Specialty Pharmaceuticals: Market Overview · 4/19/2008  · Asthma Xolair Multiple Sclerosis...

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Debbie Stern, R.Ph. Vice President Rxperts Managed Care Consultants, Inc. Specialty Pharmaceuticals: Market Overview

Transcript of Specialty Pharmaceuticals: Market Overview · 4/19/2008  · Asthma Xolair Multiple Sclerosis...

Page 1: Specialty Pharmaceuticals: Market Overview · 4/19/2008  · Asthma Xolair Multiple Sclerosis Avonex, Betaseron Copaxone, Rebif, Tysabri Anemias ... • No generics available as products

Debbie Stern, R.Ph.Vice President

Rxperts Managed Care Consultants, Inc.

Specialty Pharmaceuticals:Market Overview

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Presentation Overview

• Defining Specialty Pharmacy

• Current and Future Trends in Specialty Pharmacy

• Coverage and Management of Specialty Pharmaceuticals

• Future Challenges

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Defining Specialty Pharmacy

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What Are Specialty Pharmaceuticals?

Specialty Pharmaceuticals

Include

Specialty Pharmaceuticals

Require…

Biopharmaceuticals (bioengineered proteins)

Tailored patient education for safe and cost-effective use

Blood-derived products Patient specific dosing

Complex molecules Monitoring for serious side effects

Select oral, injectable, and infused medications

Administration via injection, infusion or orally

• A category of drugs resulting from advances in drug development research, technology, and design

• Target and treat specific chronic or genetic conditions typically with an unmet need for therapeutic intervention

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Current Biotech Diseases/Therapies and Related Drug Examples

Disease/Therapy Drug Name Disease/Therapy Drug Name

Asthma Xolair Multiple Sclerosis Avonex, BetaseronCopaxone, Rebif, Tysabri

Anemias(Hematopoietics)

Procrit, Epogen, Aranesp, Neupogen

Pulmonary HTN RemodulenFlolanTracleer

Crohn’s Disease Remicade, Humira Psoriasis AmeviveRaptiva

Gaucher’s Disease Cerezyme Oncology RituxanGleevecHerceptinAvastinTarceva

Hemophilia Recombinate,Benefix, other Factor products

Rheumatoid Arthritis

EnbrelHumiraRemicade

Hepatitis C PegasysPeg-Intron

Growth Hormone NutropinGenotropin

Infertility Gonal-F. Follistim RSV Synagis

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High Cost Specialty Therapies:Monthly and Annual Costs

Disease State Average Monthly Drug Cost Per

Patient

Avg. Annual Drug Cost per

PatientHemophilia $20,000++ $240,000++

Pulmonary Hypertension

$3,600 $43,200

Rh. Arthritis $1,400 $16,800

Multiple Sclerosis

$1,600 $19,200

Hepatitis C $1,650 $19,800

Psoriasis $1,400 $16,800

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Specialty Pharmacy Trends

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High cost per patient• Accounts for 15% of

pharmaceutical spending in the US

• Annual growth at 15-20%

• Annual drug cost ranges from $15,000 - $250,000+ per patient

• Manufacturer price increases for existing drugs

• No generics available as products mature

Increasing utilization• Flourishing pipeline

• Multiple indications for existing drugs

• Earlier use of biologics in treatment

• Move from rare diseases to more common chronic diseases

• Episodic vs. chronic treatment

Key Drivers of Specialty Trend

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Specialty Pharmacy Trend Rate Outpaces Traditional Drugs

Specialty vs. Non-Specialty Drug TrendYear to Year % Increase in Drug Cost

16.1%

20.9%

5.9%

26.6%

20.4%

16.9%18.8%

38.7%

17.5%

8.5%

5.4%2.8%

10.2%7.9%

9.4%10.6%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

2003 2004 2005 2006

Year

Tren

d R

ate

(in %

Medco (Specialty) Express Scripts (Specialty) Medco (Non-Specialty) Express Scripts (Non-Specialty)

Sources: Medco Drug Trend Report 2007, Express Scripts 2006

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Pipeline View by Therapy Class

Source: PhRMA 2006 Report: Medicines in Development)

Biotech Drugs in Development

210

50

44

22

22

18

17

15

14

13

10

9

7

6

4

4

0 50 100 150 200 250

CancerInfectious Disease

AutoimmuneAIDS/HIV

CardiovascularOther

NeurologicDiabetes

GastrointestinalRespiratory

BloodGenetic

SkinEye

GrowthTransplant

418 in late stage development

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Biotechnology PipelineNew Molecular Entities and Supplemental Indications

in Phase III Development

Caremark RxPipeline. September 2007 and March 2008

52%47%

40% 38%

48%53%

60% 62%

0%

10%

20%

30%

40%

50%

60%

70%

New MolecularEntitites (9/07)

