Building a Value-Based Approach To Biologic Drugs

A panel convened at the Jefferson School of Population Health quantifies the issues about affordability of biologics and drafts a recommended approach for payers.

Abstract

In the absence of comprehensive position papers from professional organizations on the complex issue of patient affordability of biologic therapies, the Jefferson School of Population Health reconvened a National Advisory Board to discuss the issue. The objectives of the board were to quantify the issues and to identify potential solutions – including a recommended approach for payers.

On June 13, 2008, members of the National Advisory Board on Patient Affordability reconvened in Philadelphia to focus on the issues surrounding patient affordability of biologics.1 Facilitator David B. Nash, MD, MBA, reiterated the goal in straightforward terms: “Getting biologic pharmaceuticals to those who need them for as long as they need them.” He then recapped themes that emerged at the previous meeting:

1. There is general confusion among employers, patients, and providers with respect to copayments and coinsurance. It is important for insurers to respond to the challenge of explaining the difference between these two concepts to various stakeholders.

2. Many unanswered questions remain regarding value-based insurance design (VBID) structures.

3. The role of biosimilar agents is unclear.

4. Issues related to compliance and adherence are complex and will remain a significant factor.

This article summarizes key elements from the second meeting, and presents the stepped process recommended by the advisory board.

VBID

In laying the groundwork for a discussion of VBID, advisory board member Gary Owens, MD, focused on access issues and other challenges related to a “value equation” when applied to biologics.

Health plans recognize that novel drugs, as well as new uses for existing therapies, are unprecedented advances in medical treatment. Health plans often face competing priorities, such as coverage of these products versus pressure to keep coverage affordable. One can say with certainty that more — and better — management of these drugs will be essential for a well-run health plan.

Most biologic drugs are available in injectable or intravenous (IV) forms; however, common existing benefit designs are not structured to manage injectables appropriately. Often administered in physician offices or hospital outpatient clinics, injectable/IV drugs frequently are covered under the medical rather than the pharmacy benefit — creating access challenges for patients and providers alike.

The first step in formulating a value equation is to define and understand the benefits of a biologic agent for an identified population. The next step is to define appropriate levels of cost sharing, using an approach tailored to that population. The final step is to develop new benefit designs that incorporate value for key stakeholders (health plans, employers, and patients) by assuring appropriate access to needed therapies. The resulting value equation must take into account such factors as employer and health plan turnover rates in biologic candidates, and fair evaluation of biologic agents, including an assessment of the alignment or divergence between health plan, employer, and patient.

FUTURE OF BIOLOGICS NATIONAL ADVISORY BOARD*.

David B. Nash, MD, MBA, Moderator

Dea Belazi, PharmD, MPH

Independent consultant, pharmacoeconomics

Joseph Biskupiak, PhD, MBA

Research Associate Professor

University of Utah College of Pharmacy

Becky J. Cherney

President and CEO

Central Florida Health Care Coalition

Betty Diamond, MD

Professor of Medicine and Microbiology

Columbia University, Department of Medicine

Christopher Goff, JD, MA

President and CEO

Employers Health Purchasing Corp. of Ohio

John Hardin, MD

Chief Scientific Officer

Arthritis Foundation

Marnie LaVigne, PhD

Director of Business Development

N.Y. State Center of Excellence in Bioinformatics and Life Sciences

Alan Lyles, ScD, MPH, PhD

Henry A. Rosenberg Professor of Public, Private and Non-Profit Partnerships

University of Baltimore

Jack Mahoney, MD, MPH

Retired Strategic Health Initiatives Director, Pitney-Bowes

Gary Owens, MD

President

Gary Owens Associates (managed care consultants)

Cindy Pigg, MHA

Executive Director

Foundation for Managed Care Pharmacy

F. Randy Vogenberg, RPh, PhD

Cofounder and Chief Strategic Officer

Employer-Based Pharmaceutical Strategies LLC

Alan T. Wright, MD, MPH

Independent consultant

*Affiliations shown were at the time this panel convened.

In a 2005 value-based initiative, a large employer lowered copayments for select medications, such as angiotensin-converting enzyme inhibitors/angiotensin receptor blockers, beta blockers, glucose-lowering medications, statins, and steroids, and targeted employees who did not use these drugs but were likely to benefit from them. The resulting increase in the use of these drugs (Table) corresponded with a decrease in negative disease-related events.

TABLE.

Effect of reducing copayments for specific high-value drugs

	Effects size for MPR analysis
	Effect size (% points)	Base MPR	Increase (%)	Take-up %
ACEs/ARBs	2.59**	68.37	3.79	8.2
Beta blockers	3.02**	68.30	4.43	9.5
Diabetes medications	4.02**	69.46	5.79	13.2
Statins	3.39**	52.99	6.28	7.1
Steroids	1.86*	31.56	5.88	2.7

^*P=.134.

^**P<.001.

ACEs/ARBs=angiotensin-converting enzyme inhibitors/angiotensin receptor blockers, MPR=medication-possession ratio.

