Dawn Holcombe DGH Consulting March 2013

Dawn Holcombe DGH Consulting March 2013 4/3/13
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Changing Landscape —  Majority of oncology drugs still delivered in oncology offices and acquired through buy and bill —  Growing Pressures: A.  Frequency of oral drugs in oncology pipeline B.  Financial pressures changing delivery models – will hospitals dispense? C.  The Feds – will sequestration or push to ACO’s change drug acquisition trends overnight? D.  Specialty Pharmacy and other vendors building in oncology management and delivery space 4/3/13
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A. Oral Drugs in Oncology Pipeline —  Driving Forces —  REMS dictated in FDA approvals —  Limited distribution networks raise challenges to providers – forced vendor expansion outside of historical —  Adherence – more difficult to control out of office – patient’s responsibility —  Costs and vendors fueling payer/employer concerns —  Medicare Advantage issues for patients and providers —  Oral perceived as more manageable and less costly (away from providers) 4/3/13
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B. Changing Delivery Models —  How will providers react to pressures? —  Follow mandates for “Ship for Script” vs “Buy and Bill”? —  Choose to replace acquisition with delivery for financial reasons? —  Shift patients to hospitals (acquisition or shifts) —  What choices will hospitals make? Will payers mandate for hospitals as well? —  Will hospitals then: — 
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Follow mandates Replace acquisition with delivery Where would they shift patients? (????Medicare?????) DGH Consulting - CONFIDENTIAL
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C. WWCD? What will CMS do? —  Sequestration – depth, duration and application of cuts —  ACOs – not yet oncology, but around corner —  Bundled outpatient services – like DRGs in hospitals —  Cross many specialties, providers and services for one diagnosis —  Force MDs into bundles? 4/3/13
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D. External Vendors in Oncology —  Oncology Management (medical and pharmacy) —  CVS Caremark —  ExpressScripts —  Walgreens —  ICORE —  And more 4/3/13
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Opportunity for Specialty Pharmacy —  “…many…issues can be attributed to lack of provider control and monitoring of treatment due to decreased visibility—particularly compared with intravenously administered chemotherapy—and suggests that patients require more guidance.” —  Patents misunderstand directions for medication —  Adverse reactions may lead to stopped or reduced useage —  Under or over adherence (waste or inappropriate care) —  Drug interactions “Walgreens Specialty Pharmacy's Oral Oncology Management Program” by Richard Miller, Specialty Pharmacy Times, published online May
29, 2012, http://www.specialtypharmacytimes.com/publications/specialty-pharmacy-times/2012/june-2012/Walgreens-Specialty-PharmacysOral-Oncology-Management-Program
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Services Available from Specialty Pharmacy —  Typically —  NCCN Guidelines or Compendia compliance —  External advisory boards —  Patient assessment, counseling and education —  Clinical side effect management and support (often billed as early intervention and management) —  Patient financial support and assistance program coordination —  Medication oversight (including complimentary and other disease medications) —  Cost management (hospitalization avoidance, limited fill terms) 4/3/13
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Reports for Payers from ICORE and ExpressScripts 2012 ICORE Medical Pharmacy & Oncology Trend Report™ Express Scripts 2011 Specialty Drug Trend Report 4/3/13
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TherapeuGc Classes with a Medical Formulary Currently in Place Chemotherapy 97% 57% Biologic Response Modifiers 100% 64% G-­‐CSF 76% CINV 77% 96% 2013 97% 2012 97% 89% 99% 99% IVIG ESA 0% 20% 40% 60% 80% 100% 2012 ICORE Medical Pharmacy & Oncology Trend Report™,
http://www.icorehealthcare.com/media/329731/2012_trend_report.pdf , Figure 3 Page 9
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Payer Reimbursement Trends —  About 6 of 10 covered lives are covered by plans that reimburse providers for medical benefit injectables at a % higher than the average sales price (ASP) —  The reported weighted mean percentage higher than ASP in 2012 was 18%, up from 11 % in 2011. —  payors who represent 53% of covered lives in 2012 have begun to explore pilot programs that look at bundled payments for services with large, in-­‐network oncology groups 9up form 36% in 2011) 2012 ICORE Medical Pharmacy & Oncology Trend Report™,
