MCOs’ Shifting Control Over Office-Administered Products from Medical to Pharmacy Benefit, Particularly Affecting Rheumatoid Arthritis Therapies
This Trend is Part of Overall Effort by Payers to Control Access to and Costs for Rheumatoid Arthritis, Multiple Sclerosis and Oncology Therapies, According to a New Report from Decision Resources
Why the Fervor Over Drug Adherence?
Why Adherence? Because Non-Adherence Remains a Huge Problem
- Nearly two-thirds of Americans who take medications do not take them properly.
- 64% percent of Americans who take medications don’t always take their medications as prescribed; only 33% say they never miss taking their prescription medications.
- Those who must manage multiple medications are most likely to not adhere; 70% of individuals who take 3 or more medications do not take them properly.
“Drugs don’t work in patients who don’t take them.”— C. Everett Koop, former U.S. Surgeon General
Why Adherence? Because It Has Been Proven to Work
“CBO reviewed dozens of newer studies and determined a body of research now demonstrates a link between changes in prescription drug use and changes in the use of and spending for medical services.”
— CBO Report, November 29, 2012
Why Adherence? Because Multiple Stakeholders Are Now Focused on It
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- Government. Health expenditures in the U.S. now represent 17.9% of GDP, total $2.7 trillion, and are continuing to rise. The federal government and state governments pay for much of Medicare and Medicaid, and they view the level of healthcare spending and the continued growth in spending as unsustainable. As a result, efforts are under way to change the payment system and to find ways to control costs. Data showing that improvements in drug adherence can improve outcomes and reduce costs are getting governmental attention as officials look for ways to reduce spending.
- Health plans. Like the government, health plans are continuing to see costs rise and are aware that improved drug adherence can translate into improved outcomes and decreased costs.
- Medicare Advantage plans. Per Health Affairs,[vii] health plans provide pharmacy benefits to about 12 million Medicare beneficiaries in Medicare Advantage (MA) programs. MA plans receive a “Star Rating” of 1 to 5, and are focused on receiving 4- or 5-Star Ratings because these plans receive additional payments, which can be significant, as well as marketing advantages.
- PBMs. Increasingly, PBMs are forming “preferred networks” of pharmacies. Previously, the main criterion to be part of a PBM’s preferred network was cost/pricing. But this is changing. Today and in the future, PBMs are expected to be increasingly basing network decisions on “performance,” which looks at outcomes and factors such as drug adherence.
- Pharmaceutical manufacturers. Non-adherence costs pharmaceutical manufacturers tens of billions of dollars each year, giving pharma companies a significant incentive to improve adherence.[ix]
Stakeholder | Why they care about drug adherence |
Payers (government and commercial) | To reduce total medical costs |
Medicare Advantage plans | For good Star Ratings and bonus payments |
PBMs | New definition of “performance” |
Pharmaceutical manufacturers | To increase revenue |
Why Adherence? Because There Are Significant Short- and Long-Term Benefits for Pharmacies
- Benefits to patients. Certain studies have shown medical costs have declined and outcomes improved from better patient adherence.
- Filling more prescriptions. Improvements in adherence will mean more patients are having more prescriptions filled, which will generate more fills and refills at the store level and help drive additional revenue, traffic and profit for store owners.
- Advancing professionally. It is the pharmacist’s basic role to ensure that patients understand their medications and take them as prescribed. This is the right thing to do professionally. Importantly, pharmacists are well positioned in the healthcare system to play a key role in driving adherence, which is just one more way that pharmacy continues to evolve in serving as a valuable community health resource.
