In 2014, the introductions of sofosbuvir (Sovaldi) and ledipasvir plus sofosbuvir (Harvoni) for the treatment of hepatitis C raised concerns among the employer community in the United States. The cost implications of these specialty drugs, based on the possibility of their widespread use in patients without advanced disease, had corporate executives hurriedly recalculating their healthcare budgets. Today, sofosbuvir is in competition with adalimumab (Humira) for the number 1 position for greatest revenue among pharmaceutical agents (Table)..
According to a recent survey by the Midwest Business Group on Health (MBGH), 78% of employers queried are very worried about the increasing costs of specialty drugs, and 60% are strongly concerned about the number of specialty drugs in the pipeline.2 Only 33% of employers believe that their pharmacy benefit managers (PBMs) are doing the best job possible in managing the costs of specialty drugs.
“A One-Two Punch”
Already sensitized to the expenditures of a new class of blockbuster drugs, employers and other payers have another—perhaps even greater—cost concern: the addition of a new, effective, and expensive specialty drug class to a therapeutic area that has been dominated by low-cost statins. In 2015, the US Food and Drug Administration (FDA) approved alirocumab (Praluent; sanofi-aventis) on July 24, and evolocumab (Repatha; Amgen) on August 27, the first 2 members of the new class of lipid-lowering agents, the proprotein convertase subtilisin/kexin type 9 (PCSK9) inhibitors.3-6 The FDA approval of these agents has been turning up the heat in boardroom discussions about curbing their financial exposure.
In an interview conducted in 2015, Cheryl Larson, Vice President of the MBGH, said, “In the case of hepatitis C, employers are trying to reconcile high drug cost versus curing the disease and the related impacts to productivity. In the case of PCSK9 drugs, the focus should be on making the drug available only for those who don’t benefit from other therapies. Even so, the number of potential patients appears to be significant.”
Employers are concerned about how they will handle the expanded use and related costs of PCSK9 drugs, a challenge beyond managing expenses related to existing specialty drugs and potential drugs in the research pipeline, as well as about being blindsided by unprecedented expense.
Scott Thompson, Area President, Benfield-Arthur J. Gallagher & Company, Wheaton, IL, said in an interview conducted in 2015, “I think employers are worried about PCSK9s because of how the high cost of hepatitis C therapies caught them by surprise. I talked to an employer today that had more than 40 patients with hepatitis C who started on the new medications just this year alone. Imagine what that is doing to their pharmacy budget. Their trend half-way through the year is already at over 20%.”
The cost-drivers associated with the PCSK9 inhibitors are much greater than those for hepatitis C drugs, according to Mr Thompson. “Do the math: generic statins cost $4 per month compared with PCSK9 inhibitors, which cost $1000 per month.” Compounding this is a much larger potential patient population requiring continuous therapy for a chronic and incurable condition “versus just 12 weeks of therapy for the new hepatitis C medications. Now you can see why this is a one-two punch to employers,” he remarked.
Tools Employers Can Use
In the interview, Ms Larson stated, “In the end, the future of high-cost specialty drugs may force employers to restrict access through their formulary, offer narrower pharmacy networks, shift more cost onto the consumer, or even exit healthcare as a defined benefit altogether.”
These are stark choices, as the costs of specialty pharmaceuticals climb ever higher as a result of new technology and greater utilization of such drugs. However, certain approaches are not as practical as they once were. For example, employers are clearly seeing the limitations of shifting healthcare costs to their employees. The maximum out-of-pocket cost rules and the economics of today’s employees have restricted the utility of cost-shifting to employees.
However, cost-shifting remains the top method of dealing with the escalating costs, according to the results of the MBGH survey.2 “Over half of employers are considering shifting more costs to employees, with 18% already doing so for 2015,” Ms Larson said in the interview. “In addition, 43% of the employers who shifted costs to workers over the last 3 years increased them by 50% in 2014.”
Even corporations recognize the limitations of cost-shifting, according to Ms Larson, “yet most employers don’t feel they have a choice.
In fact, many employers are concerned about their ability to continue to offer medical and/or pharmacy benefits in the future. For employers, doing nothing is no longer an option.” However, cost-shifting may just be the easiest broad policy change to enact.
The MBGH survey of 80 corporations (average size, 19,800 employees) revealed that 90% agreed with the statement that “new and innovative solutions to managing specialty drugs are needed.”2 The use of narrower networks and carve-outs for specialty drugs are increasingly being considered.2
No payer will be spared the cost implications of the PCSK9 inhibitors, according to Mr Thompson. “Assuming the government agrees to reimburse for these medications, there isn’t anything specific about the plan type (eg, commercial, Medicare, private or public exchange) other than benefit design, which could impact the use of these medications,” he said. Mr Thompson does believe that these drugs will be too expensive for many patients whose health plans have very high deductibles, currently in the range of $3000 to $5000. “Conversely, a rich benefit plan with low deductibles and copays may be associated with greater usage of the PCSK9s in the eligible patient population,” he added.
