The New Frontier of Pharmaceuticals Maximizing pharmacy value and - - PowerPoint PPT Presentation

The New Frontier of Pharmaceuticals Maximizing pharmacy value and outcomes while managing spend

Amy Ball, PharmD Chief Pharmacy Officer

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Agenda

• Current and future trends of specialty

therapies in the U.S.

• Strategies employers and health plans are

using to make sound clinical and economic drug coverage decisions while maximizing the value of their pharmacy benefits

• Latest benefit design modifications such as

partial fills, step therapy, preferred pharmacy networks, prior authorizations, reference pricing, tiered deductibles, and price transparency used to manage the pharmacy benefit and specialty drugs

• Direct and outcomes-based drug

contracting

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Pharmacy Benefit Management and the Employer

Claims Adjudication Manufacturer Revenue Contracting Retail Network Contracting Mail Order / Specialty Contracting Formulary Management Benefit Design Consulting Data Warehousing Benchmarking PBM Client / Consultant

PBM

By shifting responsibilities from PBMs to Plan Sponsors we achieve transparency, increase flexibility, improve quality of care, and reduce overall costs.

Traditional Ecosystem

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Specialty Trend

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Specialty Trend

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• Specialty Trend – Pharmacy Channel
• Remains the largest cost driver of commercial trend
• Specialty drug spending in the pharmacy channel increased 8-11% for commercial clients of PBMs
• Autoimmune and inflammatory conditions were the top spend categories followed by oncology

and MS

• Higher utilization, aided by newer therapies and indication expansion helped drive trend
• New drugs for rare conditions will drive Specialty trend
• Specialty Trend – Medical Channel
• Significant spend under the medical channel with minimal line of site and routine monitoring
• In 2018 the FDA approved 28 medications that would be managed under Medical channel
• Increasingly see independent physicians moving to employment by a health system – increasing

hospital outpatient setting place of service utilization

• Top 5 drugs billed under medical in 2018 all now have biosimilars (Remicade, Neulasta, Rituxan,

Herceptin, Avastin)

• Cell and Gene Therapy
• Hundreds of cell and gene therapies at various stages of clinical development
• By 2030, there could be 60 marketed cell and gene therapies treating about 50,000 patients per

year

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Specialty Trend

• In 2019, through October, 33

Novel New Drug therapies have been approved by the FDA

• 79% of these agents are considered

Specialty Drugs

• 36% received Priority review

https://www1.magellanrx.com/documents/2019/10/magellan-rx-pipeline-october-2019.pdf/ https://www.fda.gov/drugs/new-drugs-fda-cders-new-molecular-entities-and-new-therapeutic-biological-products/novel-drug-approvals-2019

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Drug Coverage Decisions

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Drug Coverage Decisions

• PBM makes all drug coverage decisions
• Many times incentive for PBM to add drugs to

the formulary is driven by rebate

• No transparency to true net cost
• Bundled rebate contracts allow patent

extension type products to be covered on the formulary in preferred status

• Originator Brands are often favored over

Biosimilars and Specialty generics

• Products with shorter patent life are not

preferred agents and newer agents are chosen as preferred for longer term rebate contracting

• PBM creates and administers PA criteria
• No real incentive to create aggressive criteria,

especially when PBM owns retail, mail and/or specialty pharmacy

• The PA process is often a check the box with

minimal in-depth review of medical/lab data to support use

• Employer makes own drug coverage decisions
• This could be a full custom formulary or a partial

custom formulary

• Evaluate all new to market drugs
• Put new drug to market block in place
• Evaluate clinical efficacy and cost-effectiveness

relative to other products already on the market

• Early decisions mean less rebate impact because

no utilization and no market uptake data

• Ensures “Low Clinical Value” products, like patent

extension products, are excluded from the formulary

• Identify opportunities to create more aggressive

custom UM

• Certain specialty medications like Acthar HP

need custom PA

Current State Future State

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Drug Coverage Decisions

• Helps employers take control over

what drugs to cover, rather than having PBM making decisions which may be based on rebates

• Below are examples of drugs, and

the estimated cost to employers, that PBMs often cover

• Duexis - Advil and Pepcid - $2,300/Rx
• Vimovo - Nexium and Aleve - $2,000/Rx
• Sil-K Pad - wound dressing - OTC alternatives
• $5,000/Rx
• DermacinRx Pad – lidocaine/emollient -

