Introduction. Background

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1 INFORMATION DRIVES SOUND ANALYSIS, INSIGHT PHARMACY BENEFIT ADVISORY Introduction According to the Centers for Disease Control and Prevention (CDC), the rate of new hepatitis C virus (HCV) infections in the United States declined by over 90% in the early 1990 s, and has remained fairly stable since that time. However, a large portion of hepatitis C patients are baby boomers - the generation born between 1945 and The CDC estimates that over 2 million adults, representing over 75 percent of Americans living with HCV, are baby boomers that were infected in the 1960 s and 1970 s. As HCV-infected people age, the severity of HCV is exacerbated and manifests itself in varying forms of liver disease. The aging HCV-infected baby boomer population now represents a potential epidemic of HCV-related liver disease that includes cirrhosis of the liver and liver cancer. It is mostly baby boomers that die each year from HCVrelated liver disease and with the number of baby boomers increasing, this number can be expected to increase exponentially over the coming years. In order to prepare for this, it is important that your organization understands HCV infection, populations at risk, effective pharmaceutical treatment, and associated costs. As a result of this evolving hepatitis C environment, healthcare organizations need to be prepared to handle both the clinical and financial implications of treating this population of patients. Background Hepatitis C is a viral disease that causes inflammation of the liver and, if not treated, can lead to other severe liver diseases, including cirrhosis of the liver and liver cancer. It can range in severity from an acute mild illness lasting only a few weeks to a chronic, life threatening condition. For most people, acute infection leads directly to chronic infection. Generally, Hepatitis C is spread when HCV-infected blood enters the body of someone who is not infected. According to the CDC, today, most people become infected with HCV by sharing needles or other forms of injectables. People at risk for chronic hepatitis are those who: Use contaminated needles or syringes (this is the highest cause of new HCV infections) Have sexual contact with an infected person Received a blood transfusion before July 1992 Received a tattoo or acupuncture with contaminated instruments (this risk is very low with licensed, commercial tattoo facilities) Received blood, blood products, or solid organs from an infected donor Were born to a mother infected with hepatitis C HCV infection is one of the most common bloodborne infections in the United States. The CDC estimates that there are 5.3 million Americans infected with HCV.

2 Of that number, the CDC estimates that there are 3.2 million Americans living with chronic hepatitis C. Due to the often asymptomatic nature of early-stage HCV infection, 50-70% of Americans infected with HCV are unaware of their infection. While testing for HCV on newly infected people is imperative, it is even more so for the older, baby boomer population. According to the CDC2, one in thirty baby boomers is HCV infected, and most are not aware of it due to asymptomatic HCV damage to the liver. It is estimated that of the approximately 15,000 Americans that die from HCV-related liver disease each year, most are baby boomers. Moreover, this number is expected to increase exponentially over the coming years. As a result, the CDC is alerting the medical community that all baby boomers should be tested for Hepatitis C. The CDC estimates that the testing of baby boomers could identify over 800,000 additional people with hepatitis C, and potentially save more than 120,000 lives. Hepatitis C presents not only clinical and health challenges, but also economic challenges. Both federal and state governments as well as private MCOs face the daily realities of the cost of managing HCV patients. Henry Ford Hospital recently released findings from a study that showed annual health care costs to be $24,176 for patients with chronic hepatitis C infection3. When looked at by disease stage, average annual costs were estimated to be $17,277 among patients with no cirrhosis, $22,752 among patients with compensated cirrhosis, and $59,995 among patients with end-stage liver disease. Treatment In general, treatment regimens for hepatitis C patients are not easily tolerated. The medications and the follow-ups that are necessary require commitment on the part of the prescribing physicians, as well as the patients being treated. Up until May 2011, the medications used for the treatment of hepatitis C included injections of pegylated interferon (PEG-IFN), non-pegylated interferon (IFN), and ribavirin. Patient adherence to hepatitis C medications is a great challenge, as the treatment can often cause side effects including, but not limited to fatigue, headache, fever, myalgia, nausea, anorexia, diarrhea, insomnia, irritability, depression, alopecia, skin rashes, and anemia or other blood disorders. Close monitoring of patient side effects is necessary to determine if the patient can tolerate the therapy in its entirety. For many years, the dual therapy of pegylated interferon and ribavirin was the standard of care for patients with hepatitis C. In May of 2011, oral HCV protease inhibitors were introduced to the hepatitis C market and have proven to have increased efficacy and improved overall patient outcomes. The addition of the HCV protease inhibitors, Incivek and Victrelis, to the marketplace has changed the face of hepatitis C treatment. Outcomes of the ADVANCE trial showed that patients that were treatment-naïve and on the triple therapy of Incivek, pegylated interferon, and ribavirin produced overall SVR (sustained virologic response) rates of 79% versus 46% on dual therapy of pegylated interferon and ribavirin alone.

