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Prescription Drug Costs: Purchasing Strategies for Employers
- 1. Prescription Drug Costs PURCHASING AND POLICY STRATEGIES FOR EMPLOYERS WHEN YOUR PBM AND HEALTH PLAN AREN'T CUTTING IT JULY 28, 2016
- 2. Agenda • Introduction and welcome (5 minutes) • What are employers doing? (15 minutes) • Cheryl Larson, Midwest Business Group on Health • What can they be doing? (15 minutes) • Linda Davis, Minnesota Health Action Group • More purchasing and policy strategies (15 minutes) • Brian Lehman, Ohio Public Employees Retirement System (OPERS) • Q&A, key takeaways, and next steps (10 minutes) • Kristof Stremikis, Pacific Business Group on Health
- 3. Housekeeping • Your line is muted—questions in the chat box • Curated resources for employers at www.pvnetwork.org • Webinar recording available on the website next week • Email Clare Connors cconnors@pbgh.org for slides
- 4. Today’s Panel Cheryl Larson Midwest Business Group on Health Linda Davis Minnesota Health Action Group Brian Lehman OPERS
- 5. Midwest Business Group on Health Prescription Drug Costs: Purchasing and Policy Strategies for Employers When Your PBM and Health Plan Aren't Cutting It July 28, 2016
- 6. MBGH Employer Member Survey 2015 36% 23% 23% 35% 29% 21% 19% 21% 16% 12% 16% 19% 23% 29% 36% 45% 56% 57% 0% 20% 40% 60% Coordinate vendor programs Offer price transparency tools Integrate vendor data Offer targeted wellness programs Create effective communications Create a culture of health Manage specialty/biologic drugs Reduce/manage health benefits costs Avoid the 2018 ACA excise tax High Priority Medium Priority Priorities in next 12 to 24 months Copyright © 2016 MBGH/IIH
- 7. National Employer Initiative on Biologics & Specialty Drugs Project Overview
- 8. National Employer Initiative on Biologics & Specialty Drugs - 2011 to 2016 • Employer-driven – led by an Employer Advisory Council • Annual Employer Benchmarking Surveys • Online Toolkit – www.specialtyrxtoolkit.com – serving as a roadmap to support employer efforts: Benefit coverage approaches focused on total cost of care and patient outcomes Strategies for managing costs in the medical and pharmacy benefit Guidelines for making vendors transparent and accountable through performance guarantees and contracting Access to no-cost tools and resources for employers and employees/plan members 8 Copyright © 2016 MBGH/IIH
- 9. National Employer Initiative on Biologics & Specialty Drugs - 2011 to 2016 Annual Multi-Stakeholder Meetings Employer-Driven Research with Coalitions o Employers’ Health Coalition – Arkansas o Employers Health Coalition – Ohio o Florida Healthcare Coalition – Florida o Healthcare 21 – Tennessee o Mid-America Coalition on Health Care – Kansas o Midwest Business Group on Health – Midwest National Educational Outreach Employer Interviews/Case Studies Employee/Employer Tools 9 Copyright © 2016 MBGH/IIH
- 10. Employer & Employee Resources • Pharmacy Benefits Assessment/Audit Recommendations – Checklist on types most commonly used and key elements • Pharmacy Benefit Inclusion Criteria Tool – List of 29 key criteria for inclusion in PBM contracts to help employers drive market change • Employer Checklist for Site of Care/Service – To determine if site of care strategy is beneficial for your company • Employer Checklist for Designing Specialty Drug Benefits – To begin or review specialty drug benefit strategy and contracting • Consumer Education Strategy – Communications strategy for employees/plan members including brochure, newsletter articles and implementation recommendations 10Copyright © 2016 MBGH/IIH www.specialtyrxtoolkit.com
- 11. 5th Annual Employer Survey Demographics • 50 large, self-insured public and private employers • Average employer size: 18,800 • Primary industries o 33% - Manufacturing o 12% - Education Services o 9% each - Financial Services, Insurance, Health Care 11Copyright © 2016 MBGH/IIH
- 12. 5th Annual Employer Survey Level of understanding 12Copyright © 2016 MBGH/IIH 2% 41% 37% 20% Low Below Average Average Above Average High 0% = “Low” • What specialty drugs are • Ways to effectively manage them • What coverage/ costs run through medical vs pharmacy • Cost trends
