October 11, 2011
The PMCQ presents Trends in Private Payers:
The Impact on Access and Patient Assistance Programs
Suzanne Lepage, Private Health Plan Strategist
High blood pressure. High Cholesterol. Depression. Ulcer / Reflux. Diabetes. Complications arising from these unmanaged chronic diseases are the main driver of health care costs and threaten the sustainability of our overall health care system. What can Pharma do?
Moderator Danny Peak, Sanofi Senior Manager, Private Payers and Strategic Partnerships, opened the PMCQ October dinner meeting at this Sanofi-sponsored event with the introduction of Suzanne Lepage, Private Health Plan Strategist, who was the dynamic speaker for the evening on a topic of great interest, Private Payers.
“Unmanaged diabetes and hypertension can hit the bottom line as hard as inflation and competition. Productivity losses among workers with chronic diseases are nearly 400% higher than the cost for treating the disease itself, yet only 1% of Canadian organizations measure the return on investment of their workforce health programs in a rigorous way,” opened Mr. Peak.
Yet, Pharma continues to preach to the converted. “That’s what we’ve been doing a lot in the past couple of years,” stated Mr. Peak. “We need to address the 90% of employers … who don’t recognize that a healthy employee is an important factor in the economic health of an organization.”
“For many of us, private payers can account for half of our revenue,” continued Mr. Peak. “It can take an average of 316 days to get public funding for new drugs in Canada, but only 20.3% of all new drugs are fully or partially reimbursed by the provinces. During this stage, the only source of revenue is private.”
Today’s private payer policies need to be addressed by Pharma in a more strategic way and Ms. Lepage was just the person to “level set everybody’s understanding of private insurance coverage in Canada”.
Private Market Dynamics
Private payers are “at the center of the universe… because they pay… whoever pays is really the customer,” emphatically stated Ms. Lepage.
Several influencers are key in the private payer market. First, the 400,000 to 600,000 plan sponsors: employers of small or large companies, professional associations or unions. Other influencers include plan advisors who advise on finance and managing risk — but not on health ? as well as pharmacy benefits managers (PBM) who contract between the pharmacy and the insurer.
Drug Plan Designs
Every plan sponsor must decide on a drug plan design stated Ms. Lepage. The key questions in the design process are ‘How do we decide if a drug is covered?’ and ‘How are we going to reimburse those drugs’? There are a number of additional decisions involved: choosing a formulary, co-pay pricing, maximums and programs, e.g. step therapy in which drug A must be used before Drug B or with government integration.
The first step is to determine which formulary — drugs a private plan pays for ? to choose, whether it be a Prescribed Drug Plan (79% of all plans), Prescription or Open Plan, Provincial Plan, Managed Formulary or Frozen / Custom Formulary.
Another decision to take is whether to implement a single-tier system, which covers all drugs with one set of rules, or a multi-tier system, which contains different rules for different drugs and provides incentive for the use of a preferred list of drugs.
Drug Plan Trends
Are current trends leading to a perfect storm? Of considerable note is that drug plan costs for private sponsors have not only risen, but have doubled between 2000 and 2009 which draws the attention of CFOs. In addition, private payer resources and staff focused on drug plan management are increasing.
The top 5 chronic health care conditions listed above represent a whopping 41% spent on drugs in private plans. “It’s a huge opportunity to look more closely at how to manage these conditions and the impact they’re having on drug plans,” stated Ms. Lepage. As she disclosed, there’s a sharp focus “on coming up with solutions” to lower costs, but not necessarily on the “return on investment in terms of productivity, profit and absenteeism” of employees.
The CLHA’s (Canadian Life and Health Insurance Association) development of a catastrophic drug pool to share the risk of high cost drugs across all insurance carriers is yet another trend. Ms. Lepage believes that if the industry doesn’t develop a plan first, the government may develop one for them.
Another tendency is the large number of recent new drug plan options and formularies being offered to plan sponsors. Ms. Lepage explained, “I really believe (this is happening) because plan sponsors are saying ‘we can’t afford these costs’”.
Due to recent provincial drug reforms, insurers now realize that drug prices are negotiable and are aware of pharmacy and generic rebates. Ms. Lepage continued, “Private plans, as a result, are trying to open up better agreements between pharmacies and the PBM.” This is done by setting up preferred provider networks and preferred listings for certain drugs. Some private payers are also putting together “buying groups to band together as employers to get better prices for drugs and pharmacy services”.