http://www.icorehealthcare.com/media/329731/2012_trend_report.pdf , Pages 12-13, 15
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Growth of Oral Parity No, no member parity 2012 2011 Yes, have member parity 42 44 46 48 50 52 54 56 2012 ICORE Medical Pharmacy & Oncology Trend Report™,
http://www.icorehealthcare.com/media/329731/2012_trend_report.pdf , Fig. 27 Page 21
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Medical Injectables Billing DistribuGon -­‐ Payers 60% 50% 40% 2010 30% 2011 20% 2012 10% 0% Physician Outpatient Office Home Infusion Inpatient Pharmacy Benefit 2012 ICORE Medical Pharmacy & Oncology Trend Report™,
http://www.icorehealthcare.com/media/329731/2012_trend_report.pdf ,Figure 38 Page 26
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Payer – DistribuGon Channels to Physician Offices Billing Process 2011 Average Weighted Volume Infused Chemo Drugs 2011 Average Weighted Volume Infused NON Chemo Drugs 2012 Average Weighted Volume Infused Chemo Drugs 2012 Average Weighted Volume Infused NON Chemo Drugs MD Buy and Bill 64% 38% 60% 36% Specialty Pharmacy (White Bag) 25% 44% 32% 51% Patient (Brown 5% Bag) 11% 1% 1% Other 7% 6% 10% 6% 2012 ICORE Medical Pharmacy & Oncology Trend Report™,
http://www.icorehealthcare.com/media/329731/2012_trend_report.pdf ,Figure 39 Page 27
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Differences for Payers from Drug Delivery Models —  Specialty pharmacy acquisition costs are 17 percent higher on a weighted average basis than in the provider’s office. —  Approximately 20 percent of drugs shipped to a provider’s office fail to be used due to, for example, changes in dose, therapy, duration of therapy, benefit changes or enrollment in palliative care programs. —  Higher claim cost can occur as partial-­‐vial use is not possible when billing the 11-­‐digit National Drug Codes (NDCs) used by specialty pharmacies. 2012 ICORE Medical Pharmacy & Oncology Trend Report™,
http://www.icorehealthcare.com/media/329731/2012_trend_report.pdf ,Page 27
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Management Tools for Common Therapies by Percent of Lives Prio Auth Dis Mgmt Edits – Clin Step, Paths, Req Gdlns Case Mgmt Diff Fail Reimb Gener
ic 1st NCCN Gdlns Formu
laries None IVIG 83% 53% 37% 15% 38% 9% 8% 50% 46% 0% Chemo 82% 67% 57% 17% 39% 22% 8% 84% 11% 8% ESA 81% 50% 44% 18% 35% 11% 8% 56% 47% 1% G-­‐CSF 79% 63% 44% 17% 34% 9% 8% 55% 11% 3% Biol Rsp Mdfr 94% 64% 57% 18% 35% 51% 12% 49% 51% 1% CINV 31% 64% 44% 16% 38% 46% 13% 56% 13% 11% 2012 ICORE Medical Pharmacy & Oncology Trend Report™,
http://www.icorehealthcare.com/media/329731/2012_trend_report.pdf ,Figure 44,Page 30
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Pharmacy and Medical Benefits Drug Spend –
Express Scripts 2011 Specialty Drug Trend Report
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Express Scripts SBS Medical Benefit Management Express Scripts 2011 Specialty Drug Trend Report Care Continuum™ — an Express Scripts Subsidiary — provides the industry's most comprehensive range of utilization, trend and claims management tools for controlling the cost of medically billed drugs. With more than 15 years of experience and URAC accredited, Care Continuum is supported by a staff of clinicians, medical professionals and a board-­‐certified medical director. To achieve savings on medically billed specialty drugs, we apply three management principles: — 
—  Utilization Management
Ensuring the safe and appropriate use of high-­‐cost specialty drugs
—  Site of Care Management
Redirecting patients and medications to the lowest-­‐cost and most appropriate channel
—  Reimbursement Management
Verifying claims are paid at the contracted rate and improving opportunities to achieve rebates — 
Physicians: Streamlining Administrative Processing Our administrative processes and online systems are designed to give healthcare providers easy to use tools. If you are not using the online tool yet, we've provided fax forms for you to use instead. — 
Patients: Safeguarding Care Our utilization management oversight ensures patients receive safe and appropriate clinical care. — 
Plan Sponsors: Guaranteed Savings We deliver significant savings to plan sponsors, backed by a guarantee. — 
Online Prior Authorization For healthcare providers, our services include real-­‐time PA approvals available through easy, online access. Get timely, accurate authorizations. No more faxing. 4/3/13