- 13. 5th Annual Employer Survey Level of agreement 13Copyright © 2016 MBGH/IIH 7% 3% 7% 13% 59% 17% 27% 30% 28% 11% 52% 36% 26% 46% 24% 22% 27% 30% 13% 4% 2% 7% 7% 2% 0% 50% 100% PBM does good job managing trend High cost SP drugs are a necessary expense of doing business SP drugs can contribute to lower cost of care for certain conditions Have or plan to shift more costs to employees Cost trend management is a top priority Strongly agree Somewhat agree Agree Somewhat disagree Strongly disagree
- 14. 5th Annual Employer Survey 88% of employers still use traditional plan designs but are willing to try new strategies 50% 51% 55% 56% 60% 65% 31% 7% 68% 5% 48% 49% 29% 34% 2% 29% 19% 9% 69% 93% 32% 95% 52% 51% Single integrated benefit w/drugs in medical plan Narrow network that assumes risk Vendor performance guarantees No drug formulary; cost share based on value of drug to patient/company Shift more costs to employees Add a specialty tier 0% 50% 100% Would consider Currently offer Would not consider Don't offer 14Copyright © 2016 MBGH/IIH
- 15. Most Effective Cost Management Strategies 1. Required use of a specialty pharmacy 2. Prior authorization for pharmacy claims approval 3. Patient support and case management 4. Step therapy edits for claims approval 5. Prior authorization for medical claims approval 15Copyright © 2016 MBGH/IIH
- 16. Most Effective Patient Outcome Strategies 1. Patient support and case management 2. Required use of a specialty pharmacy 3. Prior authorization for pharmacy claims approval 4. Step therapy edits for claims approval 5. Tie…… • Specialty distribution requirements (i.e. closed system delivery) • Coordinated info on disease therapies 16Copyright © 2016 MBGH/IIH
- 17. What Employers & Project Multi-Stakeholders want to Focus on in the Future… • Ongoing lack of industry knowledge on drug pricing and comparative effectiveness • How “Middleman” costs are impacting employer costs and what to do about it • PBMs – lack of transparency on pricing, rebates and contracting • Use of centers of excellence and high-performing networks • Industry – performance and outcomes-based guarantees • Getting actionable data 17Copyright © 2016 MBGH/IIH
- 18. • Carefully review PBM contracts, including terms used to describe how services will be provided – Don’t use boilerplate language – Review the entire contract to assure consistency of coverage – Ensure the contract offer the most benefit to your company and covered population, instead of the PBM – Determine if contract covers all or some specialty drug products • Consider carving out (more on this later) • Understand how rebates are handled by your PBM; make sure you are getting them 18 MBGH © Copyright 2016 Employer Recommendations: PBM Contracting - example www.specialtyrxtoolkit.com
- 19. • Specialty drugs will become the main driver of overall health care benefit cost trends • Revenue pressure will continue to drive mergers and acquisitions of PBMs and specialty pharmacies • Use of outcomes-based/performance-based contracting with payers, providers and manufacturers will grow • Increases will be seen in the use of lower cost sites of care for drug infusions • Clinical efficacy, cost and value will become even more important to employers in making formulary decisions • Benefit designs will drive mandatory use of specialty pharmacies and adherence programs 19 MBGH © Copyright 2016 Future Impacts on Employers
- 20. • Half of specialty drug spend will continue to fall under the medical benefit providing limited visibility to identifying costs • Vendors will be made more accountable – Transparency; formularies based on clinical efficacy, NOT rebates • Employers will need to assess the impacts of the “Middleman” on specialty drug costs and take action • New and alternative payment models will help to drive efficiency • Employers and employer coalitions will continue to influence this marketplace 20 MBGH © Copyright 2016 Future Impacts on Employers
