How Specialty Drugs Will Affect the Future of Healthcare - Q&A with William J. Cardarelli, PharmD, Director of Pharmacy Revenue and Supply, Atrius Health

First Report Managed Care conducted an interview with William J. Cardarelli, PharmD, one of our Editorial Advisory Board members, to discuss the advances in specialty medicine and how it affects formulary design, health coverage, and economic considerations. Here you will find Dr. Cardarelli’s take on current events related to the healthcare system.

Q: Can you describe your role as director of pharmacy for Atrius Health? What are your responsibilities? Have they evolved in recent years with the passage of the Patient Protection and Affordable Care Act (ACA)?

A: My role at this organization has changed over the years as the organization itself has evolved. Atrius Health is a nonprofit alliance of 7 large, multispecialty group practices. We serve >1 million adult and pediatric patients in >3.5 million visits annually to 50 practice locations. We employ >8200 people, more than 1000 of whom are physicians.

When I joined this company, more than 25 years ago, we were known as Harvard Community Health Plan, a staff-model health maintenance organization. My responsibilities have changed over the years as the business grew, went bankrupt, was reborn, and then grew into what it is today. We are positioning ourselves to be an accountable care organization (ACO), as healthcare delivery continues its transformation. Atrius Health one of the original Centers for Medicare & Medicaid Services Pioneer ACO project participants. We accept full risk, both medical and pharmacy, for the majority of our patients.

In my current role, I am responsible for our drug costs, both from a spend and revenue perspective. I manage contracts, formulary, participate in the design and implementation of various care processes, and manage the purchasing of our 15 site-based clinic pharmacies.

Clearly, the implementation of the ACA will significantly change the way that healthcare is delivered. Having spent the majority of my career in the risk space, I am comfortable that my company will be successful in the new environment.

Q: Although the increase in healthcare spending has remained low in the past few years, spending on specialty drugs has increased around 20% per year. How have you managed specialty spending? What strategies have been most effective? Are you planning on implementing different strategies in the coming years?

A: While it is true that healthcare cost inflation has remained low [over] the past few years, spending on specialty drugs has increased dramatically. Right now, there are almost 5000 products in phase 1, 2, or 3 development stages. A little more than 1000 of those products are biologics. Many of these biologics represent significant advances in therapy. These clinical advances come at an equally significant cost.

As a general strategy, we try to provide access to these drugs for the patients who will benefit most from their use. Given the cost of these new products, it will be increasingly difficult to maintain access as we currently provide it. The next few years will see increases in coinsurance, deductibles, and specialty tiers. This is unfortunate, as it will make it very difficult for some patients to be able to afford treatments.

Q: In December, the FDA approved sofosbuvir, an oral medication to treat hepatitis C. The drug has received a lot of attention for its efficacy, but it costs $1000 per pill and $84,000 for a standard 12-week regimen. How are you dealing with the high costs of sofosbuvir and other drugs in the pipeline to treat hepatitis C? Will people have access to these drugs?

A: Good question. Sofosbuvir is being touted as a significant improvement over existing therapies. In its studies, it demonstrated a success rate of >90%. From a patient tolerance perspective, it is a vast improvement over previous therapy regimens.

It is extraordinarily expensive and its manufacturer has been widely criticized for setting the price so high. The net effect of this high price is that it also sets the pricing bar high for future hepatitis C drugs as they come to market. We have seen this happen in other therapeutic categories, with multiple sclerosis (MS) being the prime example. This stresses the entire healthcare delivery system.

Medicare and Medicaid programs will struggle with these costs, and other payers will have to decide what level of access they can afford. Do not misunderstand me; every company is entitled to a return on their investment, but this type of pricing just invites more management of resources based on price rather than quality.

Q: There are hundreds of oncology drugs in late-stage development, some of which have had promising results. However, some of these medications are very costly and may only offer a slight benefit over existing therapies. It has traditionally been difficult to manage oncology spending, but have you seen a change in the way payers evaluate new cancer therapies?

A: Defining value has become very difficult in oncology, where products that cost thousands of dollars extend life by weeks or maybe a couple of months. In England, coverage of drugs is often defined by a calculation of dollars per quality-adjusted life years. The United States is uncomfortable with this approach. In fact, the ACA specifically prohibits these types of cost-utility analyses in formulary determination.

For now, we use national guidelines, such as the National Comprehensive Cancer Network; results from national conventions, such as the American Society of Clinical Oncology and others; peer-reviewed studies; and our local oncologists as resources. Clinical pathways are receiving more and more attention as we try to better understand and sequence our therapies.

Q: Like with hepatitis C and cancer, the treatment paradigm for MS has changed recently with the approval of oral medications. Will the oral drugs become the standard of care? How have you managed the disease?

A: Oral drugs certainly represent an opportunity to offer patients more convenient therapies. It also allows the reduction of the administration and facility costs related to infused therapies. What has not yet happened is that none of the new oral therapies have emerged clinically as the best in class. Right now, we are continuing to monitor the available options.

Q: As costs increase and new drugs are approved, it seems more people in the industry are paying attention to medication adherence. Does Atrius Health have programs in place to let people know about the importance of filling their prescriptions and sticking with their treatment regimen? Are there any approaches that work best to make sure people taking their medications as prescribed, in your opinion?

A: We do have a variety of programs. The causes of lack of adherence range from cost concerns to access to a pharmacy to communication and/or cultural issues. We offer a variety of clinician support, such as exam room posters, handouts for patients and physicians, tip sheets, clinician workflow algorithms, and questionnaires about medications that patients can fill out and bring to their appointments. All of these materials are available internally either through our electronic medical record or company-wide intranet. Patients can also access these materials through the patient portal, which allows them to access parts of [his or her] medical record and allows for electronic communication between the patient and [his or her] clinicians.

Looking forward, we will continue to leverage newer communication links, such as texts and smart-phone applications, as more people move toward mobile technologies.