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Express Scripts SBS Pharmacy Benefit Management -­‐ Express Scripts 2011 Specialty Drug Trend Report —  For more than 25 years, Express Scripts has been a leader in trend and — 
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utilization management of drugs billed through the pharmacy benefit. As the first to publish a drug trend report and the first to hold an Outcomes conference for plan sponsors, Express Scripts is an innovative leader in the industry. To continue this legacy, we apply the latest specialty pharmacy benefit management tools to reduce the spend and trend of specialty drugs billed through the pharmacy benefit. Our clinical experts designed the following programs to eliminate waste: Utilization management
• Prior Authorization • Drug Quantity Management • Specialty Step Management • Clinical Guidance*
Plan design • Tier Copayments • Network Design • Zero Retail Fills • Drug List Recommendations
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Information generated by payer organization to ask and answer questions for medical directors of payers and employers related to oncology delivery models – Published in Journal of Managed Care Medicine – November 2012 4/3/13
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NAMCP Drug Delivery Impact Study —  NAMCP —  DGH Consulting —  onPoint Oncology —  ImproveRX, Inc, —  Sanofi Aventis 4/3/13
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Purpose of Study —  Drug Delivery Models in Flux —  Potential Changing Drug Delivery Models Cost Implications for Payers —  Impact is based upon delivery-­‐related costs of drug cost only —  Regulatory Impact on Drug Management and Costs 4/3/13
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Study Focus —  Direct Acquisition Model (Buy and Bill) —  External Delivered Model (Script for Ship) —  Estimated Impact of Cancer Treatment Variation from Original Prescription under the two different drug delivery models —  Calculation of Impact – “Potential Waste” —  Study projects Potential “Waste”, if delivery model were to change, not actual current magnitude of “waste” 4/3/13
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Safe Handling Guidelines for Chemotherapy Administra8on ASCO/ONS Standards for Safe Chemotherapy Administration establish that —  22. On each clinical visit or day of treatment during chemotherapy administration, staff: —  Assess and document clinical status and/or performance status —  Document vital signs and weight —  Verify allergies, previous reactions, and treatment-­‐related toxicities —  Assess and document psychosocial concerns and need for support; taking action when indicated. —  This standard applies to all clinical encounters (including each inpatient day, practitioner visits and chemotherapy administration visits, but not laboratory or administrative visits). —  23. At each clinical visit or day of treatment during chemotherapy administration, staff review the patient’s current medications including over the counter medications and complementary and alternative therapies. Any changes in the patient’s medications are reviewed and documented by a practitioner during the same visit. 4/3/13
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Key findings —  About 1 in 10 cancer treatments have variations in treatment between — 
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the original planned dosing and the actual day of treatment for the most common cancers: breast, lung, colon and prostate Over 90% of those variations in treatment result in the planned dose not being given on the day of treatment The rest of the variations result from dose increases or dose decreases If drugs are pulled on the day of treatment from a general inventory maintained by the cancer provider (Direct Acquisition Model), only those drugs which are actually used are billed to the health plan by the cancer provider, so no waste of drug in comparison to the original prescription occurs. If drugs are delivered to the cancer practice for administration based upon the original planned prescription by the cancer provider (External Delivered Model), they are billed out to the health plan by the external vendor upon shipment, not upon actual utilization for the patient 4/3/13
