Managed Pharmacy

Insurers and employers apply a three-prong approach to what some experts are describing as hyperinflation

Thomas Reinke

In an effort to manage the ever-burgeoning cost of specialty pharmacy — what some experts call hyperinflation — employers and heath plans have settled on a three-prong approach: shifting costs to consumers through coinsurance, focusing on case management, and broadening formularies so that they apply to specialty pharmacy.

They certainly have the motivation. For the past couple of years, national PBMs have consistently reported 15 to 20 percent annual expenditure increases in specialty medicine and one sensational prediction is that specialty medications will make up 40 percent of all pharmacy benefit costs by 2020.

The Midwest Business Group on Health (MBGH) has conducted a national employer survey with 15 other coalitions to increase employers’ skills in managing specialty pharmacy. “At the outset we found that employers managed specialty pharmacy with the same strategies used for traditional pharmacy, but that is not enough,” says Cheryl Larson, MBGH’s vice president. The association is developing a toolkit that encompasses best practices above and beyond those used in traditional pharmacy, and it is tracking employers’ progress in implementing those activities.

The effort to rein in specialty pharmacy is leading to a restructuring of benefit plans and a higher priority for care management. In a ­closely related development, there may be a limited opportunity to finally implement formulary management, a powerful cost-containment tool that has been missing from specialty pharmacy. That may shift the balance of power between manufacturers and purchasers, where the drug companies have had the upper hand in pricing and ensuring access to their medications.

“Specialty medicines are now moving to a fifth tier with higher consumer cost sharing and increased use of coinsurance,” says ­Larson, adding that “you need to be cautious, as these are short-term solutions that can cause non-adherence, which impacts the health and productivity of at-risk consumers.”

Similar things are happening with Medicare plans. “Part D has gone to a fifth tier … and the fifth tier is specialty,” says Atheer Kaddis, PharmD, senior vice president at Diplomat Specialty Pharmacy. “We usually see coinsurance on the fifth tier, and that percentage continues to rise. When Part D first started, it was 20 percent, and now the most common is 30 percent.”

Coinsurance is also replacing fixed copayments in traditional pharmacy plans.

“The shifting of costs to the patient has been at an ever-increasing percentage, more so than the previous iterative increases, which were modest,” says Randy Vogenberg, RPh, PhD, an industry consultant.

Coinsurance

The MBGH’s employer survey shows that in 2011, 57 percent of employers used copayments for specialty pharmacy, while 38 percent used coinsurance. In 2012, 56 percent of plans had coinsurance arrangements.

The critical issue with coinsurance is whether there are out-of-pocket maximums that limit the burden on consumers and whether there are separate out-of-pocket maximums for pharmacy benefits and medical benefits. Oncology patients with oral medications through the pharmacy benefit and infused medications through the medical benefit might face both hurdles.

“Cost shifting is confusing because health plans and doctors have not increased the support they provide to patients in understanding their expanded responsibilities,” says Jan Berger, MD, CMO at Silverlink Communications.

“Generally, out-of-pocket maximums relate to each benefit, so patients could face both a medical benefit out-of-pocket maximum plus a pharmacy benefit out-of-pocket maximum to reach full reimbursement coverage,” says Vogenberg.

Pharmacy out-of-pocket maximums can vary widely. The 2013 Part D out-of-pocket maximum before catastrophic coverage begins is $4,750 per person. As an example of an employer-sponsored plan, the pharmacy out-of-pocket maximum in the Montana Association of Counties Health Care Trust is $1,500 per covered person, or $6,000 for a family of four.

Coinsurance can also be very complicated. In many cases there are restrictions on the ex­penses that count toward the out-of-pocket maximum. Costs that do not apply may include non-preferred drugs, the cost difference between generic and brand-name drugs when a generic is available, and specialty medications obtained through the medical benefit.

The out-of-pocket cost per fill may also be high. In the MBGH’s survey, 37 percent of employers said the maximum per-fill cost ranges from $101 to $500, 7 percent said it was $501 to $1,000, and 9 percent reported per fill maximums above $1,000.

The long-term question about coinsurance is, When is enough enough? The advent of health insurance exchanges could fuel the switch and lead to very high coinsurance percentages, if the Massachusetts Health Connector is an indicator. Some plans offered through the Health Connector have coinsurance rates of 50 percent across all tiers, including specialty pharmacy.

Prime Therapeutics reports that the 2011 average cost of all specialty prescriptions was $2,654, so 50 percent coinsurance means a $1,312 coinsurance payment.

The Health Connector does have rules limiting out-of-pocket expenses.

Fast and furious cost shifting to consumers could undermine the primary value of pharmacy benefits. Specialty medications are the primary treatment for debilitating conditions such as multiple sclerosis and life-threatening diseases such as hematopoietic malignancies.

Many consumers will face the additional strains of navigating the coinsurance maze or coinsurance details and finding the money to pay for their medications.

“Cost shifting is confusing because health plans and doctors have not increased the support they provide to patients in understanding their expanded financial responsibilities,” says Jan Berger, MD, chief medical officer of Silverlink Communications and Managed Care editorial board member.

The greater challenge is managing total costs. There has been very little opportunity for purchasers to manage the cost of specialty drugs and negotiate discounts. “The branded specialty medicines in an entire category often have very similar prices,” says Kaddis. If the price of one drug in a category increases, the others will follow suit. Likewise, if a new higher priced medication is added, the manufacturers of other drugs will increase their prices.

The standard approaches to managing specialty costs include prior authorization, required use of a specialty pharmacy, and mail distribution — and for new starts, supply limits. The MBGH’s Larson says these techniques add value, but they are not the top priority.

“We held a stakeholders meeting that brought in drug manufacturers, health plans, PBMs, and our employer members to identify top management strategies. It was interesting to be in that room because everyone except employers was saying prior authorization because that is what they fall back on. Employers, though, were saying, ‘Wait a minute. It’s case management.’”

Case management is close patient management by specialty pharmacies, more targeted than disease management by health plans. “Case management is the top priority among our employers because it can do everything PA can without putting up the barriers that PA often imposes,” says Larson.

Formulary management

Formulary management has been missing from the list of cost and utilization controls because of the limited number of specialty medications for each disease, but Diplomat’s Kaddis says things may be changing.

“We are seeing crowding in a couple of drug categories. For example, in renal cell cancer there are six similar oral products and in chronic myelogenous leukemia there are five similar products,” says Kaddis. “That crowding has not affected the actual acquisition cost, but on the back end, some manufacturers are providing rebates and the net acquisition cost can be much lower. That means we may start seeing tiering for these oncolytics. That is not happening now, but it could occur in the next two years.”

