Payers Implementing Programs to Manage Specialty Medications

Philadelphia—Four years ago, OmedaRx implemented a prior authorization program for tyrosine kinase inhibitors to treat various types of cancer. The pharmacy benefit manager (PBM) noticed that drug costs were increasing and becoming too expensive without showing substantial efficacy and safety improvements over existing therapies. The company worked with oncologists and pharmaceutical manufacturers to determine the products that would appear on the preferred formulary list.

At the time, managing oncology drugs through prior authorization, copay or coinsurance programs, or changing benefit designs was uncommon. OmedaRx feared the controversial decision would appear on the front page of newspapers and create a public relations problem. Instead, the program was well received and was later used for multiple sclerosis (MS) and rheumatoid arthritis (RA). The company plans on a putting a program together for hepatitis C medications as well.

“We are continuing to be more aggressive in our management of [drugs] we do not see bringing high-value to the expense that is attended in their use,” said Raulo Frear, PharmD, general manager, OmedaRx, at the World Congress Summit conference. “It has been a success for us, and we will continue to do that.”

PBMs and other payers are dealing with the high drug costs through various methods. At OmedaRx, the 3 most expensive disease categories are oncology, RA, and MS, and each consists almost exclusively of specialty drugs. Costs in these classes have grown at least 15% in each of the past 3 years.

When developing formularies, Dr. Frear said OmedaRx does not care if a drug is on the medical or pharmacy benefit. Unlike other PBMs, OmedaRx has not moved drugs between the benefits to achieve cost savings either because the switch can create a “negative member experience.” To improve medication adherence, OmedaRx has member education programs and utilization management programs. There are prior authorization and step therapy lists and protocols for approximately 125 drugs on the pharmacy benefit and for 35 to 40 drugs on the medical benefit, most of which are considered specialty products.

In recent years, hospitals and health systems have bought dozens of physician practices, creating difficult situations for PBMs and other payers. However, OmedaRx has had some success in site of care administration through a partnership with Walgreens, which is OmedaRx’s preferred specialty pharmacy. For instance, patients who are prescribed infliximab to treat ulcerative colitis, Crohn’s disease, RA, or other conditions are told to take the infusion medication in a less costly setting. OmedaRx also recommends that patients take intravenous (IV) immunoglobulin in ambulatory infusion centers instead of more expensive hospital outpatient departments. “If you do enough of these programs, it does start making a pretty good impact on our costs,” said Dr. Frear.

For the second half of 2014 and all of 2015, OmedaRx is requiring members and their physicians to provide a medical reason as to why they cannot receive care at lower cost sites. If the explanation is considered invalid, OmedaRx plans on denying coverage for higher cost facilities. Furthermore,
after OmedaRx found most physician groups do not understand how they can decrease costs through the pharmacy benefit, OmedaRx started to meet with accountable care organizations on a quarterly basis to review their data and steer them toward lower cost settings when possible.

Formulary Positioning and Copay Assistance
During the drug development process, companies are more attuned to reimbursement because they are concerned that their expensive medications may not be covered. Bill Goodson, deputy director of
pricing, reimbursement, and patient assistance, Bayer HealthCare, said Bayer now begins discussions with payers and the FDA about reimbursement issues during phase 2 trials. Although the success rate of drugs getting approved is low and the FDA does not require cost-effectiveness studies, companies are focusing on proving their products are worth the costs associated with them.

“It is much more efficient for us to have the information that we need, and it is more efficient for the pharmaceutical manufacturer to develop that information as they go,” Dr. Frear said. “It has been good for all parties to have that dialogue much earlier in the process.” Mr. Goodson said Bayer’s products are all considered specialty drugs and most are on specialty tiers in the formulary. Patients usually have coinsurance responsibility. When designing a copay program, Mr. Goodson recommended pharmaceutical manufacturers consider the disease state, drug indication, competitive situation, administration (oral or IV), the drug’s life cycle (new to market or close to patent expiration), cost, and formulary position. He also suggested reviewing the program every year.

“We need to have something in place where these patients can access the product because this may be the only product in that space that helps the patient,” Mr. Goodson said. “From a manufacturers’ point of view, I think you will continue to see commercial copay programs and patient assistance.”

Bayer’s copay program for oncology products began with a coinsurance mandate before switching to a program based on a patient’s income with a maximum cost of $100 per month. In July, the company introduced a $0 copay for regorafenib and sorafenib. Bayer’s programs are run by outside vendors, while other companies, such as Genentech and Celgene, run their own programs. Bayer has also implemented limited distribution networks for regorafenib and sorafenib. Patients can access the drugs through a specialty pharmacy or through the hub program.

Mr. Goodson said the categories of people covered on copay programs vary depending on the manufacturer. For instance, Bayer offers copay assistance to patients who enroll in health plans through the state and federal health insurance exchanges, but other companies do not cover these patients. “Based on the market and based on the things that are going on in the payer landscape, you have to be flexible with your copay programs,” Mr. Goodson said.

Although assistance programs help patients afford medications, they are costly for PBMs and other payers. Dr. Frear said he does not know of any data that prove or disprove their effectiveness either. He mentioned that the abandonment rates for any medications are high and a large percentage of patients never fill their first prescriptions.

“What we would like to see as payers is a little bit of relief for us,” Dr. Frear said. “If a manufacturer were to take whatever amount of money that was set aside for copay assistance programs or couponing and just baked it into a lower cost overall for that pharmaceutical, I think everybody would feel better about it.”

Payers and pharmaceutical manufacturers are constantly discussing issues related to access to medications. Companies want all of their drugs covered and on the highest tiers, and they want to offer assistance to patients who cannot afford the medications. However, payers are concerned that drugs are getting too expensive and becoming unaffordable. They are implementing measures and evaluating clinical trials and other evidence to provide patients with drugs that are safe and effective without costing too much.

“I think all of us have to realize that [access to drugs] may not boil down to something where a member wants a medication, but whether a member needs that medication,” Dr. Frear said. “I do not think the debate is over with respect to some of the information we use in developing our programs, but if we can absolutely establish that a member needs that medication based on good, scientific evidence, then I will cross my fingers and think that we have enough money to pay for it. If anybody gets irresponsible in that process and starts using something where there is no evidence of efficacy and no evidence of what is going to happen from a safety standpoint, then we are going to continue to have a lot of problems.”—Tim Casey