Healthcare Town Hall

Often lying off the radar screen of many insured populations is the high number of prescriptions for opioid analgesics (or narcotic analgesics). These drugs are prescribed for pain relief for a wide range of conditions and the potential for abuse of these medications has grown over the past several years.

High utilization patterns of these prescription drugs do not always attract attention because, compared to other classes of medications, they are relatively inexpensive. As seen in Figures 1 and 2 below, based on a 50,000-patient commercial dataset, when sorted by total allowed charges, opioid analgesics rank 13 in terms of highest total cost, but when we sort by number of prescriptions, this therapeutic class jumps in rank to 2.

There are several methods for analyzing utilization of drug classes to identify opportunities for intervention. For a broad class of drugs, such as opioid analgesics, it is useful to drill further into the therapeutic classes. In Table 1, we see that the highest number of prescriptions were filled for hydrocodone combinations (including drugs like Vicodin), followed by opioid agonists (a category of very strong analgesics including morphine and Oxycontin) and codeine combinations (including drugs such as Percocet and Percodan.)

Analysts may want to analyze utilization by network or geographic areas to determine if specific markets have higher utilization rates compared to others. Table 2 displays prescription utilization by plan, revealing that Plan 3 had the highest utilization rate for these drugs.

Identifying possible cases of abuse typically involves drilling down to the provider or patient level. Table 3 illustrates an example analyzing utilization by primary care physician (PCP).

A complete analysis would include additional reports to better understand the prescribing physician specialties, the types of conditions they treat (chronic use of pain medications for periods of time may be appropriate for some conditions such as cancer), days supplied, and refill rates. At the patient level, it may also be important to quantify how many different providers have prescribed these drugs, as one physician is not likely to know what other physicians have prescribed for that patient, if the patient has not disclosed that information.

Analgesics are not the only class of drugs that have the potential for abuse. Generic Engineering & Biotechnology News recently “put together a list of 14 top abused prescription drugs, as listed by the [Centers for Disease Control and Prevention, the Food and Drug Administration], and nongovernment nonprofit sources on public websites.”

Their list is as follows (listed by drug brand name):

1. Oxycontin
2. Concerta
3. Ambien
4. Zoloft
5. Ritalin/Focalin
6. Adderal XR
7. Lunesta
8. Opana ER
9. Xanax XR
10. Vicodin
11. Fentora
12. Percocet
13. Valium
14. Ativan

This article first appeared at Milliman MedInsight.

Pharma, Utilization Doug Bates, Drug Utilization, healthcare analytics, MedInsight

The Retiree Drug Subsidy Program (RDS) was created to enable employers to assist Medicare-eligible retirees in acquiring more cost-effective drug coverage. Under the Patient Protection and Affordable Care Act (PPACA), employers will now be taxed on government subsidies associated with the program.

Troy Filipek provides perspective on the subsidy taxation in this BenefitsPro article. Here is an excerpt:

“The big change for 2013 with the RDS program is that in the past, from 2006 forward, the allowance that these employers receive from the government for the subsidies used to be non-taxable income,” Filipek says. “That has changed since the enactment of the [PPACA].”

Now, Filipek explains, the money that employers receive from the government for these subsidies is subject to taxation.

“It’s a pretty big change,” he says. “A lot of employers have already felt the impact of it because once the law passed, based on the accounting standards, you had to recognize the future impact of that in your financial statements.”
Substantial adjustments have been taken in the form of reflections of these soon-to-be taxed subsidies. “Starting in 2013, it will be a practical effect that these moneys are going to be taxed,” Filipek says.

He notes that a lot of brokers, advisors and even employers are currently in the process of reevaluating their options for offering retirees prescription drug coverage. As far as what steps are necessary to take in order to be prepared for the coming year’s changes, Filipek feels it’s important for employers and their advisors to simply understand that there are a variety of choices available.

Options include continuing coverage and working with the newly taxed subsidies or dropping coverage and allowing retirees to enroll in individual part D plans. Additionally, Filipek says, employers can maintain group coverage and work with a pharmaceutical benefit manager or health plan in the Part D program to develop a custom benefits package through a Part D Employer Group Waiver Plan plus secondary wrap plan design, which are plan options gaining traction in the marketplace.

Regardless of what decision is made, it’s imperative that both brokers and HR professionals “make sure it’s seamless for the retiree and easy for them to understand,” Filipek says.

“It’s important to communicate with the retirees because these are not people who are coming into the workplace every day where it’s easier to communicate with them. You have to find ways for outreach to them and their spouses.”

Medicare, Pharma Healthcare Reform, Medicare, retiree drug subsidy, Troy Filipek

The prescription drug market has seen dramatic changes as the patents on most of the longtime blockbuster drug products have expired (or will expire soon) and cheaper-priced generic products take their place. The patented drugs that are left will be predominantly specialty drugs, the largest component of which are biologics—drugs that are manufactured in a laboratory using living organisms such as human protein.

In the last 18 months, Congress, through the Patient Protection and Affordable Care Act (PPACA) and more specifically the Biologics Price Competition and Innovation Act of 2009 (BPCIA), has determined that chronically ill patients should have access to lower-cost drug alternatives, which has brought biologics and biosimilar drugs into the spotlight. Biosimilars, or follow-on biologics, are approved drugs that attempt to replicate the original biologic drug manufacturer’s development processes.

