Specialty Rx – Ongoing Challenges and New Management Strategies

Specialty Rx – Ongoing Challenges
and New Management Strategies
Presented By:
Axia Strategies
Prescription Drug Management
New Trends & Development
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Overview of Axia Strategies
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Specialty Rx Background/Marketplace
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Specialty Pharmacy Management Concerns and
Challenges
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Costs versus benefit designs
Pharmacy vs. medical management
Physician impact on prescribing/revenues
Member cost share – strategies/implications
Specialty Rx – Management Strategies
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What is a Specialty Rx?
Alarming utilization/cost trends
Current marketplace/future pipeline
Review of current benefit design strategies
Movement by PBM’s to pharmacy management
Clinical/utilization management programs
Preferred Formulary
Contracting Strategies
Oncology Management
Questions and Answers
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Overview of Axia Strategies
Ø  Full service pharmacy management consultant – 15 years
marketplace experience
Ø  18 years pharmaceutical manufacturer and PBM experience
Ø  30+ current managed care clients interface with 15 different PBM
relationships
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Introduction
Ø  Specialty pharmaceuticals hold great promise for people currently
living with rare and chronic conditions
Ø  That promise, however, is not without cost
Ø  Specialty pharmaceuticals are typically developed for limited patient
populations
Ø  Manufacturer prices for these high tech medicines are often very high,
and increasing dramatically
Ø  Specialty pharmaceuticals often require special handling,
administration, patient education, and clinical support
Ø  ALL These Factors ADD to Their Cost
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Specialty Rx
Landscape – An Exploding Marketplace
Ø  Projected to generate nearly $125 billion in revenues by 2014
Ø  Specialty drugs account for between 10% - 22% of total pharmaceutical
revenues
Ø  Average cost/Rx - $2,000 (10x cost for non specialty)
Ø  Account for majority of new drug approvals
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2010
56% - of new drugs
50% of new indications
Ø  Forecast to comprise approximately 40% of a health plan’s overall drug
spend by 2020.
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Overview of Specialty Pharmacy
Ø  What is a Specialty Biotech/Injectable drug?
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Specialty Drugs are high-cost oral, injectable, infused, or inhaled medications
that are either self-administered or administered by a healthcare provider,
and used or obtained in either an outpatient, home setting or medical facility.
Ø  Defined by 2 key attributes:
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Cost
Complexity
•  Limited shelf life
•  Temperature sensitivity
•  Special handling needs
Ø  Specialty drugs have the following key characteristics:
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Need frequent dosage adjustments
Cause more severe side effects than traditional drugs
Have a narrow therapeutic range
Require periodic laboratory or diagnostic testing
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Overview of Specialty Pharmacy
Ø  Who requires Specialty and Bio-injectable drugs?
Specialty Drugs are used by approximately 0.5% to 2% of the patient
population and include the following disease states:
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Rheumatoid Arthritis
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Deep Vein Thrombosis
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Growth Hormone Deficiency
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Multiple Sclerosis
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Crohn’s Disease
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Hepatitis C
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Infertility
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Osteoporosis
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Psoriasis
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Hemophilia
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AIDS & HIV
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Oncology
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RSV
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Cystic Fibrosis
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Transplant
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High Cost, High-Touch
Specialty Pharmaceuticals