3 The SPRINT-2 trial showed that treatment-naïve patients on the triple therapy of Victrelis, pegylated interferon, and ribavirin produced overall SVR rates of 63%-66% versus 38% on dual therapy of pegylated interferon and ribavirin alone. Although these medications vary slightly in their SVR rates, both represent a greater possibility of cure in patients who have been living with hepatitis C for years and who may not have seen adequate outcomes on previous therapies. Incivek and Victrelis are not FDA-approved for use in monotherapy treatment regimens. Utilization of these agents also requires the addition of pegylated interferon and ribavirin; creating a triple therapy treatment option. As a result, the overall cost of treating patients with hepatitis C has increased dramatically. As of late 2011, the WAC pricing of 48 weeks of treatment with pegylated interferon and ribavirin was approximately $30,000. Incivek, while given over a relatively short period of 12 weeks, carries a WAC price of $49,200, while treatment with Victrelis for 48 weeks is $48,4005. The unique element to consider when evaluating Victrelis is that some patients will have the ability to discontinue therapy as early as 24 or 36 weeks into treatment based on when an undetectable result was realized. As the pharmaceutical pipeline continues to grow more robust around the treatment of HCV, associated costs will also continue to grow. In order to continue providing these new hepatitis C treatments to patients, many payers have begun to consider strategies that will allow them to address both the efficacy of the medications and their corresponding cost implications. When evaluating the clinical attributes of Incivek and Victrelis, there are three very important elements that are often considered by practitioners and payers: length of treatment, medication lead-in requirements, and potential side effects. Incivek is taken over a twelve week period and does not require a lead-in of pegylated interferon and ribavirin. One of its most commonly reported side effects is the development of a severe rash. Victrelis is taken over a total of 44 weeks, and does require a four-week lead-in of pegylated interferon and ribavirin. Its most commonly reported side effect is severe anemia. At first glance, Incivek may be thought of as the preferred protease inhibitor, due to its favorable 12-week treatment period and its less severe side effect. However, payers may also consider that although treatment with Victrelis is given over a maximum of 48 weeks, the required lead-in period with pegylated interferon and ribavirin may actually cost less in the long run, because if patients cannot tolerate the lead-in, Victrelis cannot be administered. The utilization of Incivek and Victrelis will more than likely increase over the next 18 months due to: Increased public awareness and testing The CDC held its first ever National Hepatitis Testing Day on May 19, 20122, and also issued draft guidelines proposing all baby boomers (born ) get a one-time test for Hepatitis C

4 Faster testing The FDA recently approved 6 a Hepatitis C test that takes only 20 minutes An increase in direct consumer advertising from the manufacturers of Incivek and Victrelis Prescribers becoming more comfortable with the new therapies Patients becoming more comfortable with the new therapy regimen, and spreading positive word of mouth based on the success of these new drugs Considering all of the above, payers will ultimately have to make the very difficult decision of whether they will allow open access to these highly effective but costly medications by evaluating their membership and assessing utilization of previously filled hepatitis C medications. In addition, payers may also consider evaluating their existing prior authorization criteria to include more relevant and appropriate guidelines for their use. For example, some payers have considered updating questions/criteria on their hepatitis C medication requests or prior authorization forms in order to assess current alcohol use of patients, as alcohol use may affect the efficacy of these medications. In addition, another question that is often asked by payers is whether the patient is being followed by a physician that specializes in hepatalogy, gastroenterology, or any other relevant specialty. This ensures that the patient s therapy is being consistently monitored, and also reassures the payer that its members are receiving the best care possible. Entertaining a preferred medication solo strategy is another avenue that many payers are considering in this new, evolving hepatitis C marketplace. By selecting a preferred agent for the payer s formulary or preferred drug list (PDL), payers may negotiate with manufacturers regarding deeper rebate opportunities or discounts in exchange for this preferred status. Conclusion While the rate of new HCV cases has stabilized over the years and HCV therapies have become more effective, managing HCV within the baby boomer generation should be a priority for your organization. Effective clinical management and insights into up-to-date trends and therapies are of the utmost importance. Collaborative efforts between the medical and pharmacy groups and communities associated with your organization must foster an understanding of HCV infection and its impact on your membership as a whole. This includes understanding the disease, identifying populations at risk, and identifying and evaluating new and existing treatment options as well as any associated costs.

5 About Us Optimity Advisors is a specialized management consulting and advisory firm that combines industry expertise and integrated solutions to help companies enhance stakeholder value, improve operations, and address performance and risk related challenges. Our company is comprised of professional advisors with deep domain expertise in strategy, clinical management, operational transformation, business intelligence, IT effectiveness and regulatory compliance. Our Advisors, led by on-staff PharmD oversight, provide the clinical support and insight that is needed to deliver effective, quality healthcare. Our industry experience includes: Private Sector and Medicaid Managed Care Pharmacy &Therapeutics Committee Leadership Sources 1- PMH / 2- HepTestingRecsPressRelease2012.html 3- cfm?id=46335&action=detail&ref= Jacobson IM, McHutchison JG, Dusheiko G, et al. Telaprevir for previously untreated chronic hepatitis C virus infection. N Engl J Med. 2011;364(25): Tungol A, Rademacher, K, Schafer, J. JMCP. Nov-Dec 2011;17(9): PressAnnouncements/ucm htm Research and Development of Clinical Programs Development of Formularies and Preferred Drug Lists Retail Pharmacy One-on-one Patient Counseling and Education Development of Disease State Management Protocols and Strategies Washington, DC 1600 K Street, Suite 202 Washington, DC Phone: Fax: New York, NY 183 Madison Avenue, Suite 1205 New York, NY Phone:

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