The Lynx Group

Employers’ Challenge: Cut Healthcare Costs Without Limiting Employees’ Benefits

November 2012, Vol 3, No 8

Houston, TX—Employers’ health plan managers must “balance members’ access to new treatments with the fiscal responsibility of managing the healthcare financial resources wisely,” said Bridget Eber, PharmD, Senior Consultant and Clinical Lead of Rx Group Purchasing, Towers Watson, at the 2012 Second Annual Association for Value-Based Cancer Care Conference. Towers Watson’s clients include 175 employers with self-funded benefits programs totaling $3 billion in annual drug spending.

“That means not wasting resources on unnecessary, unproven, and costly new treatments, while at the same time avoiding barriers for effective and potentially life-saving treatments,” said Dr Eber.

In the past, employers and health plans hesitated to manage oncology costs, because of political sensitivities around the issues. A good example is the use of high-dose chemotherapy, followed by autologous bone marrow transplant, which in the early 1990s was considered a promising therapy for breast cancer. Although the treatment was not proved effective, the legal and political climate at the time resulted in almost universal coverage of that approach by health plans. By the time published studies showed that this therapy was ineffective, more than 30,000 women had received bone marrow transplants, which shortened the lives and worsened the quality of life of many women.

“As a result of this compassionate coverage policy, the healthcare system incurred over $1.5 billion in costs,” Dr Eber noted. “This was the worst of all scenarios, and is an example of how the obligation to make benefits available can generate some unwanted consequences.”

Drug Utilization and Costs

the $3 billion in total annual drug spending within Dr Eber’s clients’ health plans, approximately $70 million goes toward medications managed within the specialty pharmacy.

Specialty pharmacy drugs represent less than 0.5% of all drug utilization in these plans, but these medications are associated with 19% of all covered charges.

Cancer-related drugs—the third highest driver of specialty pharmacy utilization (after autoimmune diseases and multiple sclerosis)—account for less than 0.05% of drug utilization, but are responsible for approximately 2.5% of covered charges within specialty pharmacy. Although these are relatively low utilization rates, specialty drugs are associated with exceptionally high costs, according to Dr Eber.

Cancer Drugs

In each clinical area, a few medications drive most of the utilization and costs. In oncology, 50% of drug utilization and costs are for imatinib (Gleevec), leuprolide acetate for depot suspension (Lupron Depot), lenalidomide (Revlimid), and capecitabine (Xeloda). Overall, 10 cancer drugs represent approximately 80% of all drug utilization and 75% of all drug costs.

“Employers know the main drivers of utilization among their members, so when employers are looking for a core strategy or the most essential areas to focus upon, we try to help them recognize the low-hanging fruit,” said Dr Eber.

Critical Need for Data

Clinical utilization data have been difficult to come by, creating a handicap for benefit consultants who design strategies for employers. However, data are increasingly becoming available, with better documentation of prior authorization, step therapy, and quantity limits. “We are getting some sense of activity, approval and denial rates, appeal rates, and reversal rates,” stated Dr Eber.

These data show that much of the cost-saving stems from using therapy only as indicated and denying coverage when treatment efficacy has not been established. The data also indicate that appeals often lead to reversals, probably because physicians provide more information or have direct contact with a representative.

Dr Eber noted that of a total of 120 appeals from providers in the Rx Collaborative program (an employer coalition for purchasing pharmacy benefit manager [PBM] services), 107 appeals were reversed, based on a recent analysis.

Employers Depend on Prior Authorization to Control Utilization

In contrast with the historical paradigm of coverage decisions of not interfering with a physician’s choice, the current paradigm of many plans is to restrict access to treatments that are not proved, largely with the use of prior authorization.

Bevacizumab (Avastin) coverage denial several years ago is an example of this newer strategy, which prevented spending on unnecessary or unproved therapy. Based on safety and efficacy in several tumor sites, clinicians believed that bevacizumab could improve outcomes in patients with pancreatic cancer when added to a standard regimen, and wanted to use this approach.

However, the drug’s high cost forced most PBMs to be rigorous with their prior authorization processes and to typically deny coverage for that approach, for lack of evidence for benefit. Then, in 2008, an efficacy study failed to show a survival advantage for bevacizumab in patients with pancreatic cancer.

“Approximately 40,000 new cases of pancreatic cancer occur each year, and if doctors had routinely added Avastin to standard regimens based solely on theories, the additional cost would have been $1 billion to $2 billion,” Dr Eber emphasized. Employers, however, recognize that evidence and strong rationale need to support prior authorization and coverage denials, she noted.

Where Should Employers Begin? Specialty Drug Coverage Checklist
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To ensure that employers are striking the right balance between advocating for their members and being fiscally responsible, she offers a checklist of issues for employers to consider before embarking on a specialty drug coverage program (Table). This list outlines the questions that are important to consider when looking for a benefit design for specialty drugs.

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