As­sess­ing drug value

Hos­pi­tals take steps to con­trol drug costs and aid pa­tients

Modern Healthcare - - NEWS - By Jaimy Lee

When physi­cians and ad­min­is­tra­tors at Chris­tiana Care Health Sys­tem in Wilm­ing­ton, Del., saw how many newly ap­proved spe­cialty and or­phan drugs had price tags in the tens of thou­sands of dol­lars, they de­cided in 2011 to form a com­mit­tee that uses a 20-point scor­ing sys­tem to de­cide if a drug should be listed on the sys­tem’s for­mu­lary.

All drugs that cost more than $10,000 for a course of treat­ment—about 5% of the med­i­ca­tions dis­pensed through the sys­tem’s in­pa­tient and out- pa­tient set­tings—are now as­sessed by the med­i­ca­tion value sub­com­mit­tee, which in­cludes 12 physi­cians, ad­min­is­tra­tors, nurses, phar­ma­cists and fi­nance ex­ec­u­tives.

The sub­com­mit­tee looks at a wide range of fac­tors, in­clud­ing the drug’s ef­fi­cacy and risk and the fi­nan­cial im­pact on the pa­tient and the health­care sys­tem. A group of five com­mu­nity lead­ers, in­clud­ing a lo­cal high school teacher, a pas­tor and a com­mu­nity ac­tivist, also eval­u­ate fac­tors such as a drug’s tol­er­a­bil­ity, cost and safety to pro­vide in­put on qual­ity- of-life is­sues. Of 27 drugs as­sessed by the sub­com­mit­tee, 17 ended up on the sys­tem’s for­mu­lary list.

The panel’s scor­ing sys­tem as­sesses both in­pa­tient drugs that are re­im­bursed as part of a di­ag­no­sis-re­lated group and out­pa­tient drugs. About one-tenth of Chris­tiana Care’s sup­ply costs are gen­er­ated by drug costs, which are go­ing up about 7% each year, said Teresa Corbo, Chris­tiana Care’s vice pres­i­dent of phar­macy ser­vices.

“It sends a mes­sage to drug de­vel­op­ers that you have to prove that your drug is re­ally valu­able to pa­tients,” said Dr. Mitchell Saltzberg, a car­di­ol­o­gist who chairs the for­mu­lary com­mit­tee. “We just don’t ap­prove ev­ery­thing.”

If it’s your drug that’s not get­ting ap­proved, it cre­ates ten­sion.

Dr. Mitchell Saltzberg, car­di­ol­o­gist, Chris­tiana Care Health Sys­tem

Ris­ing prices

Costs for spe­cialty drugs, which are used to treat less com­mon dis­eases and con­di­tions such as can­cer and in­flam­ma­tory con­di­tions, are ris­ing, due to both higher prices and the in­creas­ing num­ber of such drugs on the mar­ket, ex­perts say. The grow­ing num­ber of ap­provals of spe­cialty and or­phan drugs—which are de­signed to treat con­di­tions or dis­eases that af­fect fewer than 200,000 peo­ple in the U.S. and of­ten come with even higher price tags than spe­cialty drugs—have pushed in­sur­ers and phar­macy ben­e­fit man­agers to ques­tion the value and costs for these med­i­ca­tions.

Hos­pi­tals tra­di­tion­ally have been less con­cerned with drug costs in the out­pa­tient set­ting. But the move away from a fee-for-ser­vice model, the broader push to im­prove value for pa­tients, and the po­ten­tial for health sys­tems to end up shoul­der­ing all or part of the cost of some pricey med­i­ca­tions is driving more in­ter­est in con­trol­ling the costs of out­pa­tient drugs.

Hos­pi­tal lead­ers are grow­ing in­creas­ingly con­cerned about the fi­nan­cial im­pli­ca­tions of higher out­pa­tient drug costs for pa­tients as health plan de­ductibles, coin­sur­ance and co­pays in­crease and some drugs come to mar­ket with limited or un­cer­tain ben­e­fits for pa­tients.

