Payers seek new strategies in coordinating costs, management of specialty drugs

As specialty drugs become the standard of care for many complex diseases, they present unique challenges to payers, according to the 10th edition of the EMD Serono Specialty Digest. Specialty drugs can be delivered through various routes of administration (subcutaneous injection, intravenous, intramuscular injection, oral), all of which may have unique coverage criteria, patient cost share, clinical management, and patient access. 

“To better coordinate costs of management, there appears to be a trend for payers to move responsibility for  management of provider-administered drugs from the medical department to the pharmacy department,” said Allene Diaz, senior vice president, Managed Markets, for EMD Serono.Comparison of therapy categories covered under the pharmacy benefit in 2011 vs. 2013 reveals that the categories of hemophilia, RSV, and immunology (rheumatoid arthritis, Crohn’s disease, and psoriasis IV) have seen a 6%, 17%, and 8% absolute shift respectively from the medical benefit to the pharmacy benefit.

“Although there were only 3 classes where we saw a pronounced shift in management of specialty drugs from the medical to the pharmacy benefit, greater than 60% of respondents identified the integration across medical and pharmacy benefit as a top management goal, presumably because they have a greater ability to manage costs via the pharmacy benefit,” Diaz said.

On the pharmacy benefit side, step edits are the most common utilization management tools across commercial, MA-PD, and Medicaid channels, according to the survey results. For medical benefit products, prior authorization is the most common utilization management technique.

Most plans allow grandfathering in the multiple sclerosis, hepatitis C, and oncology therapeutic areas, but not so in growth hormone or infertility areas, according to Diaz.

Oncology drug management

Oral or IV oncology drug management will continue to be an increasing area of focus for payers, fueled by the robust oncology pipeline, the cost of some recently launched oncology products, and the aging population, Diaz said.

“Payers acknowledge that many of their oncology management goals have not been achieved, but they are working diligently to address the rising cost of cancer care,” she said.

Included among the report’s findings:

• ·      89% of payers rank improvement in quality of care as the most important goal in the management of oncology drugs; however, only 34% believed that they have accomplished this

• ·      86% of respondents agree that reducing drug costs is a critical goal; however, only 42% of those surveyed believe they have successfully measured and quantified the reduction in oncology drug costs

• ·      85% of respondents would like to reduce hospitalizations and ER visits, but only 36% are able to measure their success in these areas

Differences in sites of care: A concern

In addition to concern for the cost of medical benefit products and for the management of those products, payers are also concerned about the significant differences in costs associated with differing sites of care-for example, in the hospital vs. at the physician office, etc., said Diaz.

The site of service for cancer care has been a major concern.

“Payers are implementing strategies to create a more uniform reimbursement model across sites of service and also exploring innovative payment reform,” she said. “There have been several studies that find the costs of providing care in the hospital outpatient setting are higher than many of the same services performed at a physician office or community clinic.”

An analysis of Medicare claims between 2009 and 2011 showed that patients with cancer receiving chemotherapy in hospital outpatient settings are billed at rates that are 25% to 47% higher than for equivalent oncology services rendered at community-based physicians’ offices.

Several variables contribute to the differences, including variations in coding, the types of data and related methods used to calculate payment rates under each system, differences in how beneficiary cost-sharing is determined, and differing rates at which payments are updated.

According to EMD Serono Specialty Digest results, payers are focusing on several strategies to direct patients to the least costly and most effective site of service, such as an ambulatory infusion center or community physician office.  They include:

• ·      Network restrictions: Creation of limited or preferred infusion networks (31% currently implement, 32% plan to implement in the next year), recontracting with existing networks (22% currently implement, 35% plan to implement in the next year), equalization of reimbursement rates across various providers (22% currently implement, 25% plan to implement)

• ·      Changing reimbursement methodologies: Provide higher reimbursement for lower-cost drugs (33% implement, 22% plan to implement), implement variable fee schedules (36% currently implement, 15% plan to implement), and implement episode-of-care or bundled payment methodologies (11% implement, 29% plan to implement)

Other key areas

According to the Digest results, other areas of interest to payers are the large number of potential products in the pipeline for infectious diseases (hepatitis C and others) and autoimmune diseases.

Costs are consistently a key factor in the management of specialty products and will continue to be for the foreseeable future, as new therapies with high efficacy and cure rates launch in previously poorly managed disease areas such as hepatitis C, Diaz said.

While it is estimated that specialty spending will quadruple from 2012 to 2020 (CVS Caremark, Insights, 2013), the Digest results suggest that cost is not the only consideration. Clinical outcomes are also a major driver in terms of drug/formulary choice.

Diaz advises executives to assess the impact of a product on the overall cost of treatment to determine which products to include as preferred on the formulary.

“Net drug costs are one aspect of the cost of treatment. Hospitalization rates, side-effect management, infusion costs, laboratory testing, and management of recurrences/relapses among other costs are all components of the overall treatment costs associated with a particular therapy,” she said.