F. Randy Vogenberg


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  • Anticoag – LMWH,
    RA- TNF-alpha inhibitors, (remicade, humira)
    Hematopoietics – WBC, plt, EPO
    clozapine, registry, MD’s & pharm. Verify hematologic status
    Infertility – FSH
    TIPS = Tikosyn in pharmacy system
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    KEY: Traditional versus Specialty/biotech management -- dollars per employee CONTINUE TO go up, but number of employees INCREASING, not go down. Greater need for strategy and management of these medications with a value proposition to the employer.
    Advisory committee on immunization practices has voted to recommend that RotaTeq be added to the current pediatric immunization schedule of recommended vaccines.
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    KEY: Traditional versus Specialty/biotech management -- dollars per employee go up, but number of employees go down.
    As I mentioned earlier, the specialty drug market is growing. During the past 10 years, biotechnology has delivered a number of breakthrough medications to treat cancer, cardiovascular ailments and arthritis to name a few. Meeting these critical medical needs for patients has driven the commercial sales of these drugs from a few billion dollars to about $32 billion plus.
    However, we are seeing another trend that’s contributing to the growth of specialty drugs – the movement from creating drugs for rare chronic to more prevalent chronic conditions. For example, in just the last year to year and a half, we’ve seen specialty drugs such as Xolair, developed for a prevalent chronic condition like Asthma, and Raptiva, designed to treat moderate to severe psoriasis. What does this mean to you? It means that you can expect greater utilization of specialty drugs and greater impact to your spend.
    PLEASE NOTE: This chart represents the burden of illness to the healthcare system. Not all patients affected by a disorder actually seek a diagnosis and treatment. The challenge is to provide treatment to all those that are affected by the disorder.
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    Limited scope and success with current models.
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    Limited scope and success with current models.
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  • F. Randy Vogenberg

    1. 1. The Value of SpecialtyThe Value of Specialty “Drugs”“Drugs” F. Randy Vogenberg, RPh, PhDF. Randy Vogenberg, RPh, PhD PrincipalPrincipal Institute for Integrated HealthcareInstitute for Integrated Healthcare, Sharon, MA, Sharon, MA Senior FellowSenior Fellow Jefferson School of Population HealthJefferson School of Population Health
    2. 2. ©IIH, August 2010 AgendaAgenda • Specialty pharmacy and related biologicsSpecialty pharmacy and related biologics • Innovation, growth and trends effectingInnovation, growth and trends effecting pharmacy and medical benefitspharmacy and medical benefits • Future opportunities and challengesFuture opportunities and challenges
    3. 3. Specialty pharmacy and relatedSpecialty pharmacy and related biologicsbiologics
    4. 4. ©IIH, August 2010 Significance of Specialty to anSignificance of Specialty to an EmployerEmployer • Specialty representsSpecialty represents – ~25% of dollar Rx spend today~25% of dollar Rx spend today – Projections for 2020 to 2030 = ~50%Projections for 2020 to 2030 = ~50% • Combined spend in range of 40%Combined spend in range of 40% • Per annum cost range $6,000 - $350,000 perPer annum cost range $6,000 - $350,000 per employee/dependentemployee/dependent – avg./user $12,500)avg./user $12,500) • 48% of Phase III NME’s are for use in ambulatory48% of Phase III NME’s are for use in ambulatory care, ~400 new productscare, ~400 new products (PhRMA 1Q09)(PhRMA 1Q09) – Etanercept (Enbrel) = >$1.2 BnEtanercept (Enbrel) = >$1.2 Bn
    5. 5. ©IIH, August 2010 Specialty PharmacySpecialty Pharmacy  What are Specialty Drugs?What are Specialty Drugs?  Biotech and complex in natureBiotech and complex in nature  Target specific illnesses such as rheumatoid arthritis, multipleTarget specific illnesses such as rheumatoid arthritis, multiple sclerosis, hepatitis C, cancersclerosis, hepatitis C, cancer  Require supervision, monitoring and testingRequire supervision, monitoring and testing  Require special handling and storageRequire special handling and storage  Side effects are more frequent and more seriousSide effects are more frequent and more serious  Expensive – average $1,600 per monthExpensive – average $1,600 per month
    6. 6. ©IIH, August 2010 Why is Specialty “different”?Why is Specialty “different”? • No standard definition exists, usual classes -No standard definition exists, usual classes - anticoagulants, antivirals, hematopoietics, MS,anticoagulants, antivirals, hematopoietics, MS, oncology tx, RA, infertility, hGHoncology tx, RA, infertility, hGH • Characteristically, biotech agents, may be derivedCharacteristically, biotech agents, may be derived from live organismsfrom live organisms • May require special storage and/or handlingMay require special storage and/or handling • Administration method varies – often areAdministration method varies – often are parenteral, infusion center, home, etc.parenteral, infusion center, home, etc. • Delivery channel may vary with product (TIPS)Delivery channel may vary with product (TIPS) • FDA requirements (e.g. clozapine) necessitateFDA requirements (e.g. clozapine) necessitate additional clinical mgtadditional clinical mgt