Cost Analyses Based on Drug Indications
The FDA approved the 2 PCSK9 inhibitors alirocumab and evolocumab with identical indications, as an adjunct to diet and with (1) maximally tolerated statin therapy for the treatment of adults with heterozygous familial hypercholesterolemia or clinical atherosclerotic cardiovascular disease who require additional lowering of low-density lipoprotein cholesterol (LDL-C), as well as with (2) other LDL-lowering therapies (eg, statins, ezetimibe, LDL apheresis) in patients with homozygous familial hypercholesterolemia who require additional lowering of LDL-C.3-6
For many health plans, the FDA’s identical indications for the 2 drugs will surely affect coverage decisions related to alirocumab and evolocumab. The actual indication for each drug (ie, specifying that only patients with diagnosed familial hypercholesterolemia who are intolerant to or resistant to treatment with traditional statins can receive the drug) is not the most restrictive possible (ie, only for familial hypercholesterolemia). But it is also much less concerning than the widest indication, which would have affected the broadest possible population, namely, patients who are intolerant to or fail to receive adequate benefit from statins, regardless of their cardiovascular risk.
The approved indication for each of the 2 drugs falls between the 2 extremes and does not necessarily require a diagnosis of familial hypercholesterolemia, but it does require clinical evidence for atherosclerotic cardiovascular disease (ie, not simply patients who are at high risk).
In June 2015, Prime Therapeutics released cost calculations for the spectrum of scenarios associated with the PCSK9 inhibitors.7 Based on the current approved indications for the PCSK9 inhibitors, Prime Therapeutics estimated that approximately 395 per 100,000 (0.40%) commercially insured members could be eligible to receive the drugs, costing plans $3.29 per member per month (PMPM). For comparison, under the narrowest possible indication, this would have affected 112 per 100,000 commercially insured Americans and would have added approximately $0.93 PMPM. Under the widest possible indication, 806 per 100,000 (0.81%) commercially insured members would be eligible to receive the drugs, at a cost of $6.71 PMPM.
This can have particular ramifications for Medicare Part D and Medicare Advantage plans, where the costs can be as high as $12.56 PMPM (because of the high percentage of senior citizens who could be eligible for therapy).7 Unlike the new generation of drugs for hepatitis C, this is a recurring cost that will be borne by the plans and patients annually.
With these anticipated costs, employers cannot be blamed for shifting costs, or even questioning the wisdom of offering healthcare insurance. It can speed the move to send covered workers and dependents into private or public exchanges and offer fixed-contribution plans. However, because the widest possible indication was not approved, the costs associated with the PCSK9 inhibitors may not turn out to be the proverbial “line in the sand” that cannot be crossed.
Employees value their health benefits greatly. In a survey conducted in 2012, workers were asked, “If you were to be given an extra $500 from your employer, how would you like it allotted?”8 Although 22% responded that they want a $500 salary increase, 16% said they preferred either a health insurance premium reduction or a deposit of $500 into their health savings account.8 In a 2009 survey by MetLife, employees ranked their benefits according to importance, and 74% ranked health benefits from their employers just below salary (83%) as the most important benefit.9
Therefore, for corporate benefits and human resources personnel, the advice of consultants and coalitions is to be as proactive as possible in benefit designs and in discussions with C-suite executives.
Mr Thompson advised benefit design personnel, “Show them you are doing everything you can to limit [PCSK9 inhibitor] usage to the proper patients. Warn them, however, that no matter the use of prior authorization, step edits, or fail-first edits, the clinical profile of these medications may lead to overprescribing by doctors for anyone they deem is ‘statin intolerant.’ The only counter-vailing issue, besides price, is that these new medicines are injectable. Make sure your CFO [chief financial officer] knows that the company is going from $4 a month for generic statin pills to approximately $1000 a month for the PCSK9s.”
For many self-insured and fully insured corporate employers, PBMs will be expected to lead the way in addressing the PCSK9 inhibitors drug class. Beyond warning employers and other payers about these high-cost medications, Mr Thompson said that PBMs have issued numerous bulletins about the potential use and misuse of PCSK9 inhibitors, and how they plan to manage them through their specialty pharmacy programs.
“I’ve heard they will be putting specialized management programs in place, for an additional cost, to manage the use of these PCSK9s very tightly. Expect to hear more about these programs from all the major PBMs,” Mr Thompson stated.