New MolecularEntitites (3/08)

SupplementalIndications

(9/07)

SupplementalIndications

(3/08)

Traditional

Specialty

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Projected Spend for Specialty Medications: 2005 vs. 2009

Express Scripts Analysis of CMS and IMS data

Does not include infused therapy and chemotherapy

125% increase

32% increase

2009-2011 projected trend = 20% annually

Express Scripts 2007 Drug Trend Report

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Coverage and Management of Specialty Pharmaceuticals

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Impact of Specialty Injectables• High cost biotechnology drugs are changing the managed

care “paradigm”– Traditional drug management strategies are not enough – “Siloed” drug management mentality not applicable

• Specialty drugs have been the fastest growing segment of drug spend

• SpRx represents significant challenges for private and public payers– Cost Management

• Network• Patient Cost Share

– Clinical Management

– Utilization Management

– Benefit Design • Is it Pharmacy or is it Medical?

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Three Types of Specialty Drugs

Self-Administered Drugs

Home Infused Drugs

Office Administered Drugs

RA: Enbrel, Humira, KineretMS: Betaseron, Avonex, Copaxone, RebifGrowth HormonePsoriasis: Enbrel, RaptivaBlood Modifiers: Epogen, Neupogen, AranespCancer: Oral Oncolytics

Hemophilia: VariousGaucher’s Disease: CerezymeFabry’s Disease: FabrazymePAH: Flolan, RemodulenIVIG

RA: Remicade, Orencia, RituxanMS:, Avonex, Growth HormonePsoriasis: AmeviveBlood Modifiers: Epogen, Neupogen, Aranesp, ProcritAsthma: XolairCancer: Infused Oncolytics

Some Crossover Occurs Between Sites of Administration

Rx Benefit Med. Benefit Rx or Med Benefit

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There Are Many Distribution Channels for Specialty Drugs

Specialty Drugs Distribution Channels

Retail RX Mail Order RX Specialty RX MD Office Outpatient Hospital

Home Infusion

Each channel may receive a different reimbursement and be subject to different management practices

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Specialty Pharmacy Providers (SPP)

Owned by PBMs, health plan, drug chains, wholesalers, home infusion companies

Pharma trend to limit distribution of SpRX to select SPPs and restrict

access

Clinical Services

Distribution Reimbursement

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18EMD Serono Injectables DigestTM 4th Edition

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Process Flow for Self-Administered Drugs

SPP

Retail Pharmacy

Health Plan

MDPatient

Patient Goes to Retail RX

SPP Bills Plan

Pharmacy Bills Plan MD send

Referral to SPP

MD Writes RX

Over 50% of health plans allow patients to obtain self administered injectables through retail and SPP

SPP sends RX to

patient

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Process Flow for Office Administered Drugs

Over 60% of health plans that contract with SPPs allow physicians to continue to “buy and bill”

SPP

Wholesaler or

Manufacturer

Health Plan

MD Orders & SPP

Ships to MD

MD

PatientMD Bills

MD Buys

SPP Bills

MD Infuses

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Outbound Pt Call –Enrollment and Education

Outbound Pt Call – Initiate Discussion Following First Dose:Discuss ADRs, Adherence, Response; Schedule Next Refill

Outbound Pt Calls – Discuss ADRs, Adherence, Response;Initiate Discussion and Schedule Next Refill

Outbound Pt Call –Follow up to Therapy,

Assess Outcomes

Patient Starter Packet Monitor Early Virologic Response

1 Week

3 Weeks

7 wee ks

11 Weeks

15 Weeks

19 Weeks

23 Weeks

27 Weeks

31 Weeks

35 Weeks

39 Weeks

43 Weeks

47 Weeks

Assess for Early Responder

0 Weeks

12 Weeks

24 weeks

Specialty Pharmacy Therapy Management of Hepatitis C

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Clinical and Utilization Management

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Payers Want to Ensure Appropriate Utilization

Right Drug

Right Time

Right Patient

Is this the correct dose?

Is this the right time in the regimen?

Does the pt. have enough meds? Too

many?

Should therapy be discontinued?

Have labs been performed at the

right time to measure results?

Is there another medication that

may be more appropriate?

Or may be less expensive yet

equally effective?

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Payers Employ a Variety of Utilization Management Techniques

• Development of clinical guidelines and criteria

• Prior authorization to ensure appropriate use

• Step therapy guidelines

• Promote formulary with preferred products

• Reduce waste and over-use

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Managing Specialty Therapies: Identifying the Patient

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Specialty Guideline Management Condition Specific Case Study – RSV

Source: Caremark Analytics and Outcomes analysis.

