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Video Transcript: Managed Care's Mindset: How Payers and PBMs Are Approaching the Specialty Space

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Gina: Generics and biosimilars. Increasing pressure to managed costs. Aligning prescribing reimbursement with clinical outcomes. How is the managed care industry addressing these issues—and how can pharma be more involved? Join us to find out. “In the Know” starts now.

Hello and welcome to “In the Know,” your source for insight and analysis on the issues that matter to specialty pharma. I’m your host, Gina Clark.

Today, we’ll discuss what managed care companies are doing to balance the need for patient access to specialty therapeutics with the continually growing need for more stringent cost management. We’ll learn how payers are responding to the dynamic regulatory environment, the role that new technologies can play in supporting payer relations, as well as what manufacturers can do to enhance their interactions with the managed care community.

Joining us today is Gary Rice, director of specialty clinical management at MedImpact. Thanks for being with us, Gary.

Gary: Glad to be here.

What are your thoughts regarding the significance or importance of strong relationships between pharmaceutical companies and managed care companies? And what impact do these partnerships have on the quality of healthcare?

Gary: I think it’s very important that there are collaborations because there’s different information that’s being gathered between the managed care organizations and the pharmaceutical companies. For instance, they do all the pre-FDA approved studies, and those are the basis by which we move forward on utilizing these drugs. However we know as more and more patients are on these drugs, we start getting a population based type of outcomes look. By communicating and working together it really allows us compare and contrast really what’s going on with those patients and whether the original studies either support the current use of the products or are the products being used differently, or are there different outcomes.    

The number of specialty pharmaceutical products has grown tremendously over the last 10 years. How significantly has this growth in the number of products affected drug spending, and what is the managed care industry doing to address this trend?

Gary: One to three percent of the populations of most health plans are on a specialty medication. In addition to that, the healthcare spends within those plans have increased to double-digit numbers in the last three years. Probably moving forward to the next 3-5 years, we’ll see more money spent on specialty medications than on more conventional therapies treating diabetes, cardiovascular disease and so on. The PBMs and the health insurance companies are beginning to put steps in place to improve the overall management of these products. Those steps look at optimizing therapeutic choices, step therapies, and other clinical initiatives to try to curb the spend. Our ultimate goal is to make sure the right patient is on the right drug at the right time. So with some therapies like rheumatoid arthritis, we have an opportunity to look at conventional therapies versus specialty therapies. There’s a certain population that does quite well from an outcome standpoint on conventional therapies, and at some point they may have to be put on to specialty medication.   

How do plans assess the value rather than just the cost of specialty pharmaceuticals?

Gary: That’s a challenge for us today and primarily because we tend to look at the drugs independently of the total cost of healthcare. And as we get more automation and we have more plans and begin using electronic medical records and so on, we’ll be able to start combining the total cost of care, looking at the pharmaceutical cost and the medical cost. Then we can look at cascading costs moving forward. And with that we can see how certain high-cost drugs impact those cascading costs. 
 
Though FDA approval of new specialty products has been lower in recent years than earlier this decade, the pipeline for specialty pharmaceuticals remains strong. How do companies like yours prepare for the coming waves of products—especially when it comes to making decisions on coverage and reimbursement?

Gary: There are about 800-1,200 drugs currently within the pipeline that would be identified as specialty medications. Of those specialty medications, about 40% are orals and about 60% are infusion. It is a very challenging process for us to keep ahead of all these new developmental products. We do have a pipeline that we look at 2 years out, and try to look at how we need to leverage and how we need to plan for these products becoming FDA approved.  

Intensified cost pressure will challenge the degree of access granted to specialty products. What strategies can help pharmaceutical companies sustain their commercial success?

Gary: The biggest help that we need right now are biomarkers. We have a lot of specialty medications that are being used for a variety of diagnostic or disease states. What we really need are biomarkers to help us better identify the right patient for these medications. By doing that, then we can optimize costs, and hopefully optimize patient outcomes.  

What do PBMs or payers think about where biosimilars will be and the impact of generic competitors on biologics?

Gary: We’re actually waiting for biosimilars, hopefully in the next two years. But we also realize, unlike generics, they won’t be priced the same. Most biosimilars, we’re hoping, will have 15-25% price erosion over time, unlike a generic where, after the six month exclusivity occurs, there’s about an 80% savings. But considering these drugs cost in excess of over $2000 a month, the savings will still be tremendous.
 
Increasing cost efficiencies in healthcare is high on the list of priorities in Washington, D.C. How are managed care companies responding to this call?

