Evolving Management Strategies for Specialty Pharmaceuticals

Several talks during AMCP focused on evolving management controls for specialty pharmacy drugs, including: a presentation of the EMD SERONO Specialty Digest, CELGENE’s “Control versus cure? How to determine value of oncology treatments within managed care: A focus on multiple myeloma,” and ABBVIE’s “Keeping pace with new HCV treatment and management strategies.” While specialty drugs are not a new concept in the US healthcare market, the definition has evolved as the number and diversity of specialty products increased over the past few years. The definition of specialty originally referenced a limited distribution channel; however, today, 85% of plans now define a specialty drug as simply “high cost” Asthma, HCV, hemophilia, MS, and oncology are disease areas in which most of the innovative, branded products are considered to be specialty.

With the rising number of specialty drugs in development, payers are increasingly concerned about the rising cost and utilization of these drugs by their members.  In the past year alone, 25% more surveyed plans shifted from a single specialty tier to a multi-specialty-tier benefit design.  Of course, this does not mean that all members are subjected to this design, but rather that it is a product offering and option for employers.  The addition of extra tiers allows for the introduction of preferred and non-preferred specialty drugs. This will be especially important when biosimilars are introduced, as the cost of a biosimilar is expected to be within 20-30% of the originator which is still far above the cost of a small molecule generic.

Payers are also looking to increase other utilization management tactics for specialty drugs. Most plans already limit specialty products to 30 day supplies to promote drug compliance. Prior authorizations and step edits are also a very common way for payers to control utilization of these high-value products. However, specialty drugs that are covered under the medical benefit have a wider variety of clinical experts who are responsible for administering the PA than pharmacy benefit drugs. These differences often lead to inefficiencies in the system.

Outlook – Oncology

Health plans are rethinking their benefit design as the number and cost of specialty drugs continue to rise. However, each disease area offers its own challenges for utilization management controls. Until recently, oncology has not been managed very strictly due to push back from the oncology provider network. With more oncology drugs on the specialty tier, hands-off management will no longer be a necessity for most health insurance plans. This is especially true as more high cost oncology drugs are used in combination therapy, and the payer-perceived need to manage access increases.

One of the most efficient ways to control utilization is to implement pathways, guidelines established for preferred treatment order, in specific disease settings. While guidelines can be mandated through PAs, financial incentives, or tied directly to reimbursement, most plans have neither implemented nor enforced preferred treatment guidelines.  In fact, only 3% of current oncology PAs are established to drive a preferred treatment. By establishing pathways, physicians may be limited in their ability to freely prescribe combination therapy or high cost drugs to every potential patient. The future may require physicians to follow the pathway as deemed appropriate in conjunction with both the provider guidelines and the plan. While only a few plans are currently establishing pathways in oncology today, most plans will strongly consider implementation within the next 5-10 years.

Outlook- HCV

Besides pathways, payers are also looking to renegotiate their pharmaceutical contracts in order to ration expenditure. The launch of SOLVADI has now caused HCV to become one of the most likely disease areas to be subjected to risk sharing contracts between payer and manufacturer. SOLVADI is the first drug in its class to cure HCV with an overall SVR rate of 90%. It is also one of the most expensive drugs, launching with a price of USD 84,000 for a 12-week regimen. However, since the drug offers a 90% curative treatment, some payers may be more inclined to provide access to SOLVADI via an outcomes based contract, through which the plan would only pay if the patient meets pre-determined outcomes metrics. If a patient does not reach the goal, a variety of options exist, including the requirement that the manufacturer reimburse all or a portion of the treatment costs.

Although the success of outcomes-based agreements has been limited in the US, success within HCV could lead to a resurgence of interest in other disease areas. As manufacturers become increasingly financially liable, they may need to become even further involved in patient care through access to disease marker diagnostics,  as well as further enhancing patient adherence and compliance programs to ensure appropriate utilization.