Will Specialty Oncology Products Follow the Sovaldi Way?

The approval of Sovaldi in 2014 to treat hepatitis C revolutionized the disease treatment landscape. Following the subsequent cost debates, and widespread criticism of the 12-week, $84,000 Sovaldi regimen, Medicaid and some other health plans took a more restrictive approach, limiting access to the drug to patients with more advanced disease.¹ With the launch of Gilead’s second-generation drug Harvoni, and then Abbvie’s Viekira Pak, formulary wars followed, with the pharmacy benefit manager (PBM) Express Scripts giving precedence to Viekira Pak over Sovaldi.²

Some of the new oral oncology drugs many of which are molecularly targeted precision medicine treatments—also fall under the heading of specialty pharmaceuticals and are quite expensive. To discuss the challenges associated with managing and paying for some of these agents, The American Journal of Managed Care invited a group of healthcare experts to participate in the Oncology Stakeholders Summit, Spring 2015 Peer Exchange. Bruce Feinberg, DO, vice president and chief medical officer of Cardinal Health Specialty Solutions, moderated the panel that consisted of Scott Gottlieb, MD, resident fellow at the American Enterprise Institute; Brian Kiss, MD, vice president of healthcare transformation at Blue Cross Blue Shield of Florida; Michael Kolodziej, MD, national medical director for oncology strategy at Aetna; and Ted Okon, MBA, executive director of Community Oncology Alliance (COA).

While precision medicine has tremendous potential and expands patient options, the growth in the field of oral therapeutics will significantly affect payers, said Feinberg, because of the arbitrary separation that exists between pharmacy benefit and medical benefit. Feinberg explained that oral therapeutics will have a huge impact on physician clinics where chemotherapeutic infusions were traditionally administered, because not all clinics have the ability to dispense these medications through an onsite pharmacy, and in many cases state laws prohibit it. He also questioned whether oral treatments will be effective in maintaining patient-centeredness.

Patients often mistake oral therapy for a cheaper alternative to chemotherapy, said Okon. He agreed with Feinberg that with oral medications accounting for 25% to 35% of the oncology pipeline, we have a new situation to which everyone must adapt. Okon went on to explain the real-world problems with oral therapeutics, especially concerning treatment adherence. While the provider retains control with infusion treatments, with oral drugs, the onus lies with the patient. “We’ve done a lot of research at COA on this, and basically, it’s actually tied to cost,” he said. According to Okon, studies have shown that irrespective of cost, 10% of patients don’t fill even the first prescription, which complicates clinical and payer decisions if the treatment fails. Specialty pharmacies have picked up on managing this uncertain aspect of oral oncolytics, Okon thinks, which further releases the control clinical practice has traditionally had over treatment. “And we have not even touched upon the reimbursement issues or the structural issues that are influenced within the community practice.”

The Payer Strategy

Feinberg turned to the payers in the room, asking each to explain the strategy for medication therapy management, adherence, compliance, and persistence, and how these expensive medications impact the overall payer budget.

Kiss said that payers have found a way out: negotiating price deals with vendors. But these channels may not be accessible to a clinical oncologist, he said. “So you have a drug that’s $1000, which may be the patient’s out-of-pocket cost. They take the prescription to their Walgreens. And you know Walgreens can get the drug in 48 hours and still do it, but [now] instead of being $1000, it may be $1400.” These variables have resulted in an increasing shift of cost burden to the patient, according to Kiss. Another complication is that patients have the option of receiving these oral oncology drugs by mail order; if they cannot tolerate the side effects of the drug, they might stop taking them in a few days, “Which can result in huge wastage because now they have the rest of the month’s supply in their medicine cabinet.” Both Feinberg and Kiss noted that this problem is not confined to oncology; already, we are seeing a spillover into rheumatology and other therapeutic areas where novel oral therapeutics are being developed.

Kolodziej had a slightly different perspective to offer. The specialty pharmacy infrastructure created by PBMs is adept at handling the complicated procedure of prior authorization, diverse benefit designs, coinsurance, co-payments, and so on, he said. He explained that while a tiered system increases the efficacy of handling high-volume drugs and helps with cost negotiations, “Specialty medications don’t really fit those rules. Fracturing the tight association between specialty pharmacies and the PBMs and the relationships that payers have with PBMs, has potential consequences and it’s not something that will be done,” Kolodziej explained.

Gottlieb seemed to disagree with this argument presented by Kolodziej and asked why payers cannot independently contract for specialty drugs with the vendor. While Kolodziej conceded that this is a possibility, he warned of a huge pushback from the PBMs.

When asked to prescribe a solution, Kolodziej said that defining the problem at hand is extremely important. “Are we trying to fix prior authorization, are we trying to fix co-payment, or are we trying to fix adherence?” He would prefer to see a practice implement procedural changes to improve patient adherence, rather than reengineer the existing system: “The real impediments to dispensing these drugs and getting a patient to adhere are related to other defects in the system.”

