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Prescription Drug CostsPURCHASING AND POLICY STRATEGIES FOR EMPLOYERS WHEN YOUR PBM AND HEALTH PLAN AREN'T CUTTING IT
JULY 28, 2016
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
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 [email protected] for slides
Today’s Panel
Cheryl LarsonMidwest Business Group on Health
Linda DavisMinnesota Health
Action Group
Brian LehmanOPERS
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
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
National Employer Initiativeon Biologics & Specialty Drugs
Project Overview
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
8Copyright © 2016 MBGH/IIH
National Employer Initiative on Biologics & Specialty Drugs - 2011 to 2016
Annual Multi-Stakeholder Meetings
Employer-Driven Research with Coalitionso 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 Tools9
Copyright © 2016 MBGH/IIH
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
5th Annual Employer SurveyDemographics
• 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
5th Annual Employer SurveyLevel 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
5th Annual Employer SurveyLevel 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 necessaryexpense of doing business
SP drugs can contribute to lower cost ofcare for certain conditions
Have or plan to shift more costs toemployees
Cost trend management is a top priority
Strongly agree Somewhat agree Agree Somewhat disagree Strongly disagree
5th Annual Employer Survey88% 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 inmedical plan
Narrow network that assumes risk
Vendor performance guarantees
No drug formulary; cost share based onvalue of drug to patient/company
Shift more costs to employees
Add a specialty tier
0% 50% 100%
Would consider
Currently offer
Would notconsider
Don't offer
14Copyright © 2016 MBGH/IIH
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
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
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
• 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
Employer Recommendations: PBM Contracting - example
www.specialtyrxtoolkit.com
MBGH © Copyright 2016
• 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
Future Impacts on Employers
MBGH © Copyright 2016
• 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
Future Impacts on Employers
MBGH © Copyright 2016
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 LarsonVice PresidentMidwest Business Group on [email protected] www.specialtyrxtoolkit.com 21Copyright © 2016 MBGH/IIH
MBGH Employer Advisory Board Perspective
For employers, doing nothing is no
longer an option
Minnesota Health Action Group Specialty Pharmacy
Learning & Action Network
Linda Davis, [email protected]
23
Becoming Better Purchasers
2012 2013 2014 2015Back Pain/Surgery
Hip and KneeReplacements
Specialty PharmacyPhase I
Specialty PharmacyPhase II
Early 2012 – June 2013
July – Dec 2013
Jan – July 2014
Oct 2014 – April 2015
May – Dec 2015
Maternity/Infertility
2016
Specialty Pharmacy2016
Jan – Dec 2016
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
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
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
Distribution and Reimbursement “Middlemen”
Adapted with permission from Pembroke 2013-14 Economic Report on Retail, Mail, and Specialty Pharmacies; Drug Channels Institute
Employer/Purchaser
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
Findings, Surprises, ConclusionsMagnitude 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
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
2016 GoalsNDC 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
1234567
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
Prescription Drug Costs: Purchasing and Policy Strategies
Brian Lehman RPh, MBA, MHAManager of Pharmacy Benefits and Policy
32
OPERS Prescription Drug Costs
Traditional Strategies
Next Generation Strategies
Policy Strategies
Actionable Steps
1
2
3
4
5
Objectives
Ohio Public Employees Retirement System
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
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
Formulary
Contracting
EducationUtilization Management
Plan Design
Traditional Strategies
(Pharmacy Benefit)
Ohio Public Employees Retirement System
Site of Care
Quantity Level Limits
EducationCoordinated Management
Prior Authorization
Traditional Strategies(Medical Benefit)
Ohio Public Employees Retirement System
Moving from “Pay Per Pill”
to Pay for Value
Ohio Public Employees Retirement System
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
Policy Strategies
• CompetitionGeneric and Biosimilar Drugs
• ValuePayment of Drugs Based on Value
• Protect Plan Sponsor ToolsPlan Design and Utilization Management
Ohio Public Employees Retirement System
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
Evaluate Data (Rx & Medical)
Determine Opportunities
Implement Strategies
Traditional Strategies
Ohio Public Employees Retirement System
Support NG Strategies
Discuss Available NG
Strategies
Implement Strategies
Next Generation Strategies
Ohio Public Employees Retirement System
Determine Policies Impacting Health Care Costs
Look for Like-Minded Organization(s)
Take Action
Policy Strategies
Ohio Public Employees Retirement System
Biosimilar Labeling
Ohio Public Employees Retirement System
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 28th, 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.
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/Guidances/UCM493439.pdf
• TJ Garrigan, Associate Director, Policy & Strategic Alliances at GPhA, 202-249-7132, [email protected]
• Brian Lehman, Manager of Pharmacy Benefits & Policy at OPERS, [email protected]
Ohio Public Employees Retirement System
Questions?Use Chat Box
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
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
More InformationKristof Stremikis, [email protected]
For copies of presentation:
Clare Connors, [email protected]
Webinar recording available Monday at www.pvnetwork.org
