A New Deal with Managed Care - Pharmaceutical Executive


A New Deal with Managed Care
A PE Roundtable

Pharmaceutical Executive

Despite the rare instances in which pharma conducts head-to-head trials, MCOs welcome them with open arms. Dub Sitton, national director of managed care for Sankyo Pharma, points to the company's angiotensin II receptor blocker (ARB) treatment Benicar (olmesartan), which enjoyed significant uptake among managed care providers, despite the numerous competitors in that class. He says that, because Benicar was a late entry into the market, Sankyo demonstrated the product's value by conducting head-to-head studies that showed Benicar had superior efficacy over Merck's ARB market leader Cozaar (losartan) and Pfizer's widely prescribed Norvasc (amlodipine).

But given that most companies are still struggling to conduct effective pharmacoeconomic studies and that many managed care pharmacists must still undergo extensive training to analyze those models, PE editor-in-chief Patrick Clinton asks: "Are pharma companies the most appropriate stakeholder to provide health outcomes data for products? Might it be more effective for payers to analyze their databases to find out which therapies offer patients the most value?"

Kaa says, "Staff model MCOs, like Kaiser Permanente, are particularly good venues in which to conduct those types of analysis. They have claims and experience data, as well as access to other patient data like quality-of-life, productivity, risk assessment, and satisfaction levels. Clinical trial work is traditionally not 'real life' experience and evaluations depicting real life experiences are warranted in healthcare evaluations.

"Others don't have those resources. But even though pharma might be willing to provide MCOs with dollars to do those studies, some MCOs don't want to. It might be because they don't have the infrastructure. Or it might be because there is a struggle between MCOs and pharma and biotech groups about trust and appropriateness of information use."

Art Levin, MD, is medical director of HealthPlus, a Medicaid managed care company in Brooklyn, New York. He believes that "managed care organizations may be a logical place to conduct pharmacoeconomic studies. But we're not set up to do research or scientific investigations at the present time. And if we did them, we might be criticized for being biased.

"It might be that the best people to do those kinds of studies are neither the pharma nor the managed care companies, but someone who cannot be criticized for being biased, like a university."

Steven Lo agrees. He says, "Here's a real simple analogy: An employer that's buying a fleet of cars for its field force isn't going to hire mechanics to take it apart. But they're going to take the word of Consumer Reports, or some other reliable data source. Why should it be any different for systems that are buying healthcare products?"

Although nonbiased parties may be the best way to conduct health outcomes studies, Ceci Zak says it still comes down to the age-old question: "Who is going to end up paying for it? That's the part that we struggle with, because there is no one else right behind pharma companies that will help make pharmacoeconomic studies happen."

In fact, consumers may fund health outcomes studies, because they stand to benefit from having that information at their disposal. John Rother, director of policy and strategy for AARP, says, "There are drugs that represent such marginal improvement that it staggers the imagination to think any informed buyer would pay out money for, let's say, Nexium. On the other hand, there are products like statins that represent dramatic increases in value. How are consumers supposed to evaluate that? On the basis of TV ads? Health outcomes information held within the managed care community will not be as powerful until it gets out into a public realm. So it's inevitable that taxpayers will have an interest in funding these studies in order to give consumers the power of the information to evaluate their options."

Albert Wertheimer, PhD, MBA, director of the Center for Pharmaceutical Health Services Research at Temple University, has conducted studies on the value of prescription drugs on behalf of the National Pharmaceutical Council. He notes, "There is a more fundamental problem of communication because much of what people are asking for is out there. There is a very sophisticated expert group in Texas that does pharmacoeconomic analysis for the Army. The Blue Cross association has a group in Chicago that's getting off the ground-Rx Excellence. NICE has a tremendous database. The VA has done studies. The pharmaceutical industry has produced some. Plus all of the HMOs have done one or two studies.

"There really is a lot. Yet, maybe we're guilty of that 'not invented here' syndrome or we think other people can't do it as well as we can. But much of the data-the guts of it at least-that we're bemoaning isn't there is. It's just that we have to apply, borrow, and take it."

There's always the chance that the call for pharmacoeconomics is a party line. Because, in spite of its ability to simplify reimbursement decisions, payers haven't yet incorporated it in that way.

Michele Pesanello notes, "It's great to say, in an ideal world, that formulary decisions are made based solely on pharmacoeconomic or clinical data. If that were the case, everybody from the pharmaceutical side of the table would cheer because that would eliminate the need for rebates or discounts, and companies could then just plow that money back into clinical instead. It may come down to pharmacoeconomics in the future. Right now, though, pharma companies aren't positioned to do those because they haven't done them in the past, so it will be more of a long-term investment."

Biologics Given the cost, the management of biologics is payers' number one issue in 2003 and beyond. But overcoming the disconnect between pharma's high-priced advances in science and payers' ability to manage those prices-exemplified in headlines such as "Last Hope for Lymphoma, $28,000 a Dose" (Wall Street Journal, June 18, 2003)-is a challenge to all stakeholders.

At the most basic level, health plans are wrestling with how they manage those products by altering benefit design. "Biologics can fall under the pharmacy or the medical benefit, which has implications for how it is billed to the health plan," says Lo. "Pills are always covered on the pharmacy benefit side. But we're seeing a trend where managed care organizations are shifting self-administered biologics to the pharmacy benefit side-while those biologics that are administered in physicians' offices are billed under the medical benefits-which gives health plans opportunities to try to manage them by putting together a biologics/injectables formulary."

The challenge to industry is that each payer deals with advanced therapies in a different way. "Orals are simple," says Zak. "The review process is consistent and when they put pills on formulary, it is fairly transparent throughout the industry. But injectables are continually changing-how payers review them, put them on formulary, and what that status is-and they are starting to look at how to manage them as a whole."

However, benefit design philosophies and strategies, such as the emergence of fourth and fifth tiers on formulary and co-insurance schemes, mean that MCOs are jockeying into position to pass those costs onto patients. After all, no matter what benefits look like, it is unlikely that payers can sustain a $5 patient co-pay for a $25,000 drug. Therefore, pharma companies must pay close attention to how MCOs manage relevant therapeutic classes so they can include their value proposition as well as reimbursement information in their professional marketing campaigns.


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