SPECIALTY PHARMACY TAMING SPECIALTY DRUG COSTS FOR SELF- INSURED HEALTH PLANS Presented by Jody L. Miller 4Front Consulting Group, Inc. March 5, 2015 Presentation Outline Specialty Definition Spend Trends Categories Driving Trend Specialty Channel Evolution Site of Care Realities Things to Watch Strategies Being Deployed
SPECIALTY DEFINITION Level setting the discussion Payer Definition of Specialty Drug Source: EMD Serono Specialty Digest 2014
Specialty Product Defined Specialty Criteria Product Profile Example Price Annual cost of drug therapy >$10,000 Size of patient population Orphan <200,000; Ultra-orphan <6,000 Complexity of health plan design Complexity of administration Complexity of disease state Complexity of care Medical or pharmacy benefit; prior authorization, step edits, failure to other therapies HCP administered injection or infusion; reconstitution prior to injection or infusion; cold chain brought to room temperature prior to administration; controlled substance Focused screening and/or monitoring of treatment Risk profile managed by treatment team (i.e. REMS) SPENDING TRENDS Where is your money going?
Trend What's driving spend? 28% of drug spend is in specialty products
CATEGORIES DRIVING GROWTH Which products are going to be my new concern?
Respiratory Conditions Two new drug launches in 2015 that will require life long dosing will drive this cost trend These drugs result in significantly longer life expectancy in CF patients Hepatitis C Olysio (simeprevir) and Solvaldi (sofosbuvir). Harvoni (combination of ledipasvir,, and sofosbuvir, Viekira Pak four-agent combo, ombitasvir, paritaprevir and dasabuvir ritonavir The ESI decision is worth watching, as it changes the current thinking in US healthcare i.e. Patient and provider choice vs cost
SPECIALTY CHANNEL EVOLUTION Last Mile Options Biggest Changes Here
Retail Chains Expanding service lines to stay relevant Retail Chains are aggressively entering specialty space Central Fill solutions Call center expansion Dedicated Clinical Teams Options of Home delivery or In- store pickup Have lower acquisition cost than regional SP s, due to the large Generic spend Health Systems Compelling reasons to participate in Specialty ACOs encourage/incentivize control of entire patient journey Dispense specialty meds at discharge to control continuity of patient care 340b in retail is largely maximized, specialty is next area to maximize where dollars are bigger 340b hospitals can contract with any Specialty Pharmacy and receive benefit of pricing model Employed physicians are a captive referral source
Specialty Pharmacy Providers by alignment category alignment affects SPP s objectives and behavior, rapidly evolving marketplace Payer Aligned Retail Aligned Wholesaler Aligned Independent IHS / IDN / ACO PBM Aligned *Not a comprehensive list, for illustrative purposes only Private independent specialty pharmacy ranking There are twelve (12) private, independent specialty pharmacies on the 2013 Inc. 500 magazine list of the fastest-growing private companies in the U.S.
SITE OF CARE REALITIES Where infusions are provided drives substantial cost Site of Care Shifts are driving huge cost Why is this happening? Drug reimbursement methodology shift from AWP to ASP since 2005 (Medicare and Commercial) Specialties who utilize expensive infusion drugs are concerned about financial risk for <6% return Physicians risk/reward less favorable Decrease in Income makes hospital ownership seem attractive Hospitals have access to better pricing (340b) and negotiated private payer reimbursement Affordable Care Act incentives to improve care coordination (ACOs) Administration costs can be $2,000-$5000 higher in the HOPD vs. physician practice
SOURCE: EMD SERONO SPECIALTY DIGEST 2014 SOURCE: EMD SERONO SPECIALTY DIGEST 2014
THINGS TO WATCH What market forces are going to have an impact? Site of Care Aggressive action by payers Two major health plans (at least) have instituted a medical necessity standard to SOC Hospital site of care for infusions not medically necessary unless a medical condition exists, i.e. previous infusion reaction Expect strategy to broaden rapidly if these plans are successful. push back from advocates and health system providers. Not all physicians to be comfortable with home health administration
Health System actions due to 340B program benefits Health Systems will begin to trade outpatient infusion fees for access to the Specialty Provider Panel for their newly created SP s Employers need to be ready and willing to carve out SP from the PBM owned SP s if they want to take advantage of this opportunity (evaluate the cost of non exclusive sp) The 340B landscape is not a certainty forever, but most believe the near future is assured STRATEGIES Actionable tactics
Strategies Manage Site of Care Work with Employees to build incentives to use lowest cost site of care Carve Out Specialty Be willing to carve out specialty spend to health system or grocery chains to gain better control over spend. The closer they are to the patient the better Copay Programs Utilize manufacturer copay programs to greatest extent possible Aggressive PA On Hep C This disease progresses very slowly and curing someone with dormant disease is not necessarily best course of action (See state Medicaid rules on Solvaldi for guidance) Adherence- Ensure that once money is being spent, that patient is benefiting from drug. Money spent here is not wasted Change Agents These companies programs address the aforementioned strategies Compass Health http://www.compassha.com/ Creates programs to incentivize patients to make lower cost decision on site of care Save on SP www.saveonsp.com Uses a unique benefit strategy to significantly offset drug cost on most frequent classes of biologics Adherence vendors Many to choose from
Questions Questions Jody Miller Founding Partner 4Front Consulting Group, LLC 2820A One Seneca Tower Buffalo, NY 14203 Jmiller@4Frontcg.com 716-440-0192