Critical-Thinking Exercise, Part 2: Economic Question

So the first part of the exercise was determining whether the fictional drug was clinically beneficial - now to determine if it's enough of a benefit to justify paying an exorbitant amount for it ;)

And once again, the purpose of this two-part exercise is to help with critical-thinking skills in general - particularly with politics ;)

So now that we've determined that Fictional Drug X's study design is flawed, and the drug also appears less efficacious and less safe than other drugs in its class, we now have to determine if or how we will add it to our formulary to still give physicians and their patients a choice.

Now, what often would come into play here would be how much control the PBM company (pharmacy-benefit company that manages pharmaceuticals for insurance companies) has.  In fact, one major insurance company is now owned by a PBM and has to do whatever they say.

But let's pretend in our fictional insurance company, they have a seat at the P&T table and make recommendations, but we don't have to follow.

So the fictional clinical-trial results were posted again in the post below, if you need to reference them for Part 2.

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So what are you going to recommend to the Pharmacy and Therapeutics committee, and if they do vote to put on on formulary, what will you do to mitigate the cost hit?

Well, first of all, what are your bargaining chips - what did you notice are data gaps in their presentation? 

1)  They only had 150 people in their trial, though it's diabetes affects hundreds of thousands and other drugs in their class had more participants.

2)  They only tested the drug for 26 weeks, not 52 like the others.

3)  The drug trial compared itself to an old, less-effective drug rather than a head-to-head trial. 

4)  33% of the people taking the drug developed significant side effects and 25% of people stopped taking the drug.

5)  They want a 30% premium to the other drugs based on the "cost savings" of taking the drug only once a month, rather than weekly.  This would significantly limit and cost savings, as would adding a new age group to eligibility, 12-18, versus the previous age range 18 and older.

6)  The PBM (pharmacy-benefit manager) that you contract with to handle pharmaceuticals and their claims makes their profit from rebates only - thus, their advice must be taken with a grain of salt.  It may be once a month, but it is not cheaper, and may actually cost more in the long run.

What did your key-opinion-leader clinicians think of the product? 

Though in general, doctors within the plan were asking for it as a new option, key-opinion leaders felt this longer-acting version was somewhat less efficacious than the others and its potency caused worse side effects than existing products. They also had some concerns with the number of participants in the trial and the trial length, especially when treating children long term.

What did your actuaries think of the product? 

They thought that any cost savings that might've been derived from once-a-month usage were canceled by the high cost, plus adding a new age group.

What tools in your toolbelt do you have for mitigating the cost of the product? 

For starters, you could go to existing agents and asking for a steeper rebate or discount versus the new agent, if they haven't approached you already in advance.  You could then return to Pharma X and requesting a rebate to even be considered for formulary.

Also in your toolbox, unless a federally-protected class, you can impose certain restrictions, especially if a drug is less efficacious than existing agents within its class, less safe, and/or too expensive compared to the other drugs in its class.

These restrictions can come in the form of requiring a prior authorization before the drug is filled, which include the following before that prescription is filled: 

1)  Formal diagnosis of type 2 diabetes.  

This can even be further tightened to the diagnosis being made by, or in consultation with, an endocrinologist rather than a PCP.  

 

2) Rather than simple physician attestation to diagnosis, documentation can be required - i.e, lab results  and chart notes can be requested.  

 

3) "Step therapy" - meaning the patient must have tried and failed, or been intolerant to, one or more of the existing products on the market for the condition. 

They could be generics, biosimilars, or branded treatments first -  possibly trying all of them before you get to the most expensive drug (all drugs being near equal in efficacy), depending on cost. 

 

4)  Quantity limits, then reauthorization only after proven efficacy.  

 

5)  Sticking stringently to the FDA label and/or the trial criteria - only age 12 and above, no cardiovascular events in the last two years, no thyroid or endocrine tumors or cancer.

 

6) Based on cost and contracting, you can place it on different copay/coinsurance tiers - preferred, non-preferred, specialty, or exclude it entirely, only accessible through medical-exception/appeals process. 

 

Now - let's look at the three "added-benefits" the manufacturer has used to justify their 30% premium:

1)  "It's once-monthly rather than once weekly, which will save cost!"

Okay, but if you give the patients thyroid or endocrine cancer, is it worth it?  Cost avoidance is only one part of the issue - total cost of care might be greater if you give patients retinopathy or cancer.  

 

2)   "Unlike the other GLP-1's, our product can be given to patients 12 years and older, not just 18+."

 

Okay, then you're expanding your population and thus will make more money already - that's not a justification to charge a premium.

 

3)  "Our new Bluetooth technology will promote better adherence and better efficacy."  