From Managed Care

The vast majority of Part D plans follow a tiered cost-sharing structure with incentives for members to use less expensive generic and preferred brand-name drugs. Cost-sharing has increased since 2006, but the Kaiser Family Foundation reports in “Analysis of Medicare Prescription Drug Plans in 2011 and Key Trends Since 2006” that there was barely a change between 2010 and 2011.” The foundation reports that since 2006, median cost sharing for a 30-day supply of nonpreferred brand name drugs in stand-alone prescription drug plans (PDPs) increased by 42 percent, from $55 to $78. Preferred brand costs increased 50 percent, from $28 to $42. But since 2010, cost sharing has been stable.

About half of PDP enrollees and over 75 percent of MA-PD plan enrollees are in plans that charge 33 percent coinsurance for specialty drugs. Compared to 2009, this share is down modestly for PDPs but up substantially for MA-PD plans. In contrast, only 4 of the 35 national or near-national PDPs charged a 33 percent coinsurance rate for specialty tier drugs in 2006.

Jack Hoadley, PhD, a health policy analyst and political scientist at Georgetown University’s Health Policy Institute and co-author of the report, says, “There’s been an attempt to have a greater cost spread between the generics and branded drugs. That’s what we’re going to see happen in 2012.”

“On the generic side,” he says, “we’re going to see a split from one generic price to two tiers for generic drugs. Medicare is going to do its best to persuade its enrollees to choose generic drugs by adjusting copayments.”

Copays

Coinsurance

Source: Georgetown/NORC analysis of data from CMS for MedPAC and the Kaiser Family Foundation; data for employer plans from Kaiser/HRET Employer Health Benefits Survey, 2010.

MANAGED CARE January 2012. ©MediMedia USA

Tight budgets and an increasing influx of expensive biologic drugs make it imperative to rethink risk management

John Marcille

At a time when health care reform is uncertain and hard-to-categorize biological drugs are becoming a greater share of overall costs, health plan medical and pharmacy directors have the opportunity to help reinvent how health care is paid for, says F. Randy Vogenberg, PhD, RPh. A pharmaceutical consultant to employers, hospitals, drug companies, and insurers, Vogenberg’s Sharon, Mass.-based firm is called the Institute for Integrated Healthcare.

One of his goals is to get people to think about the big picture.

“Extraordinarily expensive drugs are becoming available on a mainstream basis,” he says. “How are we going to finance them when our insurance industry was designed for the marketplace of the 1950s and 1960s to pay for hospital expenses, not for drugs? What is insurance and the management of risk going to look like in 5 or 10 years?”

MANAGED CARE December 2011. ©MediMedia USA

Costly protease inhibitors work well in many patients, but call for careful monitoring

Thomas Reinke

Contributing Editor

In less than a year, two new protease inhibitors — telaprevir (Incivek) and boceprevir (Victrelis) — have changed the standard of care for hepatitis C by introducing a new mechanism of action, but their significance goes beyond that.

They are the first new medications for the disease in 10 years and they have brought dramatic improvements in outcomes by knocking out this infection in many more patients, including previous poor responders. They have also complicated care by adding a third agent to the previous standard regimen of two agents.

“We took a step back ... to make sure we could capitalize on the value of these medications,” says David Lassen, PharmD, chief clinical officer at Prime Therapeutics.

The new agents are examples of how therapy management for new and costly medications is moving from traditional utilization and outcomes management to more sophisticated strategies. The focus on adherence and medication possession rates is giving way to patient selection criteria and close monitoring of clinical results. Read more »

Formulary design, contracting, and other strategies will be key to maximizing the opportunities of brand patent expirations

Thomas Reinke

Lipitor’s anticipated patent expiration in November will be a blockbuster event in further tempering the escalation of pharmacy costs, but there may be other benefits.

Lipitor (atorvastatin) is the world’s biggest drug ever says George Van Antwerp, general manager for pharmacy solutions at Silverlink Communications. Its 2010 sales were $7.2 billion, and the availability of a generic will dramatically reduce expenditures for cholesterol-lowering agents.

The hidden value is that the strategies and actions taken to maximize savings from this conversion can serve as spring training for the world series of $78 billion in patent expirations scheduled through 2015 for preeminent names such as Plavix, Singulair, and Nexium. Read more »

MANAGED CARE March 2011. ©MediMedia USA

PPOs are increasingly looking to managed pharmacy programs to help manage drug utilization costs of members with chronic conditions who are taking numerous medications. In general, the larger the PPO (number of members), the more likely it is to use a managed pharmacy program. The Sanofi-Aventis Managed Care Digest Series — HMO-PPO Digest 2010–2011 suggests that in 2009, more than 80 percent of PPOs with 500,000 to 999,999 members had a managed pharmacy program, compared with about a quarter of plans that had fewer than 20,000 members.

By far, the most prevalent managed pharmacy programs involve pharmacy benefit managers. PBMs are playing a greater role as they are involved in administration, dispensing, utilization review, and claims and mail-service processing, according to the report.

With their specialized services in tracking electronic prescribing and medical records, PBMs should be experiencing heightened demand — especially with recent health reform emphasizing the importance of health information technology. For example, PPOs are using PBMs to dispense medications, with 82 percent using PBMs for this service in 2009, up from 78 percent in 2008.

Utilization review had a slight downturn in 2009, says the report, after having a sharp rise from 63 percent in 2006 to 76 percent in 2008. In 2009, almost three-quarters of PPOs surveyed said they used PBMs to provide drug utilization reviews. But the report says PPO reliance on PBMs for drug utilization review is likely to increase, “especially as pay-for-performance and outcomes measures become more prominent in the post-reform era.”

Various services provided by PBMs to PPOs

Source: Sanofi-Aventis Managed Care Digest Series — HMO–PPO Digest 2010–2011

MANAGED CARE March 2011. ©MediMedia USA

The static approach overseen by United States Pharmacopoeia shortchanges beneficiaries and benefit plans

Claudia Schlosberg, JD

Richard Stefanacci, DO

As patients and their physicians go about the annual process of evaluating Medicare prescription drug plans, and as Medicare plan sponsors begin to develop formularies for plan year 2012, (and the Centers for Medicare & Medicaid Services (CMS) gears up to approve them), it is important to examine the current framework for the development of the only formulary classification system specifically developed for the Medicare drug benefit — the Medicare Model Guidelines.

Under the Medicare Modernization Act of 2003, the United States Pharmacopoeia (USP), under contract to the Department of Health and Human Services (HHS), is responsible for developing the Medicare Model Guidelines. The model guidelines list medication categories and classes.

By law, the Model Guidelines are recognized as a statutory safe harbor. Part D plan formularies that use categories and classes that are consistent with the Model Guidelines cannot be disapproved for participation in the Medicare Prescription Drug Program on the basis that they are likely to substantially discourage enrollment by certain Medicare beneficiaries.

In addition, the Model Guidelines:

• Establish a framework for Medicare prescription drug plans that are required, by regulation, to include on their formularies at least two drugs for each distinct therapeutic category and pharmacologic class unless there is only one drug available in the class or category or one drug is clinically superior.
• Establish the parameters for allowable midyear therapeutic substitutions within classes.
• Are used by CMS during the formulary review process to identify formularies that may be outliers with respect to formulary coverage for Medicare plans and therefore require further evaluation.

