Life Sciences

Medicare & Reimbursement Advisor Weekly, June 10th, 2009

Medicare & Reimbursement Advisor Weekly, June 10, 2009


Where do your products fit within a comparative effectiveness policy?

Rebates please

Achieving better quality with less money

Where do your products fit within a comparative effectiveness policy?

To date, comparative effectiveness (CE) hasn’t been focused on oncology or other specialty pharmacy therapeutic areas where many of you have investment, but this figures to change given the current environment. CE isn’t just about choosing the cheaper drug, and most agree that using CE studies to find a lower-cost alternative would likely waste financial resources. So where does your suite of products fit in with CE? What about private payers? What do they want from industry?

We explore CE’s impact on oncology from multiple perspectives.

Is randomization the best approach to CE studies?

The best model for CE research comparison trials is probably the National Institutes of Health’s (NIH) rigorous randomized controlled trials (RCT), but RCTs are not practical for this type of research, as it is difficult to randomize patients in large clinical trials, says Sean Tunis, MD, founder of the Center for Medical Technology Policy. As an alternative, Tunis suggests patients be recruited from real-world settings with minimal exclusion criteria and randomized, with some equipoise.

Marc Samuels, JD, MPH, at HillCo Partners, a strategic business advisory firm with an office in Washington, DC, believes differently. “Physicians at many of the nation’s pre-eminent cancer centers see such a study as problematic,” Samuels says. “Patients demand what they see as the best therapy, so randomization is difficult.”

In oncology, where only one drug is seldom used for treatment, CE studies must be carefully constructed and applied. Scott Gottlieb, MD, former deputy commissioner for medical and scientific affairs at the FDA, and currently a senior fellow at the American Enterprise Institute, says comparing drugs head to head, although potentially valuable in some therapeutic areas, would misplace financial resources and probably carry little value in oncology. For example, with cardiovascular disease, most of the important CE research to date is not whether one statin is better than another; the same thinking should apply to cancer.

Evaluating cost-effectiveness

To be successful and ultimately useful to oncologists and patients, saving money cannot be the only motivation for conducting CE research. “It’s not as simple as comparing equivalent technologies or drugs, and then seeing what’s cheaper,” says Peter Bach, MD, a former senior advisor to CMS, who is now at Memorial Sloan Kettering Cancer Center in New York City. Medicare cannot use cost to determine whether a drug is reasonable and necessary. “Doing so would be a tough sell,” says Bach.

Even if CMS included cost in its analysis and national coverage decisions resulted, Bach is not convinced that doing so would have much effect on the reduction of total spend. “First, you would need to change the overall culture, and second, the prices for some things, in my opinion, are higher than their value. Frequency of services and drugs is a bigger issue than the units.”

For former Medicare chief medical officer Tunis, cost is a necessary component of all CE analysis. However, he doesn’t think cost should be the determining factor in a yes-or-no decision for a drug or technology, such as the way the National Institute for Health and Clinical Excellence uses cost in the United Kingdom. “I don’t see that going down as politically acceptable here [in the U.S.],” Tunis says.

Cost may find its way into CE research by helping payers design value-based insurance or patient cost-sharing, or some variable based on cost-effectiveness.

Consider colorectal cancer screening, for example. Tunis offers, “We could have no copay, or we could pay people to get screened.” However, if the test or drug to treat colorectal cancer is $100,000 per quality adjusted life year to extend life for an additional 30 days, the patient should take on more financial responsibility for that, he says. In this context, cost-effectiveness in oncology is more likely to have a political chance, rather than Medicare using it as part of a yes-or-no decision for a single product.

But as information from specific oncology CE research is publicized, patients, not payers, may become the ultimate decision-makers. Patients carry increasingly higher cost exposure, and as a result, they’re likely to become more cost and quality sensitive. “It won’t be the health plans making the treatment decision,” says Tunis. “The target has got to be to inform the doctor and the patient, so [both] can make cost-conscious healthcare choices.”

Private payers leading integration

Some commercial payers, which often follow Medicare’s policy lead, are ahead of CMS in integrating CE research into plan policy. Oncology is one of their chief targets. In a proprietary study from Xcenda, an AmerisourceBergen Specialty Group company that provides consulting and research services, almost one-third of 44 commercial plan pharmacy and medical directors said that they are conducting some version of CE studies. Gene Reeder, RPh, PhD, at Xcenda, says a majority of plans (57% in the recent advisory board survey) are apparently using the data they generate from CE studies for formulary development, determining levels of patient copay responsibility, and making decisions about exclusion coverage for less effective treatments.

More acutely, payers say they may use CE oncology research findings in benefit design, including:

  • Tiered payment structure, based on value
  • Tiered cost-sharing, reducing out-of-pocket costs for high-value items and services
  • Limited coverage or payment, if comparative superiority is not established
  • Risk-sharing agreements, which link actual beneficiary outcomes to the payment of a service based on its CE

The commercial sector has practical opinions on the role of a national center. Ron Blumenfeld, MD, the medical director for ConnectiCare Health Plans, says such a center could provide macro-level oncology research to assist payers in providing greater clarity to physicians and coverage decisions for what are difficult choices for patients at the end of life.

Of the plans conducting CE research, 41% were using in-house staff members in 2008. Plans are trying to use their own in-house data, and the answers here reflect the skepticism of using outside information or resources. “This is probably a statement that the private sector is further along with implementing comparative effectiveness than we thought,” says Thomas Bramley, RPh, PhD, at Xcenda.

