Pharma Industry’s Focus on High-Cost Drugs May Provoke More Access Barriers
Many highly specialized, expensive drugs are in protected categories that must be covered. With few other options, payers are digging in with more prior authorization and other utilization management tactics. Precision’s Dominic Galante weighs in on the increasingly difficult path to securing prior payer approval for high cost drugs.
Pharma Industry’s Focus on High-Cost Drugs May Provoke More Access Barriers
As pharmaceutical manufacturers continue to target high-cost drugs in the areas of oncology and rare diseases, a particular drug’s formulary status is becoming somewhat less significant while the provider and patient pathway to accessing the drug is rising in importance, industry insiders say.
Since so many expensive drugs are in protected categories that must be covered, payers are digging in with more prior authorization (PA) and other utilization management (UM) tactics. This leads to a perception that provider burdens are increasing as new products come online, say experts.
“With recent trends in the market shifting to the development of highly specialized, high-cost medications, utilization management tools such as prior authorization and formularies with preferred options within drug classes have become more commonplace,” says Mesfin Tegenu, R.Ph., president of PerformRx LLC.
Dana Macher, who leads Avalere’s commercialization and regulatory practice, puts it more bluntly: “I would say that [PA] is getting more capricious,” Macher tells AIS Health. “I do not see this changing — it’s going to remain that way because for high-cost drugs, [payers] don’t have a lot of tools in their toolbox. So they use what they can, and that’s really to shove the burden back onto the physician.”
“If you think of any of the protected classes, they all fall into the same bucket where they have to be covered,” Macher says. “So there’s really only so much that a payer can do because they have to cover it. They can’t not put it on formulary. So it has to be covered” either on the medical side or the pharmacy side, she says. “So what can they do? Honestly, there’s not really a lot they can do except get ornery. And that’s what they do. The higher the cost, the more cumbersome they will try to make it.”
Typically, this involves hurdles physicians must clear to obtain the product for their patients — mainly PA and step therapy requirements, says Macher. Of course, in many cases — particularly in rare diseases and oncology — there isn’t much competition, so PA is the only tool a plan has to limit use of a product and to make certain use is appropriate, she says.
As with so many issues, this has been made even more complicated by the COVID-19 pandemic, Tegenu tells AIS Health. “COVID-19 likely has made access to medications which require a patient to visit a provider — such as for drugs that require infusion in a clinic or hospital setting — more challenging,” he says. “These drugs tend to be more specialty medications and higher cost. Patients may defer or delay care due to fear of virus exposure in these settings or due to lockdowns or facilities closing from lost revenue as a result of COVID-19.” It’s possible that the increased utilization of telehealth services may mitigate this to some degree, Tegenu adds.
Formulary Access Depends on Data
The path to securing payer approval for product access, coverage and reimbursement has evolved over time as payers have required more evidence on efficacy and value before agreeing to cover a drug at all, says Dominic Galante, M.D., chief medical officer of the access experience team at PRECISIONvalue. It’s also critical for the manufacturers of new products to differentiate those products from competitors, he tells AIS Health.
“For example, in therapeutic areas that are considered to be highly commoditized and where low-cost generic alternatives or biosimilars exist, the evidence thresholds related to a product’s efficacy, safety, patient outcomes and cost have increased significantly,” he says.
These therapeutic areas include lipid-lowering therapies, antihypertensives, steroids, antibiotics and therapies for autoimmune disorders, he says. “That being said, there are certain therapeutic areas, such as oncology and rare or orphan disease states, where those thresholds are expected to remain low,” says Galante. “As a matter of fact, there are many products in the oncology therapeutic area that are coming to market sooner — via the FDA accelerated review and approval process — and achieving coverage positions with payers even in the absence of longer-term patient outcomes data and relying on intermediary efficacy metrics such as objective response rates (ORR), duration of response (DoR), progression free response (PFS) and limited efficacy data.”
Generally, securing payer approval is more complex than before, even if it is relatively linear in nature, he says. Payers utilize multiple internal and external drug and product assessment resources and tools to help them inform access and coverage policies, particularly various sources such as the Institute for Clinical and Economic Review Value Assessment Framework, he says, although there will be times a payer doesn’t follow those standard processes and decides not to cover a product.