- 21. Employers will continue to offer health benefits to attract and retain the best employees in a competitive market, but….. If cost trends continue, significant changes will need to be made to offset the impact on their ability to continue to provide high quality benefits Cheryl Larson Vice President Midwest Business Group on Health clarson@mbgh.org www.mbgh.org www.specialtyrxtoolkit.com 21Copyright © 2016 MBGH/IIH MBGH Employer Advisory Board Perspective For employers, doing nothing is no longer an option
- 22. Minnesota Health Action Group Specialty Pharmacy Learning & Action Network Linda Davis, Consultant lindad222@gmail.com
- 23. 23 Becoming Better Purchasers 2012 2013 2014 2015 Back Pain/Surgery Hip and Knee Replacements Specialty Pharmacy Phase I Specialty Pharmacy Phase II Early 2012 – June 2013 July – Dec 2013 Jan – July 2014 Oct 2014 – April 2015 May – Dec 2015 Maternity/ Infertility 2016 Specialty Pharmacy 2016 Jan – Dec 2016
- 24. 24 Learning & Action Networks: Phases I & II 16 employers elected to participate – 8 large national, 8 Minnesota based, 3 public, Minnesota Medicaid, from 1500 to 400,000 employees, – 9 carve out their PBM, 1 carves out specialty pharmacy Met with key Informants including subject matter experts and vendors – Ethicists, academics, policy makers, data analysts – 6 health plans, 7 PBMs Met 14 times. monthly, face to face, 2-3 hours each Culminated in 50+ action items in three categories – Individual employers – Collective employer group – Policy Developed Employer Purchaser Guides Advised by Stephen W. Schondelmeyer, Pharm.D., Ph.D., Professor and Director, PRIME Institute, University of Minnesota
- 25. 25 Turning Learning into Action 1 Fundamentals • Definitions • Supply chain • Specialty pharmacies • Consultants • Health plan status and activities • Goals 2 Deep Dives • Data and reporting • Clinical and UM • Pipeline management • Provider perspectives • Policy actions • Health plan and PBM updates • Prioritized goals 3 Taking Action • Medical specialty • NDCs • Parity of cost of site of care • Direct relationship with specialty pharmacy/ies • Employee, senior management communications • New models, e.g., Centers of Excellence
- 26. 26 Vendor Silos and Capabilities PBM Channels Health Plans/Channels Drug Spend Medical Benefit Specialty Pharmacy Mail-order Pharmacy Retail Pharmacy Pharmacy Benefit Outpatient Hospital Physician Office Home Infusion Ambulatory Infusion Centers Inpatient Hospital Vendor Capabilities • Formulary • Specialty List • Rebates • UM • PA • Step Therapy • Clinical Management • Provider Relationships • Adherence • Effectiveness • Actionable Reporting • Price • Utilization • Comparisons • Opportunities • Pipeline Management • Other
- 27. 27 Distribution and Reimbursement “Middlemen” Adapted with permission from Pembroke 2013-14 Economic Report on Retail, Mail, and Specialty Pharmacies; Drug Channels Institute Employer/P urchaser Physician, hospital, home care, infusion provider Specialty Pharmacy Specialty Pharmacy Specialty Pharmacy Specialty Pharmacy $$$ $$$ $$$ $$$ $$$ $$$ $$$ Specialty Wholesaler Specialty Pharmacy Specialty Pharmacy $$$ $$$ $$$ $$$ Specialty Pharmacy $$$ $$$ Health plan
- 28. 28 Findings, Surprises, Conclusions Magnitude of spend on non- inpatient medical drugs higher than expected—more than PBM costs • PBM traditional (non- specialty) + PBM specialty approximate to medical specialty + medical traditional (non- specialty) No current single vendor meets all employer or consumer needs • Health plans lack pharmacy expertise and data of PBMs • PBMs lack relationship to providers • Specialty pharmacies serve as vendors to PBM, not employer or consumer NDCs are the cornerstone of all medical specialty activities for: • PA, step therapy, and clinical management • Rebates • Granular and accurate reporting of costs and utilization • Quality measurement and management of providers
- 29. 29 Findings, Surprises, Conclusions Health plans may vary in transparency, knowledge and capabilities; medical management is piecemeal Employers not at the table when key decisions are made by vendors Manufacturers’ “long arm,” rebates as discounts, “hubs” expedite drugs to patients, coupons, patient support programs, DTC advertising No “silver bullet for site of care;” price parity rather than trying to move patients Perceived conflict of interest when PBMs own specialty pharmacies, especially if exclusive No accepted way to value of drugs, cost effectiveness, impact on health vs. price
