Health Affairs Briefing Specialty Pharmaceutical Spending And Policy. Alan Weil Editor in Chief Hyatt Regency Washington October 7, 2014

Health Affairs Briefing Specialty Pharmaceutical Spending And Policy Alan Weil Editor in Chief Hyatt Regency Washington October 7, 2014

Health Affairs thanks For its generous support of the October 2014 cluster of articles on Specialty Pharmaceuticals and this briefing.

Follow Live Tweets From The Briefing: @Health_Affairs Join In The Conversation: #SpecialtyDrugs

Panel 1: Cost And Value

Growth In National Health Expenditures (NHE) And Gross Domestic Product (GDP), And NHE As A Share Of GDP, 1990 2012. Martin A B et al. Health Aff 2014;33:67-77 2014 by Project HOPE - The People-to-People Health Foundation, Inc.

Spending increases are related to technological change.

Spending increases are driven by price increases in selected categories.

Despite High Costs, Specialty Drugs May Offer Value For Money Comparable To That Of Traditional Drugs James D. Chambers, PhD Assistant Professor, Center for the Evaluation of Value and Risk in Health Tufts Medical Center

What Did We Do? FDA drug approvals (1999 2011) Examined if costs of specialty drugs are worth the clinical benefits Compared with traditional drugs

How Did We Do It? Identified estimates of additional health gains (QALYs) and costs Dataset of drugs compared to preexisting standard of care Comparison of health gain, additional cost associated with drug use, and costeffectiveness

What Did We Find? Specialty drug use associated with Similar higher cost- costs effectiveness median inc. costs (p = 0.35) $12,238 vs. $784 (p<0.01) but specialty drugs offer larger health gains median QALY gain 0.183 vs. 0.002 (p<0.01)

What Does This Mean? Specialty drugs more expensive, but offer larger benefits In many cases offer reasonable value for money Study does not address affordability

Panel 2: Policy Issues

The Ethics Of Fail First Design Guidelines for Step Therapy Coverage Policies Steven Pearson, MD Founder and President Institute for Clinical and Economic Review

Step Therapy Coverage Policies What are they? Require patients try a less expensive treatment and fail first before the insurer will cover another, more expensive option Why use step therapy? Prudent use of limited health care resources Less restrictive than non-coverage Consistent with best scientific evidence?

Growing Use Of Step Therapy 67% of employer-sponsored health plans using step therapy in 2013 Used often for expensive specialty pharmaceuticals Controversies over step therapy have led to a patchwork of varying legislative restrictions across the country

Ethical Design Criteria Weigh short-term cost savings against long-term clinical and economic outcomes Ensure that first-step drugs are clinically appropriate for nearly all patients Give patients an excellent chance to meet clinical goals First-step failure should not cause long-term harm Clearly define failure Opting out on clinical grounds should be quick and easy Make the rationale and rules for the policy explicit and transparent Rapidly review relevant new evidence

Scenarios For Step Therapy Population-level evidence Drug A more effective than drug B, but drug B can be effective for many patients who fail with drug A Drugs A and B have equivalent safety and effectiveness Drugs A and B have equivalent safety and effectiveness Promising but inconclusive evidence suggests that drug B is safer, more effective, or both than drug A Drug B is safer, more effective, or both than drug A Drug B is safer, more effective, or both than drug A Heterogeneity of treatment effect Marked Limited Marked Uncertain Limited Marked Ethical burden on payers Lowest Very low Moderate Moderate High Highest

Policy Applications Internal guidance for payers Benchmark for accreditation bodies Framework for state or federal legislation to ensure appropriate step therapy policies

Existing FDA Pathways Have Potential To Ensure Early Access To, And Appropriate Use Of, Specialty Drugs Aaron Kesselheim, MD, JD Associate Professor of Medicine, Harvard Medical School Brigham and Women s Hospital, Division of Pharmacoepidemiology and Pharmacoeconomics

Specialty Drugs Aspects of the FDA s traditional gatekeeping role particularly relevant to review and approval of specialty drugs #1: Expedite access to lifesaving specialty drugs #2: Limit overuse

#1a: Expanded Access Patients with pressing clinical need seek to access investigational drugs FDA approves requests, but practical limitations remain, e.g., related to supply, difference between direct and actual cost Particularly relevant for complicated-tomanufacture and costly specialty drugs FDA: more active role? Require submission of pre-approval plan Clarify how review expedited access data

#1b: Expedited Approval Many pathways speed FDA approval of promising specialty drugs: fast-track, accelerated approval, priority review, breakthrough therapy (2012) 2000-13: 49/82 (61%) approved fast-track drugs, 26/37 (70%) accelerated approval Challenge evidence-based prescribing FDA must better ensure timely confirmatory studies; Fines? Sunsetting? FDA must better communicate limited data

