Key Trends in US Specialty Pharmacy and Access - Payer Perspectives and Developer Strategies, 2020-23 - Certara
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C E R TA R A E V I D E N C E & ACC E S S R E P O R T Key Trends in US Specialty Pharmacy and Access Payer Perspectives and Developer Strategies, 2020-23
2 CERTARA EVIDENCE & ACCESS REPORT OVERVIEW
Report overview
Welcome to the 2020 trends report
To allow for the optimal positioning of your product, portfolio or company, it is critical to
understand the various forces that shape the US speciality access landscape. For the last two
decades, our team has been tracking a wide range of critical market access developments.
Certara clients rely on tested playbooks to help them navigate complex and competitive
situations such as:
■ Increasing volume control over prescribed therapies by various payer types Utilization
■ Tighter formularies and stricter utilization management Management
■ Provider incentives shifting away from volume, physicians’ flexibility to make
Distribution
Rx decisions
Disruption
■ Increased patient exposure to out-of-pocket cost burden
■ Consolidation in the site-of-care landscape and payer cost shifting strategies
ci o
■ Rising complexity of reimbursement-relevant coding and billing procedures
ch F
depending on setting/ site of administration
■ Growing payer ability to leverage biosimilar entrants and therapeutic
Re s ear
ICER DRIVERS
alternatives across crowded drug classes
Impact OF CHANGE
We usually look at how these forces shape the landscape for individual product
20
or portfolio access. This report shares some of the broader and more ubiquitous
20
market trends we have uncovered in our engagement with Certara’s ‘Compass
Expert Panel’, a leading proprietary database of formulary decision makers in
health plans, PBMs, hospitals/IDNs and channels influencing access, including Alternative
specialty pharmacy, GPOs. Ready for rapid deployment, it is updated in real time Financing
and, to date, has been leveraged across hundreds of strategic projects in life sciences.
Policy
Disruption
We are convinced that the range of topics discussed in this report will peak your
interest, and hopefully encourage you to dig deeper. All of these are more than just trends.
Successful developers need awareness of their individual context, and strategic foresight
in order to thrive in an environment that gets more complex every day. We are specifically
including a section on future policies, some of which offer a drastic redesign of the current
landscape described in the earlier chapters of the report. To enable decision-making in the
face of ever more uncertainty, our consultants specialize in scientific value story development,
pro-active policy and payer engagement, as well as multi-faceted go-to-market and
distribution strategies.
Our team would be thrilled to schedule a personal consultation to discuss what these insights
may mean for your product or pipeline asset. Please feel free to reach out.
Authors We would like to acknowledge the research of Maximilian Vargas, PhD
MBA and thank both him, and Barbara Pannone, PhD for her instructive
Isha Bangia PhamD MBA, Manager, US Market Access, Certara (New Jersey) edits and feedback as well as Bill Weir for substantive copy review.
Ulrich Neumann FRSA, MBA, MSC MA, Senior Director & Head, US Access Corresponding author: Ulrich Neumann at Certara, 295 Madison Avenue,
& Commercial Strategy, Certara (New York) 23rd Floor, New York, NY 10017. Email: ulrich.neumann@certara.comCONTENTS ACCESS TRENDS IN SPECIALTY PHARMACY 2020-23 3 Contents Research methodology 4 Guidance on document use, important terms, and abbreviations 4 Limitations 4 The Shifting Landscape of Specialty Coverage Market context 6 Key market trends 8 Patient cost-sharing as leading response strategy 9 Utilization Management Restrictions Key trends with respect to Utilization Management (UM) reach across eight areas 12 Prior authorizations and reauthorization 13 Designating preferred specialty products on the medical benefit 18 Increasing product exclusions of specialty drugs 19 Split-fill programs 20 Evidence-based pathways: Increased use to manage specialty drugs 22 Quantity restrictions and step edits 24 Developer takeaways 25 Distribution Channels Disruption Increase in limited distribution for specialty pharmaceuticals 28 Shifting away from ‘buy-and-bill’ on the medical benefit 28 Disruptors on our radar 29 Developer takeaways 30 Rising Cost Effectiveness Considerations Market context 33 Key trends 34 Implications for developers 36 “ICER”-ready? Targeting publications in support of ICER defense 36 Innovative Financing for Novel Therapies The advent of transformative medicines as a driver for payment innovation 38 Case in point: How to value, how to pay for cures? 39 Milestone-based outcomes contracts 39 Annuities payments/ installment financing 43 Reinsurance/ Stop loss 44 Subscription-based pricing 45 Implications for developers 46 Escalating Policy Environment Legislative context 51 Passed regulations 51 Major congressional legislation 52 Policy dashboards: Positioning payers on drug pricing proposals 53 Endnotes 57
4 CERTARA EVIDENCE & ACCESS REPORT
Research methodology
■ Using Certara’s Compass research network, ■ Respondentswere comprised of ■ Partsof the analysis presented in this
we conducted an online survey among national (n=17) and regional health plans report have been accepted for publication
active voting members of P&T committees (n=14), pharmacy benefit managers as posters by the American Academy
in US managed care organizations (MCOs), (PBMs; n=7) and integrated delivery of Managed Care Pharmacy (AMCP) in
followed by a set of semi-structured networks (IDNs; n=6). 2020, one of which has been awarded
interviews for further interpretation and a prestigious gold ribbon in professional
probing of key trends. In-depth interviews ■ MCOs were also categorized by size, review.1,2
often help to clarify the gap between based on the number of covered
expressions in survey research and reality lives, into large, mid-sized and small
on the ground. health plans
■ Small plans:The Shifting Landscape of Specialty Coverage
6 CERTARA EVIDENCE & ACCESS REPORT THE SHIFTING LANDSCAPE
Market context
■ No universally accepted definition exists ■ While larger, injectable, protein-based ■ The FDA has approved over 140
for specialty pharmaceuticals. Most refer molecules (known as biologics) are most new specialty drugs since 2013 and
to high-cost a complex therapies, often likely going to be specialty drugs, we note approximately two-thirds of the 48
for chronic conditions, which require that roughly half of all specialty sales are novel therapies approved in 2019 were
special monitoring, dose adjustments, still small molecular entities.4 specialty drugs.7,8 About 60% of new
special distribution and administration molecular entities awaiting FDA approval
(self- or physician-administered ■ Covering the range of $10,000 to through 2021 can be classified as specialty
injectables) practices. $7,000,000 per patient annually, specialty pharmaceuticals 9 as late stage pipelines
drugs are understood to be higher- are dominated by specialty therapies
priced therapies, accounting for half of led by oncology indications and niche
all US pharmaceutical spending, roughly products across a range of classes.