- 30. 30 2016 Goals NDC codes on medical claims Parity of cost of site-of-care management Pipeline management Standard expectations of vendors and providers Senior management and employee communications Policy actions New model development 1 2 3 4 5 6 7
- 31. 31 Specialty Pharmacy 2016 Continuing face to face meetings Meeting with key stakeholders to communicate key goals Deep dive into relationships between specialty pharmacy and PBM, pros and cons of carving out Developed key questions for PBMs and specialty pharmacies Developed key questions for health plans and providers Planning open Community Dialogue August 11, 2016; presenting scorecard with four key goals for each of five key stakeholders • Health plans • Providers • PBMs • Specialty pharmacies • Manufacturers – Responses from each stakeholder group – Facilitated dialogue – Possible Guiding Coalition, other collaborative ongoing activity
- 32. 32 Prescription Drug Costs: Purchasing and Policy Strategies Brian Lehman RPh, MBA, MHA Manager of Pharmacy Benefits and Policy
- 33. OPERS Prescription Drug Costs Traditional Strategies Next Generation Strategies Policy Strategies Actionable Steps 1 2 3 4 5 Objectives Ohio Public Employees Retirement System
- 34. OPERS Prescription Drug Costs $706 M Total Drug Spend $174 M Specialty Drug Spend $119 M Specialty Drug Spend (Medical Benefit) Ohio Public Employees Retirement System
- 35. Drivers of Prescription Drug Costs Drug Price Inflation and Higher List Prices New Drugs to Market Fewer New Generic Versions of Big Selling Drugs Ohio Public Employees Retirement System
- 36. Formulary Contracting Education Utilization Management Plan Design Traditional Strategies (Pharmacy Benefit) Ohio Public Employees Retirement System
- 37. Site of Care Quantity Level Limits Education Coordinated Management Prior Authorization Traditional Strategies (Medical Benefit) Ohio Public Employees Retirement System
- 38. Moving from “Pay Per Pill” to Pay for Value Ohio Public Employees Retirement System
- 39. 1. Value Based Pricing 2. Indications Based Pricing 3. Risk Sharing Agreements Based on Outcomes 4. Reference Pricing Next Generation Strategies Ohio Public Employees Retirement System
- 40. Policy Strategies • Competition Generic and Biosimilar Drugs • Value Payment of Drugs Based on Value • Protect Plan Sponsor Tools Plan Design and Utilization Management Ohio Public Employees Retirement System
- 41. Actionable Steps Traditional Strategies Maximizing use of traditional strategies offered by vendors Testing of next generation strategies by vendors Getting involved with policy that impacts health care costs 1 2 3 Next Generation Strategies Policy Strategies Ohio Public Employees Retirement System
- 42. Evaluate Data (Rx & Medical) Determine Opportunities Implement Strategies Traditional Strategies Ohio Public Employees Retirement System
- 43. Support NG Strategies Discuss Available NG Strategies Implement Strategies Next Generation Strategies Ohio Public Employees Retirement System
- 44. Determine Policies Impacting Health Care Costs Look for Like- Minded Organization(s) Take Action Policy Strategies Ohio Public Employees Retirement System
- 45. Biosimilar Labeling Ohio Public Employees Retirement System
- 46. Ohio Public Employees Retirement System #1 #2 Robert Califf, M.D. Commissioner Food and Drug Administration 10903 New Hampshire Avenue Silver Spring, MD 20993 July 28 th , 2016 Dear Dr. Califf, As healthcare and pharmaceutical supply chain stakeholders, we are all carefully watching the development of the biosimilars market in the United States. As policymakers look at ways to control spending growth in the healthcare sector, biosimilars offer a unique opportunity to create savings and improve patient access, similar to what the generics market has done for small-molecule therapies. We believe that developing policies that encourage biosimilars competition are critical to the growth of this important market, and critical to realizing the maximum level of savings to the health system. For that reason, we would like to thank the Food and Drug Administration (FDA) for releasing its March 