Why Adherence Matters
[I] DAVID M. CUTLER, PHD, AND WENDY EVERETT, SCD, “THINKING OUTSIDE THE PILLBOX—MEDICATION ADHERENCE AS A PRIORITY FOR HEALTH CARE REFORM,” NEW ENGLAND JOURNAL OF MEDICINE 362: 1553-155, APRIL 29, 2010, HTTP://WWW.NEJM.ORG/DOI/FULL/10.1056/NEJMP1002305
[II] NEW ENGLAND HEALTHCARE INSTITUTE, “THINKING OUTSIDE THE PILLBOX: A SYSTEM-WIDE APPROACH TO IMPROVING PATIENT MEDICATION ADHERENCE FOR CHRONIC DISEASE,” AUGUST 12, 2009, WEBSITE
[III] ASHISH ATREJA, MD, MPH, NARESH BELLAM, MD, MPH, AND SUSAN R. LEVY, PHD, “STRATEGIES TO ENHANCE PATIENT ADHERENCE: MAKING IT SIMPLE,” MEDSCAPE GENERAL MEDICINE, 7(1), 4, MARCH 15, 2005, HTTP://WWW.NCBI.NLM.NIH.GOV/PMC/ARTICLES/PMC1681370/
[IV] GREENBERG QUINLAN ROSNER RESEARCH PUBLIC OPINION STRATEGIES, LACK OF MEDICATION ADHERENCE HARMS AMERICANS’ HEALTH: RESULTS FROM A U.S. NATIONAL SURVEY OF ADULTS, MAY 2, 2013, HTTP://POS.ORG/DOCUMENTS/CAHC_2013_PUBLIC_POLL_MEMO.PDF
[V]AARON MCKETHAN, JOSH BENNER, AND ALAN BROOKHART, “SEIZING THE OPPORTUNITY TO IMPROVE MEDICATION ADHERENCE,” HEALTHAFFAIRS BLOG, AUGUST 28, 2012, HTTP://HEALTHAFFAIRS.ORG/BLOG/2012/08/28/SEIZING-THE-OPPORTUNITY-TO-IMPROVE-MEDICATION-ADHERENCE/
[VI] CONGRESSIONAL BUDGET OFFICE, OFFSETTING EFFECTS OF PRESCRIPTION DRUG USE ON MEDICARE’S SPENDING FOR MEDICAL SERVICES, NOVEMBER 29, 2012, HTTP://WWW.CBO.GOV/PUBLICATION/43741
[VII]AARON MCKETHAN, JOSH BENNER, AND ALAN BROOKHART, “SEIZING THE OPPORTUNITY TO IMPROVE MEDICATION ADHERENCE,” HEALTHAFFAIRS BLOG, AUGUST 28, 2012, HTTP://HEALTHAFFAIRS.ORG/BLOG/2012/08/28/SEIZING-THE-OPPORTUNITY-TO-IMPROVE-MEDICATION-ADHERENCE/
[VIII] 4 CMS. MEDICARE HEALTH & DRUG PLAN QUALITY AND PERFORMANCE RATINGS 2013 PART C & PART D TECHNICAL NOTES. 8/9/2012
[IX] LIZ TIERNEY, “PATIENT NON-ADHERENCE COSTS UNDERESTIMATED,” PACKAGING WORLD, MARCH 22, 2013, HTTP://WWW.PACKWORLD.COM/PRINT/54751
Diabetes Drugs will Lead Specialty Category
Evolving Definition: What is a Specialty Pharmacy?
- the drug is a specialized, high cost product (typically more than $500 per dose or $6000 or more per year)
- the drug is utilized as a complex therapy for a complex disease
- the drug requires special handling or administering, shipping, or storage (such as an injectable)
- the drug may have a Food and Drug Administration (FDA) Risk Evalaution and Mitigation Strategy (REMS) in place specifying that there is required training, certifications, or other requirements that must be met in order for the drug to be administered.
- The drug has the potential for significant waste due to high cost
What is a Specialty Pharmacy?
Now that we have identified what a specialty drug is, we can begin to touch on what constitutes a specialty pharmacy. In broad terms, a specialty pharmacy is a specific type of pharmaceutical delivery system which coordinates delivery and offers comprehensive support in the distribution of drugs which are high cost or complex and utilized to treat complex conditions.
Why is This Area Poised For Growth?
The specialty pharmacy care model is being supported by several initiatives and is another way in which healthcare providers are looking to improve patient care while effectively managing costs in one coordinated system. This means that the specialty pharmacy model is in the right place at the right time from a care provision perspective. Add to this the explosion in specialty drugs.