evenly split between the medical and the
pharmacy benefit categories.5,6
FIGURE 1
Pharmaceutical spending since 2015
Growth of specialty market (2015-2020)
50%
$510.9 $513.7
Non-discounted spend (BNs)
$483.8
$500 $446.4 $455.0 40%
$426.7
$400 $264.6 $267.4 $258.9 $264.6 $266.2 $266.0 30%
Growth
$300 20%
$200 10%
$100 $162.0 $179.0 $196.1 $219.5 $244.6 $247.8
0%
$0 -10%
15 16 17 18 19 20
20 20 20 20 20 20
EB
TF
MA
■ Specialty ■ Traditional ■ Specialty growth ■ Traditional growth ■ Total market growth ––– No growth
Source: IQVIA, National Sales Perspectives, February 2020
a
>$670 sponsor-negotiated price per Medicare standards for 2019 3THE SHIFTING LANDSCAPE ACCESS TRENDS IN SPECIALTY PHARMACY 2020-23 7
■ US specialty drug spending saw a modest ■ In 2018, the top ten specialty categories
annual growth of 3%, from 44.7% in 2018 represented 87% of total specialty spend,
to 47.7% in 2019 per ESI.10 On the basis of with oncology, inflammatory diseases
non-discounted spending, specialty growth and multiple sclerosis as the leading
has been outpacing traditional product categories.12 Prescription utilization
growth, with a 10% to 0.3% dollar volume across commercial plans for oncology
increase, per IQVIA. and inflammatory conditions increased
4.4% and 3.6% and unit cost rose 13.7%
■ The two drivers of growing spending on and 10.5%, respectively.13 Notable drugs
specialty drugs are an increase in unit from these classes include Keytruda
cost and increased utilization. Specialty (pembrolizumab), Humira (adalimumab),
utilization increased by 8% year-over-year and Enbrel (etanercept).
(YOY) from 2017 to 2018.11
FIGURE 2
Three therapy areas responsible for 2/3 of
historic (5-year) sales growth and are dominating
growth in recent (1-year) launches
Top-10 therapy area growth %
12
1-year absolute growth (2018-2019)
ONCOLOGICS
10
8
AUTOIMMUNE
6
ANTIDIABETICS
4
ANTICOAGULANTS
MENTAL HIGH 1-YEAR AND 5-YEAR GROWTH
2 HEALTH
HIV ANTIVIRALS
0 PAIN MS RESPIRATORY AGENTS
-2 NERVOUS SYSTEM DISORDERS
-4
-6 -4 -2 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46
5-year absolute growth (2014-2019)
Bubble size = Total market size
Source: IQVIA, National Sales Perspectives, February 2020 ● Specialty ● Traditional ––– No growth8 CERTARA EVIDENCE & ACCESS REPORT THE SHIFTING LANDSCAPE
Key market trends
■ Our survey confirms that inflammatory Top conditions of budget impact concern
conditions, oncology and diabetes remain
the top three categories of budgetary 100%
Share of selection in top three categories
concern for Commercial and Medicare
90%
payers.b They are responsible for two thirds
of the absolute budgetary growth and 80%
dominate new launches. Budget impact is 70%
attributable to the combination of high-
60%
priced therapies and a high number of
patients in these categories. 50%
40%
■ Payers are concerned that the growth 30%
of specialty drug costs is outpacing that
20%
of non-specialty drugs, pointing to new
approvals, strong research pipelines, limited 10%
competition and increased utilization 0%
among a growing number of patients. Commercial Medicare
■ Our interviews confirmed the payer view
that the slow introduction and uptake of ■ Inflammatory conditions
biosimilars into the market has hindered ■ Diabetes
potential cost savings.14 Payers express ■ Multiple sclerosis
hope that over the next decade, biosimilar ■ Oncology FIGURE 3
introductions could lead to costs savings in ■ All other Leading conditions of budget impact concern
the range of $25B to $44B.15
■ With respect to their management of the specialty category, the top 3 challenges noted by payers outside of rising cost are:
EN G E EN G E EN G E
The increased utilization and A large number of rare disease Entry of one-time treatments such
1 2 3
CH ALL
CH ALL
CH ALL
expanded indications of drugs products (13%) as gene therapies (12%)
(cited by 15%)
■ Payers mention that utilization surges ■ It is estimated that 25-30M Americans ■ s of 2020, there are four gene therapies
A
can add the challenge of actuarial live with a rare disease. 65% of new approved by the FDA, with more
unpredictability since only about 5% of drug approvals in the next 3 years will than 900 INDs in clinical trials.17 The
patients may account for half of a payer’s fall into the rare disease and cancer cumulative effect of curative therapies
entire budget. categories, often for targeted therapies. across multiple conditions is expected
In the aggregate, payers are concerned to put increasing strains on current ‘pay-
■ Expanded indications, from original about the rising median cost per orphan as-you-go’ payment systems.
rare disease patient groups at launch drug patient.16
to broader populations later on, make ■ ollapsing decades worth of potential
C
historic launch pricing untenable given cost-offsets into the single, one-time
considerable volume increases. administration of a drug produces
extraordinary up-front budget pressures
on payers.
b
n=31, representing 169.6M Commercial and 29.2M Medicare livesTHE SHIFTING LANDSCAPE ACCESS TRENDS IN SPECIALTY PHARMACY 2020-23 9
■ With respect to their management of the specialty category, payers also see these top three opportunities:
U N IT Y U N IT Y U N IT Y
Additional contracting More aggressive utilization More restrictive benefit
1 2 3
PP O R T
PP O R T
PP O R T
O opportunities (33%) O management (UM) (23%) O designs (12%)
■ Traditionally,there has been little to ■ tilization management tactics remain
U ■ ayers express a strong desire to
P
no contracting for medical benefit the focal point for payers in managing manage the medical benefit like the
products but that may be changing spend in the specialty category and are pharmacy benefit and increasingly
as systems evolve to incorporate expanding in most areas. integrate coverage decisions across
pharmacy benefit strategies. both categories. In shifting the medical
■ ayers are determined to become
P benefit to parity with the pharmacy
■ s more clinically undifferentiated
A more restrictive across the board with benefit, they hope to draw more
products (like biosimilars) enter a different tactics to contain costs. heavily on UM tactics such as product
category there are more opportunities to exclusions and preferred products.
contract for preferred access.
■ o longer protected from cost
N
containment, the medical benefit is now
subject to the type of restrictions once
limited to pharmacy benefit drugs.18
Payers reiterate that a key medical
management objective is to move
Managed market success requires the tactical employment of a growing specialty infusions towards the lowest
set of commercial partners. In today’s market, patient access and cost site of service.19
therapy use become a product of comprehensive employment of hubs,
‘wrap-around’ services, patient assistance and ‘quick-start’ programs.
Interestingly, those are moving from specialty and orphan drugs to
increasingly ‘hub’-lite areas like chronic care.
PAUL GALLAGHER, Vice President, US Access Strategy, Certara
Patient cost-sharing as leading response strategy
42%
■ Payers listed “increased cost-sharing” as ■ On the Medicare side, 35% e of respondents
the leading strategy to finance specialty have currently implemented cost-sharing
therapeutics across 50% of Commercial for greater than 70% of covered lives. In the
and 30% of Medicare lives overall. future 48%f are likely to use cost-sharing.