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Key Findings – cont. —  If drugs are delivered from an external vendor to the cancer practice for a specific patient under the planned prescription and are not used for that patient – those drugs cannot be used for another patient, nor returned….they must be handled as “waste” and discarded by the cancer provider, resulting in a cost to both the health plan and the provider, in addition to the cost of the drugs actually used for treatment of the cancer patient. —  Based upon the results of this study, on a conservative basis, the cost of such potential “waste” to the health plan (in addition to the drugs actually used for treatment) under a External Delivered Model, could reach about $5,000 per treating physician, and are possibly significantly higher under less conservative assumptions. —  There is a potential high impact of “waste” dollars in drug use even resulting from low (under 10%) variations resulting from same day treatment changes – for both chemotherapy drugs and ancillary drugs that are delivered to the cancer provider for use, but that “waste” does not occur when cancer drugs are used from within the cancer provider’s own acquired inventory. —  Drug shortages are a significant issue in oncology today, and delivery policies that cause large numbers of unused drug to be destroyed would only exacerbate cancer drug shortages. 4/3/13
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Methodology —  Data set derived from electronic medical records (OncoEMR,® Altos Solutions, Pleasanton, CA and OnPoint Oncology, LLC, Hudson, OH) —  de-­‐identified patient information such as dose, duration, sequence and key patient demographic data including diagnoses. —  originally ordered treatment plan including the anticipated drug and dose was well as the drug and dose actually administered to the patient on the day of treatment —  Mismatches between the ordered drug and dose and the administered drug and dose provided the basis for comparisons of the two drug delivery models. —  12-­‐month period of April 1, 2011 through March 31, 201 4/3/13
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Methodology – cont. —  Three different scenarios when a mismatch between ordered amount and administered amount occurred: —  ordered>administered, including situations where administered amount = 0 (ordered dose held); —  ordered<administered; and —  ordered=administered. —  primary outcome measure was the mean cost difference between ordered drug amounts and administered drug amounts ,when ordered was greater than administered. —  Under a delivered drugs model, drug is pre-­‐ordered by the physician practice from an external source (i.e. specialty pharmacy) and can’t be returned if unused (ordered>administered). This was considered as potential ‘waste’. —  Thirty-­‐day per patient drug waste was also calculated based on the observed utilization patterns for both Average Wholesale Price (AWP)-­‐17% and Average Selling Price (ASP) + 10% and normalized to mean time on drug (in days, first to last). 4/3/13
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PaGents in Dataset PaGents in Dataset 4/1/11 -­‐ 3/31/12, 1,368 total Prostate, 119, 9% Colon, 269, 20% Breast, 540, 41% Breast Lung Colon Prostate Lung, 394, 30% 4/3/13
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Doses in Dataset Doses in Dataset 4/1/11 -­‐ 3/31/12, 25,202 total Prostate, 896, 4% Breast, 7,892 , 31% Colon, 7,857 , 31% Breast Lung Colon Prostate Lung, 8,557 , 34% 4/3/13
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Study LimitaGons —  Such variations uncounted in this study could include: —  Complete changes in regimen based upon a reassessment of the patient from one treatment to another, especially when related to a change in disease progression —  Undercounting of chemotherapy dosing changes (other reports have suggested higher variation rates – we chose to track only what was documented in this limited data set for these four cancers). Another recent study from ICORE Healthcare found a 20% rate of change for shipped cancer drugs – “Moreover, approximately 20 percent of drugs shipped to a provider’s office fail to be used due to, for example, changes in dose, therapy, duration of therapy, benefit, and higher costs, since partial vial use is not possible when billing NDC-­‐11 codes to the pharmacy benefit. —  Under-­‐tracking of actual experience due to escalating volume of documentable cases each month from April 1, 2011 to March 31, 2012. Actual total drug administrations in database for all of 2011 were 13,651. In contrast, the actual total drug administrations in the database for just the first four months of 2012 (as more practices came online with the EMR and entered data) were 18,495, which if annualized could total 55,485 for 2012. Since the database is in a phase of constant growth, a conservative decision was made to analyze only those administrations that were actually documented for the twelve months of the study period (April 1, 2011 to March 31, 2012 – an actual total of 25, 202.