Updating the model guidelines

USP initially reviewed and revised the Model Guidelines every year. However, after approval of version 4.0, USP and CMS moved to a three-year revision cycle. CMS approved Version 4.0 in February, 2008; it was effective for the plan year beginning Jan. 1, 2009. It remains in effect through Dec. 31, 2011. There has been no process for reviewing new drug approvals or newly approved therapeutic uses and no process for updating therapeutic categories or classes since Version 4.0 was approved.

In August 2010, USP began work on revisions for Version 5.0, and a new Model Guidelines expert committee began meeting to formulate recommendations to CMS. Public comments were solicited and the expert committee’s recommendations were submitted to CMS in January. Once approved by CMS, Version 5.0 will be in effect for 2012–14.

Prescription drug therapies are constantly evolving, and new drug therapies inevitably become available over the course of a single plan year. In fact, since approval of Model Guideline 4.0 in 2008, the Food and Drug Administration (FDA) has approved over 270 new drugs, of which at least 50 were new molecular entities. Thirty-four of these new approvals were given a high-priority review because, in the FDA’s words, they represent “significant improvement, compared to marketed products, in the treatment, diagnosis, or prevention of a disease.” Yet, lacking a process for continuous review, USP could not begin to review these drugs until last fall.

Because the process for updating the Model Guidelines begins a full year before the new Model Guidelines go into effect, depending on when the drugs received FDA approval, the gap between the time of approval and evaluation by USP for inclusion in the Medicare Model Guidelines can be up to four years. For example, there are several medications that are likely to be approved during 2011. None will be reviewed for inclusion in Version 5.0, even though Version 5.0 does not go into effect until Jan. 1, 2012.

If the existing policy remains in effect, Version 5.0 of the Model Guidelines, including the drug classes and categories, will remain unchanged until the plan year that begins Jan. 1, 2015. Drugs approved in 2011 will not be reviewed until at least the fall of 2013 and will not be added to the guidelines until Version 6.0 which will be effective for plan years beginning on Jan. 1, 2015 and ending Dec. 31, 2017.

Role of formularies

While a degree of formulary stability is important, formularies also must change to accommodate new drug approvals and new drug information. The dynamic nature of formularies is recognized in how they have been defined by leading authorities.

The “Principles of a Sound Formulary System,” a consensus document developed by a coalition of national organizations representing health care professionals, government, and business leaders, defines a drug formulary as “a continually updated list of medications and related information.... ” (The principles are at http://www.usp.org/hqi/patientSafety/resources/soundFormularyPrinciples.....) The Institute of Medicine defines a drug formulary as “a continually revised compilation of pharmaceuticals that meet pharmacopoeial standards.”

Best-practice formularies and formulary classification systems used by hospitals, health plans, government entities, and even Part D sponsors have processes that provide for continuous updating and review of formulary drugs and categories. For example, the American Hospital Formulary Service (AHFS) Pharmacologic Classification, widely used by hospitals, state Medicaid agencies, private insurers and Health Canada, is updated and published annually with intermediate updates published throughout the year.

The National Committee for Quality Assurance’s accreditation standards for managed care organizations, including Medicare Advantage plans, require that organizations review pharmaceutical management procedures, including formulary preferred pharmaceuticals, at least annually. The organization also must have a process for prompt response to member, pharmacist, or practitioner concerns regarding adding or deleting pharmaceuticals between annual reviews and must update procedures as it receives new pharmaceutical information without waiting for requests from members, pharmacists, or practitioners.

In 2000, the Institute of Medicine (IOM) found that the Veterans Administration’s blanket policy of waiting one year before considering any newly approved drugs for inclusion in the VA National Formulary “denied veterans access to some drugs the FDA finds significant, provides questionable protection from adverse events, and fosters a perception that it is a cost-based measure.” The IOM said that “the VA National Formulary should examine drugs newly approved by the FDA in a timely manner and abandon the blanket policy of a fixed waiting period.” Today, the VA National Formulary has processes to entertain formulary additions as well as drug class reviews on an on-going basis.

By law, USP must revise the Model Guidelines “from time to time to reflect changes in therapeutic uses covered by Part D drugs and the additions of new covered Part D drugs.” And while PDP sponsors are not permitted to change therapeutic categories and classes in a formulary other than at the beginning of the plan year, Congress explicitly allows more frequent changes “to take into account new therapeutic uses and newly approved covered Part D drugs.” However, USP is now only releasing guidelines every three years, a timetable that appears inconsistent with recognized best practices for updating and revising formularies and formulary classifications systems.

Notably, while the USP Model Guidelines were established by Congress to protect Medicare beneficiaries’ access to needed medications and serve as a safe harbor to promote a nondiscriminatory formulary classification system, it appears that plans have decreased their reliance on the guidelines as a model. At its highest usage in 2006, 74 percent of health plans were using the USP Model Guidelines (Version 1.0). According to CMS, in 2008, more than half of plans substituted their own classification system. Today it appears that health plans are even less likely to follow the USP Model Guidelines.

By law, individual plan sponsors are given broad discretion to develop their formularies, which has led to wide variation in the scope of formulary coverage across PDPs. Examining coverage of the top 10 brand-name drugs commonly used by Medicare beneficiaries, one researcher found that in 2010, only three of the top 10 commonly used drugs were on the formularies of all 43 national and near-national PDPs. This researcher found that while the average PDP formulary lists 87 percent of the drugs on CMS’s drug reference file, some plans cover as few as 62 percent of these drugs.

Provision of an adequate formulary

Yearly, CMS is responsible for reviewing Part D plan formularies to ensure inclusion of a range of drugs in a broad distribution of therapeutic categories and classes, to satisfy the Medicare Modernization Act requirement that a plan’s categorization system does not substantially discourage enrollment by any group of beneficiaries. Part D plans that use a classification system that is consistent with the USP classification system will satisfy a safe harbor and thus CMS cannot disapprove their formulary classification system. Plans must cover at least two drugs in each distinct category or class.

To review the adequacy of formularies, CMS undertakes a number of formulary checks. In the past, even if a Part D Plan sponsor has not utilized the USP classification system, CMS has relied upon USP’s drug list of Formulary Key Drug Types (FKDTs) to ensure that the formulary provides access to an acceptable range of Part D drugs.

Significant step

Yet the Model Guidelines do not keep current with new drug information and Version 5.0 will be out of date even before it goes into effect on Jan. 1, 2012.

Given the significant gap between USP releases of the guidelines, one questions whether the Model Guidelines serve to protect Medicare beneficiaries’ rights to an adequate formulary. For example, a plan following the USP model guidelines in 2011 would find itself four years behind, thus having a formulary that omits new therapeutic categories and clinically significant medications. Yet such a formulary would meet the Medicare Part D safe harbor for a nondiscriminatory formulary.

