Thomas Morrow, MD

The recent "Pharmaceutical Evaluation Survey, 2002" by Health Strategies Group reports that 57 percent of medical directors see biotech drugs as a concern both now and in the future. There is good reason to be concerned. There are 119 biopharmaceuticals for sale around the world with a total market of $32 billion. This segment is growing at a compound annual rate of almost 28 percent — nearly double the rate of other drugs.

The overall market is expected to reach $59 billion by 2010. Little competition has cropped up. There are no generic biologic products in the U.S. Moreover, the FDA has no mechanism for reviewing generic biotech products. Experts suggest that the earliest generics may become available is 2010. In addition, pharmaceutical manufacturers have attempted to limit competition by having biologic products classified as orphan by the FDA, providing seven years of exclusivity.

In fact, since the Human Genome project mapped nearly 40,000 genes, there is lots of room to develop drugs for which there is no competition, ensuring high levels of reimbursement for high-priced biopharmaceuticals.

So far, there has been minimal management of biotech drugs by health plans. With little competition in most of the categories of biologics, plans' ability to drive concessions from the manufacturers is limited. In fact, except for the need to assuage public outcry, manufacturers have been able to charge plans whatever they choose. The June 18 Wall Street Journal mentions $28,000 per dose for Zevalin (ibritumomab tiuxetan).

Health plans have used management techniques centered on limiting access to an entire category or increasing the cost sharing to the member. These techniques include:

  • Requiring prior authorization;
  • Requiring first use of nonbiologics;
  • Blocking off-label use;
  • Establishing a higher tier or a percentage copayment; and
  • Using a specialty pharmacy company (SPC) as the supplier with payment going straight to the SPC from the MCO.

Most plans have not gone much further. Only rarely have plans set criteria that actually block access to a specific drug for their entire population. Why? There are a variety of reasons.

First, biologics have been traditionally paid on the medical side and, second, there were very few available.

In the past, there was no need to manage biologics, as most medical and pharmacy directors never saw a report on the costs. But all of this has changed. With the number of drugs and the types of diseases that can be treated increasing, most MCOs are seeing nearly triple-digit increases in yearly expenses for biologics — if a report can even be compiled!

Create a competitive environment

So, what else can medical and pharmacy directors do? They can create a competitive environment among manufacturers and obtain lower prices or rebates from them.

The average formulary has only a few proton pump inhibitors on its preferred list. Likewise, most limit access to just one or two of the COX-II agents. There are a number of categories of biologic drugs that can be managed using the same techniques that have been used for the management of small molecules.

But in order to manage a biologic in this manner, there must be a substitute agent that has approximately the same efficacy and safety as the alternatives available. There must be a demand on the part of the MCO to the manufacturer. And the MCO must be willing to accept the repercussions.

Rheumatoid arthritis drugs

There are three anti-TNF drugs — Enbrel (etanercept), Remicaid (infliximab), and Humira (adalimumab). All of these drugs are effective and reasonably safe. There are no head-to-head trials and the published studies all have different selection criteria, methodologies, and endpoints. Thus, there is no published scientific article that allows an MCO decision maker to rule out one over another based on clinical comparisons.

There are a few distinguishing characteristics. They include:

  • Interval between dosing;
  • Office dosing vs. self-administration;
  • Infusion vs. injection;
  • Pre-prescription testing;
  • Weight-based versus flat dosing;
  • Response-based dosing;
  • Source of drug: physician versus pharmacy or specialty pharmacy; and
  • Cost.

Rheumatologists and other health care providers have deemed these drugs equally acceptable, and they are certainly an improvement over the small molecules. With no head-to-head trial, the most logical way to manage this category is to pick the least expensive, limit choice with stepped-care criteria, and use a specialty pharmacy to distribute the drug at a negotiated discount. By limiting the formulary, price concessions and rebates will probably become the norm.

Interferons for hepatitis C

There are two pegylated drugs available for this disease: Peg-Intron (peginterferon alfa-2b) and Pegasys (peginterferon alfa-2a).

Both are roughly the same price and share most other characteristics. Why should a plan allow the use of both when a more favorable contract may be available if all requests are directed to a chosen drug? In addition, MCOs should demand a disease management program to ensure compliance with the treatment regime because partial treatment is likely to be followed by a poor sustained viral response. A disease management program, financed by the manufacturer, would ensure the highest possible sustained viral response with no additional case management costs to the health plan.

Multiple sclerosis

There are four drugs, two of which are the same chemical, for this disease. There are two distinct interferons. Rebif and Avonex are chemically identical (interferon beta-1a). Betaseron (interferon beta-1b) is the third drug, and a polypeptide, Copaxone (glatiramer acetate), also is available. Other than a dose-response effect, the interferons are basically interchangeable. A logical approach for this disease would be to pick one, or at most, two of the interferons and glatiramer acetate. The opportunities for MCOs to obtain better contracts would obviously be enhanced if one interferon and glatiramer acetate were chosen.

Best of the rest

Growth hormone treatments. There are numerous interchangeable products on the market with indications for growth hormone deficiency. Why not eliminate all but one?

Hemophilia products. Shortages have made this category problematic, but now there are ample supplies and new products. Formulary committees may target this class for exclusions with no ill effects for the members and little opposition.

Erythropoetin. What can a plan do for this category? Limit office injection and encourage self-injection. This will reduce the cost, as physician fees are eliminated. In addition, if these drugs were subject to an additional copayment for office administration, the patient would be encouraged to use self-injection.

The savings from managing the current injectables are limited, but given the rapid development of the biopharmaceutical segment, action must start somewhere. Only by managing this segment will MCOs be able to continue to make these miraculous drugs available for tomorrow's patients!

Thomas Morrow, MD, is president of the National Association of Managed Care Physicians and vice president and medical director of Matria Health Care. He has 19 years of managed care experience at the payer or health plan level.