Situation Not Expected to Change Soon
None of this is likely to improve anytime soon for drugmakers, states Galante. “Manufacturers should expect to encounter greater drug access challenges in the future, given the increasing overall costs of therapies that payers are burdened with managing as part of their fiduciary responsibility to members and employers,” he says. “These barriers will vary, but mostly will be driven by a greater level of evidence-generation requirements — clinical and economic — and in their absences, may lead to noncoverage, exclusions, restricted access, prior authorizations and other significant utilization management policies.”
For example, “certain therapeutic areas of great unmet need or disease burden,” including oncology, rare/orphan diseases, and certain chronic disease states, such as diabetes, asthma, chronic obstructive pulmonary disease and congestive heart failure, may see a more hands-off approach for most payers, he says, “while others may challenge those established norms.”
Patients Gain Access Through UM, PA
There’s always some sort of a UM pathway, protocol or guideline that patients and providers must thread in order to access very expensive medications, says F. Randy Vogenberg, Ph.D., principal at the Institute for Integrated Healthcare. “These would probably be drugs in the third or fourth tier that they’d have extra questions about because of the high cost,” he says.
In many ways, this process has become progressively more difficult for providers, Vogenberg says, because plans and PBMs increasingly are using less-knowledgeable staff members to perform reviews as a way to save money on staff. “There are pieces [of the review] that are electronic that are relatively easy to do and other pieces that require you to fax information or to go through a telephone review,” he says. “And usually it’s with somebody who’s not a clinician. This is really where the pain points are. You used to have somebody who had some idea what you’re talking about from a clinical perspective. Now, you basically have somebody who’s reading through a script.”
If the provider doesn’t say quite the right thing or says the right thing in the wrong way, that provider might get a different answer than if he or she were speaking with a clinician, Vogenberg says, “so you end up with inconsistencies, which drives everybody crazy.” That includes the patient, who often doesn’t understand why a product that had previously been approved no longer is permitted, he says. “For the payer, this becomes a different problem if the patient is part of an employer-sponsored plan. So now you’ve got the employer or the insurance company getting this irate phone call from the patient.”
However, PBMs defend these programs as necessary. “These protocols are developed based on information from resources such as the FDA-approved package insert, data from clinical trials and clinical best practices,” Tegenu says. “Complexity of medication approval criteria can vary from drug to drug and sometimes may require — but not be limited to — a trial of other agents, a prescription by a specialist and a specific diagnosis.”
Payers rely on clinical information set forth in a request for approval, Tegenu says, and “in the case of highly specialized, high-cost medications, even preferred agents may still require prior authorization to maximize patient quality of care.”
Tegenu says he doesn’t necessarily consider UM tactics to represent “barriers.” Instead, he explains, “from a payer and patient care point of view, all utilization management activities are done to enhance patient care while utilizing resources appropriately. We also believe that it is to the benefit of the entire health care system to design a mechanism that encourages investment in innovation while effectively maximizing its value.”
UM protocol development takes into account a variety of factors, including alternative therapies, clinical guidelines, clinical efficacy and cost, Tegenu adds. “All of these factors vary from class to class. For rare diseases, products released may be the only option available to members, and in those cases the payers rely on members meeting the indication of the drug and not trial of other preferred alternatives.”
Options Exist to Cut Payers’ Red Tape
Macher makes the point that PA is expensive for payers, so it’s only in their best interests to make the requirements extensive if there’s savings to be had from doing so. “A lot of times, they will just have the physician attest to the condition — they check a box and say that this person has, for example, metastatic non-small cell lung cancer — and it goes through and gets approved.”
As products rise in price, “then they start trying to throw up more roadblocks,” Macher says. “It’s probably when you start getting into therapies for hundreds of thousands of dollars — their eyebrows start raising, and that’s when they say, ‘OK, I’m not going to do an attestation. I’m going to require that you send in the medical record.” Payers also are likely to ask the physician for lab values that have been shown in clinical trials to correlate with effectiveness of the drug, she says.
“The latest thing is, they will authorize it for X period of time,” Macher says. “And then you have to have a reauthorization. That reauthorization could be because in a clinical trial, they had scans at period X, Y and Z. And so the payer wants to see that the patient is actually responding, and you need to show them that.” This, of course, is far more work for the physician, she adds.
Pharma Can Provide Support for MDs
To ease burdens on physicians, pharma manufacturers are deploying extensive end-to-end patient-access programs, Macher says. Manufacturers have worked hard to develop and enhance these tools, which can help physicians cut through payers’ red tape, particularly for new, costly medications. The best programs include portals to help providers track reimbursement and submission of reviews, she maintains. They also can assist with the appeals process, providing templates for appeal letters to payers.