CMS explicitly recognizes that prescription drug therapies are constantly evolving and new drug therapies inevitably become available over the course of a single plan year. Therefore, CMS’s policy recognizes that new developments “may require formulary changes during the year to promote high-quality, low cost prescription drug coverage.” Congress also recognized the importance of updating the Model Guidelines and Part D plan formularies to reflect new therapeutic uses for existing drugs and newly approved covered Part D drugs that establish new therapeutic categories or classes. Yet under existing policy, a new drug or a newly approved indication for an existing drug cannot be considered for inclusion in the Model Guidelines until the next three-year revision cycle.

Formulary development and maintenance should be a dynamic process, but the USP Model Guidelines are static. As a benchmark for the adequacy of formularies under Medicare Part D and as a statutory safe harbor, it is time for CMS to consider implementing a process to provide for mid-cycle revisions and updates to the Model Guidelines to reflect new therapeutic uses and newly approved covered Part D drugs.

The authors declare no present conflicts of interest in connection with this article. Ms. Schlosberg did work with two pharmaceutical companies in 2010 regarding presentations to USP, and assisted one of those companies in drafting written comments to USP.

About the authors: Claudia Schlosberg is principal of Schlosberg Consulting and formerly served as director of policy and advocacy for the American Society of Consultant Pharmacists. Richard Stefanacci is an associate professor of health policy at the University of the Sciences, served as a CMS Health Policy Scholar during the introduction of Medicare Part D and is on the MANAGED CARE Editorial Board.
Reach them regarding this article at:
  CSchlosberg@ManagedCareMag.com
  RStefanacci@ManagedCareMag.com

Formulary development should be dynamic, but existing policy says that a drug cannot be considered for the Model Guidelines until the next three-year revision cycle, say authors Claudia Schlosberg, JD (right) and Richard Stefanacci, DO.

MANAGED CARE February 2011. ©MediMedia USA

Atrial fibrillation patients are often noncompliant with warfarin but newer drugs have better safety and side effect profiles

Bob Kirsch

We are now at a turning point with stroke prevention in patients with atrial fibrillation: Warfarin sodium no longer stands alone.

This means that managed care may be able to vastly reduce the cost of paying for stroke care for the patients currently in rebellion against warfarin who then suffer a stroke. These are patients — up to half of those who have been prescribed the drug — who refuse to take warfarin or take it irregularly for their AF condition and then are hit with a stroke. Warfarin will stand alongside the new drugs, but these other drugs are more patient friendly. A hoped-for outcome is that patients will be more likely to take their medicine and thus prevent strokes. And that means big savings in managed care expenses.

2.3 million

With AF affecting 2.3 million Americans and that number projected to rise to 4 million, we are not talking about minor costs for managed care. And we are not talking only about older people, but many in their 40s, 50s, and early 60s.

New drugs in development

An array of new drugs are poised to stand beside warfarin for this indication. Dabigatran, developed by Boehringer Ingelheim, recently received FDA approval, and a considerable number of additional oral thrombin inhibitors and factor Xa inhibitors are in both advanced and early clinical trials. “There are so many agents in phase II and III trials that it is likely that not just one but many alternatives are potentially around the corner,” says Jonathan Piccini, MD, MHS, of Duke University Medical Center and an investigator in a major rivaroxaban clinical trial.

The pivotal phase III trial of rivaroxaban, developed by Bayer with support from Johnson & Johnson, was presented at an American Heart Association meeting in November, and an application to the FDA will probably be filed early this year, says Christian Ruff, MD, MPH, of Harvard Medical School. He is an investigator in a major edoxaban clinical trial.

Apixaban, which Bristol-Myers Squibb is developing jointly with Pfizer, is in phase III trials, and findings will probably be presented next summer, Ruff says. Edoxaban, developed by Daiichi Sankyo, also in phase III trials, is likely to have findings presented in 2012.

Betrixaban, which is being developed by Portola and Merck, has a phase III trial in the planning stage. More than a half-dozen additional related drugs are in earlier stages of development.

Nobody is saying that all of the drugs being researched will eventually enter the clinic, but with so many being developed, it would not be surprising if several find their way to doctors’ offices.

Game changer

Dabigatran is a game changer, explains Mintu Turakhia, MD, MAS, of Stanford University and the Veterans Affairs Palo Alto Health Care System. He is senior author of a study of the cost effectiveness of dabigatran recently published in the Annals of Internal Medicine. “It changes the paradigm in stroke prevention for atrial fibrillation in the United States, and that is a very, very good thing.”

Moreover, it is “very relevant to managed care organizations.” The approval of dabigatran “should change the way health care organizations think about health care delivery for patients with atrial fibrillation,” not only a very common but also a very costly condition.

As mentioned, atrial fibrillation now affects more than 2.3 million Americans, and with the age-adjusted prevalence increasing, estimates are that by 2030 this number will grow to encompass 4 million Americans. Annual direct and indirect costs associated with strokes in the United States linked to atrial fibrillation are estimated at $57.9 billion.

Importantly, Turakhia, Piccini, and Shaker A. Mousa, PhD, all observed, when we spoke with them, that once several of these drugs receive approval, the huge market potential and the competitive environment will lead prices lower.

Suboptimal use of warfarin

“The introduction of other oral thrombin inhibitors and factor Xa inhibitors will drive drug costs down over time,” says Mousa, vice provost for research and professor of pharmacology at Albany College of Pharmacy and Health Sciences and author of several review articles on the subject.

Warfarin reduces relative risk of stroke by two thirds, but not if patients do not take it, and between one third and half of patients for whom it is indicated are not taking warfarin, says Piccini. Beyond that, many patients on warfarin remain unable to attain adequate anticoagulation because of factors including drug and dietary interactions, inconvenience of monitoring the international normalized ratio (INR), and the need for frequent dose adjustments. Overcoagulation can also lead to hemorrhage. As Brian F. Gage wrote in a recent New England Journal of Medicine editorial, the real-world effectiveness of warfarin is about 35 percent.

In addition, heart failure or pneumonia sometimes destabilize the INR of patients on warfarin: “It is not uncommon to hospitalize these patients for elevated INR, something that will not be seen with the new drugs, “ Ruff observes.

Multiplicity of new drugs

“These drugs have different characteristics and so will be appropriate for different patients,” Piccini says. As there are multiple drugs now used to treat hypertension or myocardial infarction, so for the first time physicians addressing stroke prevention in atrial fibrillation will be able to choose among relevant drugs, assuming several are eventually approved.

And even right now, it is likely that the availability of dabigatran alone will improve compliance. None of the new agents will affect diet and lifestyle as warfarin does, and so it will be easier for patients to adhere to physician orders, Moussa explains. And if compliance leads to better clinical outcomes in terms of efficacy and safety, then lower costs will follow: More patients will be able to avoid strokes, and expensive stroke therapies will be required less frequently.