In November 2015, CVS Health announced that it had inked an outcomes-based contracting agreement on evolocumab, while excluding alirocumab from coverage. Also in November, Harvard Pilgrim indicated that it entered into an outcomes-based contracting agreement on evolocumab, based on patient response to treatment.10
According to a commentary from CVS Health by Shrank and colleagues, PBMs will rely on clinical practice guidelines and national thought leaders to restrict eligible patients in the use of PCSK9 inhibitors.11 With a broad indication, Dr Shrank and colleagues believe that they could require laboratory tests “to show evidence of muscle inflammation or liver damage before allowing treatment for those with statin intolerance.”11
Express Scripts, while not taking the risk contracting approach and covering both drugs, believes its prior authorization criteria and discounts received will help control the costs of PCSK9 inhibitors. The PBM is restricting approvals to patients who have a documented diagnosis, validated cholesterol levels and current statin use (specifically, at the highest dose possible), and documented dietary information.12
Because alirocumab and evolocumab are managed as specialty pharmaceuticals by most plans, the PBMs may entrust specialty pharmacies with program implementation. Employers today expect specialty pharmacies to take at least conventional steps to optimize medication adherence, reduce waste, and engage patients in their treatment. It will be interesting to see if nonconventional programs develop as well.
Conclusion: Weathering the Storm
Few stakeholders have stood still. Employers have been well-informed about the cost impact of the PCSK9 inhibitors, likely primed by the hepatitis C experience. “Meetings and discussions have taken place prelaunch,” Mr Thompson said in the interview. “It has been a key topic at most of the employer and coalition meetings we attend. Most are worried about overutilization and the cost ramifications of that situation.” He believes that this situation will give rise (and opportunity) to a new wave of specific cholesterol-management programs.
Will the PCSK9 inhibitors class be the last straw—the line in the sand? Based on the approved indications, the aggressiveness of pricing, and marketing approaches by the drug manufacturers, the discussion may suggest it is yet another class of specialty agents adding to the growing cost of health benefits, and not the tidal wave that strips the beach bare.
Author Disclosure Statement
Mr Mehr has no conflicts of interest to report.
References
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2. Midwest Business Group on Health. MBGH releases annual survey of employers on specialty drug management: employers considering unconventional strategies to manage double-digit cost increases while shifting more cost to employees. Press release. June 9, 2015. www.mbgh.org/Go.aspx?MicrositeGroupTypeRouteDesignKey=93205d22-134e-4fca-be1b-fa509b7b11e&NavigationKey=65db7fb8-ea1b-4d4f-ae2b-3f7c96be39b3. Accessed June 17, 2015.
3. US Food and Drug Administration. FDA approves Praluent to treat certain patients with high cholesterol. Press release. July 24, 2015. www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm455883.htm. Accessed March 7, 2016.
4. US Food and Drug Administration. FDA approves Repatha to treat certain patients with high cholesterol. Press release. August 27, 2015. www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm460082.htm. Accessed March 7, 2016.
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6. Repatha (evolocumab) [prescribing information]. Thousand Oaks, CA: Amgen; September 2015.
7. Prime Therapeutics. High cholesterol PCSK9 drugs could be next to bust budgets, stretch pocketbooks: Prime Therapeutics analysis warns insurers to brace for substantial new costs, as much as $23.3 billion nationally. Press release. June 9, 2015. www.primetherapeutics.com/Files/PCSK9_release_FINAL.pdf. Accessed June 22, 2015.
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9. MetLife. Seventh annual Study of Employee Benefits Trends: findings from the national survey of employers and employees. 2009. www.healthplansonline.com/docs/articles/metlife/MetLife_7th_Annual_Trend_Study.pdf. Accessed July 9, 2015.
10. Palmer E. Amgen’s Repatha scores an exclusive with CVS. Fierce Pharma.November 23, 2015. www.fiercepharma.com/story/amgens-repatha-scores-exclusive-cvs/2015-11-23. Accessed March 7, 2016.
11. Shrank W, Lotvin A, Singh S, Brennan T. In the debate about cost and efficacy, PCSK9 inhibitors may be the biggest challenge yet. Health Affairs Blog. February 17, 2015. http://healthaffairs.org/blog/2015/02/17/in-the-debate-about-cost-and-efficacy-pcsk9-inhibitors-may-be-the-biggest-challenge-yet/. Accessed June 21, 2015.
12. Staton T. Express Scripts: Strict prior-auth moves keep a tight lid on PCSK9 sales. Fierce Pharma. October 1, 2015. www.fiercepharma.com/story/express-scripts-strict-prior-auth-moves-keep-tight-lid-pcsk9-sales/2015-10-01. Accessed March 7, 2016.