Specialty pharmacy prices through PBMs typically charge greater than 3% more than Medicare reimbursement. Based on my experience, the charge averages 6% higher.
This report highlights why more restrictive policies may be needed to appropriate manage specialty drugs, particularly for biosimilars. A description of Kaiser's approach follows. Follow this link to the CMS recommendations: National Coverage Determinations with Data Collection as a Condition of Coverage: Coverage with Evidence Development
Copayments Have Small Effect on Specialty Drug Usage
September 12, 2006
Higher copayments have a small effect on usage of "specialty pharmacy" medications, which can cost as much as $10,000 monthly, according to a Health Affairs study, the Pittsburgh Post-Gazette reports.
Health insurers often place specialty pharmacy medications — injectable and biological medications that target a gene or protein and often are used to treat complex chronic conditions such as anemia, cancer and multiple sclerosis — on the "fourth tier" of prescription drug formularies and require members to pay 25% copays for the treatments, with maximum out-of-pocket payments of $1,000 annually.
However, the study, led by Dana Goldman, chair and director for health economics at RAND, finds that higher copays for specialty pharmacy medications reduce usage by only 1% to 21%, compared with 30% to 50% for traditional treatments. "Insurance markets work best when there is the chance of substantial loss, when that loss is sufficiently rare and uncertain, and when the presence of coverage will not alter behavior much," according to the study.
As a result, specialty pharmacy medications "appear to warrant greater, not less, coverage than traditional pharmaceutical agents," the study finds.
Goldman said, "Patients are desperate for these drugs, and they're willing to pay quite a bit to try whatever is out there," adding, "Even though they're expensive, that cost is spread over a very large insurance pool, so, socially, it makes sense that we should cover them" (Snowbeck, Pittsburgh Post-Gazette, 9/12).
Kaiser Permanente Reveals Strategies for Managing the High Cost of Biotech Drugs
From PR Newswire Europe (inc. UK Disclose) (September 12, 2006)
OAKLAND, Calif., Sept. 12 /PRNewswire/ — Kaiser Permanente is learning valuable lessons in controlling the high costs associated with biotech medicines, having faced biotechnology drug cost increases of 505 percent over the past eight years. These lessons are outlined in a paper published today in Health Affairs. Kaiser Permanente's Evaluation and Management of Biotechnology Drugs: Assessing, Measuring, and Affecting Use describes the strategies undertaken by the health care organization to stem rising costs while optimizing health benefits associated with the emerging biotech drugs used for its members.
Evidence analysis, usage measurements, and the multidisciplinary planning of Kaiser Permanente's integrated delivery system are key elements that enable the management of biotech drugs. Kaiser Permanente's Drug Information Services provide extensive analysis and information about drugs to the Permanente physicians. In addition, a formal, multidisciplinary group of physicians and pharmacists, the Biotechnology and Emerging Pharmaceutical Technology Assessment Committee (BEPTAC), coordinates the efforts around managing biotech drugs.
Kaiser Permanente's structure and comprehensive data systems give it the ability to compile detailed data and generate statistics on drug use, trends and demographic data. The data systems can further focus on details of growing applications of biotech drugs, outpatient and inpatient prescribing, and analyze dosage requirements for individual patients.
Evidence-based guidelines have been created for more than 60 percent of all biotech drugs purchased by Kaiser Permanente. These guidelines may be evaluated by measuring criteria compliance to determine if the guidelines are effective. Finally, the use of pharmacist-managed therapy in collaboration with physicians plays an ever-increasing role in managing individual patients. Future methods will draw upon electronic health records and innovative tools for measuring individual patient outcomes as well as collective outcomes.
Biotechnology drugs accounted for 18 percent of all drug expenditures at Kaiser Permanente in 2005. Oncology, rheumatology, neurology, genetics, endocrinology and dermatology are among the clinical areas particularly affected by the introduction of expensive new therapies. "These ultra-expensive drugs can offer new therapy options to physicians treating difficult diseases. However, it is crucial to get these valuable new treatments to the right patients, while minimizing the safety risks that come with them," stated Douglas Monroe, lead author and Project Manager, Biotechnology, Emerging Technology, and Specialty Pharmacy, Kaiser Permanente. "Our unique ability to draw upon the expertise and experience of a large group of physician specialists, combined with the power to measure clinical outcomes across a large number of patients, then to be able to feed that information back to prescribers gives us a tremendous advantage in figuring out how to best use these new drugs."
The authors of the article point out that legislation and FDA regulations need to set a framework for allowing follow-on (generic) versions of biotech drugs whose patents have expired. The authors conclude that this could provide savings for patients, for healthcare providers, and for Medicare, as well as stimulating pharmaceutical manufacturers to continuously seek newer biotech drug alternatives. "There is a desperate need to bring generic biologics to the market as soon as possible," urged Anthony Barrueta, vice president, Kaiser Permanente government relations. "Even after our best strategies have been applied — using the best available evidence to ensure the use of biotech drugs by the patients who can most benefit — these drugs will still pose an onerous financial burden on employers and taxpayers."
Kaiser Permanente's Evaluation and Management of Biotechnology Drugs: Assessing, Measuring, and Affecting Use was authored by, C. Douglas Monroe, RPh, MS, FCSHP, Kaiser Permanente drug information pharmacist; Lori Potter, J.D., Kaiser Permanente counsel; Mirta Millares, Pharm.D., FCSHP, FASHP, Kaiser Permanente manager, drug information services and pharmacy outcomes research; Anthony Barrueta, J. D., vice president, Kaiser Permanente government relations; Richard A. Wagner, Pharm. D., Kaiser Permanente drug usage management leader.
Health Affairs, published by Project HOPE, is the leading journal of health policy. The peer-reviewed journal appears bimonthly in print with additional online-only papers published weekly as Health Affairs Web Exclusives at http://www.healthaffairs.org/
About Kaiser Permanente
Kaiser Permanente is America's leading integrated health plan. Founded in 1945, it is a not-for-profit, group practice program headquartered in Oakland, Calif. Kaiser Permanente serves more than 8.5 million members in nine states and the District of Columbia. Today it encompasses the not-for-profit Kaiser Foundation Health Plan, Inc., Kaiser Foundation Hospitals and their subsidiaries, and the for-profit Permanente Medical Groups. Nationwide, Kaiser Permanente includes approximately 154,000 technical, administrative and clerical employees and caregivers, and more than 12,000 physicians representing all specialties.
Kaiser Permanente
CONTACT: Beverly Hayon of Kaiser Permanente, +1-510-271-6437, or
gro.pk|ynoyah.ylreveb#gro.pk|ynoyah.ylreveb
Web site: http://www.healthaffairs.org/
http://www.kaiserpermanente.org/
