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Highlights of the Second Annual P&T Society Meeting: Integrating Clinical and Pharmacoceonomic Data in the Formulary Decision-Making Process

Speaker: Gary M. Owens, MD, Vice President, Patient Care Management, Independent Blue Cross, Philadelphia, Pennsylvania.

Dr. Owens discussed the drivers for pharmaceutical costs. While health care costs are still rising, managed care growth has flattened and employer-based coverage is declining. And the increase in pharmacy costs exceeds other health care costs. The primary driver of increased pharmacy costs is increased utilization. The growing research and development (R&D) budgets and faster FDA approval have led to more new products in the marketplace. The drivers for prescription drug spending include new drugs, biotechnology products, genomic/proteomic therapies, lifestyle drugs, and DTC advertising. The dilemma for health plans then becomes how to balance the desires of members and providers for the coverage of new pharmaceuticals versus the scientific evidence supporting their use. Health plans must be able to evaluate new pharmacy products as they come to market and understand the impact of new products in the marketplace and pharmacoeconomics (i.e., economic, clinical, and humanistic outcomes vs. cost). When using pharmacoeconomic steps and models, emphasis must be placed on real-world scenarios, value propositions, applicability to the plan, the ability to verify information, and understanding limitations. Limitations can include assumptions that are difficult to validate; a model creating multiple scenarios; the lack of a standardized format for pharmacoeconomic studies; and claim and pharmacy data that are not easy to merge. In addition, plan experts must review and understand the pharma-coeconomic studies; models will change and need refinement; and assumptions or the population might change for the plan.

Strategies for Cost Containment: Designing Programs for Benefit Providers

Speaker: Michael J. Sax, PharmD, Principal, The Pharmacy Group LLC, Glastonbury, Connecticut.
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Dr. Sax discussed the value of pharmaceutical benefit to consumers, employers and unions, and health plan and individual providers. The role of drugs in health care has transitioned from cost plus reimbursement to science-based efficacy. The annual drug-cost trend will continue to rise and is projected to be in the 13% to 18% range every year over the next three years in an unmanaged program. New drugs that are expected to account for 75% of future trends are cardiovascular, hypertension, and cholesterol-lowering drugs; central nervous system, psychiatric, and neurological drugs; gastrointestinal drugs, anti-infective drugs; and endocrine and diabetes drugs.

HMOs were created to change physician and hospital behavior. Then PBMs were created to change pharmacists’ and pharmaceutical companies’ behavior. Pharmaceutical cost control is a mix of four basic approaches: benefit design, drug selection, utilization management, and drug purchasing. The traditional pharmacy benefit design operated with a silo mentality by controlling costs in a vacuum; pharmaceutical budgets were pitted against medical budgets. The focus was on short-term financial gains and there was no integration with medical management. The new thinking in pharmacy benefit design is to manage total health care costs and integrate with medical management. There is now an increased focus on appropriate drug use, documentation of positive health outcomes, and an attention to long-term gains. Pharmacy costs can be managed by increasing premiums to employers and increasing cost-sharing by members, as well as redesigning pharmacy benefits and improving cost-management strategies. Long-term pharmacy spending can be reduced with closed formularies, utilization management, negotiated discounts, and by increasing member co-pays. Costs can be shifted by differential and/or percentage co-pays, front-end deductibles, and benefit caps and/or exclusions. Patients can be sensitized to price variations if there are additional tiers, reference pricing, annual caps and deductibles, as well as increased costs for generics and a shift to percentage co-pays.
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The challenge is to educate consumers to assume payment for non-covered drugs. By creating a triple-tier option where the co-pay at each tier is double that of the tier below, the short-term drug spending is slowed and consumers are steered toward less expensive drugs. Although this creates an incentive for the manufacturer to offer deeper discounts, it also raises questions about cost and the quality of pharmaceutical care for consumers. The current challenges are to balance the high-member demand for pharmaceutical benefits with the afford-ability of drugs, and to leverage opportunities to promote appropriate pharmacy drug use while controlling cost. The future challenges and opportunities lie in the advances of drug development, pharmaceutical marketing, prescription drug coverage, and in coping effectively with further increases in drug spending.

Category: Health

Tags: Second Annual, Society Meeting

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