Life Sciences

Breaking down silos in managed care

Medicare & Reimbursement Advisor Weekly, December 11, 2009

To evaluate costs versus outcomes in the most expensive categories, more payers are integrating cost-effectiveness models into their formulary decision-making. “The wave of the future is that there won’t be separated medical and pharmacy budgets,” said Linda Schultz, PharmD, clinical intervention manager at WellPoint Pharmacy. “[Those silos]will end, and you’re going to see one person overseeing a single budget and taking a total cost-of-care approach.”

More plans will use probabilistic sensitivity analysis to help them deal with the uncertainty of a manufacturer’s product claims, noted Paul Langley, PhD, director of Maimon Research, a pharmacoeconomic consulting firm in Minneapolis. Plans will select products for a formulary based on how much the product costs per quality-adjusted life year. As a plan, Langley said, you must ask, “If we move to therapy B, how much do we truly gain?”

Here’s what WellPoint uses to make its cost-effectiveness case:

  • A presentation of modeled claims for cost-effectiveness within a robust decision-model framework
  • Modeled claims that reflect health technology assessment standards for that disease area and a literature review summary
  • Modeled claims that reflect the need for a pragmatic impact assessment with high internal/external validity
  • Modeled claims that account for structural and parameter uncertainty
  • Preference for probabilistic sensitivity analysis in presenting incremental claim results

“Populate your claim with assumptions about how much it will cost the plan to treat patients in a particular pathway up until their success and failure,” said Langley.

So what’s the big failing of product submissions? Companies avoid product comparisons, Langley said. But how do you undertake a cost-effectiveness comparison for your class? Active comparator trials are critical, but the FDA doesn’t require them. “Senior management uses this as a reason to say, ‘Let’s not do these trials.’ But these trials are critical to your case,” he said.

An effective pitch

“We have the cost-effectiveness data that compare our product to others in our class and definitely show that you’ll save more money with our product.” This is an example of a bold, but compelling pitch that should garner you a P&T committee meeting—or at least a conference call with key decision-makers. Considerations to make your sales pitch stand out include the following: The two-year rule. If a plan invests in a product about formulary and it can’t pay for itself in two years, it’s unlikely to keep it on formulary. Play up guidelines from the National Institute for Health and Clinical Excellence (NICE) that support your product as the standard of care or first-line therapy. Follow the NICE guidelines and class reviews, and if one review is positive for your product or class, let your MCO customer know.

Patient outcomes

Managed care’s emphasis on patient reported outcomes is well timed as nurses and doctors see more evidence of poor outcomes from switching medications and other payer policies. The U.S. Department of Veterans Affairs and Kaiser Permanante use patient-reported outcomes criteria that are built into their IT to validate their formulary decisions. WellPoint was close to doing this as well, said Schultz. For example, say that a medication for hypertension (i.e., prod- uct A) is first in its class, but a plan has added product B to its formulary because the manufacturer made a great clinical case and gave the plan an excellent contract. As a result, the plan will evaluate spending for product A versus product B. Most plans have published clinical data but lack effectiveness data, including cost-specific information. If product B can show the plan that it is surpassing product A in seven out of 10 patient-outcome reporting measures, this will prompt the plan to move all of its business over to product B, although the manufacturer should expect to pay a sizeable rebate for this offer, said Langley.