Some of the new drugs require once-daily dosing, others twice-daily dosing. They differ in half-life and degree of renal clearance: Only betrixaban is not renally cleared. Researchers are looking at bleeding rates and dyspepsia and other gastrointestinal side effects, Ruff says, noting that all the new drugs differ from warfarin and that it will be some time before we are able to compare them.

For medical procedures that may entail bleeding,“We don’t know yet when patients stop one of these new drugs whether it is safe to give them another anticoagulant” or whether that will be necessary, Ruff says.

Cost of the new drugs

No simple comparison of the costs of warfarin and the new drugs can be made, says Mousa who points out that some costs associated with warfarin can be easily defined (for example, monitoring) but that others are harder to measure (for example, effect of lifestyle/dietary changes).

Meanwhile, larger changes in the U.S. health care landscape may affect warfarin clinics and payments, Piccini notes. “At this point it is impossible to have the entire picture.”

Will individual patients be willing to pay directly for drugs more expensive than warfarin? “I’m not certain the average patient who is taking four or five medications a day will pay for it,” Ruff says.

“The people who can afford the new agents will pay for the convenience of not having to measure INRs along with some of the other benefits. Those who cannot will continue to use warfarin,” Mousa says.

Frederick A. Ehlert, MD, associate clinical professor of medicine at Columbia University Medical Center, is offering dabigitran to all his patients on warfarin, aside from those with renal failure. “Most are switching despite the higher out-of-pocket costs” and he finds there is “a major quality of life impact for patients.” Warfarin costs about $1–$2 per tablet (average wholesale price) depending on the quantity dispensed.

Might it be in the interest of managed care organizations to supplement part of the costs of these drugs as a way to lower overall costs? “When you look at all the associated costs, it may be reasonable to think that lowering the cost of these medications for patients might save health systems a considerable amount of money,” Ruff says.

Who will be given the new drugs?

“Warfarin will be around for a considerable period,” Ruff says, and will be “the dominant player for the future in the United States.” One possibility is that the new drugs will be given primarily to patients not yet on warfarin and those not well controlled on warfarin. “The trial results of dabigatran do not show that it is necessarily better than warfarin” for patients well controlled on that drug.

Mousa agrees that patients noncompliant with warfarin would be good candidates for the new oral drugs, but cautions that “accurate cost-effective comparisons between the different scenarios have not yet been carried out.

“We should keep in mind that warfarin is a very good drug. But it has a narrow therapeutic window and it’s not difficult for patients to slip out of this range, and when that happens, there can be safety problems,” Mousa says.

But dabigitran also “decreases intracerebral hemorrhage rates significantly,” Ruff points out.

“Much safer drug”

For patients compliant with dabigatran, Turakhia says, “The variation in the anticoagulation is much less, and that makes it a much safer drug,” while even patients compliant with warfarin exhibit considerable variation in the quality of anticoagulation depending, for example, on what they ate for lunch.

Should the new drugs be given to patients under age 65 even though the clinical trials have focused on older populations? “The relative benefits and risks for patients younger than 65 may not be very different from those shown in the trials, but it is hard to speculate outside of clinical trials. So, you might do this with caution,” Turakhia says.

Dabigatran

Dabigatran, which has received FDA approval, is a “very compelling alternative to warfarin,” Turakhia says. Compared with warfarin, the cost of the 150 mg dose of dabigatran at roughly $8 per day is approximately $12,500 per quality-adjusted life-year (QALY), according to Turakhia’s analysis in the Annals of Internal Medicine. Turakhia describes this level as being “very compelling for health policy” and explains that if other new drugs cost $5 to $6 a day, there could be a net savings associated with their use, if associated expenses are factored in.

“The cost of dabigatran is reasonable, compared with other things we do in medicine,” says Ruff.

The pivotal dabigatran trial published in the New England Journal of Medicine randomized 18,113 patients with atrial fibrillation and risk of stroke to receive either 110 mg or 150 mg dabigatran twice daily (blinded) or warfarin (unblinded), the median duration of follow up being two years. “The 75-mg twice-daily dose now approved by the FDA and was not studied” in this trial, Mousa points out.

The dabigatran trial showed that it carries a slightly higher risk of myocardial infarction than warfarin. “We know warfarin confers some benefit toward the prevention of MI, and that benefit may be attenuated with dabigatran,” Turakhia says. Whether there is a higher risk of MI is a “real concern and we need to see how this drug plays out in the real world.”

The FDA recommends the 75-mg twice-daily dose for persons with poor renal function (creatinine clearance of 15 to 30 mL/min).

Trial

In the trial, rate of stroke or systemic embolism was 1.69 percent per year with warfarin, 1.53 percent per year with 110 mg dabigatran (relative risk with dabigatran [RRd] 0.91; 95 percent confidence interval [CI], 0.74–1.11; P < 0.001 for noninferiority) and 1.11 percent per year with 150 mg dabigatran (RRd, 0.66; 95 percent CI, 0.53 to 0.82; P< 0.001 for superiority).

Rates of major bleeding were 3.36 percent per year with warfarin, 2.71 percent per year with 110 mg dabigatran (P=0.003) and 3.11 percent per year with 150 mg dabigatran (P =0.31).

Overall, there was a 60 percent reduction in intracranial bleeds with dabigatran. If bleeding does occur with dabigatran, “the first thing to do is to stop the medication, because the blood levels drop fairly rapidly after you stop the medication,” Mousa says.

Dabigatran has no significant drug-drug or drug-food interactions, whereas there are dozens of drugs that can complicate the creation of a warfarin regimen. The only warning in the FDA label for dabigatran is its contraindication with rifampicin. As to switching patients from warfarin to dabigatran, Moussa explains that “dabigatran becomes therapeutic within 0.5–2 hours of oral administration, so it is pretty immediate.”

Drugs in the pipeline

While dabigatran is a direct thrombin inhibitor, several of the most promising drugs in the pipeline are factor Xa inhibitors. The common branch point for both the extrinsic and intrinsic coagulation pathways, factor Xa inhibitors prevent thrombin formation by interfering with Xa upstream, Piccini explains.

Results from the pivotal double-blind phase III rivaroxaban study randomizing 14,264 patients to the new drug or warfarin were presented at the American Heart Association in Chicago on Nov. 15, 2010 but, of course, the data were neither complete nor peer reviewed.

For many reasons, it looks to be prudent to keep a sharp eye out for these new drugs. Sharp but cautious. “There are a lot of reasons to be excited about dabigatran but caution may be appropriate until there is more experience with them in the real world. I am excited but not ready to switch patients on warfarin until we see how things work in the real world,” Turakhia says.

Reach the author, Bob Kirsch, at BKirsch@ManagedCareMag.com

Patients may not be willing to pay for drugs more expensive than warfarin, says Christian Ruff, MD, MPH, an investigator in an edoxabab trial.

