specialty drug management: what you must know 2017... · © archimedes 2017 4 specialty drug spend...
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© ARCHIMEDES 2017
Specialty Drug Management: What You Must KnowDecember 2017
© ARCHIMEDES 2017
© ARCHIMEDES 2017
Agenda▪ The Specialty Drug Challenge
▪ Savings Opportunities with Specialty
▪ Management Solutions
▪ Employer Case Studies
▪ Summary
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The Challenge
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Specialty Drug Spend
$722 $811
$915
$1,026
$1,147
$614
$860
2016 2017 2018 2019
Specialty Drug ForecastAcross Pharmacy and Medical
Unmanaged Managed
2020
Drivers
➢ Pipeline
➢ Inflation
➢ Site of Service
➢ Aging & Disease Burden
➢ Expanded Indications
➢ Inappropriate Use
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The Specialty Challenge
• Price, Price, Price
• Overprescribing and questions of value
• Siloed vendors
• Lack of cost transparency
• Vendor conflicts of interest
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Drug Pricing Is Receiving Scrutiny
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The Value of Specialty Drugs is in Question
▫ Many cancer drugs are approved by the FDA based on surrogate end points
▫ 86% of cancer drugs did NOT lengthen patients lives
Source:Chambers et al. Health Affairs. 2014., Kim and Prasad. JAMA. 2016.
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DTC Ads for Specialty Drugs are Growing
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The Coverage Conundrum
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Duplicate claims, Benefit shopping, Inappropriate use and site of care
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Remicade Cost by Channel(600 mg Infusion)
Numerous outpatient hospital claims exceeded $8,000.© ARCHIMEDES 2017
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Study found that physicians receiving more generous drug reimbursement prescribed more costly chemotherapy agents
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Physician Reimbursement Matters
Source; Jacobson. Health Affairs. 2006
BreastCancer$23.10
ColorectalCancer$35.50
LungCancer$13.00
Increase MD payment $1 and you increase drug cost by…
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STOCKPILING
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Formularies Are Rebate-Driven
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Drug manufacturer rebates to PBMs appear to play a Key Role in exclusion decisions
Cost-effectiveness does NOTappear to correlate with exclusion status
The more cost-effective brand is NOT always recommended
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PA Effectiveness is in Question
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• The study found “18 million in potential Sovaldi waste and $9 million in potential Olysio waste, a
total of $33,000 per member
in potential waste”
Source: Specialty Pharmacy News, October 2014
Study of Hep C Drugs
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Specialty Drug Savings Opportunities
Large Employer Example (~50,000 lives)
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Site of Care
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Growing Site of Care Opportunity
• Hospitals buying physician practices
• Hospitals expanding their outpatient footprint due to 340b opportunity
• Oncology pipeline
• Drug price inflation
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210%24%
Outpatient Hospital Physician Office
Drug
Cost
Overall Average Price Relative to ASP
Mark
Up
310% 124%
Average Price of Remicade (600 mg) by Channel
OutpatientHospital
Physician Office
$$$$$$$$$$$$$$$$$$$$$$$$$
$$$$$$$$$$$$
Source: 50,000 life employer
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Site of Care Opportunity
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Annual Savings Opportunity
Patients
Savings
Number ofPatients
Annual Savingsper Member
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Voluntary Site of Care
• Encourages providers and members to consider home infusion or infusionsuites
• Includes a small set of high cost specialty and orphan drugs (e.g., Remicade, IVIG)
• Patients are contacted by Archimedes’ clinicians to discuss alternative sites
Mandatory Site of Care
• Use of outpatient hospital setting requires precertification with review against clinical criteria
• Members who do not meet criteria are redirected to less costly, clinically appropriate sites
Site of Care Management
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Prior Auth
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Prior Authorization
Prospective utilization management reviews for specialty drugs to
ensure clinically appropriate use
Examples of Inappropriate Use from One Employer
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Challenges with Prior Auth
• PBM conflicts of interest
• Physician office attestations
• Lack of best practices (e.g., documentation)
• Use of non-clinical PBM staff
• Lack of technology for decision support
• Lack of transparency
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Prior Authorization - Acthar
Patient Profile Actions Taken
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Results Achieved
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Specialty Carve-Out
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Why Specialty Is Ideal for Carve-Out
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Average Annual Expenditure Per Person With an Expense, 2017
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Specialty Drug Carve-Out
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• Leverage clinical expertise and technology to manage specialty prior authorizations independently from distribution
• Implement value-based formulary to optimize appropriate use and net cost before rebates
• Implement a high touch utilization and billing management model to eliminate waste
Claims Adjudication
Specialty Pharmacy
Prior Authorization
Formulary and Rebates
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Specialty Drug Carve-Out Case Study
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Summary
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The Do’s and Don’ts
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• Focus on price discounts under pharmacy
• Allow auto-refill of specialty drugs
• Carve-out of medical without understanding your economics
Do NOT
Not that
Do this
✓ Limit specialty drugs to 30-day supply
✓ Implement PA policies across benefits
✓ Conduct clinical audits of your vendors
Do
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Areas of Opportunity
✓ Carve out prior authorization management from your PBM
▪ This is the single important step to mitigate inappropriate use
✓ Implement a site of care program under medical
▪ Work with health plan or outside vendor
✓ Evaluate a carve-out of specialty drugs to maximize value
• Having a contractual right in PBM contract is key