2016 guidance “Labeling for Biosimilar Products” [Docket No. FDA-2016-D-0643]. Finalizing guidances such as this are an important element of creating a predictable regulatory environment for all members of the pharmaceutical supply chain. We appreciate FDA’s diligence in continuing to provide additional clarity for stakeholders. As an initial matter we applaud FDA for taking steps in the Draft Guidance to ensure that biosimilar labeling reflects the scientific information necessary for health care providers to use a product safely and effectively, consistent with FDA regulations. We support FDA’s recommendation that biosimilar labeling should focus on information on the clinical studies for the biosimilar’s reference product. In most cases, the scientific information necessary to approve a biosimilar will primarily focus on establishing biosimilarity between the two products. Therefore, the safety and efficacy information will come from studies of the reference product rather than the biosimilar. Including a biosimilar product’s biosimilarity data in addition to that of the reference product would only provide unnecessary information and create confusion for readers, including prescribers and patients. We appreciate FDA’s willingness to allow a biosimilar’s labeling to differ when there is appropriate safety or efficacy data that distinguishes the biosimilar from its reference product. However, we are concerned about the FDA’s requirement to include a biosimilarity statement on biosimilar labeling. The biosimilarity statement is at best unnecessary. The FDA has never required any similar statement for products found to be therapeutically equivalent, and has not provided sufficient justification for its inclusion in biosimilar labeling. Moreover, the biosimilarity statement will be confusing to patients and providers who are unfamiliar with this type of unprecedented statement. This confusion could put biosimilar utilization, and savings, at risk. This differentiation between biosimilars and their reference products risks undermining the important provider education that is being done by the FDA today. Informing providers that biosimilars have “no clinically meaningful differences in terms of safety, purity and potency (safety and effectiveness) from the reference product” while requiring a differentiator on the labeling sends mixed signals to providers responsible for driving patient familiarity and comfort with these products. We thank you for your consideration of these comments and look forward to continuing to work with FDA and other stakeholders to improve the lives of patients by providing timely access to affordable pharmaceutical and biological products.
- 47. For More Information • Ohio Public Employees Retirement System (OPERS) – https://opers.org • OPERS Federal Comment Letters - https://www.opers.org/about/government/federalcomments.shtml • Express Scripts, Inc. Oncology Care Value Program - http://lab.express- scripts.com/lab/insights/drug-options/safeguardrx-improves-affordability-and-access-to- budget-busting-drugs • FDA Guidance on Labeling for Biosimilar Products - http://www.fda.gov/downloads/Drugs/GuidanceComplianceRegulatoryInformation/Gui dances/UCM493439.pdf • TJ Garrigan, Associate Director, Policy & Strategic Alliances at GPhA, 202-249-7132, tjgarrigan@gphaonline.org • Brian Lehman, Manager of Pharmacy Benefits & Policy at OPERS, blehman@opers.org Ohio Public Employees Retirement System
- 49. Key Takeaways • Complicated supply chain, unsustainable costs • Purchasers and business coalitions increasingly active • Relying on PBMs and plans not sufficient • Range of concrete purchasing and policy strategies and actionable next steps for employers • Resources from MBGH, MHAG, and others
- 50. Next Steps • Informal alliance of public and private purchasers and coalitions • Identification of highest priority purchasing (e.g., PBM audits, indications-based pricing) and policy (e.g., NDC, biosimilar labeling, 21st Century Cures) • Utilize collective influence
- 51. More Information Kristof Stremikis, kstremikis@pbgh.org For copies of presentation: Clare Connors, cconnors@pbgh.org Webinar recording available Monday at www.pvnetwork.org