That the private sector is more in front of this trend than the government may be a blessing, says Gottlieb. “Think of it this way: The Centers for Medicare & Medicaid Services has 10–12 clinicians on its reimbursement staff, and not one oncologist, while a health plan like Aetna has 250 physicians on its reimbursement staff.”

The majority of private plans make their decisions based on readily available published data, which costs the least to get, but may not give the cancer care continuum the best information with which to compare treatments in the long-term.

Industry Challenges

CE represents a bit of a paradox for managed markets and brand teams. For example, second-line therapies that haven’t had the economic market position may benefit from such a study, whereas some products could stand to lose significant share with one landmark decision. Some payers have called for more head-to-head regimental comparisons.

“Manufacturers are not helping themselves when they don’t compare against realistic benchmarks,” says Kerry Bendel, PharmD, the pharmacy and P&T committee director for Medica, a regional Medicare plan headquartered in Minneapolis.

With gaps in available oncology comparisons, Medica relies on published literature to support medical technology assessments and formulary decision-making. Bendel agreed with the 85% in the Xcenda survey who said costs are relevant to evaluating effectiveness and conducting comparative research.

Pharma has not been deterred to innovate and invest in cancer, as the current pipeline suggests, but Gottlieb wonders how long the trend would continue if the government makes CE research a means to more restrictive policies.

Oncologists could benefit immensely if more manufacturers followed Amgen’s lead by conducting a head-to-head study with an active comparator, such as when the company compared the effects of twice-yearly subcutaneous injections of denosumab to weekly oral doses of alendronate (Fosamax®) on bone mineral density in postmenopausal women with osteoporosis.

“Pharmaceutical companies probably need to take more risks with this research and think about comparative effectiveness as part of [their] product development strategy,” says Bramley.

Editor’s note: This is an article that I first wrote in December 2008. You can read the complete article at documents/OBR_nov08_CE.pdf.

Rebates please

Private health insurance leaders are pushing Congress to allow insurers to benefit from the Medicaid Drug Rebate Program, which lets states pay less for drugs in their Medicaid program. J. Mario Molina, MD, chair and CEO of Molina Healthcare, which covers more than 1.3 million Medicaid patients in 11 states, said roughly half of Medicaid beneficiaries are covered under managed care plans, which shows the rebate’s importance to insurers and states. To read the full story, click here:

Profit centers

What if today’s hospitals were managed as a collection of profit centers, instead of cost centers? Healthcare thought leader Rick Jackson believes costs and revenues are misleading metrics in measuring the success of a service line. This white paper challenges executives to transform their hospital’s financial model in order to remain healthy staples of their communities. For the full story, click here:

Account Team Tip

Let your account teams know that healthcare team meetings in the hospital setting are powerful interventions that are held far too infrequently, says Karen Zander, RN, a case management instructor. Clinicians will often reflect with wonder on how they were so surprised by a family’s change of mind or why they didn’t realize sooner that a fellow clinician had an important piece of information that no one else knew. Documentation, at its best, is only part of the story. The real story is the up-to-the-minute information that is actually integrated at a team meeting. Case managers and social workers should know the indicators and take initiative to organize and conduct team meetings, Zander says. If done right, there is an opportunity for an account manager to play a resource role and position your programs and brands as a solution, not a pitch. Common indicators for team meetings without the patient and family are:

  • Referrals from complex care rounds
  • Confusion about the diagnosis and treatment plan
  • Preparationfor meeting with patient and/or family
  • Disagreement about the appropriate level of care needed currently or in the future

Indicators for team meeting with the patient and family:

  • Initiation of special treatment protocols
  • Important decisions are needed, such as surgery or end-of-life care
  • Setting limits with patients and/or families about behaviors

For the full story, click here:

Achieving better quality with less money

Maybe it’s the fact that access to doctors is down. Maybe it’s that the economy has hurt sales for many drugs, particularly those for chronic conditions. Or maybe it’s the heightening restrictions managed care and Medicare are putting in place as they try to figure out how to pay for all pharmaceutical therapy. Whatever it is, more and more managed markets, research, and brands are turning their attention to nontraditional segments—especially hospitals. More and more of you are trying to find opportunities for account sales teams to talk to health system leaders and understand what keeps hospitals up at night, how and when hospitals generate scripts, how quality and C-suite directors influence pharmacy decisions, and, above all, the power of the script that starts with a hospitalist and a discharge plan.

With this in mind, here’s some insight from the HealthLeaders hospital quality department (the full article appears at

Eleven process measures provided at least 25 observations for a majority of hospitals in a recent Health Affairs study: aspirin at arrival and discharge and beta-blocker prescription at arrival and discharge (for AMI); assessment of left ventricular function, provision of discharge instructions, and angiotensin converter enzyme inhibitor or angiotensin receptor blocker prescription for patients with left ventricular systolic dysfunction (congestive heart failure); blood culture performed before receiving the first antibiotic in the hospital, first dose of antibiotic within four hours of admission, initial antibiotic selected appropriately, and assessment of arterial oxygenation within 24 hours of arrival (pneumonia).

The researchers constructed a measure of spending that reflected only the specific use of services to explain a large amount of hospital spending: number of hospital days, total physician visits, ICU days, and the ratio of specialist to primary care physician visits at the end of life. (This means that the influence of varying reimbursements linked to graduate medical education, Medicare disproportionate share payments, and geographical price adjustments were removed.)

What they found after all this is that by examining process of care measures, hospitals that provide more intensive and costly care do not necessarily provide better quality care, as measured by the percentage of patients who are given evidence-based treatments.

Source: MRAW correspondent Janice Simmons.