Conceptually, the historic relationship between payers and pharma companies has created an environment in which payers are
largely on the defensive. Although the public maintains a negative perception regarding MCOs' willingness to pay for therapies,
payers have in the past been very likely to cover any reasonable therapeutic regardless of its healthcare value—though patients
might have had to jump through some hoops and pay a higher co-pay. Bad press, physician support, and most importantly patient
advocacy have served to obtain coverage even in the most resistant of circumstances. Expect this to change.
As The Bruckner Group reported in a series of articles appearing in Pharmaceutical Executive over the past four years, payers have asked pharma companies to provide pharmaceoeconomic data that demonstrates products'
healthcare value (See "Biologics Beware," June 2004; "Show Us The Value," September 2003, and "Raising The Bar," November
2002). Though a few pharma marketing and development teams have embraced the outcomes-based access (OBA) paradigm, many manufacturers
have complied minimally while aggressively continuing to pursue traditional marketing tactics. Payers are dismayed at the
continued utilization, for example, of Nexium (esomeprazole) and Clarinex (desloratadine), and the lack of use of generic
Prozac (fluoxetine) for depression and Mevacor (lovastatin) for hyperlipidimia. As BGI had reported, a lack of manufacturer
compliance was likely to create an environment for an extreme crackdown by payers. This crackdown is in its initial phases
of rollout, though it has been in organization phases for years. Unfortunately, as the pendulum swings, some of these policies
appear to be outside reasonable clinical guidelines.
Reject first, ask later. Payers are enacting or plan to enact broad, sweeping changes that switch the burden of proof to companies. They are saying,
"If you want your drug covered, prove that I should pay for it." Citing cherry-picked patients, unrealistic dosing schedules,
and placebo control, companies will increasingly find that the proof must come from head-to-head trials. Unless the results
of a clinical trial are stellar and represent an unparalleled clinical outcome regardless of the above criticisms, the drug
will be in limbo. It will be neither accepted nor formally rejected—instead, the decision to place that drug on a formulary
status will be deferred.
The 2005 BGI Study of Payers uncovered a variety of sweeping rules that are already being locally tested by some of the largest
payers. These include:
- No coverage for off-label utilization, particularly for targeted biologicals, blood products, and branded drugs that had been
covered despite serious questions or doubts about their use, such as Neurontin (gabapentin).
- Reduced coverage for the treatment of chronic diseases where proof of superior outcomes for intensive therapies and prophylaxis
are not evident.
- Recurring demonstrations of a patient's improvement or stabilization to permit the re-approval of a medication.
Building the system. The key to all of these programs is that the prospective cost savings from tightening utilization need to exceed the cost
of developing and implementing the systems and staffing to achieve them. Payers may have been more reluctant in the past to
aggressively expand these efforts, instead seeking a balance of measures including working cooperatively with some obvious
candidates to try to efficiently utilize limited healthcare resources. But with the unabated escalations in healthcare costs,
and with added pressures on the other side from their customers, payers are feeling forced to more aggressively develop and
implement the systems that will make it possible to achieve their utilization efficiency and cost-containment goals.
New targets. Many payers have been improving their data collection, storage, and mining capabilities over the past years. This has expanded
their ability to locate additional targets that might have been otherwise missed, and rapidly roll out new cost-cutting programs.
While in the past payors largely ignored therapies—however high priced—that were used by a relatively small population, they
now see an opportunity for cost-cutting.
From Medical to Pharmacy Benefit
The 2005 study of payers determined that the vast majority of payers are actively moving, or gathering the resources to move,
the administration of biologicals from the medical benefit, which is the cost center for such services as physician and hospital
care, to the pharmacy benefit, where pharmaceuticals are currently covered. Although this has been an issue on the horizon
in previous years, payers now believe that the benefits of this change outweigh the costs, and the time has come to address