Over the last two decades, patients with chronic and debilitating conditions like arthritis, multiple sclerosis, cancer and immunodeficiency have seen improved treatment options thanks to specialty medications. But the traditional insurance approach – formularies – is leading to some unintended consequences and prompting calls for a redesign of drug benefits.
With millions of new Americans gaining individual insurance through exchanges, a big challenge for insurers is creating drug formularies that can cover the needs of a broad range of patients and making sure consumers looking for guaranteed access to certain drugs can find the right plans.
For some patients across individual and group health plans, though, formularies with high cost-sharing and narrow medication coverage can lead to confusion and non-adherence, argues Mark Fendrick, MD, an internist and University of Michigan medical professor who directs the Center for Value-Based Insurance Design.
About one-quarter of total pharmaceutical spending in the commercial healthcare market is devoted to specialty medications, and, if current trends continue, specialty medications may comprise half of all commercial pharmaceutical spending by 2018. Amid those kinds of trends, which are driving drug spending to grow at a faster rate than medical and hospital care, insurers and pharmacy benefits plans have been adopting formularies that exclude certain drugs for particular conditions or are increasing cost sharing.
In patients with rheumatoid arthritis, the most common specialty medications are TNF inhibitors that curb inflammatory responses and have been shown to inhibit RA progression and delay or prevent joint damage. But cost sharing has become a major challenge, Fendrick argued in a recent University of Michigan white paper. Almost 10 percent of patients who discontinue therapies do so because of access issues, according to registry data analyzed in a 2013 Annals of Rheumatology study. Group health plans that doubled cost sharing for RA medications, from an average of $400 to $800 annually, led to a 3 percent decrease in therapy usage, a 2010 Health Services Research found.
In the long term, those discontinuations could lead to poorer overall patient outcomes that cost insurers in hospitalizations and employers in lost productivity, Fendrick argued.
No easy fixes for substitutability
Another case highlighting the need for better drug plan design, experts argue, is the rare condition of primary immunodeficiency, in which an individual cannot produce immunoglobulin and has a compromised immune system.
Over the last three decades, treatment for primary immunodeficiency has greatly improved, with intravenous immunoglobulin allowing patients to live relatively normal lives. Immunoglobulin treatments, biologic specialty medications that must be checked for contamination, can costs thousands of dollars per treatment.
As more immunoglobulin products came to the market in the late 2000s, insurers and drug plans started crafting preferred product plans that excluded certain brands or required members to try other brands first.
While there are about a dozen immunoglobulin products available and all of them are mostly immunoglobulin, they may not be interchangeable from a patient's perspective, said Mark Ballow, MD, an immunologist and member of the Immune Deficiency Foundation's medical advisory committee. For instance, some have sodium-based stabilizers, which could be problematic for patients with heart disease, while others have fructose-based stabilizers that should be avoided by diabetics.
"Patients tell me they tolerate one brand rather than another and that may be due to nuances in manufacturing," he said. That gets to be important, because if a patient can't tolerate the one particular product offered by any given formulary, health issues, possibly requiring expensive care, may ensue.
Ballow and other immunodeficiency advocates have started reaching out to insurers to start conversations about ways to make more immunoglobulin products available based on individual needs. "All it takes is one hospitalization to negate all of the savings from these co-pays," Ballow said, arguing that broad access to therapy for immunodeficiency patients can actually save money in the long run.
One study published in Immunologic Research in 2011 seems to back Ballow up. It estimated that immunoglobulin saved $78,000 per patient per year in avoided medical and hospital costs, along with 25 days of avoided missed work days.
Rethinking formularies
In his whitepaper, Fendrick has specific suggestions for insurers.
Incentivizing value-based treatment through high-quality sites of care, well-designed cost sharing and access to a range of evidence-supported drugs are needed more broadly across specialty pharmaceuticals and conditions. Insurers and PBMs should impose only modest cost sharing for high-value medications and reduce cost sharing for patients who can most benefit from certain treatments, such as using genetic and molecular biomarkers to guide the availability of cancer or arthritis drugs. "Such an approach may require creating new provider/plan information-sharing arrangements, which may have up-front costs, but the merit of clinically nuanced cost-sharing could make these expenses worthwhile," Fendrick wrote. Insurers and PBMs should also reduce high cost sharing for patients when they fail to respond to preferred front-line medications. The type of "reward the good soldier" approach "would maintain incentives for the use of preferred medications, but reduce concerns about the addition of essential medications, when necessary," Fendrick wrote.When it comes to sites of care for specialty medication treatments, insurers have an opportunity to use cost sharing to encourage the selection of high performing providers, through designated centers of excellence and alternative and collaborative payment models.