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Donna Paine, PharmD, the clinical pharmacy specialist for Blue Cross Blue Shield of Rhode Island, and Lynn Nishida, RPh, director of clinical pharmacy services at RegenceRx, in Portland, Ore., work on opposite sides of the country. Despite the wide geographic divide, they share a common challenge: Redesigning benefits to include all therapeutics in the dawning age of biologics.
Each of their organizations had become accomplished at pharmacy benefit management. An influx of generics helped to control costs, while formulary design work on copayments and drug management tools, like step therapy, helped to weed out waste. But even as the pharmacy benefit trend improved, the therapeutics covered under their plans’ medical benefits had little oversight. With more injectables being administered in the physician’s office or in a clinic, costs were skyrocketing, and members were learning that a switch to a more expensive drug could sometimes cost them less in out-of-pocket payments.
“They’re not all biologics, though, I would say, the majority are,” says Paine, about the specialty drugs flying under the plan’s radar. And these new therapies often come with a steep price tag.
“We’ve seen certain therapies come to market that can cost $10,000 over a two- or three-month span,” notes Nishida.
So Paine and Nishida’s drug expert teams went to work, each in their own way, carefully breaking down the barriers that had sheltered the therapies handled under the medical benefit. And what they learned along the way could be helpful for pharmaceutical benefit managers who are following the same path.
A central problem with the drugs offered under the medical benefit was that plan members could often obtain them for far less money than they paid for drugs provided under their pharmacy benefit. Inevitably, this pushed some members to game the system.
“If your benefit designs are not aligned, you end up creating incentives — or disincentives — for prescribers and members [who select] medications not on the basis of efficacy or safety but because the benefit allows better coverage,” says Nishida, whose company manages pharmaceuticals for five health plans in the Pacific Northwest.
Nishida offers this example: If you took rheumatoid arthritis drugs that were covered under the traditional pharmacy benefit, you probably would be on the hook for 20 percent of the cost of the drug. On the medical benefit side, drugs that can be given intravenously for RA may have the same type of efficacy, but because there are added costs of an office visit, an infusion charge, and clinic stays, treatment costs more. But if a member’s out-of-pocket maximum for the medical benefit is already met, the plan pays the whole bill.
“That’s an incentive to say, ‘Why don’t you just come into the clinic and have it infused?” says Nishida. “You don’t have to pay anything out of pocket. And that drug can cost a lot.”
Traditional utilization management, using techniques like prior authorization, just isn’t enough any more, says
“If your benefit designs are not aligned, you end up creating incentives — or disincentives — for prescribers and members [who select] medications not on the basis of efficacy or safety, but because the benefit allows better coverage.”— Lynn Nishida, RPh, Regence Rx
Paine. “The next step was to take a broader look.” Once Paine and her colleagues did, the Blue Cross plan created a new benefit category to cover all specialty drugs.
“If a drug is covered under the specialty benefit, regardless of whether it is self-administered or administered by a healthcare provider, the drug is provided by one of our preferred specialty vendors,” says Paine.
“The specialty vendor dispenses the medication, and when it needs a provider to administer the drug, it’s shipped to the provider. The specialty vendor collects the drug co-payment, but the physician’s office is still responsible for billing for administering the drug,” adds Paine. “I think that aspect has been helpful for doctors — they’re disassociated from collecting copayments and can focus on providing the care.
“There may be some utilization review to make sure the appropriate patient is selected, thereby minimizing off-label use, where it may not have been studied for those conditions. Some therapies have certain criteria that patients should satisfy to make sure those drugs have the most potential for success.”
Paine offers growth hormone as an example. “Growth hormones have gained attention for sports enhancements, which they are not approved for. We want to make sure they’re used for conditions caused by growth hormone deficiency.
There are a number of diseases that stand out among specialty drugs. “RA is the highest-volume specialty drug,” says Paine. She ticks off others: Psoriasis and multiple sclerosis, as well as growth hormone, osteoporosis, and fertility, which required a carve-out specialty vendor, Village Fertility Pharmacy.
“Our fertility specialty pharmacy is able to dispense in very small quantities, even on a daily basis,” says Paine. “Physicians will sometimes do daily medication adjustments and may add a drug or back off on drugs. Getting a vendor to monitor patients closely is good waste management. We don’t have to dispense for a month. Working on a daily basis will get them enough to make it through a couple of days for more blood work.”
Specialty drugs also are typically tied to the plan’s highest copayment. “We promote a $75 copayment,” says Paine. “Employers have the option to make it lower or higher, but most have gone with $75.”
Paine and her colleagues try to steer sponsors away from punishing members with out-of-pocket expenses that sting too much.
“We don’t encourage that,” she says. “Then you get into the affordability issue. If it’s something someone takes for a chronic illness, the cost can become burdensome.”
For RegenceRx, the disconnect between the pharmacy benefit and the medical benefit was bridged by a new pharmacy and therapeutics (P&T) committee strategy. Rather than focusing their efforts on drugs by class, RegenceRx may conduct a review of medications by medical condition, allowing for medications across different classes and regardless of benefit coverage to be compared.
“P&T committees do not necessarily review drugs under the medical benefit,” says Nishida. “Typically, they just review those medications covered under the pharmacy benefit. So now, we’re expanding the comparators that we want to study — what drugs are the best — instead of just looking at those covered under the pharmacy benefit.
“We’re finding that for certain cancer conditions, other options across the benefit continuum should be considered,” adds Nishida. “You need to expand comparators to other drugs that work differently, get a broader perspective, and not just look at the chemical class. We have an oncology P&T subcommittee, which allows us to gain the necessary perspectives from practicing oncologists in the different areas we serve. They give us feedback on medications under review, coverage criteria, and policies. We gather their comments and take them back to the P&T committee.”
Physicians who prescribe specialty drugs for our members are directed to our network pharmacies that can provide these medications at a lower discounted cost, says Nishida.
“The challenge in billing medical drug claims is that it isn’t real time,” says Nishida. “There may be a lag time between billing and submitting the claim by the physician’s office. Therefore, utilization and claims payments may take a while before you see them reflected in your claims data.”
Utilization management also has to be flexible and routinely monitored so that a health plan knows when to apply strategies like prior authorization, and when to stop using them when they’re no longer needed.
Where you have a prior authorization plan in place, “if you start approving more than 90 percent of the time, health plans need to start weighing the pros and cons of continuing with [those] efforts,” says Nishida. “Or you can focus on new areas.”
Blue Cross Blue Shield of Rhode Island started offering its plan in April 2008.
“Our decision was to roll it out as employer groups renewed their healthcare coverage with us,” recalls Paine. “It took a year before we had pretty much anyone who was going to have the benefit on board. That process had its drawbacks. Initially it was a challenge for physicians to know who needs to use the specialty vendor and who doesn’t. But now, because so many people are in it, they don’t have to think about it.
“Our goal was to try and bend the trend,” adds Paine. “Not necessarily to reduce cost, but to see if we could mitigate the increase.”
Looking at the cost trajectory for the first full year of the program, from April 2008 to April 2009, Paine says the maiden voyage worked.
“For the folks with the specialty program, the cost for those drugs increased only one percent overall, while the folks who didn’t have the program saw their costs increase by 16 percent. We’ll re-run the analysis after two years to see if the same numbers can be replicated or improved on. But if we can have even a several point difference in the percentage increase in costs, it will be worthwhile.”