Conventional Specialty Type of Condition Common Acute Common Chronic Complex Chronic Rare Disease Medication Augmentin Crestor Avonex Flolan Indication Acute Bacterial Infection Cholesterol Reducer Multiple Sclerosis Pulmonary Arterial Hypertension U.S. Patient Population 23 million scripts in 2001 Affects >50 million people Affects about 350,000 patients Affects less than 20,000 patients Handling Requirements No special requirements No special requirements Refrigeration training Refrigeration/ mixing/pumps/ central line/training Duration of Therapy About 10 days per episode Ongoing (maintenance drug) Lifelong Lifelong Cost of Therapy $92 per episode $1,360 per year $17,000 per year $80,000 per year Optimal Distribution Channel Retail Pharmacy Mail-­‐service pharmacy Specialty pharmacy Specialty pharmacy with advanced clinical services 9
Overview of Specialty Pharmacy
Estimates of Annual Cost per Patient of Common Specialty Drugs
Disease Commonly Prescribed Drugs Average Annual Cost per Patient Number of U.S. Patient Affected Respiratory syncytial virus (RSV) Synagis $8,000 90,000 – 115,000 infants Cancer Herceptin, Rituxan, Mylotarg, Campath, Avastin, Leukine $10,000 -­‐ $20,000 1.3 million new cases in 2002 HIV/AIDS Combivir, Epivir, Zerit, Crixivan, Sustiva, Viracept, Fuzeon $20,000 900,000 in U.S. (350,000 currently receiving treatment) Infertility Humegon, Pergonal, Repronex, Metrodin, Fertinex, Follistim, Gonal-­‐F, Lupron $14,000 6 million women Multiple sclerosis Betaseron, Rebif, Avonex, Copaxone $17,000 350,000 Rheumatoid arthritis Enbrel, Humira, Remicade, Arava, Keneret $18,000 2.5 million Crohn’s disease Remicade $20,000 400,000 Growth hormone deficiency Humatrope, Nutropin $30,000 15,000 – 25,000 Hereditary emphysema Prolastin, Aralast $30,000 100,000 Hepatitis C Peg-­‐Intron, Rebetol. Incivek, Victrelus $40,000 4 million Various autoimmune immunoglobulin (IVIG) Intravenous $50,000 Depends on disorder Pulmonary hypertension Flolan, Tracleer, Remodulin $85,000 25,000 Hemophilia Blood clotting factor $150,000 – $200,000+ 20,000 Gaucher’s disease Cerezyme $150,000 -­‐ $200,000 3,000 10
Overview of Specialty
Pharmacy Trends
Why do we need to be concerned?
Ø  Over 200 Specialty Medications on the market and 324 biotech/injectable
products in development
Ø  Total 2011 Biologic drug spend: $90 billion (est.) – Specialty Drugs
accounted for nearly 15% of overall Pharmacy Spending in 2011
Ø  Biotech industry sales are projected to rise 15% to 20% annually
Ø  The average cost of specialty drugs is over $2000 for a 30 day supply
Ø  60% of Specialty Drug costs for cancer and newer indications
Source: Managed Care April ‘11
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Overview of Specialty
Pharmacy Trends
Why do we need to be concerned?
Ø  Today approximately 25% of total drug spend occurs within medical
Ø  Unit Costs for Specialty Drugs increased 11.5% - with the primary
contributors to this increase including:
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Price Inflation of specialty drugs
Significant proportion of new drug approvals for high cost specialty drugs
Dosage Creep or dosage increase
Ø  Utilization of Specialty drugs increased nearly 15% in 2011, factored by:
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Increased use of Enbrel and Humira – RA + other indications
Increased # of Treatment Options – Pulmonary Hypertension
Re-allocation of some specialty drugs from medical to pharmacy
Increased use of specialty Rx’s for new indications
Source: Managed Care April ‘11
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Overview of Specialty Pharmacy
Biotech in the Pipeline
Source: “2010 Survey, Medicines in Development: Biotechnology,”
Pharmaceutical Research and Manufacturers of American, Washington
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Projected Spend for
Managed Specialty Drugs
2011 Total Pharmacy Spend -­‐ $300 billion Specialty growing 3X as fast as overall Rx
Specialty Rx Spend -­‐ $90 Billion 2004 Total Pharmacy Spend-­‐ $190 billion Specialty Rx Spend -­‐ $35 Billion 30%
18%
Traditional Rx Spend -­‐ $155 Billion Traditional Rx Spend -­‐ $210 Billion Assumptions: Using an annual growth rate of 11% for traditional drugs and an annual growth rate of 20% for specialty drugs, specialty spend will double over the next four
years, accounting for more than 25% of all outpatient pharmacy spend by 2008.
Source: IMS data through November 2011, Wall Street Equity Research, 2004.
CMS National Healthcare Expenditure Projection: 2003-2013.
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Management Challenges
Important Facts and Trends
Ø  Historically most injectable drugs have been part of the medical benefit
Ø  These medications have been a significant revenue source for physicians
and hospitals
Ø  Doctors are prescribing specialty injectables as first-line use over
traditional therapies.