- “Within 4 years, specialty drugs will account for 40% to 45% of pharmaceutical manufacturer sales” Specialty Pharmacy Today
- “7 of the top 10 bestselling drugs (by revenue) are projected to be specialty drugs in 2016 compared with 3 in 2010″ EvaluatePharma
- Furthermore, according to Jon Haas, VP, Managed Markets, Palio “in 1990 there were 10 specialty drugs on the market, while in 2010 there were 250 specialty drugs”
Expiring Prescription Drug Patents Benefit Consumers
Are Employers the Culprits Behind High U.S. Health Care Prices?
These price differentials, it should be noted, have never been shown to be related either to the cost of producing health care procedures or to their quality. The question, not addressed in the article, is who bears the blame for this chaotic, private-sector price system. The only fair answer is: American employers. Who else could it be?
I have been critical of employment-based health insurance in this country for more than two decades. In the early 1990s, for example, at the annual gathering of the Business Council, I bluntly told the top chief executives assembled there, “If you want to find the culprit behind the health care cost explosion in the U.S., go to the bathroom and look in the mirror.” After years of further study, I stand by that remark.
I can imagine that some would look instead to the usual suspects – Medicare, Medicaid and possibly even the Tricare program for the military – but that would be a stretch. The argument would be that the public programs shift costs to the private sector, causing the chaos there. Few economists buy that theory.
Most health-policy analysts I know regret that employers appointed themselves their employees’ agents in the markets for health insurance and health care, developing in the process the ephemeral insurance coverage that is lost to the family when its breadwinner loses his or her job.
Employers were able to capture that agency role during World War II when they successfully walked around the prevailing wage controls simply by having Congress exempt fringe benefits from the wage cap. Employers were able to retain their agency even after the wage controls ended by having Congress exempt employer-paid fringe benefits from the taxable income of employees, a tax preference not granted Americans who purchased health insurance on their own. Retaining their tax-preferred agency role has been of great help to employers in the labor market.
Alas, in their self-appointed role as purchasing agents in health care, American employers have arguably become the sloppiest purchasers of health care anywhere in the world. The chaotic price system for health care is one manifestation of that sloppiness.
For more than half a century, employers have passively paid just about every health care bill that has been put before them, with few questions asked. And all along they have been party to a deal to keep the chaotic price system they helped create opaque from the public and even from their own employees. Only very recently and very timidly have a few of them dared to lift the veil a little.
Employers may protest that they rarely purchase health care for their employees directly. The actual purchases are made by the employers’ agents, private health insurance carriers. But the latter are merely the conduits for the employers’ wishes. When agents perform poorly, one should look first for the root cause at the principals’ instructions.
One reason for the employers’ passivity in paying health care bills may be that they know, or should know, that the fringe benefits they purchase for their employees ultimately come out of the employees’ total pay package. In a sense, employers behave like pickpockets who take from their employees’ wallets and with the money lifted purchase goodies for their employees. Far too many employees have been seduced into believing that their benevolent employer pays for most of their health care.
The result of this untoward pas de deux is the system Ms. Rosenthal describes.
One consequence of this opaque pricing system has been that, according to the 2013 Milliman Medical Index, the average cost of health care of a typical American family of four under age 65, and insured through an employer-sponsored preferred provider plan, is now $22,000, up from about $10,000 a decade earlier. It is a staggering amount, not only by international comparison, but also when compared with the distribution of family income in the United States, with a median income of $50,000 to $60,000.
Another result has been that, according to a recent analysis published in the policy journal Health Affairs, a decade of health care cost growth under employment-based health insurance has wiped out the real income gains for an average family with employment-based health insurance. One must wonder how any employer as agent for employees can take pride in that outcome.
Yet a third consequence of the rampant price discrimination baked into this pricing system is that uninsured Americans with some financial means are often charged the highest prices for health care when they fall ill, exposing them to the prospect of financial bankruptcy.
How long must the opaque and chaotic health care pricing system of employment-based health insurance in the United States persist? I can envisage two alternatives.
The first would be an all-payer system on the German or Swiss model, perhaps on a statewide basis, with some adjustments for smaller regional cost differentials (urban versus rural, for example), as is now the practice in the Medicare price schedules. In those systems, multiple insurance carriers negotiate jointly with counter-associations of the relevant health care providers over common price schedules, which thereafter are binding on every payer and every health care provider in the region (an analysis in Health Affairs offered more details). One can easily link such a system to the growth of gross domestic product.