Dabigatran is a game changer that alters the paradigm in stroke prevention, says Mintu Turakhia, MD,of Stanford.

“The people who can afford the new agents will pay for the convenience of not having to measure INRs,” says Shaker A. Mousa.

MANAGED CARE January 2011. ©MediMedia USA

Patient-advocacy groups and some physicians are lobbying legislatures to hobble this common technique to control drug costs

John Carroll

Over the past decade, health plans have designed increasingly sophisticated drug formularies to push their members to the most cost-effective therapies that can treat their ailments. In some cases, new tiers have been added that increase members’ out-of-pocket expenses for pricey biologics. Prices for generic drugs as well as a host of preferred therapies have been reined in. And as branded blockbusters lost their exclusive market status, payers have begun to gain leverage on drug costs by aggressively pushing low-cost therapeutic substitutions.

By pushing up generic drug use, formularies helped save the health care system close to $140 billion in 2009, according to a study by IMS Health. Overall, generics now account for 70 percent to 72 percent of all scripts, says Lisa Zeitel, a senior vice president and AON Hewitt’s national leader for pharmacy consulting. In the next couple of years, with blockbusters like Lipitor losing exclusivity, that rate could easily exceed 80 percent.

To push savings further, formularies increasingly relied on the therapeutic substitution of prescription drugs, using tactics like step therapy. But as therapeutic substitution has become increasingly popular with insurers, it’s been just as effective at agitating doctors and some influential patient advocacy groups. And that is helping to create a fertile landscape for new legislation designed to limit or even stop the practice.

A few weeks ago the Global Healthy Living Foundation, which speaks out on behalf of the chronically ill, released a survey claiming that insurers are now responsible for pushing physicians to switch drugs on up to 70 percent of all prescriptions being handed out. And the advocacy group zeroed in on so-called fail-first brand drug programs, where payers can designate drugs which have to be tried first.

“When patients are switched so the health insurance company can save a few pennies, and then the patient’s chronic condition worsens, not just the patient, but the entire economy suffers,” argues Louis Tharp, the executive director of the foundation.

Prescription switching is an issue that has been resonating with doctors as well. Tharp’s group has been tracking proposed legislation in California, Missouri, and New York that would rein in payers’ switching tactics. And he says that Louisiana legislators have already acted to stop the practice.

In Georgia, meanwhile, the state epilepsy foundation pushed through a law this year that requires prescription labels to alert patients to generic substitutions, as doctors complained loudly about risks. And other state groups are preparing to join the movement as new legislation brews around the country.

In South Carolina, for example, the state medical association recently surveyed its members and found that 97 percent said they had to switch a medication for a patient because of insurance companies’ restrictions — and nearly as many thought that new legislation was needed to better regulate the practice.

Signing off

Analysts are seeing a growing number of step therapy programs, says Zeitel, particularly in drug classes where the insurer’s pharmacy and therapeutics (P&T) committee sees a high level of therapeutic equivalence, such as proton pump inhibitors.

“Some pharmaceutical benefit management programs try to get someone who uses, say, Aciphex, to take another proton pump inhibitor like omeprazole [Prilosec] or Nexium,” she notes. “The emphasis is a generic or formulary brand. Alternative generics are always more cost effective.”

There are some real advantages to these kind of interchange programs, says the Academy of Managed Care Pharmacy, which works with many pharmaceutical benefit managers. When directed by a dedicated team of experts — pharmacists and physicians who understand how to evaluate therapeutic equivalence — substitution programs can save patients money by lowering out-of-pocket costs, help identify medications that can be more convenient to take, and improve compliance rates and outcomes.

P&T experts say that any kind of formulary change is likely to trigger a backlash, so you have to anticipate the reaction and explain clearly what you are doing.

“Implementing a switch from one drug to another within a therapeutic class may be opposed by some on the grounds of convenience or safety as proxies for quality,” writes Marc Mora, MD, a medical director at Group Health Physicians, an integrated physicians group, in the June issue of the American Journal of Pharmacy Benefits. “Committees should respond early to potential arguments against the switch. Including those arguments in communications to patients, physicians, or purchasers also can help align those groups in the change process.”

It’s also important to keep in mind that all payers offer ways to protect patients and listen to doctors’ advice, adds Zeitel.

“In cases where there may be no coverage, there’s always an appeals process,” says Zeitel. That may be a hassle for the member and physicians or their staff, but it does work and has helped mute opposition.

For the plan to get the therapeutic substitution prescribed, though, doctors do have to sign off on the switch first. And that’s when temperatures start to rise.

For the past five years, Hugh Durrence, MD, a family practitioner in Charleston, S.C., has managed to effectively control the blood pressure of one of his hypertensive patients with a branded drug that has worked extremely well. With no warning at all, he says, the patient’s pharmaceutical benefit manager’s formulary changed, excluding coverage of the drug and directing her to get Durrence to choose from five other medications in the same class.

“Just because they’re in the same class doesn’t mean they’re equivalent medications,” says Durrence, angry that a patient of his who has already found a drug that works has to start regular monitoring again to find another one she can afford.

“With another patient,” offers Durrence’s nurse, Jean Moore, “to get the insurance company to pay for the drug, he needed to fail two generics first.” By the time he had finished failing, “he could barely breathe or talk.” And those are just a couple of examples of a growing trend.

It’s a position that the head of the South Carolina Medical Association intends to take up with legislators in his state. The SCMA is “currently prioritizing a number of outstanding issues, therapeutic switching among them, that it intends to aggressively pursue in the next legislative session,” says association CEO Todd Atwater.

Looking for options

Even generic drug substitution — replacing an expensive branded drug with a far less expensive copy containing the same active ingredient — isn’t always safe, say other experts.

One of the most regularly used antiseizure drugs in the United States is Keppra (levetiracetam), says Lawrence Seiden, MD, a neurologist who helped push for the law.

Different standards

“There are about 18 or 20 manufacturers of the generic form of that drug around the world,” says Seiden. “Each manufactures it to different standards, and they don’t have to compare theirs to each other. They just have to present data on how they compare to the original. One [dosage] may run low, another high. Every month a patient’s medication may come from a different manufacturer.”

For epileptics, that variability can lead to trouble, he says.

“Historically, even with the newer generation of antiseizure medications, when patients who are doing well on brand names are switched to generics, there is an increased risk that patients are going to have some problem side effects, recurrent seizures, or both.”

Initially, Seiden adds, the foundation wanted to try for a much tougher law that banned any substitutions. But it couldn’t force insurers to pay for everything that is prescribed. And patients often simply can’t cover the cost alone.

“Our issue is not with the pharmacy,” says the neurologist. “Our issue is with the insurance industry. Many insurers don’t offer adequate reimbursement for the brand-name medicine.”

Any laws that do interfere with a pharmaceutical benefit manager’s ability to steer patients to cheaper drugs probably “would slow down the overall rate of savings,” concedes Zeitel. But the tidal wave of generics cannot be stopped.

