Specialty pharmaceuticals Christina Hansen, pharm.d

CHARACTERISTICS Treat complex and rare disease states RA, Cancer, Crohn’s, MS More expensive Distribution restrictions Special handling requirements Continuous monitoring

characteristics Biologics or medications complex to manufacture ROA – injectables, infusions, oral More costly Rarely any low-cost generic equivalents

background <1% written prescriptions 2013 - 27% of US total pharmacy spending 2017 – estimated to be 50% (per Express Scripts) Specialty pharmaceuticals interest biopharmaceutical companies in the innovative and business perspective

PCSK9 inhibitors Praluent (alirocumab) Repatha (Evolocumab) PSCK9 is a protein that promotes degradation of LDLR receptors. Inhibits PCSK9 from binding to LDLR receptors on surface of liver cells – allows more LDL-C to bind and be cleared from liver Single injection every 2 weeks Approved by FDA 07/2015 Price: $1,120 every 28 days PCSK9 inihibitor PSCK9 is a protein that promotes degradation of LDLR receptors. Inhibits PCSK9 from binding to LDLR receptors on surface of liver cells – allows more LDL-C to bind and be cleared from liver Single injection given every 2 weeks or once monthly Approved by FDA 08/2015 Price: $1300 per 28 days

Hepatitis C Treatments SOVALDI (sofosbuvir) Harvoni (Ledipasvir/sofosbuvir) Treatment of Hepatitis C Attaches to RNA and prevents virus from replicating Treatment duration- 12-24 weeks (depending on genotype diagnosed) Combination therapy – 1 pill daily Approved by FDA 12/2013 Price: $30,000/28 tablets Treatment of Hepatitis C – genotype 1 Targets Hep C virus to prevent replication Treatment duration – 12 weeks Single therapy – 1 pill daily Approved by FDA 10/2014 Price: $38,000 per 28 tablets

Impact of higher prices on patients Patient Non-compliance – increased patient expense is associated with Decreased rates of initiating medication therapy Lower adherence rates Increased patient discontinuation of therapy Patient may or may not look for alternative – depending on disease state, may incur more physician visits, ER/hospital bills

Specialty pharmacies Typically owned by retail pharmacies or PBMs May dispense medications Biggest asset – patient support services on a per month basis Compliance Patience assistance Tolerance of medication Refill requests

Tools for managing costs Prior authorization/step therapy Reference guidelines for treatment pathways Physicians typically do not know how much medication costs! Copayment/coinsurance Incentivize patients to try preferred or generic alternatives with lower copays Directed networks for physician and service care

Intervention strategies Change payment policies “buy and bill” – physicians are paid a percentage of the cost of medication – incentivizing them to write for more expensive medications Reimburse drug acquisition cost and flat fee (depends on therapeutic class) instead of a percentage Reimbursement model could incentivize patients based on ROA and site of care Self-injectable medicine available that is as effective and less expensive as one administered in physician office Infusion or injection at physician clinic vs hospital setting Utilization of specialty pharmacies adherence programs have the potential to improve outcomes and reduce costs

Intervention Strategies Financial incentive to those providers that use equally effective and more cost-effective therapy, if there is one United Healthcare piloting model reimbursing 100% drug acquisition cost to oncologist groups adhering to pathways for 85% of UHC patients Exceptions for medical contraindications and clinical trial enrollment Wellpoint, Inc., paying incentives to in-network oncologists for following the clinical pathway Promotes use of therapies that are best for patient – quality of care and best outcomes

Value-based insurance design 15 years in the making with University of Michigan Center for Value-Based Insurance Design (V-BID) and National Pharmaceutical Councel (NPC) V-BID makes high-value providers and the services they offer more accessible and discourages use of those that are of lower value, aligns patient out of pocket costs with value of services Focus on how smart you spend healthcare dollars vs dollar amount Cost-sharing ideas: Modest cost-sharing on specialty medications for common chronic disease states – encourage compliace Specialty meds showing benefit in a group of patients, decrease cost-sharing for those who may benefit Failure on preferred medication (lower generic alternative) Differential cost sharing to incentivize patients to see better providers