The second alternative would be a marriage in which the financial risks of ill health are shared up to a point and raw, transparent price competition for the remainder. In such a system, called “reference pricing,” a private insurer, as agent for an employer or for a government program, would cover only the price charged for a medical procedure by a low-cost provider in the insured’s market area, forcing the insured to pay out of pocket the full difference between that low-cost “reference price” and whatever a higher-cost provider in the area charges for the same procedure.
Such a system, of course, presupposes full transparency of the prices charged by alternative providers in the relevant market area.
Because an all-payer system is highly regulatory, I predict the private health care market in the United States will sooner or later lapse into full-fledged reference pricing. It would entail ever more pronounced rationing of quality, real or imagined, by income class.
But such tiering has long been the American way in other important human services – notably justice and education. Why would health care remain the exception?
By: UWE E. REINHARDT
Uwe E. Reinhardt is an economics professor at Princeton. He has some financial interests in the health care field.
Spending on Specialty Medications Will Rise 67%: Report
Specialty medicines are those used to treat chronic, complex diseases such as cancer, multiple sclerosis and rheumatoid arthritis. They are prescription drugs that require special handling, distribution and administration. Many specialty medicines are biologics that are delivered via an injection or an infusion and are used to treat chronic, complex diseases.
Prescription drug spending on eight of the top 10 specialty therapy classes will continue to increase over the next three years, according to the report. This is due to both the introduction of new biologics and physicians delaying treatment of patients until the new drugs are on the market.
According to the forecast, overall spending on traditional prescription drugs – mostly pills used to treat common conditions such as high cholesterol and depression – will decline four percent by the end of 2015, largely because of the availability of generic medications. Only two of the top 10 traditional drugs — for diabetes and attention disorders — are likely to have spending increases over the next three years, but those increases will be significant.
Express Scripts said it expects that cancer, multiple sclerosis and inflammatory conditions such as rheumatoid arthritis — all specialty conditions — each will command higher drug spending than any other therapy class except diabetes by the end of 2015.
Hepatitis C drug spending likely will quadruple over the next three years, the largest percentage increase by far among therapy classes. This increase will be caused in part by new interferon-free medications expected to gain FDA-approval in 2014.
“As we see what’s on the horizon, it’s time for employers and health plans to act so they can continue to offer an affordable pharmacy benefit for their members,” said Glen Stettin, M.D., senior vice president, Clinical, Research and New Solutions at Express Scripts. “New specialty treatments are making a real difference in the lives of patients, but the very high cost of these drugs creates difficult decisions for plan sponsors on which medicines to cover.”
Biosimilars, which are less-costly alternatives to biologics, could become available once the patents expire on currently marketed biologics, a development that could help mitigate the rising cost of specialty medications.. Express Scripts recently projected that the country would save $250 billion between 2014 and 2024 if the 11 most likely biosimilar candidates were launched in the U.S.
Diabetes became the costliest prescription drug therapy class in 2011, and according to the new projections, it will continue to hold that distinction at least through 2015. Over the next three years, Express Scripts expects spending on diabetes medications to rise an additional 24 percent because of high prevalence and a robust pipeline of new therapies.
Despite the availability of generic equivalents for many attention disorder therapies, the data projects spending in the category to increase approximately 25 percent over the next three years, driven by increased utilization among middle-aged adults and wide geographic variation in diagnosis.
Express Scripts said its research shows that prevalence, medication use and associated medical and pharmacy costs for attention disorders is highest in the South. However, the Northeast region of the U.S. experienced rapid growth in attention disorder diagnosis, and that region’s associated costs grew nearly 60 percent from 2008 to 2010.
“In the absence of new therapies, to see such an increase in a traditional drug category suggests there is significant opportunity to better manage attention disorders,” said Dr. Stettin.
As part of its analysis, Express Scripts incorporates historical prescription drug cost and utilization trends from its own pharmacy claims data, the pipeline for emerging therapies, anticipated patent expirations, and other clinical and demographic factors.
Source | Insurance Journal
U.S. Medical Price Tag Far Higher Than Others
Matthew Ryan Williams for The New York Times
A poster illustrating diseases of the digestive system at a doctor’s office.
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