$11,000/Rx 23 of nearly 100 drugs approved in 2018 exceed annual WAC cost of $35K

2018 Drug Approvals

Drug Annual cost of treatment Indication Takhzyro $573,820 Hereditary angioedema Tegsedi $449,800 Hereditary polyneuropathy Vitrakvi $399,069 Solid tumors Tibsovo $317,733 Acute myeloid leukemia Galafold $315,250 Fabry disease Symdeko $292,000 Cystic fibrosis Xospata $273,750 Acute myeloid leukemia Lorbrena $195,345 Lung cancer Palynziq $178,120 Phenylketonuria Talzenna $177,39 Breast cancer Jynarque $170,002 Kidney disease Vizimpro $150,865 Lung cancer Braftovi $133,546 Melanoma Mektovi $133,546 Melanoma Erleada $132,860 Prostate cancer Tavalisse $114,975 Chronic immune thrombocytopenia Daurismo $94,780 Acute myeloid leukemia Oxervate $94,400 Neurotrophic keratitis Copiktra $76,909 Lymphoma Symtuza $42,366 HIV Sympazan $37,960 Lennox-Gastaut syndrome Tiglutik $37,800 Amyotrophic lateral sclerosis (ALS) Biktarvy $35,839 HIV https://www.goodrx.com/blog/prescription-drugs-approved-in-2018-list-prices-over-30k-per-year/

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There were only 836 cancer therapies counted by PhRMA in 2015 compared to over 1,100 in clinical trials today

https://endpts.com/phrmas-new-report-counts-each-cancer-drug-in-the-us-pipeline-which-has-now-swelled-to-over-1000-in-the-clinic/

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Tipping Points Lead to Transformation

FDA Historical Review

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1906 Congress passed the Pure Food & Drugs Act

• Tipping Point: Upton Sinclair’s The Jungle
• Established a regulatory agency to protect the nation’s supply of

food and drugs

• “I aimed at the public’s heart and by accident hit the stomach”
• 1930 the agency was officially named the Food & Drug

Administration (FDA)

1938 Congress passed the Food, Drug, & Cosmetic Act

• Tipping point: elixir sulfanilamide/base diethylene glycol
• Manufacturer tested appearance, flavor and fragrance
• Mandated drug + its ingredients must be shown to be safe
• All NDA required pre-human testing safety data
• Ended marketing of proprietary mixtures of untested ingredients

1962 Keefauver – Harris Amendment

• Tipping point: DES to prevent miscarriages despite evidence of

ineffectiveness

• Harmful exposure of 5-10 million women and fetuses
• Required manufacturers to show substantial evidence of efficacy
• 1/3 of all marketed drugs lacked even a single effective use and

were removed

1980s Development of expedited review programs

• Tipping Point: HIV/Aids crisis

1992 Priority Review for serious or life-threatening conditions

• Review and provide decision in 6 months
• Shortened the standard process by about 4 months

1992 Accelerated Approval Pathway

• Allowed approval based on surrogate markers
• Requires post approval studies to confirm clinical benefits

1997 Fast-track Pathway

• Rolling review with goal to reduce the duration of clinical

trials

2012 Breakthrough Therapy Programs

• Goal to abbreviate the overall drug development process
• Drug shows great promise in early phases
• Shortened median development time (4.8 years) to

approval

https://www.smithsonianmag.com/science-nature/origins-FDA-what-does-it-do-180962054/ https://www.fda.gov/about-fda/fdas-evolving-regulatory-powers/milestones-us-food-and-drug-law-history https://www.fda.gov/patients/learn-about-drug-and-device-approvals/fast-track-breakthrough-therapy-accelerated-approval-priority-review

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Accelerated Approval Pathway

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Allowed approval based on surrogate markers

• Oncologic surrogate endpoints include:

 Response Rates (tumor shrinkage)  Objective overall response (ORR)  Progression-free survival (time to tumor growth)  Time to progression (time to tumor growth)  Disease-free survival (time to recurrence)  Recurrence-free survival (time to recurrence)  Metastasis-free survival

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Accelerated Approval

Internal FDA Assessment of Cancer Drugs

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• Published 2018
• 93 drugs approved through this pathway 1992 through

May 2017

• 51 clinical benefit confirmed
• 5 had been withdrawn or revoked
• 37 ongoing post approval evaluation
• Conclusion: low failure rate evidence of effective
• peration

Gyawali B, Hey SP, Kesselheim AS. Assessment of the clinical benefit of cancer drugs receiving accelerated approval [published online May 28, 2019]. JAMA Intern Med.

