Medical Directors Meeting Exploring the Pharmacy Opportunity March 3, 2011

Medical Directors Meeting

Exploring the Pharmacy Opportunity

March 3, 2011

Purpose

• Set context• Share two examples of actions ACHP

plans are taking– Fallon Community Health Plan– Capital District Physicians Health Plan

• Discuss potential for ACHP collaborative effort

2

Health Care Costs: An Unsustainable Path

• While overall health care costs trended down (slightly) in 2009 for the first time in over 50 years, total health expenditures of $2.5 trillion = 17.6 percent of the nation’s GDP, an increase of 1% from 2008.

• The growth in health spending continues to outpace the growth of the rest of the US economy.

Health Expenditures Continue to Rise Across All Categories

Medical Director Focus: Clinical Leadership Lever

Transitions of care & Primary Care Innovation

Co

st O

pp

ort

un

itie

s

ACHP Triple Aim Initiatives

Hospital Costs (Readmissions, LOS, ED)

End of Life Costs (primarily hospital related)

Pharmaceutical costs

Advanced Imaging Costs

Preference sensitive interventions

Chronic Care costs

Palliative Care

Shared Decision Making

Primary Care Innovation

Primary Care Innovation

Opportunity area

Agenda

• About Fallon Community Health Plan

• Network options

• Plan designs

• Value-added features

• Taking care of your employees

• Your FCHP team

Pharmacy 2011

Leslie Fish, PharmD

Elizabeth Malko, MD

Fallon Community Health Plan

Agenda


• Network options

• Plan designs



• Your FCHP team

Agenda

• Trends in Retail and Specialty

• Trends at Fallon Community Health Plan

• Reasons for price increases

• Health Care Reform influences

• Management - future

Agenda


• Network options

• Plan designs



• Your FCHP team

Average cost = $103.75/Rx (first time over $100)

Trends in Retail

Volume grew 2.7%

Spending grew 9.3%

Average costs: Cash $68.58/RxMedicaid $93.20/Rx3rd party $109.46/Rx

2009

Agenda


• Network options

• Plan designs



• Your FCHP team

Average % shares of health benefit premiums allocated to the pharmacy benefit

2009 2010

MA-PD private plans

18.3% 18.9%

Commercial Plans

15.6% 16.3%

Agenda


• Network options

• Plan designs



• Your FCHP team

Highest states in utilizationState # Rxs

West Virginia 20.1

Kentucky 18.5

Tennessee 18.2

Alabama 17.9

Louisiana 16.9

Arkansas 16.3

Rhode Island 16.3

Mississippi 16

Iowa 15.1

Pennsylvania 15

Agenda


• Network options

• Plan designs



• Your FCHP team

Lowest states by utilizationState # Rxs

Washington 11.3

Maryland 11.2

Nevada 11.1

Arizona 10.7

Hawaii 10.7

Utah 10.6

New Mexico 10.3

California 9.4

Colorado 9.4

Alaska 8.1

Agenda


• Network options

• Plan designs



• Your FCHP team

National retail prescription market 2009

Cost• Third party $354B• Medicaid (non-third party) $28B• Cash $30B

Utilization• Third party 3.2B• Medicaid 0.3B• Cash 0.4B

Agenda


• Network options

• Plan designs



• Your FCHP team

Prescription decision making

2008 2009

Dispensed to Patients

86.3% 85.6%

% Denied by Health Plans

8.6% 8.1%

% Abandoned by Patients

5.1% 6.3%

Agenda


• Network options

• Plan designs



• Your FCHP team

Trend by specialty

• Oncology accounts for over 50% of medical specialty drug costs.

• 25% of costs of medical specialty drug costs are for RA, Crohn’s, psoriatic arthritis and other autoimmune diseases.

• Oral oncology medications account for about 10% of all cancer medications.

Agenda


• Network options

• Plan designs



• Your FCHP team

Trend drivers:Top 24 medical injectables

• Remicade • Aloxi • Tysabri

• Avastin • Zometa • Abraxane

• Neulasta • Orencia • Sandostatin

• Rituxan • Alimta • Gammagard

• Herceptin • Gemzar • Eligard

• Eloxatin • Procrit • Carboplatin

• Taxotere • Erbitux • Taxol

• Aranesp • Velcade • Gammargard S

Agenda


• Network options

• Plan designs



• Your FCHP team

Specialty drug spend by provider specialty

• 39% Hematology

• 24% Oncology

• 12% Rheumatology

• 2% Urology

• 23% Other

Agenda


• Network options

• Plan designs



• Your FCHP team

Specialty drug trends

• AWP has been largely replaced with ASP reimbursement with larger payers.