Top drug ex­pen­di­ture cat­e­gories for hos­pi­tals usu­ally in­clude can­cer drugs, an­tiretro­vi­ral ther­a­pies to treat HIV and AIDs, in­flam­ma­tory con­di­tions such as rheuma­toid arthri­tis and in­tra­venous im­munoglob­u­lin, said Lau­ren Barnes, se­nior vice pres­i­dent with con­sult­ing firm Avalere Health.

But drug costs are ris­ing across the board. Phar­ma­ceu­ti­cal spend­ing by clin­ics grew 4.5% and rose 1.8% at non­govern­ment hos­pi­tals in 2013, ac­cord­ing to a study pub­lished in March in the Amer­i­can Jour­nal of Health-Sys­tem Phar­macy. Spend­ing on im­munoglob­u­lin, a hu­man blood plasma prod­uct, topped $713.8 mil­lion in 2013.

U.S. spend­ing on spe­cialty drugs, is ex­pected to rise by 19% in 2014, ac­cord­ing to Ex­press Scripts. A lit­tle more than half of the 27 new drugs ap­proved by the Food and Drug Ad­min­is­tra­tion in 2013 were spe­cialty drugs. In the past, physi­cians have been will­ing to pre­scribe spe­cialty drugs. But as more doc­tors be­come em­ployed by hos­pi­tals, this can mean they lose some au­ton­omy in choos­ing what drugs they pre­scribe for pa­tients as their hos­pi­tals im­ple­ment stricter rules for get­ting drugs listed on the for­mu­lary. This can put doc­tors at odds with hos­pi­tal ad­min­is­tra­tors.

“If it’s your drug that’s not get­ting ap­proved, it cre­ates ten­sion,” Saltzberg said.

‘Ev­i­dence-based dis­cus­sion’

Some sys­tems such as Chris­tiana Care have set stricter pa­ram­e­ters around what drugs end up on the for­mu­lary, while oth­ers have sought re­bates and pay­ment as­sis­tance from man­u­fac­tur­ers for pa­tients who qual­ify. “In light of health­care re­form, hos­pi­tals have no choice but to select drugs that are ef­fec­tive and have value,” a group of Chris­tiana Care lead­ers wrote in a 2012 study look­ing at its cost-scor­ing sys­tem for pricey new drugs.

“In the past, it was a con­tract­ing de­ci­sion,” Avalere’s Barnes said. “Now it’s more of an ev­i­dence-based dis­cus­sion.”

In 2012, on­col­o­gists at Memo­rial Sloan Ket­ter­ing Can­cer Cen­ter in New York pulled can­cer drug Zal­trap from the hos­pi­tal’s for­mu­lary, ar­gu­ing in a New York Times op-ed that the drug wasn’t worth its monthly treat­ment cost of $11,000. The man­u­fac­turer Sanofi even­tu­ally halved the price of the drug. More re­cently, Gilead Sciences’ So­valdi, which has high cure rates but costs $84,000 for a course of treat­ment, has be­come em­blem­atic of the high drug-cost de­bate, trig­ger­ing crit­i­cism from health in­sur­ers as well as law­mak­ers over the cost of a drug that could be used to treat mil­lions of pa­tients with hep­ati­tis C.

Har­ris Health Sys­tem, a pub­lic hos­pi­tal sys­tem in the Hous­ton area, is us­ing an ad­di­tional ap­proach beyond its for­mu­lary to make sure out­pa­tient drugs are af­ford­able to its in­di­gent and unin­sured pa­tients.

Since 2012, Har­ris has em­ployed 18 full-time drug re­place­ment an­a­lysts, who ap­ply for pa­tient fi­nan­cial as­sis­tance pro­grams es­tab­lished by phar­ma­ceu­ti­cal com­pa­nies on be­half of pa­tients who meet the qual­i­fi­ca­tions. The pro­gram ex­pects to save about $26 mil­lion on drug costs this year, up from the roughly $1.2 mil­lion it for­merly saved on drug re­place­ment costs when it out­sourced that func­tion, said Tam Nguyen, Har­ris Health’s di­rec­tor of phar­macy op­er­a­tions.