■ 42% of respondents c have currently ■ Mid-sized plans (≥920,000 and10 CERTARA EVIDENCE & ACCESS REPORT THE SHIFTING LANDSCAPE
Patient out-of-pocket cost by type of cost-sharing ■ Data from IQVIA shows that the growing
shift towards higher deductibles and
100% ■ Deductible coinsurance (Figure 4) comes with trade-
90% ■ Coinsurance offs as it can have a significant impact
Share of patient out-of-pocket (%)
21% 26% ■ Co-pay on patient’s medication compliance and
80%
drug waste. Patients generally show high
70% sensitivity to higher out-of-pocket costs,
24%
60% as cost exposures are increased, the rate of
29%
prescription abandonment accelerates to
50%
over 60% at $250 monthly patient out of
40% FIGURE 4 pocket costs.
30% Rising patient cost share of
54%
44%
deductibles and coinsurance
20%
(Commercial)
10%
Source: IQVIA Rx Benefit Design;
0% IQVIA analysis
2013 2017
30-day new-to-brand abandonment by patient out-of-pocket cost in 2018 (top brands)
New patient abandonment (% NBRxs)
FIGURE 5 80%
Increasing abandonment with
70%
level of patient cost exposure
60%
Source: IQVIA Formulary Impact Analyzer;
IQVIA Analysis, Dec 2018
50%
40%
30%
20%
10%
■ Commercial
0%
■ Medicare
.00 99 99 99 99 .99 .99
4.9
9 .99 0+
$0 -9. -19
.
-29
.
-39
.
-49 -74 -12 49 $25
.01 $10 $20 $30 $40 $50 5-2
$0 $75 $ 1 2
Patient out-of-pocket cost
CASE EXAMPLE
Hemophilia has traditionally been an that payers have started to implement The restrictions in this setting mimic
indication with treatments managed under utilization management criteria seen with those traditionally seen in categories
the medical benefit however as the category pharmacy benefit drugs, in indications managed under the pharmacy benefit.
expands, new options have entered such with drugs predominantly covered under
as self-administered Hemlibra. the medical benefit, like hemophilia. As Certara hypothesized, payers
are becoming more stringent in the
A client approached Certara to better Among national and regional payers management of indications with largely
understand utilization management and PBMs, Certara confirmed that most infusible drugs, like hemophilia, in an
around hemophilia treatments and treatments across all four hemophilia attempt to manage high costs.
what restrictions are in place for these indications are covered with a PA to the
products. Certara conducted qualitative FDA-label or PA beyond the label tied to
research to validate the hypothesis clinical trial design.Utilization Management
Restrictions12 CERTARA EVIDENCE & ACCESS REPORT UTILIZATION MANAGEMENT RESTRICTIONS
8
KEY TRENDS WITH RESPECT TO UTILIZATION MANAGEMENT (UM)
REACH ACROSS EIGHT AREAS
ND Prior authorizations limiting to ND
1 5
TRE
TRE
populations narrower than label- Split-fill program
approved indication
ND ND
Reauthorization criteria based on Evidence-based pathways promoted
2 6
TRE
TRE
improved clinical response to drug to specify drug use
ND ND
Designate preferred medical benefit
3 7
TRE
TRE
Quantity restrictions
specialty products
ND ND
“Brand A before Brand B”
4 8
TRE
TRE
Medical benefit products excluded
step edits expanded
Average level of utilization management among payers, ranked by level of current implementation
Quantity restrictions
“Brand A before Brand B” step edits in specialty categories
Reauthorization criteria are based on improved clinical response to drug
Split-fill program
Designate preferred medical benefit specialty products
PA limit to populations narrower than FDA-approved indication based
on clinical study design
Implement evidence-based pathways that specify which drugs to use
Exclude particular medical benefit products
Not Limited rollout Implemented for Implemented for Implemented for Fully implemented,
implemented 90% of lives
■ Commercial ■ Medicare
FIGURE 6
Average level of UM tactics in 2020, as estimated
by Commercial and Medicare payersUTILIZATION MANAGEMENT RESTRICTIONS ACCESS TRENDS IN SPECIALTY PHARMACY 2020-23 13
ND ND
1 2 Prior authorizations and reauthorizations
TRE
TRE
■ Payers limit drug utilization to populations
narrower than the FDA approved
indication, based on clinical study design.
Restrictions beyond the FDA label make
the PA process more rigorous and limit
use of specialty medications.
■ Payers require confirmation of clinical Physician prescribes
treatment/medication
response to drug as renewal criteria. These
reauthorization criteria are used by payers
to ensure that continued use of a product
is warranted. Evidence of clinical response
to treatments is often required at annual or
six-month intervals.
Pharmacy processes prescription
claim and medication requires
CURRENT STATE a prior authorization from
the payer
■ 55% of surveyed payers g utilize PAs beyond
the label for an estimated 70% or more of
their Commercial and Medicare lives.
■ 70% of payers from PBMs h and 50% of
IDNs i implement PAs beyond the label for Pharmacy or payer initiates prior
at least 70% covered Commercial lives. authorization process electronically
or by directly contacting
physician
■ According to the Kaiser Family Foundation,
72% of beneficiaries with Medicare
Advantage require a prior authorization for
Part B drugs.20 We find that 35% of payers
are implementing a narrow PA for 70% (or
more) Medicare lives.
Physician will complete and submit
required documents such as
■ Two-thirds of payers j utilize reauthorization diagnosis confirmation
criteria based on improved clinical to payer
response to drug for at least 70% of
Commercial lives, including 86% of PBMs k,
80% of small and mid-sized plans l, 66% of
IDNs m, and 56% of larger MCO plans.n
Clean approval from the payer may
take 1-10 days. An approved drug may
require a reauthorization every 6 to 12
months from a payer. A rejection and
appeal cycle may take 2 days FIGURE 7
to 2 months Customary steps in the
prior authorization 21
g j
n=17, representing 34.3M Commercial lives n=21, representing 145.4M Commercial lives
h k m
n=5, representing 24.8M Commercial lives n=7, representing 57.3M Commercial lives n=6, representing 5.1M Commercial lives
i l n
n=3, representing 1.1M Commercial lives n=15, representing 10.9M Commercial lives n=9, representing 135.5M Commercial lives14 CERTARA EVIDENCE & ACCESS REPORT UTILIZATION MANAGEMENT RESTRICTIONS
FUTURE EXPECTATION
■ All commercial payers plan to expand ■ We should note that US payers understand ■ 80% of smaller and mid-sized plans o are
the use of more stringent PA criteria this to be a response mechanism, not a more likely to embrace this approach than
for specialty medications. All PBM fait accompli. They use more stringent PA are large payers.
respondents and nearly eight in ten IDNs criteria in reaction to a certain pricing level.
are likely to expand implementation of Certara’s price testing research routinely ■ Based on survey results, payers are expected
narrow PA in the future. probes for price points at which payers are to maintain status quo on the Medicare side,
open to remove additional restrictions. not aiming to expand PA beyond the label.
