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Session 171 PD, The Facts and Fiction of Pharmacy
Moderator:
Stuart D. Rachlin, FSA, MAAA
Presenters:
Kathryn Bronstein, Ph.D., RN
Stephen George, PharmD, MS
The Facts and Fiction of Pharmacy
Session 171 PD
Wednesday, October 29
10:15 a.m.-11:30 a.m.
Moderator and Presenters
Stuart D. Rachlin, FSA, MAAA,
Principal and Consulting Actuary
Milliman, Inc. Tampa, FL
Kathryn Bronstein, PhD, RN
VP Health Outcomes
Walgreens, Inc. Deerfield, IL
Stephen George, PharmD, MS
Senior Consultant
Milliman, Inc. Tampa, FL
1
October 30, 2014
Presentation Goals
1. Identify differences in pharmacy coverage between
major lines of business (LOB)
2. Explain the critical variable in projecting trends
3. Define how pharmacy contracts are structured
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October 30, 2014
Presentation Outline
TOPIC
I.
Overview of specialty pharmacy
II.
Advances in drug development
III.
Case Study – Pulmonary Arterial Hypertension (PAH)
IV.
Case Study - Hemophilia
V.
Case Study – Hepatitis C Virus (HCV)
VI.
Case Study – Cystic Fibrosis (CF)
VII. Innovation in Pharmacy Contracting
VIII. Conclusions
VIII. Questions
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Introduction and Overview
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Specialty Landscape
- Robust Pipeline/ Novel
MOA
Headwinds
- Manufacturer Price
Approval Pathways
/Orphan Drugs
- 351 (k) pathway not
well definedIncreases
- Accelerated
- Emerging / Warehoused
Populations
- Consensus Guidelines
- Pharma Market Pressure
- Ancillary Medication
Cost Reduction
- Reduced Disease
Impact Costs
(hospitalizations, ER)
- Performance
Guarantees
- Site Of Care and
Channel Cost Disparity
- Patent Expirations
- Pharmacoeconomic
Studies
- Market Landscape/
Competitive Pricing
- Biosimilars?
5
References: 1. FDA Orphan Drug Act accessed at
http://www.fda.gov/regulatoryinformation/legislation/federalfooddrugandcosmeticactfdcact/significantamendmentstothefdcact/orphandrugact/default.htm
2. Chughtai M, Chang J, Philips MI, et al. Benefits of the orphan drug act for rare disease treatments. TUFTScope. Spring, 2010.
Tailwinds
Rare Disease: Specialty Subset
Accelerator
Orphan / Rare Disease
• Conditions that affect fewer than
200,000 patients1
• Estimated 15 to 20 million Americans
affected2
Rare Disease
Specialty Spend
Through 2018, there will be a 17
percent compound annual growth
rate in U.S.1
Orphan Drugs Set to be 15.9% of
Worldwide Prescription Sales by
20182
6
Prior to 1983 only 34 orphan
products were marketed3
Between 1983 and 2009 the FDA
approved 275 orphan drugs for 337
orphan indication3
There are an estimated 6,000 rare
diseases currently recognized in the
U.S. alone
References:
1. http://www.healthcarefinancenews.com/news/sensible-strategies-curb-cost-growth-specialty-drugs
2. Hyde R. Orphan Drug Pricing and Payer Management in the United States: Are We Approaching the
Tipping Point. January/February 2010 Volume3 No1 American Health and Drug Benefits
3. Joshua P. Cohen and Abigail Felix. Are payers treating orphan drugs differently? Journal of Market
Access & Health Policy 201.2; 23513. 4. http://www.fiercepharmamarketing.com/story/orphan-drugapprovals-are-prices-are-more/2014-07-16
2013-2018 CAGR
Orphan 5.67%
vs. Non-Orphan 3%
U.S. orphan market has resulted in
86 new approvals between 2000
and 20134
Balance
Potential Cost
Compression
Each Scenario
depicted is
dependent on the
Orphan Condition
and Pipeline
Opportunity
Market
Competition
Patent Expirations
Disease Burden
or Pathology
Hospitalizations
Novel
Mechanism
Outcomes Data
Drug Cost
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Case Study: Pulmonary Arterial
Hypertension
Population
8
• Prevalence of 109 per million for ages <65 and
451 per million for Medicare1
• High Comorbid Index1
• Average AWP Specialty Cost Per Month= $8,0002
• Based on data from the Registry to Evaluate Early
And Long-term PAH disease management
(REVEAL) of patients in the United States, there is
an estimated five-year survival rate of 57% from
diagnosis.