Har­ris does not have Gilead Sciences’ hep­ati­tis C drug So­valdi on its for­mu­lary. But it has treated 94 pa­tients with So­valdi af­ter help­ing them ap­ply for as­sis­tance. Gilead pro­vides up to $16,000 for de­ductibles and coin­sur­ance for pa­tients who qual­ify. Most phar­ma­ceu­ti­cal firms of­fer fi­nan­cial as­sis­tance pro­grams that will cover the en­tire or par­tial cost of treat­ment for pa­tients. Drug re­place­ment an­a­lysts also work with can­cer pa­tients.

“We have to make sure that the re­sources we use are for the right pa­tient, are the right treat­ment and the right clin­i­cal out­come,” Nguyen said.

Few hos­pi­tals say they base their for­mu­lary de­ci­sions solely on the price of a drug, no mat­ter how ex­pen­sive it is. Do­ing so can raise the ire of pa­tients and physi­cians. “The com­par­i­son of clin­i­cal ef­fec­tive­ness is al­ways our pri­mary goal,” Nguyen said. “Cost will come as sec­ondary in our de­ci­sion-mak­ing process.”

Har­ris Health spent about $81 mil­lion on drugs in fis­cal 2014, with about 60% of that spend­ing go­ing to­ward out­pa­tient drug costs. It spends about $18 mil­lion each year

The com­mit­tee’s scor­ing sys­tem as­sesses both in­pa­tient drugs that are re­im­bursed as part of a di­ag­no­sis-re­lated group and out­pa­tient drugs.

Teresa Corbo, Chris­tiana Care’s vice pres­i­dent of phar­macy ser­vices

on can­cer drugs alone.

The in­creased align­ment be­tween hos­pi­tals and physi­cians, as well as the broader con­sol­i­da­tion among hos­pi­tals and health sys­tems, has given hos­pi­tal sys­tems more lever­age in seek­ing to curb cost growth for drugs. For one, it has changed the way phar­ma­ceu­ti­cal com­pa­nies mar­ket to health­care providers.

Some drug com­pa­nies have de­vel­oped teams of de­tail­ers that tar­get hos­pi­tal ad­min­is­tra­tors, rather than send­ing sales rep­re­sen­ta­tives to meet only with physi­cians. The drug com­pa­nies of­ten re­fer to in­te­grated de­liv­ery net­works or ac­count­able care or­ga­ni­za­tions as “or­ga­nized cus­tomers,” Barnes said.

An anal­y­sis con­ducted by Capgem­ini Con­sult­ing and Quan­tia and re­leased in Oc­to­ber found that roughly half of 2,200 doc­tors who work in or­ga­nized health sys­tems are limited to pre­scrib­ing drugs that are on the for­mu­lary or re­quire prior au­tho­riza­tion. Those re­stric­tions tend to be more strict in in­pa­tient set­tings, where the hos­pi­tal strives to con­trol costs, the sur­vey par­tic­u­larly found.

Physi­cians aren’t nec­es­sar­ily happy about this trend. In the study on its scor­ing sys­tem for high-cost drugs, Chris­tiana Care said most of its physi­cians—the ma­jor­ity of whom are in­de­pen­dent prac­ti­tion­ers—think as­sess­ing value is im­por­tant but dis­agree about whether the value assess­ment should take place at the ad­min­is­tra­tive level.

“There are some who view FDA ap­proval as ev­i­dence that the med­i­ca­tion has value,” they wrote.

Chris­tiana Care’s Saltzberg said his sys­tem’s for­mu­lary com­mit­tee process for vet­ting drugs hasn’t al­ways been easy, es­pe­cially for the physi­cians who are re­quest­ing cer­tain drugs. “It’s been in­cred­i­bly ef­fec­tive but not with­out po­lit­i­cal costs,” he said.

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