Ø  Drug Makers are focusing development efforts and advertising on
Specialty Medications (Example: Commercials and ads for Procrit, Humira,
Remicade
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Management Challenges
Ø  Develop and implement policies to slow trends and control costs
Ø  Provide support for specialty participants in a coordinated fashion
Ø  Identify, consolidate, and manage specialty drugs across all
outpatient settings
Ø  Documentation of improved outcomes
Ø  Implement aggressive High Dollar Review protocols - medical
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Top Goals: Management of
Specialty Medication: 2012
Axia Book of Business
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Goals of Specialty Rx Management
Program for Payers
Ø  Reduce costs by driving to lowest unit cost from specialty pharmacies/PBMs/
wholesalers/providers
Ø  Effectively balance benefits between pharmacy and medical
•  Minimize members choosing administration site based on coverage
Ø  Ensure appropriate utilization by employing:
•  Clinical guidelines
•  Specialty formulary where possible
•  Prior authorization, step therapy and other management tools
Ø  Push increased member cost share as appropriate:
•  Separate specialty Rx tiers
•  Increased member cost per Rx up to Adherence Threshold
•  Annual max consideration
•  Non-preferred specialty Rx tier(s)
•  Build benefit to allow for future generic biologics when available
Ø  Develop contract to drive:
•  Rebates
•  General biologics
•  Increased use of a “white bagging” to manage in office costs
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Specialty Rx
Management Considerations
Ø  Cost Management – National PBM Statistics – Health Plans
Cost Management Strategies % of Plans Utilizing Exclusive PBM for Specialty Utilization 50% Plans permitting retail channel (either always or for defined # of fills) 25% Preferred PBM with 1-­‐2 outside specialty vendors – (threshold based) 40% Restricted medical coverage – incentive to move to pharmacy benefit 25% Individualized vs. Combined discount structure 75% Rebate arrangements No rebates – 20% Flat amount – 25% 21
% Share -­‐ 15% % and/or guar 40% Specialty Rx
Management Considerations
Ensure appropriate usage (most common programs in place today)
Ø Prior Authorization – Evidence based guidelines , minimize off label indication utilization
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Concept of whether to use as tool for moving to different drugs, minimizing off label, or just
‘sentinel effect” – or all
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Quantity Limits – ensure proper dosage, minimize waste
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Step Edits – drive utilization to non-specialty first line, then drive to preferred specialty
over non-preferred
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PBM Marketplace Movement to date:
HGH and MS – programs most widely incorporated
RA – not widely utilized yet, needs solid level of physician buy-in
Hep C – pretty new, no clients on board yet
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Implement Cost Containment/High Dollar Audit Strategies
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Review of pharmacy charges (J Codes) on medical claims
Review all specialty drugs (PA) – or establish $$ threshold
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Specialty Rx (continued)
Management Considerations
Ø  Cost sharing strategies/benefit designs
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Establish separate tier(s) for specialty
4 /5 tier set ups (specialty or preferred/non-preferred specialty)
Key areas of consideration:
•  4 vs 5 tiers: How are “lifestyle drugs” treated?