#2a: Limiting Overuse With Narrow Indications Overly broad approved indications invites inappropriate prescribing Examples: Target treatment ranges (Epoetin for anemia), or limited to refractory population in which drug was tested More emphasis on companion diagnostics like HercepTest Of 13 drugs explicitly approved with companion diagnostic, 12 are specialty drugs

#2b: Risk Evaluation And Mitigation Strategies (REMS) 2007 FDAAA allow FDA to require development of restricted prescribing plan if needed to ensure benefits outweigh identified safety risks Medication guides, certification, enhanced patient informed consent ~1/2 of 81 REMS related to specialty drugs Need broader authority to impose for specialty drugs?

Control Spending FDA cannot take costs into account when reviewing new drug applications Can expeditiously withdraw disproven indications for specialty drugs (see Avastin and MBC) Can also facilitate market competition by creating reliable pathway for biosimilars, since many specialty drugs are biologics

Conclusions Specialty drugs offer promise of substantial health benefits, require patient monitoring because of important risks, complex to manufacture, extremely costly Many existing regulatory tools can be applied to ensure efficient approval of and access to specialty drugs and promote appropriate prescribing after approval

Specialty Drug Coupons Lower Out-of-pocket Costs And May Improve Adherence At The Risk Of Increasing Premiums Catherine L. Starner, senior health outcomes researcher, Prime Therapeutics G. Caleb Alexander, associate professor, Department of Epidemiology, and co-director of the Center for Drug Safety and Effectiveness at Johns Hopkins Bloomberg School of Public Health Kevin Bowen, senior health outcomes researcher, Prime Therapeutics Yang Qui, data scientist, Prime Therapeutics Peter Wickersham, senior vice president for integrated care and specialty, Prime Therapeutics Patrick P. Gleason, director of health outcomes, Prime Therapeutics

Specialty Drug Coupons Impact At Prime Specialty Pharmacy 57% Patient pay before copay coupon After coupon Patient pay before copay coupon After coupon 3% 12% 1% Patient cost share greater than $50 Patient cost share greater than $250 117,330 prescriptions with a coupon Source: Prime Therapeutics LLC

Cost Share Impact On Adherence Unadjusted Abandonment Rates of Specialty Drugs By 15,937 Patients Newly Initiating Or Restarting Use

Tools To Manage Specialty Spend Patient cost share & formulary (drug list) management Utilization management Contracting management Care / Case management Channel management Prior authorization Step therapy Quantity limit maximums per prescription fill Prime Therapeutics LLC Rebates Provider reimbursement fee schedules Patient counseling to ensure safe & effective drug use Patient services to ensure use of preferred care network and specialist Coordination of care Specialty Pharmacy network Drug purchasing discounts Optimize site of care Patient financial assistance (coupons) for preferred formulary tier drugs

Conclusions As patient cost shares go beyond $250 per month, more patients abandon their drug therapy A patient s cost share for preferred tier specialty drugs on the formulary (drug list) should be $250 or less per month When coupons were applied, they reduced patient cost share to less than $250 and saved patients $6 of every $10 they are asked to pay out of pocket Unless used on preferred specialty drugs, coupons may undermine insurer s ability to manage costs, risking increases to premiums Laws banning specialty drug tiers will likely increase costs and limit access Prime Therapeutics LLC

What is 340B? Federal program intended to allow some hospitals that care for the poor to obtain drugs at reduced prices. Manufacturers must extend these discounts for drugs available to patients insured by Medicaid.

When the West Clinic merged with Methodist Hospital, Dr. Lee S. Schwartzberg, said the 340B program definitely was a factor in the decision to form the partnership. - NY Times, 2.12.2013 We investigate whether program expansions are consistent with program goal to serve the poor. Are newer 340B hospitals and newer affiliations capturing more poor patients or better insured ones?

Old and new 340B hospitals and their clinic affiliations

If nonprofit hospitals are essentially profiting from the 340B program without passing those savings to its patients, then the 340B program is not functioning as intended. -Senator Charles E. Grassley

A Conversation On Specialty Pharmaceuticals Troyen A. Brennan, MD, CVS Health Peter Bach, MD, Memorial Sloan Kettering s Center for Health Policy and Outcomes Alan Weil, Moderator

Thank You! Please be sure to join us for these upcoming events: November Issue Briefing: Communities and Health Wednesday, November 5, National Press Club December Briefing: Children s Health Monday, December 8, National Press Club