Okon agreed, adding that at a recent COA board meeting, standards were proposed for community oncology practices that operate retail pharmacies in states where it’s permitted. COA, he said, announced the formation of the Community Oncology Pharmacy Association (COPA).³ Among other things, COPA’s advisory board has issued the following agenda:

• Developing national quality measures for practice-based dispensing and retail pharmacies in conjunction with accreditation recognition.
• Conducting and publishing an independent analysis documenting the quality, compliance, and low costs of patients being treated in dispensing and retail pharmacies within integrated community oncology practices versus disconnected specialty pharmacy providers.
• Establishing a closed listserv enabling information sharing among COPA members on best practices.
• Creating a website with resources available to practices that have a dispensing or retail pharmacy as well as those looking for resources to assist in establishing a pharmacy.⁴

^​Kolodziej said that while split-fills can partially address the likely problem of drug wastage, an enhanced care model, with an intervention offered at the physician’s office, would be an ideal route to follow. He went on to cite a study conducted in patients with chronic myelogenous leukemia who were taking tyrosine kinase inhibitors. The study found that increasing the patient’s responsibility for self-care increased noncompliance from 12% to 17%. For Kolodziej, the baseline value of nonadherence was intriguing. “Why were 12% of the patients not taking a drug that can cure and which has few side effects?” He believes there are several nuances to the adherence problem, and site of care cannot address all of them. Okon added that tiered formularies with a high co-payment can also influence adherence.

Do Oncologists Influence Cost?

Kiss introduced the subject of the buy-and-bill practice, in which clinics purchase and stock their own medications and then charge the health plans, including a markup. In his opinion, payment reform should emphasize changing how community oncologists are compensated. “They should be paid for their cognitive and technical skills and not have to depend on drug profits, even if they are the pharmacy.”

Kolodziej defended buy-and-bill, pointing out that it’s a system that evolved as care migrated from the hospital to the community setting. But the community practices could not translate the structural requirements needed to deliver this care, and the buy-and-bill practice is a product of this adaptation. He said that while margins are necessary for supporting the infrastructural needs of a community practice, he believes—and studies have shown—that “Doctors do not generally make therapeutic decisions based on margin. I would like a system that could transition from that model that is perceived to be conflicted, to a model that is more rationally based on performance, outcome, services; but the math is very, very difficult.”

Kiss added that while the system wasn’t really being abused, it called for reform while being fair with compensating oncologists. “Do we allow [oncologists] to share in this part of the drug [cost] or is this an opportunity to migrate the payment system? And I think that’s the only point.” Gottlieb thinks that the perception within CMS that doctors are conflicted has resulted in additional government regulation on decision making, with the implementation of more Part B rules around the provision of oncology products. “That’s unfortunate, and it’s another thing to think about as we contemplate a different system,” he said.

Okon argued that if drug incentives were a profitable option, we wouldn’t see as many cancer clinics shutting down or migrating over to health systems. Citing studies conducted by Avalere and the Milliman Group, he said, “We have more and more data that present a very interesting picture about what physicians do or don’t do or think about in terms of the incentive and where it really exists, which is on the hospital side.”

Easing Costs in the Oncology Market

Feinberg then transitioned the discussion to specifically address the cost of these specialty medications. With competition, rebates, and payer relations, a pricing shift was observed with Sovaldi; would this be reflected in oncology? “Who would take the lead in this shifting landscape, if it does happen: payers or PBMs?”

Gottlieb summarized the case of the hepatitis C regimens, saying that competition drew down the prices. His suggestion is to allow second-in-class drugs to enter the market as efficiently as the first-in-class, especially with respect to regulatory procedures.

The panelists agreed that the sheer number of patients—a majority of whom are baby boomers—was the primary reason for price concern with the hepatitis C medications, in addition to the high price. Gottlieb noted that while newer drugs in the pipeline may not necessarily treat a large number of patients, many of them—especially gene therapy—based approaches—are very expensive. “So I think that probably requires us to have a discussion about different ways to finance these things and to potentially amortize these costs.”

Kolodziej believes that competition will definitely drive down the cost of the novel immuno-oncology agents, and that if all the PD-1 and PD-L1 agents are treated as a single drug class, the market could then regulate the price of these drugs.

Okon and Gottlieb agreed that a free market approach without price controls is called for to avoid what happened with Sovaldi. Gottlieb suggested that drug manufacturers adopt competitive models and options provided by PBMs.

Kiss, however, highlighted an extremely important point: that drugs account for only 20% to 25% of fixed oncology healthcare spending. He said it’s important to understand how this 20% to 25% of drug cost influences the remaining 75% of healthcare cost.

So whose opinion matters the most with cost, and how early should these stakeholder discussions be initiated?

“I think [drug manufacturers] are making more of a concerted effort to engage the payers much earlier in discussions around their pipeline and what information the payers are going to find meaningful to make coverage decisions,” said Gottlieb. But in his opinion, drug developers should also be in conversation with consolidated delivery systems that take capitated risks—in the future, “They are going to become much more active in steering these decisions.”References

1. Ornstein C. New hepatitis C drugs are costing Medicare billions. Washington Post website. http://www.washingtonpost.com/national/health-science/medicare-spent-45-billion-on-new-hepatitis-c-drugs-last-year-data-shows/2015/03/29/66952dde-d32a-11e4-a62f-ee745911a4ff_story.html. Published March 29, 2015. Accessed June 6, 2015.

2. Pollack A. AbbVie deal heralds changed landscape for hepatitis drugs. New York Times website. http://www.nytimes.com/2014/12/22/business/pharmacy-deal-heralds-changed-landscape-for-hepatitis-drugs.html?_r=0. Published December 22, 2014. Accessed June 6, 2015.

3. COA board approves launch of national pharmacy organization for community oncology practices. Community Oncology Alliance website. http://www.communityoncology.org/site/blog/detail/2015/03/17/coa-board-approves-launch-of-national-pharmacy-organization-for-community-oncology-practices.html. Published March 17, 2015. Accessed June 17, 2015.

4. Community Oncology Alliance Pharmacy Associations (COPA) names advisory board [press release]. http://coaadvocacy.org/2015/05/community-oncology-alliance-pharmacy-associations-copa-names-advisory-board/. Washington DC: Community Oncology Alliance; May 19, 2015.

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