Four innovative models rein in pharma costs

Total spending on medications in the United States reached $310 billion in 2015 on an estimated net price basis, up 8.5% from 2014, according to a recent IMS Health study. Specialty drug spending reached $121 billion on a net price basis, up more than 15% from 2014.

MarcheIMS Health also shows that the average patient cost exposure for brand prescriptions filled through a commercial plan has increased more than 25% since 2010, reaching $44 per prescription in 2015.

“Costs are completely out of hand, not just specialty pharmacy but also some generics and branded drugs with astronomical costs. As a payer, we ask ourselves, ‘How do we mitigate costs?’” says Sarah Marche, vice president, pharmacy services for Highmark.

While many payers and PBMs are using the same traditional tools to contain costs, others have added programs or expanded upon existing ones. Here are four organizations using innovative new models.

Express Scripts: Risking more for higher rewards

Express Scripts, a PBM, created SafeGuardRx, an umbrella of services focusing on the “pain” points for customers in terms of affordability and quality of care. Its initial two programs launched in 2015-the Hepatitis Cure Value Program (HCV) and the Cholesterol Care Value Program (CCV)-have since been joined by the Inflation Protection Program and the Oncology Care Value Program.

StettinAt the heart of HCV is making Viekira Pak the exclusive formulary option for members with genotype 1 hepatitis C. In return, AbbVie, the drug’s manufacturer, provides significant discounts to patients if they fill their prescriptions via Express Scripts’ Accredo Specialty Pharmacy. Express Scripts caps the cost of Viekira Pak if patients require treatment longer than the typical 90-day regimen. In addition, the PBM refunds the cost of therapy if patients do not reach adherence.

“We bet on ourselves in achieving adherence, cure rates and savings,” says Glen Stettin, MD, senior vice president and chief innovation officer for Express Scripts.

CCV offers a per member per year cost cap on PCSK9 inhibitors that Express Scripts added to its national formulary this year. The drugs must be obtained through Accredo and go through rigorous clinical review. Express Scripts provides a guarantee on cost, based on actuarial analyses for those with heart disease and hyperlipidemia that are the conditions warranting the use of PCSK9s.

The Oncology Care Value Program, focusing initially on prostate and lung cancer and renal cell carcinoma, aligns cost of treatment with outcomes. “The cost of cancer drugs is based on value,” Stettin says. The program provides access to the right oncology drugs for patients and if they don’t work, they receive refunds.

The Inflation Protection Program, which began January 2016, caps brand drug inflation, protecting plans from the full cost of year-over-year increases on brand drugs. Plans pay about one-third less per year.

In 2017, Express Scripts will unveil three new programs to help rein in pharmacy costs: the Diabetes Care Value Program, the Inflammatory Condition Care Value Program and the Market Events Protection Program.

The diabetes program is guaranteeing per patient spending caps to improve adherence and prevent cost increases. Stettin says that plans using the program should expect to pay an average increase in diabetes drug spend in 2017 that is about half of what the industry is currently forecasting for U.S. commercial payers next year. 

Stettin says the inflammatory program blossomed when it became apparent that patients switch from one drug to another for these conditions, such as rheumatoid arthritis, psoriasis and Crohn’s disease, due to side effects. Between 21% and 36% of patients discontinue these medications within the first 90 days. In response, the PBM provides a savings guarantee for plan sponsors up to $6,000 if a patient discontinues a preferred anti-inflammatory medication within the first 90 days.

All of the care value programs also take advantage of pharmacists specializing in specific conditions, therapeutic resource centers in 20 different clinical areas, and the Accredo Specialty Pharmacy.

The Market Events Program targets unusual market situations and directs clients to the most clinically appropriate, cost-effective therapy or dispensing channel. Stettin says that when clients face events, such as inflated generic drug prices, significant increases in average wholesale prices for brands, or monopolies in certain drugs, Express Scripts asks plans to grant the PBM the authority to deploy solutions to counter these types of situations.

Next: Highmark takes action

Highmark: Focusing on utilization and outcomes

Marche, of Highmark, says the insurer relies on the tried-and-true formulary to help rein in pharmacy costs. “Our formulary is not just based on whether a drug is a brand or generic because there are some low-cost brands on tiers one and two and high-cost generics on tier two or higher. We have redefined tiers and communicate this to our members.”

Highmark also incorporates care and case management into its pharmacy programs by building a team of dedicated pharmacists. Pharmacists serve as consultants to nurse coaches or, if an issue merits more pharmacist expertise, the pharmacists proactively find members associated with low adherence, gaps in care or duplicative drugs-opportunities for cost savings.