62% 55%67% 61% 59%

15%17%

5%3% 3%

23% 28% 28% 36% 38%

0%10%

20%30%

40%50%

60%70%

80%90%

100%

2002-2003 2003-2004 2004-2005 2005-2006 2006-2007

Met Guidelines and Treated Did Not Meet Guidelines and TreatedDid Not Meet Guidelines and Not Treated

N=1,271 N=1,029 N=739 N=961 N=976

791

191

289

566

177

286

497

35

207

584

27

350

578

30

368

Program Financial Results 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007Did not meet AAP Guidelines 23% 28% 28% 36% 38%Number of Doses Avoided 1,300 1,287 941 1,278 1,391Cost Avoidance $ 1.9M $ 1.9M $ 1.5M $2.1M $2.5M

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Benefit Design Issues

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Misaligned Financial Incentives Among Stakeholders

Patient

Specialty Pharmacy

Doctor

I want the highest reimbursement

I want the lowest copay

I want to make a profit on the drug

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Payers are Looking at New Benefit Strategies to Manage Specialty DrugsChanging Benefit Design

• Trend to move from Medical Benefit to RX Benefit

• New Specialty Benefit

• Results in equalizing cost sharing, deductibles, clinical review

Increased Pt. Cost Share

• Creation of 4th copaytier– % coinsurance/higher

flat copay

• Out-of-pocket maximums per RX

• Deductibles

• Annual or lifetime maximum benefit

Payers face an ethical dilemma – how much copay is too much?

Page 30: Specialty Pharmaceuticals: Market Overview · 4/19/2008  · Asthma Xolair Multiple Sclerosis Avonex, Betaseron Copaxone, Rebif, Tysabri Anemias ... • No generics available as products

Looking to the Future

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Payer Shifting Focus on SpecialtyPrevious Expectations• Biologics were indicated for treating

rare diseases only

• Payers implemented few management tactics

• Physicians were given “carte blanche” related to prescribing

• Some therapeutic categories viewed as “off-limits”

– Oncology – HIV/AIDs– Genetic disorders

New Expectations• Biologics will shift from treating rare

disease to more common diseases

• No drug categories are “off-limits” if there is sufficient utilization and concern about their value and appropriate use

• New biologic treatments must result in favorable outcomes – both clinical and economic

• Shift burden of proof of overall value to pharma

• Develop a standardized approach to manage total specialty spend regardless of site or method of administration

• Physicians will be more accountable for their therapy selections and reimbursement will be equalized across channels

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Focus on Outcomes• Uncertainty Related to Outcomes

– Safety, efficacy and cost concerns• 75 new or revised black box warnings in 2007

– Outcomes data not available when a new drug comes to market– Efficacy varies across patient populations and indications– Payers demanding pharmacoeconomic value from new therapies– Many new therapies do not provide quantifiable outcomes – FDA accelerated approvals

• Product approval for life threatening diseases available on the market on the basis of preliminary evidence prior to formal demonstration of patient benefit.

– Pharma may be required to document outcomes via a Pay for Performance (P4P) model.

– P4P’s intent is to improve evidence base for safety, comparative effectiveness and value

• Move focus from EBM to outcome based medicine• Comparative effectiveness of competing agents• Improve value for money paid as well as quality of care

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Global P4P Models: Will This Work in the US?

Type of Model Description Example

Price/Volume Payment is linked to predetermined utilization based on prevalence or sub-groups to limit budget impact and inappropriate use

55 agreements in Australia including anti-TNF and Spiriva.

Other agreements in France and Italy.

Performance or Risk-based

Different reimbursed price depending on patient outcomes

NICE/UK Multiple sclerosis DMDsManufacturers at risk for cost if defined outcomes are not achieved

Velcade (bortezomibe)Manufacturer refunds cost if target outcome not achieved

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Selecting Optimal Therapy

NonResponders

Poor Metaboizers

Poor Responders

ExtendedMetabolizers

High Responders

HyperMetabolizers

No Effect Desired Effect Adverse Effects

40-60% of patients do not benefit from the drugs they are prescribed

Adapted from PWC Personalized Medicine 2005

Page 35: Specialty Pharmaceuticals: Market Overview · 4/19/2008  · Asthma Xolair Multiple Sclerosis Avonex, Betaseron Copaxone, Rebif, Tysabri Anemias ... • No generics available as products

ExamplesDisease Treatment

Disease Drug Mechanism Diagnostic test

Various solid tumors Various Identify resistance to chemotherapy and clinical failure or potential success

Oncotech EDR® Assay

Marker Drug Mechanism Test

Camptosar Predict patient’s safety-related response

UGT1A1 assay

Disease PreventionDisease Genetic Variant Indication Results

Cytochrome P450 metabolism

30 different forms of CP450 coded by a different gene

Variations in genes lead to or ↓in metabolism of drugs

Amplichip® detects variations in 2

Breast Cancer Herceptin® Inhibit HER2 receptor IHC and FISH

CML & Malignant gastrointestinal stromal tumors (GIST)