References:
1.http://www.unboundmedicine.com/medline/citation/21793646/Prevalence_of_pulmonary_arterial_hypertension_and_chronic_thromboem
bolic_pulmonary_hypertension_in_the_United_States_2. Treatment patterns and resource utilization and costs among patients with
pulmonary arterial hypertension in the United States 2010, Vol. 13, No. 3 , Pages 393-402
Case Study: Pulmonary Arterial
Hypertension
Pharmacy
Coverage
Differences
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• Formulary / Preferred Product
• Staging/Population Burden
• Access vs. Adherence
• Medical/Pharmacy Benefit
Cross Over
References:
1.http://www.unboundmedicine.com/medline/citation/21793646/Prevalence_of_pulmonary_arterial_hypertension_and_chronic_thromboem
bolic_pulmonary_hypertension_in_the_United_States_2. Treatment patterns and resource utilization and costs among patients with
pulmonary arterial hypertension in the United States 2010, Vol. 13, No. 3 , Pages 393-402
Case Study: Pulmonary Arterial
Hypertension
Critical
Variables
10
• Patent Expiration / Generic
• Pipeline - Novel Agents/ Price
Set
• Manufacturer Price Increases
• Ancillary Care
• Population/Disease Burden
References:
1.http://www.unboundmedicine.com/medline/citation/21793646/Prevalence_of_pulmonary_arterial_hypertension_and_chronic_thromboem
bolic_pulmonary_hypertension_in_the_United_States_2. Treatment patterns and resource utilization and costs among patients with
pulmonary arterial hypertension in the United States 2010, Vol. 13, No. 3 , Pages 393-402
Case Study: Hemophilia
Background
and
Population
11
• Hemophilia is a chronic and expensive condition, with
antihemophilic medications accounting for 45%-93% of total
health care costs, depending on severity and treatment
regimen with $0.28 PMPM
• Estimated 18,500 patients with hemophilia A and B in the
United States2
• 1 in 5,000 male babies are born in the U.S. with hemophilia
A each year1
• Approximately 12,500 hemophilia A patients utilize Factor
VIII therapy3
• 28% mild, 19% moderate, 53% Severe
References:
1. Hemophilia A (factor VIII deficiency). National Hemophilia Foundation Web site.
Http://www.hemophilia.org/NHFWeb/MainPgs/MainNHF.aspx?menuid=180&contentid=45&rptname=bleeding 2. Summary report of UDC activity national patient
demographics (hemophilia). Centers for Disease Control and Prevention Web site.
3.https://www2a.cdc.gov/ncbddd/htcweb/UDC_Report/UDC_view1.asp?para1=NATION&para2= DEMOH&para3=&ScreenWidth=1920&ScreenHeight=1200. 3.
Summary report of UDC activity national treatment/clinical characteristics (hemophilia). Centers for Disease Control and Prevention Web site. 4.Smith PS. Levine
PH. The benefits of comprehensive care of hemophilia: a five-year study of outcomes. Am J Public Health. 1984;74:616-617.