Electronic prior authorization

New e-prescribing technology can help, offers Durrence. Insurers could set up electronic prior authorization to make it easier to gain a payer’s acceptance of a needed drug.

“As we get into this new environment of electronic prescribing, we have to leave the medical decisions in the doctors’ hands,” the physician adds. “E-prescribing has to be designed to allow us to promote the highest quality of care, with the right dose to the right patient at the right time. We must preserve the physician-patient relationship.”

Reach John Carroll at JCarroll@ManagedCareMag.com.

The tidal wave of generics cannot be stopped, says Lisa Zeitel, AON Hewitt’s national leader for pharmacy consulting.

“Just because they’re in the same class doesn’t mean they’re equivalent medications,” says Hugh Durrence, MD, a family practitioner in Charleston, S.C. He is one of many who want to leave well enough alone when a prescribed drug is found to work.

MANAGED CARE September 2010. ©MediMedia USA

Coverage of this costly biologic for prostate cancer is generally being provided under very specific circumstances

Ed Silverman

After three years of intense scrutiny and heated debate, the Provenge vaccine for prostate cancer was approved last spring and, by most accounts, the sought-after endorsement appeared to end what had been a tumultuous and long-running drama surrounding the product. As it turns out, the excitement for managed care is just beginning.

Not everyone followed the events closely, so a little history is in order. After an FDA advisory panel recommended approval in May 2007, the agency ignored that advice and rejected the vaccine, thanks, in part, to private notes written by two panelists who were unconvinced by the trial data and argued against approval. This unexpected development led to charges that those panel members held undisclosed conflicts of interest.

Angry cancer patients and their families held protests outside FDA headquarters. They also joined investors in filing a lawsuit against the agency. And there was a Securities and Exchange Commission inquiry into unusual trading activity in the shares of Dendreon, which makes Provenge.

Price, availability, coverage

“This has been quite a story,” says Howard Liang, a biotechnology analyst at Leerink Swann, who tracks Dendreon. “Provenge is definitely one of the more interesting tales in biotech. With this one, you can only be certain there will be surprises.”

Indeed, since the April approval by the FDA, Provenge has remained a source of heated controversy, but the most recent hoopla has centered on issues near and dear to third-party payers — price, availability, and insurance coverage.

Using patients’ cells

The vaccine is the first in a new class of cancer-fighting treatments that use a patient’s own cells to stimulate the body’s immune system to fight cancer, an approach known as immunotherapy. Essentially, Provenge is a customized product that extends mean survival time by roughly four months and costs $93,000 for the necessary three courses of therapy. It is for patients who have prostate cancer that has metastasized, who have either minimal or no symptoms from the disease, and who have not responded to hormone-blocking drugs.

And so, amid lingering skepticism in some quarters about key trial data and, consequently, overall value, the central issue is the extent to which third-party payers will bless this new therapy.

So far, the early indications look favorable, although there are many factors, of course, that must be considered as the coverage process plays out.

High on the list is the cost. In the weeks leading up to regulatory approval, Provenge pricing was a betting game that rivaled the Kentucky Derby. Analysts and fund managers were scurrying for information and, in the end, relied on what turned out to be very hazy crystal balls — some estimated that Dendreon would price its vaccine as low as $40,000 per patient annually, while others predicted as much as $70,000. But even they were shy of the mark.

Some insurers fall in line

Despite the surprising heft of the price tag, several large third-party payers are falling in line. Among them are Aetna, Humana, Emblem Health and Kaiser Permanente, as well as some Blues plans. Yet it remains unclear how many other plans will follow suit, with or without caveats. A recent survey of medical and pharmacy directors at 50 national and regional insurers found that two thirds did not have any concern that Provenge is now available, but 65 percent did indicate that they might restrict patient access in some fashion.

At the time the survey was conducted in June, 80 percent of the respondents hadn’t yet reviewed the vaccine, but 74 percent expected to require some form of prior authorization — such as documented use of two courses of hormonal therapy — with only 19 percent indicating that they expected no restrictions at all. And 46 percent responded that they would not pay without patients first undergoing chemotherapy treatment, while 56 percent expected they would require documented metastatic disease for payment. In short, coverage may come with conditions, underscoring concerns about immunotherapy, in particular, and ongoing worries over the high cost of specialty drugs that have little or no price competition.

“Payers are going to be much more skeptical of high-cost therapies, especially Provenge,” says Rhonda Greenapple, who heads Reimbursement Intelligence, the consulting company that conducted the survey, which also found that most payers expect a six-month incremental improvement in survival benefit for new drugs to demonstrate a clinical benefit over standard-of-care treatments. “What payers are telling me is that it is very expensive and has a minimal survival advantage … for $93,000,” she says.

Finesse it

These decisions, though, reflect a stark reality that requires payers to exercise a degree of finesse as they attempt to balance their budgets with patient needs in the context of the larger national discussion about health care reform. As one managed care expert explained, Provenge is symbolic of an uncomfortably difficult and all-too familiar situation that payers periodically confront — the emergence of a different, if not novel, type of therapy that plays into the necessary debate about the scientific evidence needed for coverage of treatments for life-threatening diseases.

“This is a very interesting case,” says Bruce Leavitt, lead “payer value consultant” at Milliman. “Provenge is, literally, a nexus of innovative therapy, cancer treatment, specialty drug, and aggressive price. And cancer is one of those areas that when you have something that has a significant impact on a patient’s life and where the current therapies don’t meet the demand, well, that’s where you really want to reward innovation. That said, when there’s a big cost and the value isn’t well established, managed care will try to drag it out. They don’t want to take the hit on the budget, but based on what we’re seeing so far, they will end up capitulating” and cover Provenge.

CMS review

An interesting sideshow, and a relevant one, is playing out at the Centers for Medicare and Medicaid Services, which, in late June, unexpectedly disclosed plans to undertake a national coverage analysis of Provenge after receiving inquiries from local Medicare contractors. CMS officials were vague about the specific questions that prompted their move, although they have no mandate to explore the price. Just the same, the CMS review, which won’t be completed until next June, will determine what those local Medicare contractors ultimately do. Until then, speculation rests on such issues as whether Provenge may be viewed as a drug or biologic and the quality of its trial data, according to remarks made by Louis Jacques, director of the coverage and analysis group at CMS.

For their part, Dendreon executives maintain that the CMS launched its review to ensure that Provenge is administered only to qualified patients, which is another way of saying that the potential for off-label usage is being scrutinized. Moreover, they believe that 14 of 15 regional Medicare contractors have taken steps that suggest that coverage is being provided. For instance, Hans Bishop, Dendreon’s executive vice president and chief operating officer, told Wall Street analysts in a recent conference call that nine Medicare contractors published coverage guidelines that “we interpret as supportive of on-label use. Our customers tell us that a further three [contractors] have issued written confirmation of coverage, and another two have given [oral] confirmation.” And they also point out that the National Comprehensive Cancer Network, a not-for-profit alliance of 21 cancer centers, endorsed usage.