PA BEYOND THE LABEL
CURRENT LEVEL OF IMPLEMENTATION FUTURE LIKELIHOOD FOR EXPANSION
Average all payers
PBMs
Large plans
Mid-sized plans
Small plans
IDNs
Not Limited Implemented Implemented Implemented Fully Not at all Unlikely Somewhat Somewhat Likely Highly
implemented rollout 90% of lives
FIGURE 8 FIGURE 9 ■ Commercial
PA to populations narrower than the FDA approved indication Reauthorization criteria based on improved clinical response to drug ■ Medicare
REAUTHORIZATION BASED ON CLINICAL RESPONSE
CURRENT LEVEL OF IMPLEMENTATION FUTURE LIKELIHOOD FOR EXPANSION
Average all payers
PBMs
Large plans
Mid-sized plans
Small plans
IDNs
Not Limited Implemented Implemented Implemented Fully Not at all Unlikely Somewhat Somewhat Likely Highly
implemented rollout 90% of lives
o
n=12, representing 11.6M Commercial livesUTILIZATION MANAGEMENT RESTRICTIONS ACCESS TRENDS IN SPECIALTY PHARMACY 2020-23 15
■ There will be a 62% increase in the ■ Most of Certara’s physician research ■ 9
in 10 physicians report that PAs cause
number of payers using reauthorization engagements are aimed to give a nuanced delays in patient care.26,27
criteria for Medicare lives, up from 42% to perspective on the level of disruption or
68% of payers. burden of the administrative procedure that ■ PAs also impact therapeutic areas
is associated with PA. It depends on various with recognized need of treatment
■ Nearly 9 in 10 commercial payers are likely factors such as provider type, indication, personalization. According to a survey
to expand future use of reauthorization type (e.g. soft, or requiring lab values etc.) among cancer radiologists, 73% report
criteria as a means for cost containment. and associated requirements (e.g. step edits). their cancer patients regularly express
concern about the delay caused by prior
■ WhilePAs and reauthorizations are seen as Patient burden authorizations, forcing a third of doctors to
an effective means for cost containment pursue different treatments than the ones
and reduction of drug waste from the ■ Nearly 8 in 10 physicians find that PAs may indicated just to avoid such delays.28
payer perspective, they do increase the result in patients stopping treatment and
treatment burden for patients, providers sometimes lead to treatment abandonment.25
and developers from an access perspective.
Provider burden
■ According to the American Medical
Association (AMA), 9 in 10 physicians find
that prior authorizations have a negative
impact on patient outcomes and believe The prior authorization process is out of control. It is
the burden associated with PAs has increasing and rather than a tool for preventing unnecessary
increased over the past 5 years.23 79% of
or expensive care, prior authorizations negatively impact my
physicians report that they sometimes,
often or always have to submit medication patients’ health and is a significant cause for family physician
reauthorizations when a patient with a burnout and the closure of small private practices.
chronic condition is stabilized.24
DR. JOHN CULLEN, American Academy of Family Physicians (AAFP) 22
Opportunities in specialty category
23% OF SURVEY
7%
4%
11%
33%
FIGURE 10
Payer noted opportunities in the specialty category
RESPONDENTS FIND
MORE AGGRESSIVE 12%
■ Additional contracting opportunities
■ More aggressive UM
UM AN OPPORTUNITY ■ Encourage biosimilar and generic utilization
IN MANAGING THE ■ More restrictive benefit designs
SPECIALTY CATEGORY 10% ■ Changes to physician drug reimbursement
23% ■ Stakeholder education
■ Other16 CERTARA EVIDENCE & ACCESS REPORT UTILIZATION MANAGEMENT RESTRICTIONS
The prior authorization obstacle course
6% 70% 40%
FIGURE 11
265 Million 186 Million 74.4 Million Challenges encountered in the course of
4.4 Billion Prescriptions Requiring PA Abandoned
rejected requests
prior authorizations
annual
prescriptions Data from Avalere, Covermymeds, TrialCard, published
in: Basta, N.The Prior Authorization Obstacle Course.
Pharmaceutical Commerce.https://pharmaceuticalcommerce.
2014 com/special-report/hub-services-special-report-2016/.
Published March 15, 2016. Accessed April 08. 2020
94% 30% Due to complex
policies and
4.2 Billion 80 Million procedures
Prescriptions Resolved at
filled pharmacy
CMS concerned about
denials in Medicare
hen beneficiaries and providers appealed preauthorization
W
Advantage and payment denials, Medicare Advantage Organizations
(MAOs) overturned 75 percent of their own denials during
■ When the US HHS Office of Inspector
General (OIG) ran an audit of Medicare
2014–16, overturning approximately 216,000 denials each year.
Advantage Plans (operated by private During the same period, independent reviewers at higher levels
companies commissioned by CMS, of the appeals process overturned additional denials in favor
many covering prescription drug
benefits) it found notable over- and
of beneficiaries and providers. The high number of overturned
misuse of coverage and payment denials raises concerns that some Medicare Advantage
denials, contributing to “physical or beneficiaries and providers were initially denied services and
financial harm” of beneficiaries.
payments that should have been provided. This is especially
■ CMS confirmed that yearly audits concerning because beneficiaries and providers rarely used the
discovered widespread performance appeals process, which is designed to ensure access to care and
issues regarding denials, leading to
citations, a variety of fines and sanctions.29 payment. During 2014-16, beneficiaries and providers appealed
only 1 percent of denials to the first level of appeal.
HHS OFFICE OF THE INSPECTOR GENERAL, 2018UTILIZATION MANAGEMENT RESTRICTIONS ACCESS TRENDS IN SPECIALTY PHARMACY 2020-23 17
Restrictive prior authorization practices can cause
unnecessary, stressful and potentially life-threatening delays
for cancer patients. ... In its current form, prior authorization
causes immense anxiety and wastes precious time for
cancer patients.
PROF. PAUL HARARI, MD, FASTRO
Chairman of Human Oncology, University of Wisconsin-Madison 30
CASE EXAMPLE
■ Amanufacturer in early Phase 3 planning to launch a Product PA status across payers
second-to-market product for a rare disease wanted
to assess the current level of management and access 75%
in the category. 70%
65%
■ Certara conducted MCO payer interviews covering
a total of 73M lives. Almost ¾ of commercial 60%
payers were managing the category, with a prior 55%
authorization going beyond the FDA label. Payers 50%
anticipated similar coverage for new category
Share of lives
45%
entrants and criteria beyond the label most often
40%
aligned with clinical trial criteria. Certara, together
with the commercial team, engaged the clinical team 35%
to clarify how the clinical trial design would impact 30%
access and as a result commercial forecasts and 25%
product revenue, if based on a broad indication. 20%
15%
■ In
such instances, tighter integration across
10%
manufacturers between clinical and commercial
teams, especially at earlier stages is warranted. 5%
Incorporating payer feedback early in the 0%
development process can align commercial forecasts Commercial Medicaid
with clinical development to ensure maximized
Covered lives
revenue and access.