Specialty drugs are now in the cross hairs. The average cost is over $1,000 vs. $51 for all other types of drugs. While “the number of claims are low, the percentage of their spend is really high,” said Ms. Lepage. “They’re growing at 13% per year vs. .8% for all other drugs combined… and estimated to be 25% of all drugs spent in 2015… If you’re in these disease areas, you’re going to have close attention paid to you and not in the way you’d like.”
Other trends include a focus on the lowest cost therapeutic alternative which means the lowest cost to treat a disease; looking to CADTH/CDR /PCODR for guidance due to the lack of an in-house skill set; integration with government, hospital and Pharma programs; and a very keen focus on prior authorization – right drug, right person, right time and right location.
“If you’re launching an IV drug and you want private reimbursement, seriously consider having private clinics for those drugs,” recommended Ms. Lepage. “Private plans are making sure they take advantage of any programs that might pay for the drug… A lot of them are interested in the Pharma company programs.”
So what can Pharma do? Ms. Lepage suggested Pharma should answer the following questions to determine “your situational analysis through the lens of the private payer”:
Our private market strategy should position products and key messages with emphasize on what’s important to private payers: productivity and absenteeism. Other suggestions for Pharma are that it should have a realistic listing ambition; a private market strategy for BIA (Budget Impact Analysis) and pharma-economic analysis; a sales forecast aligned with its market access plan; program development to maximize private market sales; and a patient and reimbursement access program to help maximize private coverage.
“Have your finger on the pulse, reading those articles, knowing what’s going on,” added Ms. Lepage. Identify trends, threats and risks; gather market intelligence; monitor the private market; build private payer relationships; and shape policies for a positive environment for dealing with issues.
In regard to best practices in patient programs ? which are used to pull through access coverage and get a patient on drug ? she stated that there’s a lot of financial risk associated with co-pay cards, but there are many ways to minimize that risk.
If we had a more robust system for reporting why a drug was declined we “could feed the market access team and allow them to do a better job”. Pharma should also explain the advantages of our programs to private payers and optimize turnaround times on coverage investigation by spending more time discussing private payers’ needs. “A lot are very impressed with the level of nursing and adherence support that you offer. Often we fail to profile them really well,” she added.
One question asked of Ms. Lepage was ‘Are the awakening private payers on the verge of become as price sensitive as the public payer?’ This was answered with a resounding, “They already are…(We have a huge) opportunity to show that this is more than just a commodity, this is an investment, but we really don’t have tools in Canada to measure the investment on a medication and that return on investment to the employer”.
Another question, ‘Should we develop a joint strategy regarding drugs that have few patients, but a big cost?’ was met with her editorial comment, “A bunch of competitors who are in business together and who are trying to come together to manage cost looks a lot like price fixing.”
And how should we deal with the private payer: nationally or regionally? “My personal bias is that there is more in common with private payers across the country,” stated Ms. Lepage. Due to the fact that employers may have employees across Canada, there is a need to do so on a national level.
Can an employer find out how much an employee is costing the plan? “They don’t know at all,” answered Ms. Lepage. “You can only see aggregate data and not individual plan member data. If an insurer ever provided data that was identifiable it would be chargeable under the Privacy Act.”
In answer to ‘What can we learn from our own affiliate companies in the United States?’ Ms. Lepage pointed out that our US counterparts put together “really great dossiers for the private market and position their drugs for private payers”. She highly recommended obtaining the AMCP (Academy of Managed Care Pharmacy) standardized dossier system required for private payer submissions in the US.
The world of the private payer is complex, but it’s a world where action needs to be taken or we’ll be “caught in a situation where we can’t do much about it,” concluded Mr. Peak. “…we need to face that employers don’t have the tools to make decisions today to put the drug back in their plans. We need to address that, provide better tools for them. Once we realize that a product is not reimbursed on a drug plan, it’s too late.”
As Mr. Atallah sagely advised, “We can’t take anything for granted anymore.”
Luckily, if you missed out, we have 'The Impact on Access and Patient Assistance Programs' slides right here.
Cocktails: 5:30 p.m.
Dinner: 6:00 p.m.
Panel Discussion: 6:30 p.m.