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Percent of Doses Mismatched Percent of Doses That didn't Match Original MD Order -­‐ Dataset 4/1/11 -­‐ 3/31/12 18% 16.50% 16% 14% 12% 9.90% 10% 8% 8% 7.40% 5.90% 6% 4% 2% 0% Breast 4/3/13
Lung Colon DGH Consulting - CONFIDENTIAL
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PotenGal “Waste” for Payers PotenGal Dollars of "Waste" due to Unmatched Doses -­‐ Dataset 4/1/11 -­‐ 3/31/12 $1,400,000 "Waste" in AWP -­‐ 17% Values $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $0 Breast Lung Colon Prostate Total Total AWP -­‐ 17% "Waste" $327,561 $236,764 $499,036 $90,943 $1,154,304 Chemo AWP -­‐ 17% "Waste" $171,188 $76,398 $223,426 $26,012 $497,024 Anc AWP -­‐ 17% "Waste" $156,373 $160,366 $275,610 $64,931 $657,280 4/3/13
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PotenGal $ “Waste” per MD Poten8al Dollars of "Waste" per MD (at AWP -­‐ 17% value of doses) due to Unmatched Doses -­‐ Dataset 4/1/11 -­‐ 3/31/12 $5,000 $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 Breast Lung Total 4/3/13
Colon Chemo Prostate Total Ancillary DGH Consulting - CONFIDENTIAL
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Top 10 Chemo Drugs % “Waste” Top 10 Chemo drugs "Waste" % not matching original dose -­‐ Dataset 4/1/11 -­‐ 3/31/12 Bevacizumab 20% 46% OxaliplaGn 30% Trastuzumab 23% Leuprolide Alemtuzumab Docetaxel 70% CarboplaGn 71% Cetuximab Rituximab 23% 11% 4/3/13
13% Pemetrexed 36% DGH Consulting - CONFIDENTIAL
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Top 10 Chemo Drugs $ “Waste” Top 10 Chemo Drugs "Waste" -­‐ doses valued at AWP-­‐17% -­‐ Dataset 4/1/11 -­‐ 3/31/12 $12,026 $14,628 $9,822 $18,656 $28,222 Bevacizumab OxaliplaGn Trastuzumab Leuprolide Alemtuzumab Docetaxel CarboplaGn Cetuximab Rituximab Pemetrexed $155,150 $31,643 $31,970 $74,539 4/3/13
$79,412 DGH Consulting - CONFIDENTIAL
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Top 5 Ancillary Drugs % “Waste” Top 5 Prostate Ancillary Drugs "Waste" % not matching dose -­‐ Dataset 4/1/11 -­‐ 3/31/12 4.7% 11.0% 7.5% Denosumab PegfilgrasGm Zoledronic Acid DarbepoeGn 42.9% 4/3/13
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14.3% Palonosetron 38
Top 5 Ancillary $ “Waste” Top 5 Prostate Ancillary drugs "Waste" -­‐ doses valued at AWP-­‐17% -­‐ Dataset 4/1/11 -­‐ 3/31/12 $1,510 Denosumab PegfilgrasGm Zoledronic Acid DarbepoeGn $9,054 $21,372 $14,049 $18,013 4/3/13
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Summary —  Management of costs in cancer is critical to health plans —  significant potential financial costs for payers under a shift to a External Delivered Model before the costs of the drugs actually used in treatment for the patients. —  Conservatively, almost $5,000 per treating oncology provider —  conservatively, at least one in ten cancer treatments for the top four cancers —  Slight Variations can lead to High “Waste” 4/3/13
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Summary – cont. —  Potential high dollar impact to payers even if there are fairly low (under 10%) variations in drug use resulting from same day patient health status changes —  Many chemotherapy drugs observed in this study have notable rates of variation from planned doses – most between 10 and 20% and some even as high as 100% —  In lung, prostate and colon cancers, there is even a higher potential dollar impact on health plans from variations in ancillary drugs used to support high density chemotherapy administration than there is in the chemotherapy drugs used for those cancers. —  Ancillary and chemotherapy impact is fairly equal for breast cancer treatments. – yet ancillary drugs are more likely to be considered as candidates for movement to Delivered Drug Models through a specialty pharmacy. 4/3/13
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ImplicaGon messages for payers —  Potential for unintended high dollar costs —  Evaluation of specific strategies related to delivered drug models and acquired drug models —  Seek increased collaboration with providers to develop coordinated programs that minimize potential waste —  Ask providers about current observed “waste” under existing delivered drug models —  Consider delivery times and quantities shipped and possible impact on “waste” from current vendors 4/3/13