Case Study: Hemophilia
Coverage
Drivers and
Strategies
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• Formulary / Preferred Product
• Medicaid Expansion
• Population Burden/Spend - Prevalence/ Spend
Disparity in Medicaid vs. Commercial
• Care management vs. Drug Management
• StopLoss Reinsurance/ Risk Delegation/ Carve
Out
• Medical benefit vs. Pharmacy benefit
References:
1. Hemophilia A (factor VIII deficiency). National Hemophilia Foundation Web site.
Http://www.hemophilia.org/NHFWeb/MainPgs/MainNHF.aspx?menuid=180&contentid=45&rptname=bleeding 2. Summary report of UDC activity national patient
demographics (hemophilia). Centers for Disease Control and Prevention Web site.
3.https://www2a.cdc.gov/ncbddd/htcweb/UDC_Report/UDC_view1.asp?para1=NATION&para2= DEMOH&para3=&ScreenWidth=1920&ScreenHeight=1200. 3.
Summary report of UDC activity national treatment/clinical characteristics (hemophilia). Centers for Disease Control and Prevention Web site. 4.Smith PS. Levine
PH. The benefits of comprehensive care of hemophilia: a five-year study of outcomes. Am J Public Health. 1984;74:616-617.
Case Study: Hemophilia
Critical
Variables
13
• New Long-Acting Products
• Performance Guarantees
• Manufacturer Price Increases
• Ancillary Care- Reduction in
hospitalizations4
• Population/Disease Burden
References:
1. Hemophilia A (factor VIII deficiency). National Hemophilia Foundation Web site.
Http://www.hemophilia.org/NHFWeb/MainPgs/MainNHF.aspx?menuid=180&contentid=45&rptname=bleeding 2. Summary report of UDC activity national patient
demographics (hemophilia). Centers for Disease Control and Prevention Web site.
3.https://www2a.cdc.gov/ncbddd/htcweb/UDC_Report/UDC_view1.asp?para1=NATION&para2= DEMOH&para3=&ScreenWidth=1920&ScreenHeight=1200. 3.
Summary report of UDC activity national treatment/clinical characteristics (hemophilia). Centers for Disease Control and Prevention Web site. 4.Smith PS. Levine
PH. The benefits of comprehensive care of hemophilia: a five-year study of outcomes. Am J Public Health. 1984;74:616-617.
Scientific Breakthrough
HCV Genotype 1 or 4
OLYSIO® 12 wks + INTERFERON + RIBAVIRIN 24 wks
Hepatocellular Carcinoma Awaiting Liver
Transplantation (Genotype 1-4)
SOVALDI ® 12 wks + RIBAVIRIN 12-24 wks
HCV Genotype 2
SOVALDI ® + RIBAVIRIN 12 wks
HCV Genotype 3
INTERFERON + RIBAVIRIN 24-48 wks
https://www.wellcare.com/WCAssets/corporate/assets/ccg/hs_ccg_hepatitisc_05_2014.pdf Accessed
October, 2014
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Case Study: Hepatitis C Virus (HCV)
Population
1.05% estimate prevalence (2013)
777,000 estimated prevalence in commercial payer
population (2013)
http://us.milliman.com/uploadedFiles/insight/2013/convergence-of-risk-and-opportunity.pdf Accessed, May 2014Sources: Authors’
analysis of NHANES. Variable:LBXHCR - Hepatitis C RNA (HCV-RNA) in NHANES. Chien N, Dundoo G,
Horani M et al. Seroprevalence of viral hepatitis in an older nursing home population. J Am Geriatr Soc. 1999;47:1110-3.
Dominitz JA, Boyko EJ, Koepsell TD et al. Elevated prevalence of hepatitis c infection in users of the United States veterans
medical centers. Hepatology. 2005;41:88-96. Chak E, Talal A, Sherman K et al. Hepatitis C virus infection in USA: an estimate
of true prevalence. Liver International. 2011;10:1090-1101.
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Estimated Liver Transplant Cost
2011 Estimated Average Transplant Cost Per Member Per Month (PMPM)
http://us.milliman.com/insight/research/health/2011-U_S_-organ-and-tissue-transplant-cost-estimates-and-discussion/
Bentley TS, et al. 2011 US organ and tissue transplant cost estimates and discussion. Milliman Research Report.