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External Review of Original FDA Data Set

The Rest of the Story

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May 2019 JAMA Internal Medicine

• FDA’s original data set but deeper dive into the data
• Same 93 drugs approved via FDA’s accelerated pathway
• 51 clinical outcome benefit “confirmed” by the FDA

 15/51 follow-up studies documented increased overall survival  19/51 follow-up studies used the same surrogate marker  17/51 follow-up studies used a different surrogate marker

Gyawali B, Hey SP, Kesselheim AS. Assessment of the clinical benefit of cancer drugs receiving accelerated approval [published online May 28, 2019]. JAMA Intern Med.

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Impact of FDA Accelerated Review Process

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• Most new cancer drugs are approved through the accelerated

approval process

• Cancer drug approvals suggests that most drugs have less than

a transformational response rates and unconfirmed clinical benefit

• An umbrella meta-analysis of oncology clinical trials

demonstrated a weak association between commonly used surrogate end points and overall survival in most cancer types.

Haslam A, Hey SP, Gill J, Prasad V. A systematic review of trial-level meta-analyses measuring the strength of association between surrogate end-points and overall survival in oncology. Eur J Cancer. 2019;106:196-211.

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Examples Medium control +:

• No coverage of cancer

medications without overall survival data or improved quality of life (QOL)

• No coverage of new drug

classes that enter the market when many other drug classes are available if new class provides no real improvement in

• utcomes (SGLT-2’s when

first available on market)

• No coverage of OA knee

injections

Formulary Decision Philosophy

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Examples No coverage of:

• Drugs with OTC alternatives
• Drugs with minimal clinical

value (e.g. OTC combo pain patches)

• New strength or

formulations without improved outcomes Examples Low control +:

• No coverage of Tamiflu (

improvement in symptoms not felt to be clinically) significant

• Movement of all cough

and cold and vitamins, if covered, to highest tier (brand and generic)

• No coverage of new

Brand Drugs in a class of drugs that are mostly available as generic (Lipruzet, Livalo – statins)

Low Control Medium Control High Control

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New Drug to Market Review (example)

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Specialty Plan Design

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Specialty Plan Design

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• Partial/Split fills
• Utilization Management
• Quality PA’s and reauthorizations
• Step therapy – Preferred products, Biosimilar, Non-Specialty
• Fill limits – QL, Days supply limits step therapy
• Preferred pharmacy networks
• Demographics of employer – local strategy
• Tiered copays and deductibles
• Copay Assistance Programs
• Accumulator Programs (manufacturer copay assistance)
• Medical versus Pharmacy Benefit
• Site of Care
• Duplicate billing
• Formulary alignment
• Pharmacy like prior authorization process
• QALY (Quality Adjusted Life Year) or LYG (Life Year Gained)

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Specialty Plan Design

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• The Quality-Adjusted Life Year (QALY) is the gold standard for

measuring how well a medical treatment improves and lengthens patients’ lives

• Served as a fundamental component of cost-effectiveness analyses

in the U.S. and around the world for more than 30 years.

• Using the QALY system, one year in perfect health is equal to one

QALY.

• One year with some sort of health problem that has an effect on quality of life

would be worth less than one QALY, depending on its severity.

• For example, if a 55-year-old whose life expectancy is another 24 years, lives

those 24 years in perfect health, that equals 24 QALYs.

• By contrast, if that person is suffering from untreated rheumatoid arthritis, those

24 years could come with extreme pain and a loss of mobility that could equal just 10 QALYs.

• However, if a drug is able to reduce the person's pain and improve mobility,

another five QALYs may be added for a total of 15.

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Specialty Plan Design

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• The Institute for Clinical and Economic Review (ICER) is an

independent nonprofit organization that seeks to improve healthcare value by providing comprehensive clinical and cost- effectiveness analyses of treatments, tests, and procedures

• ICER reviews the available data on the drug and translates its
• utcome into QALYs
• ICER has determined that the maximum value a single QALY can

have in dollars is $150,000

• It made that calculation based on a variety of health-economics studies on

how much Americans are willing to pay for their health care and how health care spending compares per capita worldwide.