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Payer/Employer Drug Management ExpectaGons – MD or SP —  Patient and Clinical Assessment – formal process, tough choices, cost sensitivity —  Counsel – to patients and providers —  Education – to patients and providers, drawing clinical lines and tiering cost impact —  Outreach – to control adherence, minimize side effects, avoid unnecessary costs —  Monitoring – utilization, improvement, failure, good or poor response —  Reporting – by NDC for rebates, by evidence, savings and costs, “value” —  Watch large national or regional employers that cross multiple provider markets 4/3/13
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Oncology and Specialty Pharmacy – Next Steps 1.  Decide what you can control given external forces 2.  Define your role with specialty pharmacy 1.  Competition, collaboration, or conversion 2.  Orals, injectables, all or selected 3.  Identify parameters for interaction with specialty pharmacy 1. 
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Vetting Flow of information BOTH ways Key contacts and relationships Local, regional or national DGH Consulting - CONFIDENTIAL
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Internal Review for Providers —  Practice patterns regarding orals and injectables —  Practice patterns of treatment choices vs alternatives —  Patient monitoring, communications, and oversight for compliance and adherence (particularly orals) —  Opportunities and challenges of working with specialty pharmacy (local, regional, national) —  Establish policy and expectations —  Clinical —  Patient-­‐focused —  Reporting —  Care continuum positioning 4/3/13
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Points to consider —  Specialty Pharmacy not currently allowed under law to provide injectables to non-­‐Medicare advantage patients – MDs can through Part B —  Specialty Pharmacy delivery results in unused drug when treatment plan changes on day of service —  Specialty Pharmacy communicates with patient – outside of provider care or as part of team —  Specialty Pharmacy buys drugs at rates higher than MDs – for now —  Cancer trained pharmacists growing – role in infrastructure —  Specialty Pharmacy as industry is committed, growing, and marketing aggressively – compare with providers 4/3/13
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No easy answers —  Need deep integration of new treatment parameters and processes into care upstream and downstream —  Need better integration of medical/drug side effects, alternative medicine, comorbid condition management —  Accountability for costs of treatment decisions vs alternatives a growing expectation for payers and employers – and question roles of pharmacist and MD —  External forces (reimbursement policy, ACOs, clinical integration, financial pressures) increasing despite provider plans to contrary 4/3/13
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Take Aways from Today —  Role of MDs and Specialty Pharmacy in flex —  Universal “NO” increasingly difficult, sometimes provider themselves choose “YES” for own reasons —  Control of decision-­‐making regarding treatment, including drug dosing and schedule is in flux —  Provider delivery model fluctuations between hospital and community may drive role of specialty pharmacy, or may be driven by broad payer/employer decisions across multiple providers 4/3/13
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Messages from Today for Providers – Community or Hospital-­‐Based —  State and federal regulations and policy will dictate your reality —  Rapidly growing specialty pharmacy programs outside of MD plans for oncology management future —  Understand —  Watch —  Decide on Role and Interactions – While you can —  Positives and Negatives for specialty pharmacy – know, leverage, and balance —  Delivered drug “waste” —  Patient communication, adherence, compliance —  Interactions and alternatives —  Medical Benefit management, Pharmacy Benefit Management —  Tomorrow will look different – guaranteed, and will vary geographically —  We may or may not be masters of our own fate, or our patients – remains to be seen 4/3/13
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Thank You, and Good Luck
Dawn Holcombe, MBA, FACMPE
DGH Consulting
33 Woodmar Circle
South Windsor, CT 06074
860-305-4510
860-644-9119 fax
[email protected]
www.dghconsulting.net
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