
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Growing Pipeline
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Over 250 specialty medications have been
approved by FDA
Pipeline is robust with specialty drugs likely to
outnumber small molecule drugs
– 633 specialty drugs in development for
more than 100 diseases (254 for cancer,
162 infectious disease, 59 auto immune)
– Approvals will outnumber other new drugs
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Examples of specialty pipeline drugs
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Replagal – treatment of Fabry disease with
enzyme alpha-galactosidase A manufactured by
human cell line, $250 million projected sales
approval 2010
Motavizumab – second generation respiratory
syncytial virus antibody, $950 million projected
sales, approval 2010
Telaprevir – Protease inhibitor for treatment of
hepatitis C, $1.9 billion projected sales, approval
2011
Benlysta – inhibitor of B lymphocyte stimulator for
treatment of lupus and RA, projected sales $1.1
billion, approval 2011
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Challenges in Clinical and Fin. Mgmt of Specialty Drugs
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Often the only option for treatment of a
complex serious illness
Production by small number of biotech
manufactures allows for high pricing and
limited leverage
Multiple routes of administration and benefit
coverage presents utilization control and
reporting issues
Traditional methods of pharmacy
management not applicable
Use of drugs for off label indications
Complexity of data capture and coverage –
medical, pharmacy and specialty rider
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Coverage of Specialty Pharmaceuticals –Med vs. Rx
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Historical coverage driven by location of
administered - self administered drugs under
pharmacy and infusions under medical
Medical vs. Pharmacy
• Two thirds of plans cover self injectables
under pharmacy
• 70% cover drugs requiring administration
by a health professional under medical
• 5% have a separate rider
Differences in reimbursement rates, billing
systems, cost share and utilization
management approaches
Example – Humira (injectable) vs remicade
(infusion)
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Coverage of Specialty Pharmaceuticals –Med vs. Rx
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Integration under pharmacy specialty
medications benefit allows for alignment of
incentives, data collection and
standardization of benefits
Allows for management of me-too drugs or
appropriate substitutes
Can implement co-pay differentials if
substitutes exist
Co-insurance and out of pocket maximums –
requires integrated processing
Allows for data tracking and management
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Limitations of Traditional Pharmacy Management
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Many traditional management methods not
effective
• Generic substitutes
• Creation of formularies
• Maximization of manufacturer’s rebates
• Therapeutic substitutions
• Quantity restrictions
• Patient cost share through tiered copays
Requires more complex and sophisticated
tools
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Adherence and Affordability
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Limitations of cost shifting
Adherence to treatment is multi-factorial
(costs, complex regiments, side effects etc)
Can have a significant impact on outcomes
and medical costs
Increasing cost share may reduce
employer/plan drug costs - but will likely
impact hospital/ER costs and clinical
outcomes
Studies have found decrease in fill rate 4.6
more likely if out of pocket costs greater than
$250 vs. less than $100
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Categories of approaches to manage specialties
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More clinical and utilization management
Provider reimbursement
New specialty provider strategies
Benefit design
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Most common recent changes specialty pharmacy
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Created new copay - 90%
New benefit – 75%
Mandatory specialty pharmacy program –
70%
Decreased reimbursement for drugs - 67%
Selected preferred products – 40%
Utilized lab values 36%
Step edits – 33%
More prior auths – 31%
Genetic testing – 22%
Source EMD Serono Injectable 5th edition
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Clinical Strategies to Manage Specialty Drugs
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Vary by therapeutic class
• Optimize clinical outcomes (MS, Hepatitis
C, oral oncology)
• Limit off label use (Oncology)
• Prevent inappropriate use based on
national guidelines (respiratory syncytical
virus, growth hormone)
• Require trial and failure of other agents first
(rheumatoid arthritis, psoriasis and asthma)
Future strategies focus on targeting based on
laboratory values and genetic testing
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Clinical Utilization Management
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Goals include:
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Appropriate use based on disease severity and
diagnosis,
Limit non-FDA approved use (up to 33% in
oncology)
Ensure tried and failed first line therapy
Strategies include
– Step Therapy
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Preferred drugs for select classes (impose prior
authorization, tiered copays, on line edits,
payment lockout)
Preferred drugs when available in
therapeutic class (growth hormone,
multiple sclerosis, hepatitis)
Coverage criteria and review for select
drugs assure appropriate use according to
national guidelines
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Clinical Utilization
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Case and disease management
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Coordination with current programs
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Rare disease management programs
Management of individuals with multiple
conditions/co-morbities
Role of education and patient care
management
Compliance
• Administration
• Expectation management
• Avoidance of unnecessary hospital and
emergency utilization
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Clinical Utilization
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Pipeline management
• New drugs being approved and utilized at
a rapid pace
• Need information and analysis of new
approvals
• Understanding of clinical and financial
impact of the drug
• Assuring placement in correct therapeutic
category and implications for current
drugs
• Development of clinical strategies
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Financial Utilization Management
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Distribution management
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Reimbursement methodology
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Discounts off average wholesale price (AWP)
vs average sales price (ASP)
Site of care management
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Use of specialty pharmacies vs open network
or buy and bill
Modification in provider reimbursement and
large margins on administering drugs
Better capture of claims submission data
(move from non-specific J codes)
Claims management
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Retrospective and concurrent DUR
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Survey of most effective strategies
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Implement prior authorization
Implement step edits
Mandate use of specialty pharmacy
programs
Select preferred products
Create guidelines
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Summary
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Increase in the number of specialty products
Continued cost pressure and irrational price
increases
Highly effective treatments-which often lead to
lower medical expenses
Heightened emphasis around clinical programs
and ongoing oversight
Different strategies required to manage
specialty vs. traditional medications
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Q&A
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Copies of the presentation will be made
available
Contact information:
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bresnick@sbgbenefits.com
aron@sbgbenefits.com
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