•  Co-pay differential – large enough to move buying behavior, small enough not to
threaten adherence
•  Co-pay versus coinsurance (or both)
•  Industry norm - $100 – 150 – acceptable, >$200 compromises adherence
•  Consideration of Yearly or Lifetime out of pocket maximums
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First fill retail, subsequent fill at specialty location – physician and local pharmacy
impact
Drive all/targeted specialty to pharmacy benefit
Ø  Current industry wide benefit designs – Co-Pay Programs
Component Average Co-­‐Pay Amount Specialty @ Retail (30 days) $112.00 Specialty @ Retail (90 days) $275 Specialty @ Mail $238 23
Specialty Rx (continued)
Management Considerations
Ø  4 Tier Programs - with built in Coinsurance
Component Ave Coinsurance Average Minimum Average Maximum Specialty @ Retail 20% $75 $107 Specialty @ Mail 40% $156 $372 24
Medical vs. Pharmacy Specialty Rx
Historical Management Billing
Considerations
Provider Type Pharmacy Benefit Medical Benefit Billing Bill and Dispense “Buy & Bill” Claim Type NCPDP CMS 1500 Drug Coding National Drug Code (NDC-­‐11 Digits) HPCPS J or Q code Not specific to manufacturer, strength or package size Reimbursed Negotiated cost of drug & dispensing fee Negotiated cost of drug & administration fee Provider Identification NABP – Pharmacy National Provider ID – Provider National Provider ID Utilization Management Programs PA, concurrent DUR, review edits, co-­‐pays & formularies PA, DM, CM High cost CM J Code Auditing Member Cost Share Co-­‐pay or coinsurance Co-­‐pay for office visit, some co-­‐
insurance -­‐ sometimes no cost share required 25
Evolution of Buy and Bill Process
for Specialty Pharmaceuticals
Ø  Third party payers are increasingly dissatisfied with current process
for Rx’s covered under medical benefit
Ø  Increased role of “white bagging”
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Specialty Rx dispensed by specialty provider or PBM, but drop-shipped
directly to provider (hospital pharmacy or physicians office)
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Provider holds product until patient arrives for treatment
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Specialty vendor adjudicates the Rx claim/collects co-payment from patient
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Provider does not purchase or seek reimbursement for drug
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Oncologist “Buy and Bill” Revenues
for Specialty Pharmaceuticals Decreases
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J-Code Billing Challenges
for Specialty Claims
Payment is: •  Unmanaged >J3490< No data available to distinguish many NDC codes NDC: 44087120001 $1851.62 NDC: 55566718502 16 different Infertility NDCs under a single HCPCS, J3490, such as: $648.67 NDC: 00052030631 $1304.92 NDC: 44087115001 $44.65 Avg Claim Cost shown based on CIGNA data
Source: Adapted from ICORE Healthcare data, 2010
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•  Based on % of charges •  Manually processed J3490 is an unclassified code used for MANY injectables No unique billing code assigned by Medicare for: • New Products • Current with No Code • Current with Other Code Specialty HCPCS Codes
for Data Mining
HCPCS Code Brand Drug Name Generic Drug Name C9003 Synagis palivizumab C9119, S0135 Neulasta pegfilgrastim J0135 Humira adalimumab J0200 Trovan alatrofloxacin mesylate J0207 Ethyol amifostine J0270 Caverject alprostadil J0290 Omnipen-­‐N ampicillin sodium J0295 Unasyn ampicillin sodium/ sulbactam J0456 Zithromax azithromycin J0530, J0540, J0550 Bicillin C-­‐R penicillin G benzathine & penicillin G procaine J0560, J0570, J0580 Bicillin L-­‐A penicillin G benzathine J0585 Botox botulinum toxin type A J0630 Calcimar calcitonin-­‐salmon J0640 Wellcovorin leucovorin calcium 29
Balancing Medical & Pharmacy
Benefit Designs
Medical Benefit Pharmacy Benefit Office administered tier Office and self-­‐administered tier 20% coinsurance 20% coinsurance $2,500 Annual Rx out of pocket maximum $2,500 annual out of pocket maximum Self administered Rx’s no longer covered under medical benefit Coverage only through specialty pharmacy(ies) at aggressive rates All provider bills required to designate NDC PA’s dosing guidelines and QLL’s implemented Provider reimbursed same $ amount as Specialty Rx contracted rate Restricted to 30 day max supply Increase in provider admin fee to offset loss of revenue from decreased Rx price No provider admin fees permitted 30
Drug Volume Distributed in
Physicians Office
Billing Process Chemo Drugs Non-­‐Chemo Drugs Physician Buy & Bill 64% 38% Specialty Vendor Ships to Providers Office 25% 44% Brown Bag (Member Takes Drug to Provider) 5% 7% Other 6% 11% * 2011 iCore Medical Pharmacy and Oncology Report 31
Medical Pharmacy Claims Repricing
Objectives:
Ø  Eliminate the problems associated with J-Codes by allowing NDC level
reporting and claims repricing
Ø  Allow for consistent prospective-utilization management and step
therapy to be implemented on physician office drug prescribing and use
Ø  Provide data collection and reporting to allow implementation of
formulary and generic substitution programs
Ø  Provide an avenue for early identification of high-risk members in order
to apply clinical-management interventions early in the disease process
