6 Payor Tactics to Control Drug Spending

Kimberly Grant, PharmD, and Julia Mahler, PharmD, clinical pharmacists with IPD Analytics, state that specialty products are outpacing traditional medications, and competition is building among patient assistance and access programs. Solidification on the direction of the biosimilar market impacting pipeline drugs will be necessary, and we'll face challenges from doctors using biosimilars to the payor side.

By Karen Blum | specialtypharmacycontinuum.com

The growth of high-cost specialty drugs is causing payors to scramble to manage spending on these products, speakers said during the 2022 Managed Health Care Associates Inc. (MHA) Business Summit in Las Vegas. The payors discussed six trends affecting management of specialty and infusion drugs.

Specialty products are outpacing traditional medications. Specialty drug spending in 2020 was $265.3 billion, or 49.6% of total pharmacy expenditures, said Kimberly Grant, PharmD, a clinical pharmacist with IPD Analytics, citing published data (Am J Health Syst Pharm 2021;78[14]:1294-1308), and is on target to exceed that this year. Some 65% of new drug approvals in the next three years are estimated to fall into the rare disease or oncology categories, Dr. Grant said.

The increase in specialty products is a challenge for payors, Dr. Grant said. Not only are more drugs being approved; many of them have expanding indications. “When you look into the pipeline, manufacturers are really going after multiple additional indications over the next three to five years,” she said.

One example is efgartigimod alfa-fcab (Vyvgart, Argenx), approved by the FDA in December 2021 for adults with generalized myasthenia gravis. “It’s a small patient population right now,” Dr. Grant said, “but when you look at Argenx’s goals, they’re looking to be active in about 15 disease states by 2025.” A payor might just focus on a myasthenia gravis policy now but needs to keep these drugs on the radar for additional indications, she said.

She added that products for rare and ultrarare diseases are expected to account for more than 20% of all prescription drug sales by 2024. One-time cell and gene therapies also are increasing.

Currently, payors consider these products individually, Dr. Grant said, but an estimated 25 to 30 million Americans have a rare disease, increasing the chances that payors will have multiple affected beneficiaries. Some drugs, such as onasemnogene abeparvovec-xioi (Zolgensma, Novartis) for spinal muscular atrophy, were approved “with a pretty broad label,” she said. In response, payors are trying to manage use of the drug based on how it was studied in clinical trials, “which is a lot stricter than the FDA-approved labeling,” Dr. Grant said. “Currently, about 57% of coverage decisions for cell and gene therapies are more restrictive than the drug’s FDA-approved label.”

Payors also are struggling with how to define value for one-time, potentially curative therapies, without long-term outcomes data, she noted.

Creative contracting and payment models are gaining traction. Health plans are engaging in various creative contracts and payment models with manufacturers to contain costs, Dr. Grant said. These include payment plans tied to achieving certain outcomes; mortgage models in which payors make a 20% down payment on a medication, followed by monthly sums; and subscription models in which payors pay a flat monthly fee. There are limited publicly available data on these arrangements, she said.

One area of interest is mobility clauses, Dr. Grant said. If a payor is covering an expensive therapy for a beneficiary, and that person moves to another plan, will the payment plan follow the patient? “I suspect we’re going to be hearing more about the execution of these over the next few years,” she said.

Biosimilars are predicted to slash drug expenditures. Biosimilars will likely have the greatest impact on future drug spending, with estimated savings of $38 billion from 2021 to 2025, Dr. Grant said. Some issues remain, including a need for more patient and provider education about these products, and “skinny labels,” where a biosimilar is approved for one of several of a reference product’s indications.

Payor strategies regarding biosimilars vary, she said, with some plans nervous about losing rebates on the reference products still preferring the brand names, others allowing a few preferred biosimilars or an “all-in” attitude. “With biosimilar all-in, you’re losing rebates on the reference products, so you’re going to see a lot of aggressive management strategies in terms of step therapies or prior authorizations just to move patients on to the biosimilars,” she said. Incentivized switch programs may offer beneficiaries a one-time payment to move to a biosimilar or preferred biologic. (For more biosimilars trends, see page 1, as well as box on this page.)

Pressure is building to shift to the medical benefit. Plans didn’t historically manage drugs on the medical benefit as strictly as the pharmacy benefit, but now there is increasing economic pressure to do so, Dr. Grant said. Payor strategies here include aggressive site-of-care optimization strategies directing patients to the most cost-effective location to receive medications, and requiring billing through specialty pharmacies, known as bagging strategies, where health systems and physician practices must accept bagged medications from pharmacies to administer to patients. The best option is gold bagging, in which a specialty pharmacy dispenses prescriptions to its own clinics for administration, she said. Some states and professional groups, such as the American Hospital Association, have banned or oppose bagging for its potential disruptions in care.

Competition is building among patient assistance and access programs. Manufacturer-sponsored financial assistance programs designed to offset out-of-pocket costs for patients have been offered in multiple formats, such as a coupon/copay cards, free trials, patient assistance programs or bridge/quick-start programs, said Julia Mahler, PharmD, a clinical pharmacist with IPD Analytics.

Biosimilars also have patient access programs, Dr. Mahler said, with new programs tending to mirror those of competitor medications. “This is important because if I’m taking adalimumab [Humira, AbbVie] and paying $5 a month, and I’m being switched to a lower-cost biosimilar, I don’t want to be paying more than $5 a month for a brand,” she said. “These patient access programs have to be as robust for biosimilars as they are for the reference brand product.”

Copay accumulators still in play. Payors continue to use copay accumulators and maximizer programs to shift costs to manufacturer financial assistance programs, she said. The accumulator adjustments are a strategy to stop copay assistance from being applied to patient deductibles and out-of-pocket spending, until a coupon’s value is exhausted. The maximizers take the maximum value of financial assistance programs and split them evenly throughout a coverage year.

Challenges Ahead

The presentation was beneficial to MHA members in attendance, commented Stephen Moll, MBA, the director of sales, Alternate Site Care Division, at MHA, and moderator of the session. “The biggest takeaway was solidification on the direction of the biosimilar market, and that having a very large impact on drugs in the pipeline, as well as the challenges that we’ll still face with acceptance from doctors using biosimilars to the payor side,” Mr. Moll said. “I hope the presentation gave them enough information to take back and implement into their business of pharmacy.”

Dr. Grant has received an unrestricted educational grant from Bayer HealthCare Pharmaceuticals Inc. Dr. Mahler and Mr. Moll reported no relevant financial disclosures.