The insurer looks outside the pharmacy benefit to determine how to reap more savings. It pays close attention to where and how high-cost infusibles are administered and encourages patients-if clinically appropriate and self-administered-to have these given at home, a much less-expensive site than a hospital or infusion center.

By reviewing evidence-based research, Highmark has put in place appropriate utilization management controls to help ensure each prescribed drug works for a target patient and that the patient is approved to take it, says Marche. “It’s our responsibility to ensure we remain in line with the FDA utilization guidelines.”

Highmark is also exploring outcomes-based agreements with manufacturers. If Highmark members take a drug for diabetes to lower HbA1c, the plan will monitor progress and if the medication is not working, patients will receive reimbursement for the drug. “Manufacturers need to put their money where their mouths are,” Marche says. “If drugs are too expensive, members won’t take them.”

SelectHealth: Using incentives and alerts

Prescription drugs represent the fastest growing expense category for Intermountain Healthcare-rising about 13% a year, compared to increases in salaries and other types of expenses, which are in the low single digits.

CannonEric Cannon, assistant vice president, pharmacy benefit services for SelectHealth, the health plan affiliated with Intermountain Healthcare, says diabetes and asthma elicit the most calls from doctors regarding drug prices. “The major concern is unit cost increases in all products,” he says.

The price of oral diabetes drugs has risen 34% between 2006 and 2013, based on an analysis reported in JAMA. While there is no generic insulin product available, several companies have announced plans to develop biosimilars.

Cannon says that some of the common tools used to rein in costs no longer offer the opportunities they once did. As generic use at SelectHealth reached 90%, offering incentives for them has topped out.

He also weighs the value of open and closed formularies. While large employer groups have successfully used closed formularies that provide necessary drugs that cost 15% less-choice is limited. “Even if you have an open formulary, all drugs might be available, but many require prior authorization or on a high tier so the lines are blurred, and then it’s not really ‘open,’” he says.

SelectHealth alerts physicians and members about high-cost drugs that have alternatives. When advised about a $10 generic for a diabetes drug priced at $5,000, for example, everyone switched to the lower cost drug, says Cannon.

“It causes trepidation for plans to have to ask for these kinds of changes. A lack of transparency in drug pricing highlights the problem.”

The plan also provides incentives to physicians for agreed upon performance goals and sharing risk. For example, if the health plan’s Medicaid product is profitable, the gains are shared with physicians based on predetermined algorithms; if there are losses, then the plan shares those losses.

Cannon says the plan is also exploring sharing risk with manufacturers to determine the most optimal strategy. 

Next: Community Care's approach

Community Care North Carolina: Counting on pharmacists

Community Care North Carolina, a primary care-case management plan for most Medicaid beneficiaries in North Carolina, has care management in pharmacy down pat. It used its experience from developing a wrap-around, population care program for primary care physicians (PCPs) and replicated it for pharmacy.

Its Community Pharmacy Enhanced Services Network expanded capacity for care management and medication optimization services through 270 community pharmacies, in coordination with a primary care network with a robust medical home model.

Trygstad“We want to move engagement from the physician office to the pharmacy-the ‘last mile’ for provider-through education, medication management services, care coordination and oversight of pharmacy benefits,” says Troy Trygstad, vice president, pharmacy program for Community Care North Carolina.

Each pharmacy network generally includes a full-time pharmacist and a clinical pharmacist, who also work closely with physicians and nurse case managers. The main strategy for clinical pharmacists is medication management for transitional care and for chronic care patients, Trygstad says.

Nurse case managers coordinate patients’ medications for reconciliation reviewed by a pharmacist, who might also conduct a comprehensive medication review for complex patients.

Because each patient is in a medical home, pharmacists can access clinical information from PCPs and hospitals, medical histories and discharge summaries, along with pharmacy claims data, progress notes, lab data and other patient information, helping pharmacists recognize potential drug interactions, declining health from adherence issues, and polypharmacy and drug cost issues.

For transitional patients moving from a hospital or acute care center to home, pharmacists can identify discrepancies in medication lists and make necessary updates. After patients are discharged from a hospital, their PCPs receive a copy of medication reconciliation reports to use during follow-up.

Community Care has introduced a pharmacy payment model based on risk-adjusted and performance tiers calculated at the end of each quarter. Trygstad says it has proved to be more stable than fee-for-service, with better incentives for follow-up and monitoring.

The model includes four risk and four performance categories. For example, if a pharmacist is in the highest performing tier and has the highest risk population, he/she can earn $40 per member per month for identifying problems.

On the other hand, if a pharmacist has a high-risk population and low performance, he/she might only earn $5 per member per month. For lower risk patients, the range could be $5 to nothing at all.

Mari Edlin is a frequent contributor to Managed Healthcare Executive. She is based in Sonoma, California.