Ø  Enable clients to realign benefit design for specialty drugs
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Use of Specific Specialty
Management Strategies – 2012/2013
Axia Book of Business
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Specialty Rx
Cost Containment Strategies
Ø  Exclusive specialty provider vs. preferred/leveraged relationships
Ø  PBMs
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Incented to mandate exclusive specialty distribution arrangement
Big PBMs – move from mail at AWP - 25% to AWP - 15%
Exclusive specialty Rx lists
Recommend “preferred” arrangement with PBM as “primary” distribution
with ability to utilize specialty pharmacies as “one-offs”
Establish minimum utilization % threshold (+/- 75%) for PBM
Ø  Providers
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Recommend blocking selected J-codes from coverage under medical benefit
Moving cancer reimbursement to ASP (average sales price) methodology
Ensure clinical appropriateness, correct cost basis, double billing is not
taking place through ongoing audits
Restricted reimbursement for office based agents – equal to pharmacy rates
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Specialty Rx (continued)
Cost Containment Strategies
Ø  Rebates
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Becoming more common (growth hormones, RA, MS)
Should be passed on to payer, preferably separate from other rebates
Pharmacy benefit – managed by PBM or specialty provider
Medical benefit – through direct contracting or select vendors
Ø  Prior Authorization
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Only cover appropriate indications
Only cover for correct duration
Drive to preferred providers
Monitor response to therapy
Ø  Step Therapy
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Requires that a special drug be used before the more expensive, specialty
medication (i.e. growth hormones)
Ø  Quantity Restrictions
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Enforce correct capsule size and dosing for specialty medications
Limit to 30 day supply, often following a 1-2 week trial to ensure patient can
tolerate medication
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Preferred Formulary
Ø  A number of disease states treated by specialty pharmaceuticals now have
multiple products with similar therapeutic effects. Formulary
management allows plans to encourage the use of most cost-effective
products and obtain price discounts with manufacturers. Increased
competition in the marketplace is likely to expand formulary management
opportunities
Ø  Key Categories Include:
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Growth Hormone
RA/Crohn’s Disease
Multiple Sclerosis
Hepatitis C (Sub Cutaneous & Oral)
Psoriasis
Osteoporosis
Ø  Genetic Testing Requirements
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Require diagnostic/genetic tests to be conducted to monitor or initiate certain
therapies (i.e. Herceptin – breast CA, non-small lung cancer – Tarceva &
Iressa)
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Oncology Management Strategies
Ø  Increased focus on palliative care/end of life care programs
Ø  Key Strategies Include:
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Adoption of NCCN/ASCO guidelines for clinical pathways and approval of
medication regimens
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Adjust oncologist fee schedules to incent lower cost drugs
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Selection of preferred products where available
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Incorporation of PA where appropriate
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Contract Negotiation Strategies
Ø  Exclusive vs. preferred relationships
Ø  Payers – final authority over what is considered a specialty Rx and
where reimbursed
Ø  Minimum, drug by drug specific pricing, updated quarterly
Ø  Payer right to carve out Specialty Rx to another vendor
Ø  Specialty contract pricing to be reviewed annually
Ø  Aggressive ongoing rebate strategy with guarantees in place
Ø  Requiring specialty Rx claims to be included in overall Rx discount
guarantees
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Value Proposition
Savings
potential of over $10 PMPY
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Spe
3-­‐5% g
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Contr
ign 1-­‐2% Plan Des
$ ent 1-­‐2% Case Managem
Claims Processing 1-­‐2% Time
Ø  To produce realized savings through true disease management
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8-15%
Client Strategies
Impact of Specialty Drug Management Initiatives
Ø  Low Impact
Ø  High Impact
Ø  Less Savings
Ø  Greater Savings
Ø  Minimal marketplace disruption
Ø  More marketplace disruption
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Summary
With Aggressive Discounts, Medical Claims Re-pricing, and Case
Management as part of a Specialty Program:
Ø  Control expense by improving quality
Ø  Prevent overuse, under use and misuse
Ø  Refining reimbursement coding systems (J-Codes and NDC Codes) to
assure that physicians and other providers are reimbursed appropriately
for each dosage
Ø  Identifying the most efficient site for delivery of services
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