    7. 7. ©IIH, August 2010 No single definition for specialty pharmacyNo single definition for specialty pharmacy How does your organization define specialty pharmaceuticals? Perspective from PBM and Specialty Pharmacy executives
    8. 8. ©IIH, August 2010
    9. 9. Innovation, growth and trends effectingInnovation, growth and trends effecting pharmacy and medical benefitspharmacy and medical benefits Drugs, Devices, Diagnostics (3 Ds)Drugs, Devices, Diagnostics (3 Ds)
    10. 10. ©IIH, August 2010 Examples Now On the MarketExamples Now On the Market • OncologyOncology – Dacogen® (Decitabine) - MDS and solidDacogen® (Decitabine) - MDS and solid tumorstumors – Revlimid® (Lenalidomide) - MDS andRevlimid® (Lenalidomide) - MDS and multiple myelomamultiple myeloma – Arranon® (Nelarabine) - T-cell ALL andArranon® (Nelarabine) - T-cell ALL and T-cell LBLT-cell LBL – Panitumumab - metastatic colon cancerPanitumumab - metastatic colon cancer – Nexavar ® (Sorafenib) - mRCCNexavar ® (Sorafenib) - mRCC metastatic renal cell carcinomametastatic renal cell carcinoma – Sutent®Sutent® (Sunitinib) - mRCC and(Sunitinib) - mRCC and gastrointestinal stromal tumorsgastrointestinal stromal tumors • Rheumatoid ArthritisRheumatoid Arthritis – Orencia®Orencia® (Abatacept) - T-cell co-(Abatacept) - T-cell co- stimulation modulatorstimulation modulator – Rituxan ®Rituxan ® (Rituximab) - RA and non-(Rituximab) - RA and non- hodgkin’s lymphomahodgkin’s lymphoma • HematologyHematology – Cera®Cera® - 1x month continuous- 1x month continuous erythropoiesis receptor activatorerythropoiesis receptor activator • OphthalmologyOphthalmology – Lucentis®Lucentis® (Ranibizumab)(Ranibizumab) • GastroenterologyGastroenterology – Cimzia®Cimzia® (Certolizumab) - Crohn’s(Certolizumab) - Crohn’s disease, once monthly injectiondisease, once monthly injection – Lubiprostone - chronic constipation &Lubiprostone - chronic constipation & IBSIBS • OsteoporosisOsteoporosis – Boniva®Boniva® (Ibandronate IV) - injection(Ibandronate IV) - injection every 2-3 monthsevery 2-3 months – Preos® (Parathyroid hormone) - SCPreos® (Parathyroid hormone) - SC injectioninjection • VaccinesVaccines – Gardasil® - Human PapillomavirusGardasil® - Human Papillomavirus vaccinevaccine – Zostavax® - prevention and treatment ofZostavax® - prevention and treatment of herpes zoster and post herpeticherpes zoster and post herpetic neuralgianeuralgia – RotaTeq® - rotavirus vaccine forRotaTeq® - rotavirus vaccine for gastroenteritis in infantsgastroenteritis in infants • DiabetesDiabetes – Vildagliptin®Vildagliptin® - new class, incretin- new class, incretin enhancersenhancers
    11. 11. ©IIH, August 2010 Pipeline in General (industry wide)Pipeline in General (industry wide) • 4+% growth in Phases I, II, III4+% growth in Phases I, II, III – Accelerating now due toAccelerating now due to • merger/acquisitionsmerger/acquisitions • Change in R&D investmentsChange in R&D investments • ~750 “specialty” drugs~750 “specialty” drugs – 35% are oral35% are oral – 25% of pipeline are “specialty”25% of pipeline are “specialty” Source: FDC Reports, 2006, 2007, 2008.
    12. 12. ©IIH, August 2010 Specialty: Incidence BeyondSpecialty: Incidence Beyond Rare or Unusual ChronicRare or Unusual Chronic DisordersDisorders Source: Bear Stearns, Health Care Distribution, “Specialty Pharmacy Services, Among the Fastest-Growing Areas of Health Care,” November 2003, p. 25. Number of Patients Affected in the United States Infertility 6,000,000 Moderate/Severe Allergic Asthma 4,200,000 Hepatitis C 4,000,000 Rheumatoid Arthritis 2,500,000 Moderate/Severe Psoriasis 1,500,000 Oncology 1,300,000 HIV/AIDS 900,000 Crohn’s Disease 400,000 Multiple Sclerosis 300,000 Renal Disease 300,000 RSV prophylaxis 90,000 Pulmonary Arterial Hypertension 25,000 Growth Hormone Disorders 20,000 Hemophilia 20,000
    13. 13. ©IIH, August 2010Source: Banc of America Securities LLC New “Specialty” Drugs Are EscalatingNew “Specialty” Drugs Are Escalating Rapidly & Impacting Medication SpendRapidly & Impacting Medication Spend • U.S. biotech companies had sales of $32.3 billion in 2003. • U.S. biotech companies sales are predicted to be $1 Trillion in 2010. Specialty Drug Industry Growth, 1990-2005E 100 240 369 29 92 197 600 10 0 100 200 300 400 500 600 700 1990 1995 2000 2005E $0 $10 $20 $30 $40 $50 Drugs in Development Drugs on Market Product Revenue ($Billions) $17B $46B NumberofSpecialtyDrugs ProductRevenues($ Billions)
    14. 14. What about DoseWhat about Dose Forms?Forms? The Trend for Oral Agents—smallThe Trend for Oral Agents—small molecules but not all biologic/biotech!molecules but not all biologic/biotech!