“Manufacturers are actually providing a good bit of support around helping physicians lessen this burden, making sure they have the right clinical information, the justification for benefit verification,” says Macher. “They do a really nice job. Especially if you have a high-cost product, it’s imperative that you have a program that helps reduce that burden.”
On the patient side, drugmakers are offering copay programs for commercially insured patients to help improve access, plus foundation-based charity programs for patients who qualify, she says.
Manufacturers also can go directly to payers with evidence that a high-price drug lowers medical costs elsewhere in the system, states Macher. In particular, this may help in therapeutic categories where a manufacturer has a higher-cost product that’s competing with multiple other products that offer rebates, she says: “There are ways to help payers understand from an economic standpoint that you are actually providing some cost offsets, and there may be some economic value for them in this if you’re helping keep patients out of the hospital or keeping them out of emergency departments.”
More Access Restrictions Are Anticipated
The future holds more UM if current trends continue, says Tegenu: “The requirement to use utilization management protocols will increase as more and more medications coming to market are higher-cost specialty medications.”
However, these trends depend on a number of factors, he says, “such as whether policy changes end up lowering the costs of prescription drugs within the current health care system, the number of medications in the same class, the cost of newer medications coming to market and the overall impact of pharmaceutical care in relation to overall health care costs and the creativity of the free market.”
Vogenberg says the problem goes deeper, into the underlying economics of health care. PBMs are working to point fingers at pharma for raising prices while providing members with coupons and other mainly promotional campaigns that lower consumer costs around the edges. At the same time, costs for the higher-priced drugs are growing rapidly, he points out. Gene therapies are a prime example and are not always well understood by the marketplace, he says.
Manufacturers, meanwhile, don’t always understand the differences among PBMs, insurance companies and employer-sponsored plans, says Vogenberg, and this gets back to varying approaches to managing risk. “If you own the risk, there are different things you can do,” he explains. “If you’re just hired like a PBM or a third-party administrator, what you’re doing is managing costs. It’s all about economics. So your strategies are different, your tactics are different, and how you approach those protocols and guidelines and how you execute them is a little bit different. Understanding the risk component gives you a clue as to how the differences are beginning to play out in the marketplace.”
“Building off of those differences, pharma has to rethink what really are the barriers [to access], because, fundamentally, nobody wants to not cover something that works,” says Vogenberg. “The barrier to access is created by the third-party administrator or the PBM. And why are they doing that? Because you’re going to pay them off to cover it. The employer or the insurance company themselves aren’t necessarily saying, ‘I need to have that money,’ but if pharma is willing to give it to them, they’ll take it. So pharma has created this barrier problem, ironically, and in the course of the last decade in particular, it’s about out of control now.”
Industry May Be Close to Inflection Point
In fact, Vogenberg says he believes the health care industry may be close to an inflection point that will emphasize value and rearrange the concepts surrounding access. Price transparency is beginning to be addressed on the provider side, both for physicians and for hospitals. Pharma isn’t there yet, but “it’s got to get there,” he says. “That’s a big lift, for them to think differently, but that’s what it’s eventually going to take, particularly, I think, for the very high-end biologic products and for the gene therapy products. It’s really just too much money to not have that understanding of what does this really cost, and I think that’s where we’re really headed on this.”
Manufacturers have been interested for years in direct-to-employer alternative risk contract scenarios since that gets them outside of health plan and PBM negotiations, he says. “The problem is they can’t agree on the measures, the metrics.” That’s been an area of focus for the Employer Provider Interface Council, a subgroup of the not-for-profit Hospital Quality Foundation, says Vogenberg, who serves as a board member for the council, and drugmakers are now interested in it as well. “They’re going to get sucked into it one way or the other, so they need to be part of the conversation rather than being outside of the room.”
These are different than the metrics pharma manufacturers are accustomed to dealing with, which likely will make them uneasy at first, Vogenberg says. “Eventually, I think it could be a good thing. It could be very opportunistic, but it requires a change in business.”
Contact Tegenu at mtegenu@performrx.com, Macher via Liz Moore at lmoore@avalere.com, Galante via Tess Rollano at trollano@coynepr.com and Vogenberg at randy@iih-online.com.
by Jane Anderson
