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 - but here are the financial aspects again:
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Okay, so let's pretend it's 2025 and you are the VP of Pharmacy for a national commercial health insurance plan. In two days, you have to give your recommendation to the Pharmacy and Therapeutics committee for a vote, whether or not to add this product to your formulary.
Now - remember the the IRA (Inflation Reduction Act) will be in full effect by 2025, which will lower copay costs to us, the consumers, to no more than $50 - especially in diabetes - which Big Pharma will likely respond to by simply raising their prices, putting the burden on insurance companies, who will, in turn, raise their premiums ;)
So Fictional Product X is a new GLP-1 that has just entered the market for type 2 diabetes.
You already have 3 GLP-1's on the market.
Product Y and Z are both self-injected, either daily or once weekly, both proving to have similar efficacy at significantly reducing both hemoglobin A1c and weight and are fairly safe.
Product Y has just published a post-launch 2-year study proving long-term prevention of cardiovascular events, with Product Z's results expected to be published soon with similar results.
Product Q is an oral pill, slightly less effective than Y and Z, but also proven in a post-launch study to offer some cardiovascular protection.
Through contracting, you received a bigger rebate for Product Z than Product Y; thus, Product Z is on the preferred tier (lower copay/coinsurance).
Also, another recent anti-diabetes class is available, the class of SGLT2 inhibitors, which have been found to be just as effective.
Your company's PBM - Pharmacy Benefit Manager (the company that contracts and manages all your pharmaceutical products) tells you that Product Y - currently on the non-preferred tier - is now offering an even steeper rebate of an additional 20%, if they are made 1 of 2 preferred options on the formulary, after this new drug launches.
You don't care how you get to a better bottom-line net cost - high wholesale cost/higher rebates VS. low wholesale cost/low rebates - you just care that at the end of the day, you get the best deal so you don't have to raise your premiums for members.
(The PBM, however, makes most of their large profits off high wholes ale cost/high rebates ;)
Your key-opinion expert endocrinologist says the efficacy of this new longer-acting GLP-1 is actually somewhat less than the others, and she has some some safety concerns.
However, 10% of your plan's in-network endocrinologists have called you, telling you they believe this drug is actually better and they'd like to try it, especially for their patients that have failed the other GLP-1's, they don't care what it costs, especially now that their patients only have to pay no more than $50 with the Inflation Reduction Act.
*Now remember, this is a pharmaceutical company, trying to sell you a product - so think carefully and critically*
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Now, the pharmaceutical company notes that there was no head-to-head comparison against other GLP-1's, nor SGLT2's (though both were on the market when the study began and have become the standard of care by many endocrinologists.)
However, in their presentation, they have a slide of side-by-side comparison with the market-leading GLP-1. All previous trials for GLP-1's have gone on 26 weeks rather than 12 weeks, so you have to extrapolate if their results at 12 weeks would be similar.
The WAC or wholesale acquisition price, or list-price range before rebates for GLP-1's already on the market is now $1,000 to $1,500 per month/$12,000 to $18,000 annually.
However, the manufacturer of Product X tells you that the WAC price for Product X will be at a 30% per-dose premium to the others.
They are justifying this 30% premium cost because they are once monthly instead of once weekly, which they say not only saves cost in the long run, but will promote better patient adherence, PLUS they are approved for younger patients, PLUS they provide a self-injector with new technology that sends information via Bluetooth about whether the medication was administered correctly, at the appropriate dose times, to both the pharmacy and the provider, also to ensure better patient adherence.
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1) Formal diagnosis of type 2 diabetes (which can 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 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. .
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?
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."
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?"
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