Gary: I think one of the biggest things we’re pushing for, which has been a very slow adoption, is electronic medical record. We need to have medical and pharmaceutical data combined, and right now even though we’re trying not to live in silos, we really are still living in silos. Even though we request data from a lot of the health plans, from a patient care or medical side, their technologies within their systems really makes it difficult for them to transmit data to us.  
 
For managed care companies, what are the advantages and what are the downsides to this increased focus on cost efficiency in healthcare?

Gary: I think it’s very positive actually. The pressure on a managed care organization is to make sure it’s adapting to the changes that are going on in the environment. The electronic medical record side has been very expensive for many companies, and it takes years to realize the benefits. They’re beginning to push forward to try to achieve that, and I think the economies of electronic medical records and other initiatives from the electronic standpoint will create tremendous efficiencies.    

How do you think comparative effectiveness will impact your organization’s decision-making in the next 2-4 years?

Gary: Well the pharmacy and therapeutics committees currently use comparative effectiveness. However, it’s primarily evaluated based on the drug alone. I think what we’ll learn through governmental assistance is a broader look at comparative effectiveness. Combining medical data, looking at outcomes, and then looking at what medications may truly be the best for a population base evaluation. However, we need to be careful that there’s a lot of patient variation. These trends will be very valuable for us to look at, but we still need to allow the doctor to make those difficult choices of what medications are best for that particular patient.   
 
There's ongoing discussion on aligning provider incentives with appropriate clinical outcomes. The discussion largely occurs among the provider and payer communities. To what extent can manufacturers be involved?

Gary: I think as we move forward and start trying to identify the right patients for the right drugs, whether it’s biomarkers or other types of evaluation processes. It’d be great to have incentives for those drugs to be used in those areas. Maybe rebates or refunds for drugs that are not creating a desired effect.

How are managed care organizations working with providers to ensure appropriate prescribing of specialty pharmaceuticals? 

Gary: I think a lot of it begins with education, and it’s followed by strategies and how best that medication can be used. RA is another good example like I discussed earlier. Where there are a lot of conventional therapies that still can be used for these patients. In fact in the RA community, 5-20% of the patients go through complete remission with no therapy at all. So as we move forward, and we collaborate on these initiatives, and we train the physicians on these approaches, how these medications should be used, I think they’ll be used more effectively. 
 
What role do new technologies—like e-prescribing, EMRs and PHRs—play in the future of interactions between providers, payers, patients and pharma?

Gary:Just like it takes a village to raise a child, it takes a village to treat a patient. And by having that information integrated, collaborated and combined in one useful source, it creates efficiencies that we probably don’t even realize today will occur. Secondly, as we go to e-health, which to me is an extension of the electronic medical record, hopefully the patient will become more empowered with their own healthcare. This is because they can take that information from the electronic medical record, bring it into their own, whether it is health vaults or one of those other programs, whether it’s Google or whether it’s Microsoft, and they can begin looking at it, massaging it, considering it. Within those programs, there are applications that help them better utilize that information.
 
Oral products appear to be gaining momentum across several specialties, including oncology. What advantages do these oral products provide for managed care companies? 

Gary: Well oral products are a little bit confounding right now as far as how to best utilize them. On the solid tumors, they replace an infusible product, but within that protocol there are still a variety of drugs and many of them are still infusables. However on the hematological cancers, where principally the products are orals, it’s been increasingly beneficial because these products are better than the products that were previously available. So for a solid tumor, it’s integrated into a protocol. However for hematologic cancers, generally speaking it’s that therapy plus maybe some other insulary therapies, so it really has been innovative.   

To what extent are these advantages offset by issues like patient non-adherence?
 
Gary: We’ve had to develop some strategies to work with the specialty pharmacies to ensure these patients are taking their medications. Some of those strategies have included telephonic reminders. We’re even doing applications on iPhones and other types of mobile devices. We’re hoping long term, that we’ll be able to demonstrate that those strategies help with adherence. We also hope in the future, that there’ll be some ways where technology will allow us to measure a patient actually going into a prescription bottle. We’re not here today, but that would be another way to be able to measure adherence.  

Economic challenges will chip away at patient adherence to specialty regimens. What are managed care companies doing to counteract this trend and support strong patient outcomes? Is there opportunity there for manufacturers to work more closely with payers on this?

Gary: It’s a real challenge right now with the cost of some of these medications. We’re hoping that through some value-based formulary management strategies, and with some initiatives through pharma through education and other strategies to improve adherence, that we’ll be able to keep having patients on these costly medications, and we’ll be able to keep adherence high. 

Gary, it looks like we’re out of time for today’s program. Thanks so much for being with us.

Gary: I enjoyed being here, thank you.

And thank you for joining us—we’ll be back soon with another webisode. Until then, if it’s on your mind, it’s In the Know.

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