    15. 15. ©IIH, August 2010 AptamersAptamers • Known as chemical antibodiesKnown as chemical antibodies • Possibly replace monoclonal antibodiesPossibly replace monoclonal antibodies for use infor use in – TreatmentTreatment – DiagnosesDiagnoses – Drug developmentDrug development
    16. 16. ©IIH, August 2010 NanotechnologyNanotechnology • Drug delivery innovationDrug delivery innovation • Traditional and Biologic drugsTraditional and Biologic drugs
    17. 17. ©IIH, August 2010 Vaccine DevelopmentVaccine Development e.g. Merck, GSK, Novartis, Pfizere.g. Merck, GSK, Novartis, Pfizer 0 50 100 150 200 250 300 350 400 450 1996 2007 Source: adapted from Pharma Voice, 2007.
    18. 18. ©IIH, August 2010 Plan Sponsors Can’t ForgetPlan Sponsors Can’t Forget DiagnosticsDiagnostics • LaboratoryLaboratory – +20 % genetic testing+20 % genetic testing • +3 % non-genetic testing+3 % non-genetic testing – Diagnostic and biomarkersDiagnostic and biomarkers – Drug dosing and delivery applicationsDrug dosing and delivery applications • 250 on market, 300 coming250 on market, 300 coming • ImagingImaging—single and combined techniques—single and combined techniques – ClarityClarity – SpecificitySpecificity – SensitivitySensitivity
    19. 19. Future opportunities andFuture opportunities and challengeschallenges
    20. 20. ©IIH, August 2010 Today's’ PayerToday's’ Payer PopulationPopulation Initiatives ControlInitiatives Control Rx Utilization and CostRx Utilization and Cost • Stakeholder focused on traditional plan designStakeholder focused on traditional plan design – Reimbursement by location or site of administrationReimbursement by location or site of administration not patient carenot patient care – PBM IHM contracts, not include Specialty valuePBM IHM contracts, not include Specialty value • Generics are the strategy—especially throughGenerics are the strategy—especially through mail ordermail order – Does not address specialtyDoes not address specialty • Friendly step therapy to patient & providerFriendly step therapy to patient & provider – Soft “PA”, Multi-tier, Electronic, user friendly editsSoft “PA”, Multi-tier, Electronic, user friendly edits – Not necessarily benefits plan sponsor/employerNot necessarily benefits plan sponsor/employer
    21. 21. ©IIH, August 2010 …… PayerPayer PopulationPopulation Initiatives toInitiatives to Control Rx Utilization and CostControl Rx Utilization and Cost • Conundrum around Off-Label UseConundrum around Off-Label Use – rFactor VIIA (NovoSeven)rFactor VIIA (NovoSeven) – cancer medications and combinationscancer medications and combinations – Guidelines help but still “squishy”Guidelines help but still “squishy” • Not great with Genomic medicationsNot great with Genomic medications – Pharmacology and Molecular biology, notPharmacology and Molecular biology, not chemistrychemistry
    22. 22. ©IIH, August 2010 Opportunities for positive changeOpportunities for positive change • Address specialty pharmacy and biologicAddress specialty pharmacy and biologic products more specificallyproducts more specifically • Assess total cost of care impact andAssess total cost of care impact and holistic value proposition as a businessholistic value proposition as a business strategystrategy • Understand where you are at today thenUnderstand where you are at today then move towards where you want to bemove towards where you want to be
    23. 23. ©IIH, August 2010 SummarySummary • Specialty requires you to understand the totalSpecialty requires you to understand the total impact of all benefits on the organization,impact of all benefits on the organization, andand health coverage strategyhealth coverage strategy • Specialty is important today and action neededSpecialty is important today and action needed now as we go into future plan yearsnow as we go into future plan years – There will be technologic “explosions” in many aspects of healthThere will be technologic “explosions” in many aspects of health care, including the 3 “D”scare, including the 3 “D”s – Specialty/biotech present real challenges—personalizedSpecialty/biotech present real challenges—personalized medicinemedicine • Insurance trends will rise beyond PPACAInsurance trends will rise beyond PPACA effects in the absence of effective integratedeffects in the absence of effective integrated benefitsbenefits – Defining coverage, utilization and incorporating behavioralDefining coverage, utilization and incorporating behavioral based benefit designs for consumer centric outcomes are criticalbased benefit designs for consumer centric outcomes are critical success factorssuccess factors
    24. 24. Thank YOU !Thank YOU ! F. Randy Vogenberg, PhD, RPhF. Randy Vogenberg, PhD, RPh Institute for Integrated HealthcareInstitute for Integrated Healthcare Sharon, MASharon, MA randy@vogenberg.comrandy@vogenberg.com