 

Really?  Because your clinical trial doesn't prove that, especially compared to the efficacy of others in its class.   

Also, you're presuming that your device will promote better adherence and thus better efficacy, but you haven't done any studies on the device itself, regardless of medication. 

Why should we pay extra for a device which you haven't proven to us results in better adherence and efficacy?

So what would my recommendation be to the P&T Committee?

Nope, not on formulary, due to lesser efficacy and safety than other drugs in its class, as well as unjustified cost - it should be medical-exception only - makes the docs prove they've already tried other stuff and are intolerant to it or it doesn't work for them first.

Now, what happens if the P&T committee does not take your recommendation and votes to approve it anyway?

Now you reach for the above tools in your toolbox when negotiating with the manufacturer.

Me:   Okay, so if you give me a 60% rebate and price protection for 2 years, I can put you on the non-preferred tier, but still having to step through metformin first line, plus the other preferred GLP-1, plus an SGLT2 first - otherwise, you're non-preferred with severe restrictions - sorry."

No manufacturer in the world is going to give you a 60% rebate for a PA with moderate restrictions, so most likely, if you have to put them on your formulary, they're just going to have to accept non-preferred tier with severe restrictions and steps first - 3 out of the 6 restrictions mentioned above.

IMO, because of it's efficacy, safety, and cost compared to the others, I would make the restrictions so difficult that it would be extremely difficult for anyone to ever get ;)

Big Pharma would likely come back and say: "We'll offer you a 30% rebate off this product PLUS a portfolio contract that if you sell the heck out of another one of our products in other disease state, you get an extra 30% rebate on that other product, too, PLUS  price protection for 2 years on both."  

 

Me: "Oh - you mean an extra 30% rebate back for a different product in a different disease state that we already know doesn't sell?  30% rebate back from $0 is $0, so I don't think so lol. " 

"Here's the thing - there's no amount of rebate or discount you can offer me is ever going to get you on the preferred tier because your efficacy and safety are 10% worse than the other GLP-1's." 

 "So the best you can do is non-preferred tier.  Even on that tier, at a 30% rebate, with that efficacy and safety versus the others, the best we can offer you is most likely the most amount of restrictions compared to the others, even others on the non-preferred tier - PLUS having to step through one of them, if not all of them, PLUS the GLP-1 on the preferred tier, PLUS an SGLT2, PLUS metformin.   

"So what else ya got?" 

 

Big Pharma: "Okay, what about a value-based/outcomes-based agreement? You provide proof that their A1c has NOT been lowered by 1% lower than metformin does and we refund you in full." 

 

Me: "No can do. Do you know how much extra work and manpower that would take on our end? lol.  First of all, we don't have access to pharmaceutical claims, on medical claims, our PBM does that. Secondly, we'd have to pull all the results of both metformin only and Product X and compare each and every claim, when some people are on both. We don't have that kind of time and resources, and we'd actually be spending more resources to do that for you."  

"And what if it's like .999 of 1%? What happens then, are we going to haggle on a refund?"  

 

Big Pharma: "Okay, okay - 50% rebate on the product, 10% additional rebate on the other non-seller already on your formulary in another disease state, just to not make us step through all the other products first, accepting the non-preferred tier.  "  

 

Me: "Okay, but the steps through metformin and another GLP-1 are NOT going away, possibly even an SGLT2 because of your price. Your efficacy and safety are of concern comparatively.  And you do realize that 50% rebate off $0 sales due to 0% prescriber uptake is still $0 for us us both, right? lol "  

 

Big Pharma: "Okay, but can you make it a step through metformin and either one other GLP-1 OR one SGLT2?  

 

Me: "Nope, I'm sorry. Both are more effective than your drug and safer, too.  And we're really not too interested in your non-selling other product in another disease state, actually."  

 

Big Pharma: "Okay, okay - 40% rebate, price protection for 3 years, and just a step through metformin and the preferred GLP-1, but that's the worst the PA criteria gets?"

Yahtzee :)

Well, of course, I'm oversimplifying this process and don't do any of these negotiations - plus in real life, I might not think of all of that at the time due to social anxiety -  but you get the idea lol.

And it's this sort of critical thinking that we should apply to our politics as well before we "buy" them, yes? 

You can also see how tricky this stuff is - it's not as simple as the government mandating lowering copays or offering cheaper government-subsidized insurance - insurance companies only respond to this by raising their rates.

At present, the U.S. pays thousands to tens of thousands more for drugs than any other country in the world - and unfortunately, at this point, I don't see any other way out than to start regulating prices.  I hate to do this, but our present economic system cannot sustain itself at this astronomic prices.