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Estimated Liver Transplant Cost
2011 Estimated Average Billed Charges per Transplant
*61% 10-year survival rate (1997-2007)
http://us.milliman.com/insight/research/health/2011-U_S_-organ-and-tissue-transplant-cost-estimates-and-discussion/
Bentley TS, et al. 2011 US organ and tissue transplant cost estimates and discussion. Milliman Research Report.
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October 30, 2014
Case Study: HCV LOB Issues
• Medicare
2015, 4.3 - 8.6 % increase in 2015 monthly
1.05% estimate prevalence (2013)
777,000 estimated prevalence in commercial payer
premiums
due(2013)
to new HCV treatments
population
-
$17 - $33 / beneficiary / year
• Medicaid coverage (Florida, New York, Oregon)
• Commercial coverage - employer groups and Health
Insurance Marketplace (HIM) plans
http://www.pcmanet.org/images/stories/uploads/2014/partdpremiumstudymilliman.pdf Accessed, August 2014
http://us.milliman.com/uploadedFiles/insight/2013/convergence-of-risk-and-opportunity.pdf Accessed, May 2014
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Case Study: HCV Critical Issues
•
•
•
•
$33,600 average wholesale price (AWP) Sovaldi ®
Impact of patient warehousing
Formulary / Tier positioning
Pharmacy Benefit Manager (PBM) strategy
http://www.pcmanet.org/images/stories/uploads/2014/partdpremiumstudymilliman.pdf Accessed, August 2014
http://us.milliman.com/uploadedFiles/insight/2013/convergence-of-risk-and-opportunity.pdf Accessed, May 2014
1919
Case Study: Cystic Fibrosis (CF)
Population
• Most prevalent recessive and lethal genetic condition
• 10 million carriers of CF gene
• 30,000 actual active cases
http://www.cff.org/UploadedFiles/GetInvolved/Advocate/AdvocacyToolkit/CFF-Access-to-Care-Fact-Sheet.pdf Accessed, September 2014
Van Gool K, et al. Value Health 2012;12:33
2020
Case Study: CF LOB Issues
• Mandated fetus or newborn testing varies across
states
• Commercially insured patients with CF have medical
costs 9 to 13 times higher than the average
commercial member
http://www.cff.org/UploadedFiles/GetInvolved/Advocate/AdvocacyToolkit/CFF-Access-to-Care-Fact-Sheet.pdf Accessed, September 2014
Van Gool K, et al. Value Health 2012;12:33
2121
Case Study: CF Critical Variables
• Kalydeco® (ivacaftor) $31,000 AWP month supply
• 2016 combination therapy
-
Kalydeco ® + lumacaftor
ataluren
• Pharmacy Benefit Manager (PBM) strategies
http://www.cff.org/UploadedFiles/GetInvolved/Advocate/AdvocacyToolkit/CFF-Access-to-Care-Fact-Sheet.pdf Accessed, September 2014
Van Gool K, et al. Value Health 2012;12:33
2222
Trend Projection Influencers
Improving confidence with strategies and tactics
Sophisticated
Data
Warehouse /
Mining
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General
Business
Principal –
Evolution /
Adaptation
Trend
Forecasting
Integration
Actuarial and
Clinical
MARKET
EFFECTS
Pharmacy Innovation
Contract Oversight
Prescriber
Risk
HCCs
Contract Grid
Performance
Guarantees
Performance
Guarantees
Formulary
Price
HCC = Hierarchical Condition Category
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October 30, 2014
Pharmacy Fact or Fiction Conclusions
• Dynamic environment impacting multiple stakeholders
• Alignment of stakeholder outcomes not likely in the
near future
• Continuous examination of trend projection techniques
and capabilities
• Market will need to adopt new management tactics
• Influence of quality and providing more with less
2525
Questions and Open Discussion
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