Coverage decisions coming soon

Overall, Dendreon executives maintain that many coverage decisions are coming in sooner than expected. “We’re seeing really good traction on the private payer side, too,” Bishop said, although he declined to discuss the progress in convincing other large private payers to provide coverage.

Nonetheless, questions about value — and not just economic value — continue to linger in ways that may give pause to insurers, as well as physicians. In mid-July, a 27-page analysis suddenly began circulating on the Internet and was purportedly written by an anonymous team of experts who questioned whether the survival extension was really four months and suggested that the manufacturing process used by Dendreon skewed trial results.

The detailed missive seemed to spook investors more than anyone else, given that it was aimed at the financial community.

Nonetheless, its appearance managed to garner significant publicity, prompting a few Wall Street analysts to issue research notes that day to calm their clients. The report moved off the collective radar screen quickly, especially since the lack of authorship undermined any claims toward credibility. Still, the bizarre turn of events suggested that third-party payers and physicians may have been given another reason to scrutinize the vaccine.

New England Journal weighs in

If the mysterious memo didn’t raise such concerns, though, the New England Journal of Medicine may have come much closer. In late July, it gave Dendreon the imprimatur of long-sought respectability by publishing a report on the IMPACT (Immunotherapy for Prostate Adenocarcinoma Treatment) trial, Dendreon’s most important study data on Provenge. In reality, there was nothing in the study that wasn’t known before and so the take-away message remained intact — overall, Provenge patients had a 22-percent decrease in the risk of death compared to the controls in the trial and an increase of 4.1 months median survival time. And the study findings were unchanged even for patients who were treated with chemotherapy — specifically, Taxotere, the Sanofi-Aventis medication.

The study, however, wasn’t the issue. An accompanying editorial written by a cancer researcher threw some cold water on Provenge. The researcher called the reduction in the risk of death “an important step,” but then wondered whether the treatment regimen that was given the placebo group in the study — these were cells not incubated with an immune stimulant — somehow accounted for the favorable outcome. And the researcher also reiterated skepticism about the lack of evidence that Provenge shrinks tumors or delays tumor growth. Here is a shortened link to the NEJM article’s abstract, which includes a method for obtaining a reprint: www.nejm.org/doi/full/10.1056/NEJMoa1001294. This link is to the editorial, which requires an NEJM account: www.nejm.org/doi/full/10.1056/NEJMe1006300

Concerns

“The prolongation of survival without a measurable antitumor effect is surprising,” wrote Dan Longo, an immunologist at the National Institute on Aging. “It is hard to understand how the natural history of a cancer can be affected without some apparent measurable change in the tumor, either evidence of tumor shrinkage or at least disease stabilization reflected in a delay in tumor progression. This lack of tumor effect raises concern that the results could have been influenced by an unmeasured prognostic variable that was accidentally imbalanced in study-group assignments.” He also seized on price by adding that the “high cost may affect use” and that in the not-too-distant future, Provenge may be eclipsed by “other promising treatments in development.”

Any negative reaction among physicians — be they urologists or oncologists — is unclear at this point, since Provenge is still a relatively new treatment and the cautionary tone of the editorial may take some time to marinate as specialists continue to assess the data and the specific needs of their own patients. Still, the sentiment expressed by Longo could have the effect of dampening the enthusiasm some doctors are expected to show for the treatment, and this would only work in favor of third-party payers that would like to see measured use of the vaccine.

Physicians surveyed

Up to that point, there seemed to be a growing belief that most physicians stand ready to embrace Provenge. Just days before the editorial was published, Howard Liang, with Leerink Swann, an investment bank specializing in health care, published a survey of 17 physicians who work at 13 distinct institutions, a quarter of the 50 initial sites administering the vaccine.

More than half indicated they planned to prescribe Provenge this summer, and most of the prescribers at the time were waiting for confirmation of payment before prescribing to additional patients. Significantly, he found there were no big issues regarding payment, pre-authorization, or logistics raised by any of the doctors. All in all, the reasons for not yet prescribing Provenge did not “appear particularly ominous for future use.”

Did the editorial in the New England Journal of Medicine suggest that the situation on the ground may change? Liang doesn’t think so. “I could see, maybe, someone who isn’t familiar with the data may perceive some issues. But my guess is the issues raised wouldn’t surprise anybody in terms of the credibility of the data,” he says.

“Everyone struggles with the survival issue, but statistically significant survival benefit was seen in two trials and a similar trend was seen in a third trial. It’s probably hard to explain that by chance. Most doctors would say that, if the FDA approves it, they intend to use it. That’s what we found from our survey. I think it would be restricted to on-label use, but it’s not clear to me how you would restrict it further within the label population. Anyway, I do think it will be covered. But in this environment, there can always be surprises.”

One development that isn’t surprising is the lack of available vaccine. So far, Dendreon has just one facility available to provide Provenge to patients, which is located in New Jersey, although the company is still awaiting FDA approval of a recent expansion. And two more facilities are expected to be running by the end of 2011, in Atlanta and California. In the meantime, though, rationing is taking place. For instance, 8 of the 13 institutions surveyed by Leerink Swann reported having a waiting list that is running, on average, nine months. In fact, just 2,000 patients are forecast to receive treatment during the first 12 months that Provenge is available.

As a practical matter, this supply constraint may place less pressure on third-party payers to respond to inquiries from physicians and demands from patients. And this conservative posture is likely to continue, given that Dendreon is very carefully managing Provenge production to avoid even the slightest mistake that could erode confidence among patients, physicians, investors, regulators, and even big drug makers.

As industry observers have noted, Dendreon has not yet struck a deal with a large pharmaceutical company that could enhance its manufacturing and marketing ability, a move that is needed if the company wants to maximize growth not just in the United States but, eventually, overseas. Until or unless that happens, third-party payers may be spared a crushing hit on their near-term budgets, although Provenge must also be watched closely as a test case, since similar treatments are said to be in the offing.

Critical mass

“What also makes this product an issue is the notion of critical mass,” says Milliman’s Leavitt. “If you’ve got a bunch of similar products coming right behind it, and I’m not saying that’s the case here, managed care must follow this very carefully. There will be other [treatments], but right now, there are lessons to be learned.”

Ed Silverman reports on the pharmaceutical industry. Reach him at ESilverman@managedcaremag.com.

Original links for NEJM articles

• http://www.nejm.org/doi/full/10.1056/NEJMoa1001294
• http://www.nejm.org/doi/full/10.1056/NEJMe1006300

The appearance of blastic metastasis to bone (green area) is typical in a person with prostate cancer as seen in this axial CT image. Credit: Medical Body Scans / Photo Researchers Inc.

Just 2,000 patients are forecast to receive treatment during the first 12 months that Provenge is available.