The purpose of this study is to quantify the impact of biosimilar savings to employers and take a closer look at the potential drivers of cost savings and their variability. Employers can use this study to help understand the implications of such changes on future healthcare expenditures and determine the timing and to what extent human resources need to be devoted to this area of their healthcare cost management.

The full study is available here.

This report was prepared for Amgen, Inc.

Pharma Amgen, biosimilar drugs, employers, Frank Kopenski, pharma

Managed Care Magazine reports on the cost challenge posed by specialty pharmaceuticals, a cost component the magazine dubs an “outlier.” Here is an excerpt detailing one of many cost control strategies:

One of these new pricing arrangements involves risk sharing, which is viewed as having the advantage of focusing everyone’s attention on medication outcomes.

“We are being asked to evaluate different risk-sharing arrangements between manufacturers and payers,” says Troy Filipek, a Milliman actuary. “I’ve seen it structured in two ways. One is where the payer receives a lower price or refund if the drug doesn’t work for the patient within a certain time period; the other is where the total cost is capped for a patient who takes the drug for an extended time.” Filipek says that manufacturers are often interested in having some of the savings go to patients, such as through reduced copayments. That achieves their objective of having their name stay in front of patients.

Risk sharing has been reported to be common in Australia and it is used in the United Kingdom’s National Health Service. It has also come to this country.

Cost, Pharma

Healthcare reform legislation has resulted in significant changes to prescription drug plan options under Medicare Part D. A new article by Troy Filipek and Greg Gysberg considers why plan sponsors should reexamine their existing approaches to prescription drug coverage and take advantage of the new opportunities available since passage of the new healthcare laws.

Medicare, Pharma Greg Gysberg, Medicare Part D, Troy Filipek

A new article in Insurance News Net looks at the the implications of health reform on pharmaceutical benefits. Here is an excerpt:

What’s Happening Now: 2010 Changes

RDS Tax Exemption Eliminated – The tax exemption to employers who receive the Retiree Drug Subsidy (RDS) for providing qualifying prescription drug coverage for retirees eligible for Medicare has been eliminated. Even though this change does not occur until the beginning of 2013, if plans are currently receiving the RDS, it has the immediate accounting impact of creating a deferred tax liability for their other post-employment benefit (OPEB) obligations. Some analysts have estimated that S&P 500 companies will take a combined one-time hit of $4.5 billion to first quarter 2010 earnings as a result of this change. For example, AT&T has disclosed their estimate that the change will cost them $1 billion, Verizon reported $970 million, Deere & Co. reported $150 million, and Caterpillar Inc. reported $100 million. As a result, companies may consider alternate options for providing benefits or cut future benefits to offset some portion of the impact.

Read more…

Pharma, Reform

The New York Times considers the long-term implications of hepatitis C and the efforts to treat it with drugs that are now becoming available. Here is an excerpt:

But even if the [hepatitis C] drugs do work, some experts and doctors warn that this virus may be particularly tough to vanquish. Three-quarters of the people who are infected do not know it because they are not tested for the virus and because the infection can be asymptomatic for years while it stealthily attacks the liver.

And because this disease is transmitted by blood, those infected largely are former or current IV-drug users — a population that characteristically has little or no health insurance — who may not be the most able to stick to a lengthy treatment regimen that can cause brutal side effects…

Vertex has commissioned studies projecting a rising toll from hepatitis C. One such study, done by Milliman, a health insurance consulting firm, projected that the number of people with advanced liver disease from hepatitis C would quadruple in 20 years if treatment did not improve.

The Milliman report is available here.

Pharma Bruce Pyenson, Hepatitis C

Jill Van Den Bos and Daniel Perlman look at off-label drug use in the latest issue of Pharmaceutical Commerce. Here is an excerpt:

Clinical trials are clearly of great importance, but the extent of off-label use of the high-utilization drugs described above is a good illustration of one of the shortcomings of clinical trials; because they are conducted in a highly controlled environment, they may miss important facts about how drugs are used in the real world. As shown, the medical profiles of patients taking the drugs may differ significantly from what was anticipated in clinical trials. It is important for manufacturers to study real-world adherence patterns, concomitant medications, and comorbidities of actual patients once a drug is on the market.

Read the full article here.

Pharma Daniel Perlman, Jill Van Den Bos, off-label

A new healthcare reform briefing paper by Brian Anderson and Troy Filipek looks at the reform provisions relevant to pharmacy benefits and their implications for patients, physicians, pharmacy benefit managers (PBMs), pharmaceutical manufacturers, and other interested parties. The paper is available here.

Pharma, Reform Brian Anderson, Troy Filipek

We have blogged before about possible increased transparency facing pharmacy benefit managers (PBMs), and about how changes in pharmaceutical average wholesale price will affect PBM contracts. Now a new article by Brian Anderson and Bob Cosway in Health Watch looks at some of the intricacies of effective PBM contracting from a plan sponsor’s perspective. What should employers and others that pay for healthcare look for in these contracts? What’s the best way to keep up with new drugs coming onto the market? How should pricing be set and kept current?

Cost, Pharma Bob Cosway, Brian Anderson, PBM contracting