Source: Chernow 2008

Though VBID does not guarantee overall cost savings, targeting specific populations can improve the return on investment. In addition, raising copayments on low-value services can finance increased access to high-value services.

Citing the work of Michael Chernew, PhD, of Harvard Medical School, Owens concluded that a VBID is characterized by “fairness” and reduces (or keeps low) copayments for such high-value services as biologics. “All changes in benefit design and policy must be evidence-driven and dynamic,” Owens said.

Board discussion. Varying the coinsurance amount on an individual basis would be an administrative nightmare for payers. However, some newer table-driven claims systems with multiple tiers might offer a manageable alternative. Large health plans have in-house expertise in this area; smaller plans might be able to use a system developed by a third party. Another important consideration is market variation; a $20 copayment, for instance, is likely to have a different effect on consumers in New York City, where wages and the cost of living are relatively high, than on those who live and work in other parts of New York State.

There is a general view that healthcare is an entitlement. Insurers should consider making wellness and prevention mandatory through such methods as health risk assessments (HRA), with incentives such as lower premiums or copayments for individuals who demonstrate low-risk behaviors.

Another consideration in VBID is individual differences in risk aversion or a person’s financial priorities. A consumer’s risk tolerance influences what he or she is willing to pay for healthcare services. Further study in this area is warranted.

Healthy people must be included in studies of value-based insurance benefit designs and economic models, or adverse selection will occur. Another factor that must be taken into account is that insurance benefit designs may change as socioeconomic considerations evolve over time.

BUSINESS PERSPECTIVE

The Employers Health Purchasing Corp. of Ohio (EHPCO) purchases and manages pharmacy benefits for multiple businesses in eight states. EHPCO’s role is to “manage the pharmacy benefit manager,” through initiatives to improve adherence and safety, and provide advice regarding business models, clinical programs, and plan design.

Advisory board member Christopher Goff, JD, MA, shared 2007 EHPCO data pertaining to prescription program costs, customer-care results, and the top 25 drugs by gross cost.

The average employee and his or her family had 26 prescriptions per year, one third of which were filled by mail order. Under EHPCO’s various pharmacy plans, injectable biologics must be obtained by the patient from a specialty pharmacy and taken to a physician for administration. The average specialty pharmacy cost was $2,540 per prescription. Biologics accounted for 10.4 percent of the overall drug expenditure.

About 35 percent of EHPCO members rely on Specialty Guideline Management (SGM) to meet the clinical program needs of patients who require biologics. A Caremark product, SGM optimizes cost-effectiveness of medications and minimizes the impact of inappropriate use. The process includes:

• Prospective review (screening for appropriate use based on diagnosis)

• Concurrent recertification review (assessing for presence of safety issues and efficacy)

• Retrospective clinical review (monitoring for appropriate use of adjuvant therapies, adherence, duration of therapy)

• Outcomes analysis (e.g., disease progression, functional status/productivity)

On behalf of its coalition members, EHPCO uses more than 300 benefit designs that feature mechanisms such as copayments, co-insurance, one- to five-tier structures, and minimums/maximums. These mechanisms are intended to share the cost burden while assuring patient access to specialty pharmaceuticals. The average cost per prescription depends on the average copayment structure. Some plans have a maximum out-of-pocket cost per prescription, and these maximums have remained constant over the past few years.

IMPLEMENTING VALUE-BASED INITIATIVES

Board members formed two work groups — a payer group and a patient group — to discuss several issues: to derive the components of an ideal biologic patient affordability model; the bases for formulary decisions; and approaches to balancing cost/quality, cost/outcomes, and cost/patient safety/satisfaction. Nash advised the groups to consider the potential roles of pay for performance, disease management, chronic care management, evidence-based practice, healthcare purchasing coalitions, and data systems.

Payer work group report. Payers function as extensions of employers. In this capacity, they should define the “ideal” benefit in terms of funding, various care settings, affordability, accessibility, and cost awareness. The design must consider what happens when a physician chooses an inappropriate patient or prescription for biologic treatment. Incentive payments might be useful to induce providers to follow the correct process and make appropriate patient selections. Pharmaceutical experts or an independent entity can be helpful in resolving compliance and legal issues.

As the group identified key dimensions in the value proposition, an employer/payer-focused approach to biologics began to emerge in four distinct phases (Figure).

FIGURE.

Payer work group’s value-based approach to incorporating biologics in a benefit design model

Phase 1: Understand the organization’s core values

Each payer organization (employer and/or health plan) should begin by defining its guiding value system. Are biopharmaceuticals a benefit that the organization must provide, or does the organization want to provide them because it values its employees? Next, a cost-sensitivity analysis should be done for both the purchaser and the health plan. Bear in mind that unlike a prepaid benefit, “true” insurance protects against the risk of a catastrophic occurrence. Initially, a value-seeking strategy should be developed within the context of the organization’s defined values.

Phase 2: Develop a value-based benefit design

Access, availability, and affordability of biopharmaceutical therapies are tantamount in a VBID. With this in mind, each organization must weigh decisions regarding copayments versus coinsurance and out-of-pocket maximums. It is important to link copayments to both the out-of-pocket maximums and the wage structure; that is, employees who earn more should have higher out-of-pocket maximums. Tiered or stepped programs are well suited to value-based designs.