Commercial Medicaid
■ Specialty PA beyond label ■ Covered PA beyond label
■ Specialty PA to label ■ Covered PA to label
FIGURE 12 ■ Preferred ■ Covered
Prior authorization criteria for a rare disease product
■ Medical exception only18 CERTARA EVIDENCE & ACCESS REPORT UTILIZATION MANAGEMENT RESTRICTIONS
ND
3 Designating preferred specialty products on the medical benefit
TRE
■ Compared to treatments on the
medical benefit, medications covered FIGURE 13
on the pharmacy benefit traditionally Total specialty spend between benefit type
allow payers to have more control on Data source: Medicines Use and Spending in the US health plan sponsors are
management and utilization. US IMS, April 2016. NHE, Artemetrix, CVS Health projected to waste more than
Internal Analysis, 2016.
$9 billion, or 49% of their total
■ Specialty drugs covered on
55% of total pharmacy spend on specialty
the medical benefit (physician-
administered) are no longer immune
drug spend medication services that
to UM tactics, such as product provide no additional value.
exclusions and designated preferred 36% of total This wasteful spending could
products, as payers try to integrate drug spend be recovered if payers applied
medical and pharmacy benefits. the same cost-saving
techniques from the pharmacy
■ According to Express Scripts data, up benefit on medications that are
to 15% of the specialty spend could be
2015 2020 administered through the
reduced by health plans implementing
medical benefit.
medical benefit management services.31 ■ Medical benefit ■ Pharmacy benefit
BRIAN SEIZ
PharmD, President
Pharmacy at Express Scripts 32
CURRENT STATE FUTURE EXPECTATION
■ All surveyed p IDNs currently implement ■ Going forward, all payers will likely expand,
preferred medical products for 70% or or in the case of IDNs continue, this model
more lives. of preferred medical treatments.
■ 1 in 2 MCO plans q, regardless of plan size, ■ Based on the status quo, we may see more FIGURE 14
implements this UM tactic for medical preferred products on PBM and MCO Designating preferred specialty products
benefit drugs. formularies in the coming years.
PREFERRED SPECIALTY PRODUCTS ON MEDICAL BENEFIT
CURRENT LEVEL OF IMPLEMENTATION FUTURE LIKELIHOOD FOR EXPANSION
Average all payers
PBMs
Large plans
Mid-sized plans
Small plans
IDNs
Not Limited Implemented Implemented Implemented Fully Not at all Unlikely Somewhat Somewhat Likely Highly
implemented rollout 90% of lives
■ Commercial ■ Medicare
p q
n=6, representing 18.6M Commercial lives n=18UTILIZATION MANAGEMENT RESTRICTIONS ACCESS TRENDS IN SPECIALTY PHARMACY 2020-23 19
ND
4 Increasing product exclusions of specialty drugs
TRE
■ The concept of product exclusions ■ In 2014, ESI started excluding certain CURRENT STATE
traditionally applied to small-molecule specialty products like biologics
drugs on the pharmacy benefit. Cimzia, Simponi, Stelara, Xeljanz for ■ We find that there is still overall limited
inflammatory indications.35 In 2019, 50 implementation of product exclusions
■ Payers started introducing product exclusion new drugs were excluded, including across all payers today, with only a quarter
lists as another UM tool and cost containment specialty products like Onpattro of payers r excluding particular specialty
strategy. While traditional drug classes see this for polyneuropathy of hereditary products covered on the medical benefit
more than specialty drugs, specialty drugs in transthyretin-mediated amyloidosis. 70% or greater covered Commercial lives.
rare diseases and on the medical benefit are In 2020, ESI is excluding 32 new drugs
no longer immune to exclusions. from its national formulary including ■ 12% of survey respondents consider more
specialty products like Factor VIII restrictive benefit designs a key opportunity
■ The first exclusion list, released by CVS recombinant products for hemophilia in managing specialty pharmaceuticals.
in 2012, only applied to small-molecule and granulocyte stimulating agents.36
non-specialty drugs. In 2017, CVS also
began excluding products for rare diseases ■ Other important payers such as FUTURE EXPECTATION
such as Gleevec and Tasigna for chronic Cigna, Aetna, Optum, and Prime
myeloid leukemia (CML), though still on Therapeutics also began product ■ All payer archetypes anticipate to expand
the pharmacy benefit.33,34 exclusions since 2016.37 use of this tactic to more covered
Commercial lives in the next few years,
with more than two-thirds s of the 31 payer
respondents likely to begin excluding
particular medical benefit products.
242
FIGURE 15
Number of brand exclusions from PBM formularies
196
Source: Drug Channels Institute. Numbers of Products on 173
PBM Formulary Exclusion Lists, 2012 To 2019.; 2018. 154 154
https://www.drugchannels.net/2018/08/2019-express-
scripts-formula. Accessed April 16, 2020. 124
95
87 85
72 66
50 48 FIGURE 16
38
0 0 Exclude particular medical benefit products
2012 2013 2014 2015 2016 2017 2018 2019
■ Express Scripts ■ CVS Caremark
PRODUCT EXCLUSIONS
CURRENT LEVEL OF IMPLEMENTATION FUTURE LIKELIHOOD FOR EXPANSION
Average all payers
PBMs
Large plans
Mid-sized plans
Small plans
IDNs
Not Limited Implemented Implemented Implemented Fully Not at all Unlikely Somewhat Somewhat Likely Highly
implemented rollout 90% of lives
■ Commercial ■ Medicare
r s
n=8, representing 47.2M Commercial lives n=21, representing 77.1M Commercial lives20 CERTARA EVIDENCE & ACCESS REPORT UTILIZATION MANAGEMENT RESTRICTIONS
ND
5 Split-fill programs
TRE
■ Split-fill(also known as partial fill) ■ Split-fill
programs showed lower
programs for oral medications allow discontinuation rates, pharmacy costs
payers to reduce medication waste, and potential wastage as demonstrated
improve medication adherence and by a study of an oral oncology split
consequently drive down costs. fill program in a national specialty
pharmacy. Within six months, the
Walgreens program saved $2,646.74
CURRENT STATE monthly in medication wastage.39
■ AllianceRx Walgreens Prime research ■ Only about 30% of all payers t have not FIGURE 17
found that within the first 3 months of implemented any split fill programs Monthly mean differences in
implementing a split-fill program, payers for specialty products within their cost between split-fill and
would see savings of $2,724 per month on organizations, half of them PBM and non-split fill
average for one oral oncology medication. IDN payers.