• Two thirds of commercial health plans require a co-share for medical injectables for which the average co-share is 17% of the drug cost.

• Two thirds of payers require genetic testing prior to receiving medications such as Herceptin or Erbitux.

Agenda


• Network options

• Plan designs



• Your FCHP team

Future specialty medications

• SLE - drugs are here• Hep C - new orals used in addition• MS - new orals• HIV - new oral in treatment naïve• New oral and injectable oncology medications

Agenda


• Network options

• Plan designs



• Your FCHP team

Significant influences on pharmacy at FCHP in 2011

• MS category• Colchicine• Decrease in rebates from pharma• New oral anticoagulants

Agenda


• Network options

• Plan designs



• Your FCHP team

Reason for increases

• Health Care Reform

• Dried up Pipelines

• Stricter Management - including Medicaid

• Recession

• Lower bars with respect to outcomes

• Lower price concessions to Europe

• Resurrection strategy

Agenda


• Network options

• Plan designs



• Your FCHP team

Health Care Reform

• Cannot wait until 2014 (share holders)• Comparative effectiveness• Rebates to Medicaid• Medicare - fill in doughnut hole• Biosimilar exclusivity

Agenda


• Network options

• Plan designs



• Your FCHP team

The Good

• Comparative effectiveness (Patient Centered outcome research)

• Transparency• Member education• Physician education• Medical Home model

Agenda


• Network options

• Plan designs



• Your FCHP team

Benefit Changes

Copays/Co-insurance

Buy & BillMD

HighDeductibles

Site of Care

Specialty Mandatory-

Member

Goal: Reduce cost and improve Pharmacy management

TieredPhysicianNetworks

Agenda


• Network options

• Plan designs



• Your FCHP team

Management Changes

StricterManagement-Guidelines-Criteria setfor oncology

-HIV

Preferred Drug Lists

Elimination of certain categoriesfrom the

formulary

QuantityLimits

Step Therapies

Goal: Reduce cost and improve Pharmacy management

Agenda


• Network options

• Plan designs



• Your FCHP team

FCHP PPI program• Exclusion of certain PPI products • PPI formulary consist of Dexilant #30 for Tier 3

copayment, $5.00 for #42 OTC Prilosec and #42 Prevacid 24

• Nexium with PA and Step• Savings of $2M for 2010 in Commercial

membership• Decrease of 29% in utilization• 72% of use in OTC products

Agenda


• Network options

• Plan designs



• Your FCHP team

FCHP Specialty Mandate for Retail Rx

• Mandate specialty retail medications via specialty vendor

• Limit to one month supply

• Decreased waste (lost meds, unused meds, wrong med ordered)

• First year savings in decrease amount of medication sent out

PPI Step Therapy1. Omeprazole

2. Lansoprazole

3. PantoprazoleAll brands are non-formulary

Statin Step Therapy1. Generics through

simvastatin 80 mg

2. Lipitor 80 mg

3. Crestor 40 mg

All Crestor utilizers “grandfathered”

New-starts affected July 1st; Current utilizers have 90-day transition period

Physician telephone consultations allowed and reimbursed with no copay required – July through October

CDPHP Summary of Targeted Formulary Action

$10 Million savings from Step Therapy for Statin and PPI Classes -- Beginning July 2010

CDPHP: Therapeutic Class Costs Dropping

Cost of Therapeutic Class- Per Member-Per MonthFormulary Decision date - June 16, 2010

Over $8 million saved per 100k Commercial lives

$6.42

$4.84$4.53

$2.45

$7.72$7.60$7.29

$6.93$6.47

$6.35

$-

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

$9.00

4Q09 1Q10 2Q10 3Q10 4Q10

PM

PM

Co

st

HMG PPI

Overall Generic Utilization Rate Commercial Products

69.5%

71.6%

67.9%

70.9%

73.3%

74.0%

66.0% 66.4%66.6%

67.0%

67.6%

62.0%

64.0%

66.0%

68.0%

70.0%

72.0%

74.0%

76.0%

Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10

CDPHP: Generic Utilization Increasing

Next Steps

30

Documents

Medical Directors Meeting Exploring the Pharmacy Opportunity March 3, 2011