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Pharmacy – 2016 in review

December 22, 2016

Welcome to our round-table discussion featuring members of our GSC pharmacy team – Sal Cimino, Ned Pojskic, and Leilany Mandlsohn – as well as David Willows, our vice president of Strategic Market Solutions.

David: In 2015 we wrote a lot about the new hepatitis C drugs which brought exploding costs in that class of drugs. What happened with the hepatitis C drugs in 2016?

Sal: I was recently looking at the data for one of our large plan sponsors and noted a significant drop in claims and costs. Much of this was anticipated because of the plan’s demographics. The plan members who were part of the “hepatitis bulge” due to their age, got their treatment and are done. Leila have you kept an eye on the rest of our book?

Leila: Yes! Overall the growth in spend for specialty drugs has decreased from the very challenging 2015. So the spend is still going up, but not as dramatically as it did last year. With fewer plan members starting the hepatitis C drugs, the decrease was largely driven by utilization of those drugs falling slightly. The cost per claimant for hepatitis C drugs is also going down.

Ned: Another point is that across payors, we’re hearing that 70% of the hepatitis C drug costs are now in the public realm, with 30% remaining in the private space.

David: If the utilization and costs are now going down, what’s the future for the hepatitis C drugs?

Leila: I understand that some provinces, which have traditionally paid for the more severe cases of hepatitis C, may open up the criteria for the less severe cases. The idea is to eradicate the disease, period.

In terms of the future for those drugs, in general we’ll see a steady, slow decrease in claims because we’re now going to be treating a different population of patients. So costs should continue to go down, but they will remain as one of the higher priced classes. And any new hepatitis C drugs coming into the market are going to have to be competitively priced and offer an even shorter treatment duration.

David: Okay, if 2015 was the year of hepatitis C, what’s the big story in 2016?

Sal: More of the same in terms of costs… I don’t think this was unanticipated, but the general drug spend has gone up significantly over the last few years. The patent cliff has passed and there are fewer generics coming on the market that will offset the costs of all the new high cost drugs.  

Leila: Over the past five years the average cost per claim for biologic products has gone up by 25 per cent compared to the non-biologic drugs where the average cost per claim has gone down by two per cent… which makes sense. So to your point Sal, there are fewer generics – and fewer non-biologic drugs – coming to market.

Sal: We need to talk about the new biologics for cholesterol.

David: So our approach is to assess adherence to first-line treatment before approving access to the more costly biologics?

Sal: Yes, what we’ve been doing is authorizing claims for the PCSK9 inhibitors [the biologics for cholesterol] when we have proof that the patient did not achieve their cholesterol target despite being adherent to their statin.

Leila: We do this because statins are highly effective drugs, and if the patient is adherent they can often be successfully treated without adding a high-priced biologic.

Sal: Exactly.

David: Are physicians upset that we’re not approving some of those claims after they have prescribed the biologic?

Sal: No. For Repatha specifically, we’ve seen several re-submissions from physicians, mostly because they’re not giving us all the information we need to make an appropriate coverage assessment, so until we get the necessary information to review the claim we will not issue an approval. On the other hand, submissions for Praluent, the newest PCSK9 inhibitor in the market, have been much more streamlined and are completed appropriately, so we’ve seen virtually no re-submissions.

David: This brings us to our specialty drug preferred pharmacy network [PPN] that we launched about 18 months ago. How has it grown and progressed? What’s the feedback?

Sal: I think it has gone quite smoothly in the first year – any questions or concerns that have come up have been handled very well between us and HealthForward [our PPN partner]. New GSC clients are coming on and signing up quickly, so that’s a feather in our cap.

David: So what percentages are we talking about for uptake?

Ned: When you’re talking about our traditional group clients, we have over 90 per cent of our block of business in the PPN. There are very few who have deferred – it’s by far the norm to be in the PPN.

Sal: And there are a few plan sponsors that already had their own PPNs, which they feel are sufficient. These are PPNs for all prescription drugs, not just specialty, so even without the extra services offered through HealthForward, there is already some cost protection built in.

David: We thought we were taking a chance with a “mandatory” PPN… that asking a plan member to change pharmacies would be an issue, but I haven’t heard a lot of negative feedback about the customer experience.

Ned: Yes, it’s smooth, it’s working well. Half of plan members don’t even have to change pharmacies, and those who did change, appear to be satisfied with the new pharmacy and their experience.

David: Any other 2016 topics we should talk about?

Ned: We’re continuing to get our head around the impact of the emerging number of high-cost chronic drugs. Namely, that almost every chronic disease category is going to have a high-cost specialty drug associated with it. And those drugs are just starting to take off. That story will be an interesting one in the future. How will we keep people on the less expensive drugs that still work? Our approach on PCSK9 inhibitors becomes even more important: Is it applicable to other drugs for conditions like asthma or diabetes? Are we going to continue to invoke personal responsibility and not approve the claim when adherence to traditional, lower cost but effective drugs is low? These questions are what we’ll need to continue to investigate and talk to advisors and sponsors about as we head into the new year.