Within the first month, split-fill was
associated with a $132.50 lower copay
than non-split fills (pUTILIZATION MANAGEMENT RESTRICTIONS ACCESS TRENDS IN SPECIALTY PHARMACY 2020-23 21
FUTURE EXPECTATION Categories with split-fill programs Number of mentions (total=30)
■ In the future, the utilization of split-fills is
Oncology 17
likely to remain relatively stagnant, with
75% of payers u continuing use. Oncology,
inflammatory conditions and MS are Inflammatory conditions 5
the top indications in which payers
implement split fills, though split-fill is Multiple sclerosis 5
present in other indications like diabetes,
asthma and hypercholesterolemia. High cholesterol 2
Attention deficit disorders 1
FIGURE 19
Indications with most split-fill use
We continue to expand the
number of medications available
under our split-fill program to
support patients and maximize
the investments health plans
make in their patients.
RICK MILLER
VP, Clinical and Professional Services
AllianceRx Walgreens Prime 40
u
n=23, representing 184.9M Commercial lives22 CERTARA EVIDENCE & ACCESS REPORT UTILIZATION MANAGEMENT RESTRICTIONS
ND
6 Evidence-based pathways: Increased use to manage specialty drugs
TRE
■ Treatment guidelines like the National ■ In2019, ESI estimated that $1.3B could
Comprehensive Cancer Network (NCCN), be saved annually in specialty costs by
and supporting literature have been used implementing evidence-based UM policies
by payers to provide evidence-based care. for medical benefit drugs, similar to those
done for the pharmacy benefit.41
■ Payers are able to standardize care and
maintain indication costs by covering ■ ESIreports that 15-20% of current drug
specific products recommended per claims do not follow treatment guidelines.42
evidence-based pathways.
EVIDENCE-BASED PATHWAYS
CURRENT LEVEL OF IMPLEMENTATION FUTURE LIKELIHOOD FOR EXPANSION
Average all payers
PBMs
Large plans
Mid-sized plans
Small plans
IDNs
Not Limited Implemented Implemented Implemented Fully Not at all Unlikely Somewhat Somewhat Likely Highly
implemented rollout 90% of lives
■ Commercial ■ Medicare
FIGURE 20
Level of implementation of
evidence-based pathways for drug useUTILIZATION MANAGEMENT RESTRICTIONS ACCESS TRENDS IN SPECIALTY PHARMACY 2020-23 23
CURRENT STATE
■ In our analysis, PBMs and IDNs v see
the highest level of implementation of
evidence-based pathways, as well as
the highest expressed interest to expand
them further.
■ Rheumatology, cardiology, diabetes and Treatment guidelines 86%
MS are found to have the most uptake
Randomized controlled trials 81%
of evidence-based pathways outside
of oncology. Clinical guidelines and Retrospective studies 57%
randomized controlled trials are the most
Registry studies 48%
common sources for evidence-pathway
development 43 (Figure 21). Claim data studies 43%
Provider experience/usage 43%
Observational studies 43%
Compendia 29%
FIGURE 21 Fee schedules 19%
Top sources of data for development
of evidence-based pathways
Other 10% { Phase II studies
Internal analysis
0% 20% 40% 60% 80% 100%
Percentage of respondents
FUTURE EXPECTATION
■ 60% of payers w of which half are large ■ ertara research indicates that oncology,
C
health plans, are likely to implement diabetes, and MS are key therapeutic areas
evidence-based pathways that specify where payers rely on evidenced-based
which drugs to use in the near future; pathways in formulary decision-making
this is an almost 4-fold increase from processes.
the status quo of payers fully utilizing
evidence-based pathways for Commercial ■ In oncology, a pathway is typically
lives. As larger plans are more likely to developed for first-line treatments and not
adopt evidence-based pathways, smaller later lines. Payers develop these pathways
and mid-sized plans may follow suit. to specify which drugs should be used first
and while physicians are not required to
■ We find that the expected increase in follow the guidance, they are incented to
providing evidence-based care will do so, usually a monetary incentive.
come largely from IDNs and MCOs as
opposed to PBMs.
v w
n=9, representing 40.5M Commercial lives n=10, representing 76.6M Commercial lives24 CERTARA EVIDENCE & ACCESS REPORT UTILIZATION MANAGEMENT RESTRICTIONS
ND ND
7 8 Quantity restrictions and step edits
TRE
TRE
■ Quantity limits and step edits have ■ Our research confirms that quantity
been cited as two of the most restrictions and step edits are the most FIGURE 22
common restrictions payers use in drug implemented UM tactics, with the latter Current and future utilization of quantity limits
management.44 seeing further expansion across all payer
types in the future.
QUANTITY RESTRICTIONS
CURRENT LEVEL OF IMPLEMENTATION FUTURE LIKELIHOOD FOR EXPANSION
Average all payers
PBMs
Large plans
Mid-sized plans
Small plans
IDNs
Not Limited Implemented Implemented Implemented Fully Not at all Unlikely Somewhat Somewhat Likely Highly
implemented rollout 90% of lives
■ Commercial ■ Medicare
FIGURE 23
Current and future utilization of Brand A before B step edits
STEP EDITS
CURRENT LEVEL OF IMPLEMENTATION FUTURE LIKELIHOOD FOR EXPANSION
Average all payers
PBMs
Large plans
Mid-sized plans
Small plans
IDNs
Not Limited Implemented Implemented Implemented Fully Not at all Unlikely Somewhat Somewhat Likely Highly
implemented rollout 90% of lives
■ Commercial ■ MedicareUTILIZATION MANAGEMENT RESTRICTIONS ACCESS TRENDS IN SPECIALTY PHARMACY 2020-23 25
DEVELOPER TAKEAWAYS
■ Clinical
trial designs are subject to scrutiny ■ Arobust assessment of clinical trial ■ Key considerations for developers include:
as a means to limit product use with a designs through the payer perspective
narrower PA than the FDA label. early on in the clinical development ■ Willinclusion in certain guidelines
phases is warranted to ensure the most or treatment protocols, such as the
■ Developers of specialty pharmaceuticals appropriate and widest patient inclusion NCCN, allow for better access at the
will be subject to more stringent criteria are developed. payer level?
reauthorization criteria which will likely
align with clinical response. ■ Anexpanded use of product exclusions ■ Does the timing of inclusion vs. P&T
by payers suggests that payers are unable review impact access?
■ Strong engagement with payers via to distinguish value across products in
advisory board and primary research crowded therapeutic areas. ■ Does use of evidence-based pathways
provides vital insight on PA management vary across payer segments?
and criteria that may be included in PAs. ■ Payersmay use product exclusions to
negotiate deeper rebates with developers. ■ What can developers do to support
■ Developers must be proactive with physician use of evidence-based
payer engagement to understand the ■ Developers must leverage attributes of pathways?
current reauthorization environment product value that may warrant a preferred
for their product’s respective indication product status, outside of and beyond price.
and competition.