Phase 3: Manage healthcare

Employers and health plans drive consumer access to products, health risk management services, and condition-specific disease management programs. The challenge here is that there are myriad independent entities that define clinical parameters (e.g., proper patient selection, appropriate use of products, patient education tools and materials) and product effectiveness and safety (e.g., methods and measures used to monitor effectiveness, safety, and patient adherence). One size does not fit all, and programs and interventions must be tailored to their specific populations.

Phase 4: Evaluate and improve programs

Program evaluation is driven by robust data from reliable sources, such as the data warehouses populated and maintained by health plans and healthcare purchasing coalitions. These data enable assessments of the comparative effectiveness of alternative therapies. As in the other phases, the evaluation and improvement plan should be consistent with the goals of the organization’s value system.

Patient work group report. From the patient’s perspective, fairness and equity are of utmost importance. Patients need assurances that their physicians will be able to make treatment determinations, provide them with access to the most appropriate medications, and offer them the ability to continue to receive these medications for as long as necessary.

Although many health plan protocols mandate that treatment begin with traditional agents before bio-pharmaceuticals are considered, the evidence suggests that, perhaps, clinicians should prescribe from the broadest spectrum of treatments to achieve the best therapeutic outcomes for individual patients.

Today, biopharmaceuticals fall under benefit designs originally intended for small molecules. The group discussed the feasibility of insurance riders or a separate category for biologics. Would these actions serve as an impetus to increase efforts to control costs or to incorporate more stepped/tiered benefit designs? Additional research in this area is warranted.

The group discussed a number of opportunities that might be explored with respect to biopharmaceuticals. HCPCS and NDC data might be transformed into information for mapping and “pathways.” At the state level, small-scale healthcare reform might involve targeted ERISA redesign, or the National Association of Insurance Commissioners might consider introducing targeted legislation. Discussion focused chiefly on the choice, quality, satisfaction, and cost benefits of biologics.

Choice

Clinical trial results have increased the certainty that patients will respond favorably to biopharmaceuticals. It is important to have adequate information, such as data from chronic disease management programs and registries, on which to base treatment decisions. Consistent industry standards are imperative to facilitate patient transitions from one health plan or provider to another. Cafeteria-style benefit designs improve the ability of each patient to choose services and products most important to him or her.

Quality

Every patient is unique. Determining where the patient’s treatment needs lie on the continuum —from small molecules to biologic agents — is critical to quality care. Risk stratification methodologies should be employed. The patient’s physician is central to patient access to disease management and the full range of treatment agents and options. Patient adherence to therapy is essential. Each of these quality elements is conditioned on patient access and affordability.

Satisfaction

All noncost barriers must be removed to assure fairness and equity. Patients need face-to-face education, along with information about access to care and risks for conditions that require biologic drugs, tailored to their comprehension levels. Some online healthcare services provide “one-stop shopping” for patient information. Convenience and effective patient support are vital to patient satisfaction.

Costs

Costs should be predictable, without “surprises” for patients. Payers that use out-of-pocket caps in their benefit designs should make them intelligible to patients. When benefit limits are reached, health plans should assist patients to negotiate and/or transition to alternative options to reduce the risk of a poor clinical outcome. Payers might consider implementing incentives for healthy behaviors such as health risk assessment completion and/or meeting recommended clinical targets for other conditions. Because biologics are different from small-molecule agents, insurance riders might be an appropriate vehicle for coverage.

BOARD’S KEY MESSAGES

Patient affordability. Important issues in this challenging area include fairness, appropriateness, and standardized access. Our society should work toward assuring that all appropriate patients have access to all biologic products that have been developed.

Clinical decision making. Patients should be viewed as individuals rather than an undifferentiated mass when clinical decisions are made. National-level registries will become increasingly important for making determinations. Pilot studies and other initiatives can enhance our decision-making abilities pertaining to biologics. Consensus will develop around what makes sense for optimal treatment.

Pharmaceutical manufacturers. Broader, more holistic education is needed regarding the business case for pharmacy benefit managers. Long term, it is likely that when biologics are fully developed, attention will turn toward translating a complex molecule into a small-molecule agent that works in the same fashion.

Policy. The central issue is one of access. Explore and discuss proposed legislation with employer groups first to avoid the action being perceived as self-serving. Groups will always return to the issue of affordability because of the immediate need. The focus should be on what information, such as HRAs and improved outcome measures, is available to make good decisions. Developing cost-effective agents is within our reach.

CONCLUSION

Even with considerable challenges that must be met, we should bear in mind that those challenges exist because science is successful. The National Advisory Board on Patient Affordability is approaching this issue at a new level — one that features product stewardship and a partnership with purchasers. Its goals are to ensure that maximum efficiencies are reached and that biologics are used appropriately. The board has recommended a value-based approach for payers to follow as they work toward making biologics accessible and affordable for patients struggling with treatable conditions.