Other avenues of cost-saving YOUR EMPLOYEES HAVE MAJOR IMPACT ON HEALTHCARE DOLLARS SPENT!! KEEP A HEALTHY EMPLOYEE HEALTHY! Wellness Programs: Offer gym memberships Weight management plans Smoking cessation Healthy lifestyle strategies

Why is this important? Loeppke and colleagues in a 2009 analysis showed the cost to employers for employees off work due to illness is 2.3 times as much as the cost of medical and pharmacy spending combined Well documented that cost-related non-compliance with certain disease states is associated with increased morbidity and mortality

conclusions Specialty medications will continue to be scrutinized by payers in the coming years due to their expensive nature, increased need for use and burgeoning pipeline. 11 new biologics have been approved by the FDA in 2015, and all new medications start out very expensive Payers have to be aware of how high cost-sharing can impact adherence, health, productivity and financial well-being among patients that use specialty medications. Knowledge of guidelines and pathways can aid in formulary design It isn’t always about how much you are spending, but the potential outcome and savings you may incur from that spending.

References Hagerman, J, et al. “Specialty pharmacy: A unique and growing industry”. Pharmacy Today. 1 Jul 2013. http://www.pharmacist.com/specialty-pharmacy-unique-and-growing-industry Spatz, I, et al. “Health Policy Brief: Specialty Pharmaceuticals. Complex new drugs hold great promise for people with chronic and life- threatening conditions. The drugs are also a driver of spending growth”. Health Affairs. 25 Nov 2013. http://www.healthaffairs.org/healthpolicybriefs/brief.php?brief_id=103. Johnson, K. “Current trends in specialty drug utilization and management Payer interventions in the shadow of a burgeoning pipeline”. 4 Jul 2013. http://formularyjournal.modernmedicine.com/formulary-journal/content/tags/specialty-drugs/current-trends-specialty-drug- utilization-and-managem?page=full Jacobs, M, et al. “Curbing the Costly Trend: Exploring the need for a Progressive Approach to the Management of Specialty Pharmaceuticals Under the Medical Benefit”. American Health and Drug Benefits. Jul/Aug 2012. http://www.ncbi.nlm.nih.gov/pmc/articles/PMC4046456/. Burns, J. “Here’s why specialty pharmaceuticals need value-based insurance design”. Association of Health Care Journalists. Jun 2014. http://healthjournalism.org/blog/2014/06/heres-why-specialty-pharmaceuticals-need-value-based-insurance-design/.

References Barlas, S. “Are Specialty Drug Prices Destroying Insurers and Hurting Consumers?”. P&T. Aug 2014. http://www.ncbi.nlm.nih.gov/pmc/articles/PMC4123806/. Duffant, B, et al. “Overview of the Specialty Drug Trend. Succeeding in the Rapidly Changing U.S. Specialty Market”. IMS Health. 2013. https://www.imshealth.com/deployedfiles/imshealth/Global/North%20America/United%20States/Managed%20Ma rkets/5-29-14%20Specialty_Drug_Trend_Whitepaper_Hi-Res.pdf. University of Michigan Center for Value-Based Insurance Design. “Supporting Consumer Access to Specialty Medications through Value-Based Insurance Design”. 11 Oct 2014. http://vbidcenter.org/june-2014-issue- brief/10897/. University of Michigan Center for Value-Based Insurance Design. “Specialty Pharmaceuticals and Value-Based Insurance Design”. Jul 2014. http://vbidcenter.org/wp-content/uploads/2014/07/Specialty-Pharmaceuticals-one- pager.pdf. Fendrick, A, et al. “Supporting Consumer Access to Specialty Medications Through Value-Based Insurance Design”. Oct 2014. http://vbidcenter.org/wp-content/uploads/2014/10/vbid-specialty-medications-npc2014-final-web.pdf. Therapeutics Research Center. “New Drugs Approved by the FDA in 2015. Pharmacists Letter. 2015. http://pharmacistsletter.therapeuticresearch.com/pl/NewDrugs.aspx?cs=&s=PL&pt=20.

References https://www.acponline.org/clinical_information/guidelines/guidelines/ http://www.guideline.gov/ https://www.repatha.com/ https://www.harvoni.com/ https://www.praluent.com/ https://www.sovaldi.com/

Thank you