■ Developers should educate payers on
clinical endpoints/ responses that are most
relevant for their product.
The definition of what constitutes “value” for healthcare
interventions is an incredibly complex and hotly
debated topic. However, regardless of the school of
thought you come from, there is broad consensus that
value assessment must take into consideration a
multitude of factors beyond purely economic ones.
Especially important in value assessment are factors
such as unmet needs and disease severity, in particular
this applies for rare diseases. Whether they are explicitly
or implicitly captured in the assessment criteria, it is
clear that healthcare decision-makers are indeed
swayed by these factors, and as such it is critical for
developers take a holistic approach to their evidence
development and communication activities.
ROMAN CASCIANO
General Manager and SVP, Certara Evidence & Access26 CERTARA EVIDENCE & ACCESS REPORT UTILIZATION MANAGEMENT RESTRICTIONS
CASE EXAMPLES
■ A manufacturer in a specialty Average importance and motivation of messages
category needed to test the brand
messaging and determinants of Motivation to learn more
value for its flagship product. VERY VERY
NEUTRAL
UNMOTIVATING MOTIVATING
Certara conducted an evidence-
based assessment of the product’s
value story with 15 MCOs and
IMPORTANT
Importance to formulary decision making
Important, but Both important
VERY
GPO. Certara was able to identify not motivating
M3
and motivating
M6
key clinical and class elements Re-work wording M16
M11
important to payers which were
M14
likely to result in perceived M13
M10
meaningful differentiation.
NEUTRAL
M1
M4
M9
Neither important M7 Unimportant, but
nor motivating motivating
UNIMPORTANT
Consider removing M2 “Nice to have”
FIGURE 24 messages
VERY
M12
Payer assessment of key elements of M8
M5 M15
product value
■ Adeveloper in the oncology space rely heavily on evidence-based pathways NCCN guidelines over the FDA label
wanted to understand the impact to guide formulary decisions. Through for product use. Certara advised the
inclusion in the NCCN guidelines has discussions with our proprietary payer manufacturer to develop a strong key
on formulary coverage when the FDA network, Certara assessed the extent opinion leader (KOL) education and
label is narrow. The developer was to which national and regional MCO engagement strategy as an initial step
anticipating a narrow FDA label, but payers align formulary coverage with to be positioned in clinical guidelines.
inclusion in the NCCN guidelines for NCCN guidelines and FDA labels. Certara We recommended that the developer
a broader indication. Certara’s initial was able to validate that a majority of conduct an advisory board to facilitate
hypothesis was that in oncology, payers payers will align coverage with broader KOL engagement around product value.
Payers expect use of Product X in all eligible patients if recommended
by the NCCN, otherwise will be consistent with trial inclusion/
exclusion criteria or FDA-specific label
■ Patients per inclusion/excluion
criteria only Expected patients for Product X by indication / guidelines recommendations scenarios (n=10)
■ Patients per FDA indication only 100%
■ All eligible patients
80%
Share of payers
60%
40%
20%
FIGURE 25
Evidence-based pathways 0%
impact on access With expected FDA indication With expected FDA indication for
NCCN guidelines recommendation
Potential scenarios at the time of reviewDistribution Channels
Disruption28 CERTARA EVIDENCE & ACCESS REPORT DISTRIBUTION CHANNELS DISRUPTION
Increase in limited distribution for specialty pharmaceuticals
■ Payers’ preferred distribution channel for
}
pharmacy benefit specialty medications
are specialty pharmacies through a Small patient population
limited distribution network, which are
today owned by various market entities. Exclusive Greater control over inventory
Approximately 80% of payers required Distribution
(1 SP) Better access to data
certain specialty drugs to be dispensed
through specialty pharmacies in 2018.45 Control over REMS program
Limited Distribution Better integration with
■ Limited distribution networks can limit (2-10+ Specialty Pharmacies) reimbursement hubs
medication access for providers, as
Need for higher quality management
HCPs and hospitals not part of a limited
Open Access of patients
network may have to pay higher costs to (Retail and Specialty)
obtain drugs.
FIGURE 26
Distribution channels for specialty pharmaceuticals
Shifting away from ‘buy-and-bill’ on the medical benefit
■ Specialty drugs are reimbursed through
the supply chain as either a pharmacy
benefit, or as a medical benefit through the
buy-and-bill model. Each channel receives
different reimbursement and is subject to
different management practices.
Chargeback for contract pricing
■ Similar to utilization management,
distribution on the pharmacy benefit Rebate payment
Manufacturer Third-party
allows payers to have more control and Wholesaler payment payer / Health plan
management over medication use as for product
compared to buy-and-bill practices on the
medical benefit. Payers leverage specialty
Product shipment
pharmacies to provide cost management Drug
and coordinated patient care leading to wholesaler
Product shipment
better health outcomes.
Provider payment for Provider
product at contract pricing Reimbursement to provider
Physician Hospital Clinic
office outpatient
Copayment or
FIGURE 27 Administer drug
Coinsurance
Flow of buy-and-bill distribution
Adapted from: Fein, Adam. J., The 2016–17 Patient Product movement
Economic Report on Pharmaceutical Wholesalers Financial flow
and Specialty Distributors, Drug Channels
Institute, September 2016, Exhibit 28.DISTRIBUTION CHANNELS DISRUPTION ACCESS TRENDS IN SPECIALTY PHARMACY 2020-23 29
CURRENT STATE FUTURE EXPECTATION
■ Today only about 30% of PBM respondents x ■ Research shows an upwards trend in the ■ Across our survey respondents, about
have fully implemented mandated use mandated use of specialty pharmacy two-thirds have not increased physician
of specialty pharmacy and/or direct from payers. More than 75% of payers, reimbursement for lower cost options
contracting to eliminate buy-and-bill including MCOs, IDNs and PBMs are likely among specialty buy-and-bill products.
across Commercial lives whereas 80% of to expand use of specialty pharmacy
IDNs y have done so. within the next three years.
■ 42% of large, mid-sized and small health ■ On the medical benefit side, the key trend
plans z have specialty pharmacy use and/ being seen is an overall push away from
or direct contracting implemented for the traditional buy-and-bill practices
70%+ of Commercial lives. towards alternative distribution strategies
that allow payers to have more control
over drug use such as payers taking over
distribution themselves.
DISRUPTORS ON OUR RADAR
Cigna: 2020 Embarc Benefit Protection
■ High-cost, curative therapies bring ■ The2020 initiative “Embarc Benefit ■ Through previous vertical integration
significant challenges to the traditional Protection” establishes Cigna as an and expansion, Cigna owns a specialty
buy-and-bill reimbursement model. in-network gene therapy provider. pharmacy network (Accredo), specialty
As more one-time treatments like Employers and plan sponsors will pay a pharmacy distributors (CursaScriptSD,
gene therapies enter the market, novel $12 per-member monthly fee for access ESI), a medical benefits management
distribution alternatives are emerging. to Luxturna and Zolgensma with a zero company (eviCore) and a PBM (ESI).