Gleevec® Inhibits Bcr-Abl protein

Indicates hereditary propensity for cancer

BCR-ABL (CML), C-KIT (GIST)

Genetic test to monitor emergence of Gleevec resistance

HIV/AIDS Various Phenotypic and genotypic resistance testing

Reduce Adverse Drug Reactions

Breast and Ovarian Cancer

BRCA1 and BRCA2 Guide preventive measures

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Public Perception of Specialty Pharmaceuticals

Page 37: Specialty Pharmaceuticals: Market Overview · 4/19/2008  · Asthma Xolair Multiple Sclerosis Avonex, Betaseron Copaxone, Rebif, Tysabri Anemias ... • No generics available as products

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Specialty Drug Costs are Viewed as a “Side Effect”

• Current specialty drug spend is $60 billion

• Expected to reach $99 billion by 2010

• Annual trend rate is 15–20%

Side Effects2

The average cost of a monthly prescription is going up for many drug classes.

Drug Class Cost (2007) Change from 2006

Cancer $1816.38 15.8%

Multiple sclerosis $1647.00 12.1%

Blood-cell deficiency $1724.51 9.0%

Inflammatory conditions $1547.97 4.6%

Growth-hormone deficiency $2569.10 1.8%

Source: Express Scripts (prices are paid by the pharmacy-benefits manager

2. Table reported in the Wall Street Journal, 3/20/2008.

“Payers Aim to Rein in Specialty Drug Spending”Wall Street Journal 3/20/08

Page 38: Specialty Pharmaceuticals: Market Overview · 4/19/2008  · Asthma Xolair Multiple Sclerosis Avonex, Betaseron Copaxone, Rebif, Tysabri Anemias ... • No generics available as products

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Specialty Pharmacies, Pharma and Health Plans Portrayed as “Pushing Prices Higher”

New York Times, 4/14/08

“Co-payments Soar for Drugs with High Prices”

Blames employers and plan sponsors for the high cost of biotech treatments.

New York Times, 4/19/08

“Paid to Control Drug Costs, Yet Pushing

Some Prices Higher”

Blames high cost of biotech drugs on those who dispense and manage biotech products.

Focus on drugs with limited or exclusive distribution.

Page 39: Specialty Pharmaceuticals: Market Overview · 4/19/2008  · Asthma Xolair Multiple Sclerosis Avonex, Betaseron Copaxone, Rebif, Tysabri Anemias ... • No generics available as products

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Issues to Consider…• How private and public payers can continue to offer affordable

benefits to all enrollees with increased use of biologics

• How to equitable adjust cost share for persons who need to take expensive biologics

• How to remove administrative decisions about benefit design and reimbursement when selecting the appropriate drug for the patient

• The lack of a viable biosimilar pathway

• How to monitor therapy adherence and outcomes that show effectiveness of therapy

• How to overcome data management challenges within the legacy medical claims system

Page 40: Specialty Pharmaceuticals: Market Overview · 4/19/2008  · Asthma Xolair Multiple Sclerosis Avonex, Betaseron Copaxone, Rebif, Tysabri Anemias ... • No generics available as products

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Discussion

Page 41: Specialty Pharmaceuticals: Market Overview · 4/19/2008  · Asthma Xolair Multiple Sclerosis Avonex, Betaseron Copaxone, Rebif, Tysabri Anemias ... • No generics available as products

Top specialty drug spend Pharmacy benefit and medical benefit – 2006

Pharmacy Medical

Source: Medco BOB Sample. Pharmacy data, 2006.

5.1%

4.6%

25.1%

15.5%

6.5%

25.2%

18.0%

Multiple sclerosis

Rheumatoidarthritis

Allother

Cancer

Growth hormone

Anemia

Hep C 14.5% 31.3%

16.6%

22.0%15.3%

RheumatoidarthritisAll

other

Cancer

Anemia

Neutropenia

Medco 2007 Drug Trend Report

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Changing Cost and Prevalence in Biotechnology : Shift Toward Larger Target

Populations

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The Promise of Personalized MedicineBetter diagnoses and earlier interventions.

• Detect disease at earlier stage

• Reduce adverse drug reactions

• Shift emphasis from REACTION to PROACTION

More efficient drug development.

• Design targeted therapies based on molecular pathways

• Smaller defined patient population to reduce initial cost and duration of clinical trials

• Reduce time, cost and failure rate of clinical trials

More cost-effective therapies.

• Cost savings realized through proactive and preventive interventions

• More patients seeking care once identified

• Less patients requiring “shotgun” or ineffective therapy

• Select optimal therapy and reduce trial and error prescribing