• Looking at the arthritis patient, if an arthritis drug could add five

QALYs, the maximum cost of the drug should be $750,000, that value is then spread over the 24 years the patient is expected to use it, coming to a cost of $31,250 per year.

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Specialty Plan Design

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• The cost per QALY gained for new treatments remains the best way

for policymakers to understand how well the price of a treatment lines up with its relative benefits and risks for patients compared to

• ther treatment options
• ICER QALY data is becoming increasingly influential in US Drug

Pricing

• Novartis AG set the price of its gene therapy Zolgensma at a limit set by ICER.
• Regeneron Pharmaceuticals, based in the United States, dropped the price of

their cholesterol drug Praluent to line up with ICER's recommendations

• QALYs are being used by health plans, employers and PBMs to

make coverage decisions

• CVS Caremark has also started offering self-insured employers a list of

medicines that exclude drugs based on a certain QALY cost unless the drugs were approved under Breakthrough designation.

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Contracting

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Specialty Pharmacy Contracting

• Outcomes based contracting
• Hep C, Heart Disease, Heart Failure, Diabetes
• Luxturna - 50% of the price of Luxturna tied to efficacy and durability over three to five years
• Financial Intermediary
• Gene therapy payment plans – Zolgensma and Luxturna
• Collaborative approach
• Embarc Benefit Protection - pay a fixed per-member, per-month amount to Cigna’s eviCore business
• After a patient is approved for a gene therapy treatment, eviCore acts as the exclusive, in-network

provider for the gene therapy drugs

• Payers and patients incur no additional costs for the gene therapy
• eviCore arranges for the provision of the drugs to patients through a network of specialty pharmacies

and specialty distributors

• eviCore network includes only Accredo and CuraScript SD.
• Specialty Carve-Out
• Direct to Employer Manufacturer Contracting
• Contract for lowest net cost – rebate, copay assistance, procurement discount
• Direct to Employer Contracting with Specialty Pharmacy
• Cost plus pricing – to lower acquisition price
• Prior Authorization Carve Out
• PA to neutral third party who does not own the Specialty Pharmacy dispensing the drug
• Require actual documentation of tests, not just check boxes
• Specialty PBM Service Carve Out
• Full carve out of Specialty PBM services

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Specialty PBM Carve Out

A Two PBM Model

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• Two PBM model
• Non-Specialty PBM – process all non-specialty claims adjudication, PA, formulary, rebates, etc.
• Specialty PBM – process all Specialty claims adjudication, PA, formulary, rebates, etc.
• Specialty PBM does not own the Specialty pharmacy
• Have a network of pharmacies, but have a primary pharmacy they will contract with
• Can use your own direct contract specialty pharmacy as well
• Utilization management
• Aggressive management of prior authorization criteria
• Require actual studies, tests, etc. from MD office
• Proactive conversation, “peer to peer”, with MD to ensure drug is right for member
• Rebate management
• Have minimum rebate guarantees but approach drives to lowest net cost
• Biosimilar approach if lowest net cost
• Transparency of rebates
• Variable copay assistance
• Variable copay assistance ensures full use of manufacturer programs
• Lowers member and plan costs
• “Reverse” accumulator in place
• Complete transparency to copay assistance in claims feed

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Specialty PBM Carve-Out Results

A Two PBM Model

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• Varying levels of experience to date
• Client #1 – 10 months
• 49% of total plan paid spend was

Specialty prior to implementation

• Client #2 – 12 months reported
• 45% of total plan paid spend was

Specialty prior to implementation

• Client #3 – 4 months
• 54% of total plan paid spend was

Specialty prior to implementation

• 20.20%
• 18.40%
• 39.10%

CLIENT #1 (40K) CLIENT #2 (25K) CLIENT #3 (7K)

Specialty Plan Paid Trend

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Summary

• Specialty Drugs are driving trend for most

employers

• Pipeline indicates these trends will continue

into the future

• Employers need to become more involved in

managing trend

• Drug coverage decisions
• Creative contracting
• Plan design changes

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Questions

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Contact Information

• amy.ball@healthstrategyllc.com – Chief Pharmacy Officer
• chris.crawford@healthstrategyllc.com – Chief Growth Officer
• https://www.healthstrategyllc.com/ - Health Strategy Website

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