OOP. Eventually, Cigna plans to include Cigna can use this armamentarium to
more gene therapies, like CAR-Ts, into be an in-network gene therapy provider.
the program. The Embarc program increases Cigna’s
position as it will serve as payer and
distributor, the first time we have seen
this level in a high-cost area.46,47
Payers that participate with us will be
getting the best price. They will be getting
uniform utilization management.
STEVE MILLER, MD, Chief Clinical Officer, Cigna
x y z
n=2, representing 34.3M Commercial lives n=5, representing 15.2M Commercial lives n=13, representing 131.9M lives30 CERTARA EVIDENCE & ACCESS REPORT DISTRIBUTION CHANNELS DISRUPTION
DISRUPTORS ON OUR RADAR
BCBS of Massachusetts
Amazon: PillPack has partnered with
PillPack to integrate their
■ Amazon’s acquisition of PillPack, the online pharmacy services into
pharmacy, is an enormous advance for the
retailer within the drug distribution channel.
BCBS’s website and app
PillPack brings economies of scale to the concluding that
medication supply chain by coordinating, “Members have reported
organizing, packaging and supplying
presorted doses of medications directly to
higher satisfaction with
millions of patients. PillPack than with other
pharmacy options”. 49
■ While still unclear how PillPack will play
in the specialty category, PillPack could
limit distribution through PBM-owned
specialty pharmacies and provide an
alternative avenue of distribution that
developers and health plans directly
contract or integrate with PillPack’s
ecommerce model which can decrease
the practice of polypharmacy.48
DEVELOPER TAKEAWAYS
■ The shift away from buy-and-bill on the ■ Insuch instances, payers can verify ■ As utilization moves away from buy and
medical benefit side means that health coverage before a drug is shipped/ bill, patients may experience greater
plans are contracting more directly with dispensed to patients, allowing for cost sharing as the product is now paid
developers as a means to achieve deeper more management of utilization. Such a out of their pharmacy benefit, providers
discounts on products and avoid markups proactive approach allows payers to have may experience benefits related to
from provider facilities.50 similar influence in managing the medical inventory management and challenges
benefit as they do pharmacy benefit. related to reductions in revenue and
■ Payers are taking on more distributor However, hospital purchasers (pharmacy additional access controls. Manufacturers
roles. The shift to alternative strategies directors) in Certara research have voiced may experience additional controls on
such as direct contracting and clear- their frustration with mandated buys from utilization as authorization becomes even
bagging spurs payers’ more pro-active specialty pharmacies, leading many to more proactive.
distribution management.51 open up their own specialty pharmacy, or
in some instances push back to request
■ Consider direct purchasing such as when buy-and-bill.
Harvard Pilgrim contracted directly to
receive Luxturna from Spark Therapeutics
rather than hospitals purchasing the
product. Harvard Pilgrim supplies Luxturna
to its contracted treatment centers, but it
can avoid any additional markups hospitals
would have added to Luxturna.52Rising Cost Effectiveness
Considerations32 CERTARA EVIDENCE & ACCESS REPORT RISING COST EFFECTIVENESS CONSIDERATIONS
FIGURE 28
Payer readiness to employ ICER in P&T
We are integrating ICER assessments directly We used the ICER report in our negotiations.
into the formulary evaluation process of our P&T Did we receive the ICER price? The answer is
committee. It has helped us improve the quality no, we didn’t..
of our value assessments. NATIONAL PBM
REGIONAL PLAN
It will be necessary to include new bases of clinical and financial review… such as comparative
effectiveness and QALYs, as the drugs are too expensive to pay for if they don’t deliver enough either
to individuals or populations.
NATIONAL PBM
People are finding the QALY concept I think everyone would welcome, including pharma and
to be more and more acceptable. payers, a value-based pricing mechanism … In the UK,
As these kinds of approaches get they have NICE and in the United States we have ICER .
adapted… pharma will have to change REGIONAL PLAN
its view on what best pricing is.
NATIONAL PBM
I don’t know what the right threshold is. But the fact that there is no agreement doesn’t mean that the
threshold is unlimited. The Brits actually get this, while we pretend it’s an unlimited budget.
REGIONAL PLAN
Information from ICER on complex disease states has ICER is responding to real needs in
been helpful… using their report saves us roughly the marketplace, which is why it has
$10-30k per P&T meeting. become so visible.
REGIONAL PLAN IDN
…an important component to drug coverage decisions, helping to ensure the most clinically appropriate
and cost-effective medications are preferred in drug formulary.
NATIONAL PBMRISING COST EFFECTIVENESS CONSIDERATIONS ACCESS TRENDS IN SPECIALTY PHARMACY 2020-23 33
Market context
■ The public debate around drug pricing ■ 97% of reports the organization
has spurred demand for standardized published online in 2018 found that
value assessment in the US. A venture- developer WAC prices do not match
funded think-tank called “ICER” (Institute the value the products provide,
for Clinical and Economic Review), has requesting discounts beyond 60% in
made its name as America’s “drug price nearly half of all reviews. To further
watchdog”, selecting pharmaceutical address affordability concerns,
products for review under cost- “ICER” also projects a budget impact
effectiveness criteria. The incremental of interventions on the basis of a FIGURE 29
health gains are measured in quality population-level back of the envelope (Simplified) components of
adjusted life years and equal value of calculation for the US healthcare ICER’s value framework and
life years gained, as complimentary system, as shown in Figure 30. cost-effectiveness calculation
method the organization suggests for
life extending treatments (Figure 29).
The ICER framework
Cost ($)
Long-term Even more effective
Higher cost
value for money
More effective
Higher cost
Comparative clinical Incremental
Effectiveness (QALYs and evLYGs)
effectiveness cost-effectiveness Cost-effectiveness
Threshold
Other benefits or Contextual
disadvantages considerations
Item Parameter Estimate Source
1 Growth in US GDP +1% 3.5% World Bank, 2019
CMS National Health
2 Total personal medical care spending, 2018 estimate $2.95 Trillion
Expenditures, 2019
Contribution of drug spending to total health care spending (%)
3 16.9% Calculation
(Row 4 + Row 2)
CMS National Health
4 Contribution of drug spending to total health care spending, 2018 $498.6 Billion Expenditures, 2019;
Altarum Institute, 2018
FIGURE 30
Assumptions, ICER budget Annual threshold for net health care cost growth for ALL drugs
5 $17.4 Billion Calculation
(Row 1 x Row4)
impact calculation
Average annual number of new molecular entity approvals over
Source: ICER 6 42.6 FDA, 2019
5 years (2014-2018)
Annual threshold for average cost growth per individual new
7 $409.6 Million Calculation
molecular entity (Row 5 + Row6)
Annual threshold for estimated potential budget impact for each
8 $819 Million Calculation
individual new molecular entity (doubling of Row 7)You can also read
