Featured Health Business Daily Story, Feb. 2, 2015

Hepatitis C Drug Competition Results in Cost Discounts, Broader Member Access

Reprinted from SPECIALTY PHARMACY NEWS, a monthly newsletter designed to help health plans, PBMs, providers and employers contain costs and improve outcomes related to high-cost specialty products. Sign up for an $84 two-month trial subscription today.

By Angela Maas, Managing Editor
January 2015Volume 12Issue 1

The Dec. 19 FDA approval of AbbVie Inc.’s Viekira Pak (ombitasvir, paritaprevir and ritonavir tablets co-packaged with dasabuvir tablets) to treat people with hepatitis C genotype 1 infection sparked formulary decisions among multiple payers as they attempt to drive down costs for this condition. And as the various deals are unveiled, it appears that’s exactly what’s happening. This, in turn, means the drugs are available to a broader range of patients than what payers have been allowing.

Gilead Sciences, Inc. therapy Sovaldi’s (sofosbuvir) approval in late 2013 sparked an outcry over its cost of $84,000 for 12 weeks of treatment, and the din only grew louder after Gilead’s Harvoni (ledipasvir and sofosbuvir) was approved in October and priced at $94,500 for the same treatment duration (SPN 12/14, p. 1). Most payers put in place stringent utilization management tactics that allowed only the sickest patients to be covered while they waited for the approval of other hep C drugs in the hopes that competition would mean lower costs. But when Viekira Pak finally was approved, its price for a 12-week course was $83,319 — certainly not much less than those of the other two drugs. But those prices, however, don’t include contracting rebates, for which plans have begun negotiating.

First out of the gate was Express Scripts Holding Co., which struck a multiyear deal with AbbVie making Viekira Pak its exclusive option for members with genotype 1 infection and excluding Sovaldi, Harvoni and Olysio (simeprevir) from its National Preferred Formulary, which covers about 25 million people. That deal was unveiled only three days after Viekira Pak’s approval.

And on Jan. 5, CVS Health said it had made a deal with Gilead giving preferred formulary status to Sovaldi and Harvoni for CVS/caremark standard commercial, exchange, Medicare Part D and Medicaid formularies.Then on Jan. 12, Prime Therapeutics LLC unveiled a deal giving co-preferred status to both Harvoni and Viekira Pak. As of SPN deadline, two payers, Anthem Inc. and Humana Inc., also have unveiled exclusive deals for Gilead’s drugs.

None has said what kind of pricing discount it received.

“Our agreement expands the number of people who can be treated with a curative therapy, adding value for patients, payers and physicians,” Express Scripts spokesperson Brian Henry tells SPN. “Before the approval of Viekira Pak, and our agreement, most payers were choosing to treat only the sickest patients because of the high cost of available treatment. We have driven down the cost of cure to a point where physicians can now treat all hepatitis C patients, not just the sickest, with a curative treatment. Our decision has expanded access for millions of people.”

CVS spokesperson Christine Cramer tells SPN that “our goal was to create the lowest net-cost solution for the entire population of patients with all genotypes of hepatitis C. When making this decision, we evaluated a wide variety of factors including duration of therapy, relative distribution of genotype and cost of the individual agents in the category as well as the results of a comprehensive clinical review of the different hepatitis C regimens. We believe this strategy meets patient needs while delivering excellent value and clinical options to both clients and plan members.”

David Lassen, Pharm.D., chief clinical officer for Prime, maintains that the co-preferred status is good for two reasons. First, “we’ve accomplished a great cost of care in creating significant value” and “lowering the price point” of the therapies, he tells SPN. Second, the PBM’s members are getting really good care by having access to the most appropriate drugs. “We anticipate that this value we’re creating for our plans will be significant.” Prime still covers Sovaldi on formulary, Lassen clarifies. In light of the two newer drugs, “We anticipate Sovaldi’s use mainly will be for non-genotype 1 infection.”

‘It Probably Paid to Not Go First’

“Things have rapidly been evolving over the last few weeks” since Express Scripts first unveiled its deal with AbbVie, Lassen says. In fact, “four weeks ago, I might have thought Prime would be going down the same path.” But “both companies strongly wanted to be part of our formulary.…The timing of events…really played into our ability to secure a really good deal with both manufacturers.” Also a help was Prime’s ability to “leverage our Blue Cross partners.” Lassen tells SPN that while he “can’t provide any details” as far as pricing discounts Prime is receiving, “we believe that the deals that were structured are extra competitive.…It probably paid to not go first.”

Asked about other PBMs’ approaches that gave formulary exclusivity to certain drugs and excluded others, Lassen contends, “There is a role for using exclusivity if it’s done correctly.”

While the agreements seem to be coming more quickly than usual after Viekira Pak’s approval, both Henry and Lassen tell SPN that their companies had been in discussion with the manufacturers before the FDA approval. “We’ve been working with the manufacturers for months leading up” to the approval, says Lassen.

“A manufacturer contracting contest for payer and PBM preference or exclusivity (exclusionary formularies have become popular) was inevitable once therapeutically similar drugs became available for treatment of hepatitis C,” maintains Elan Rubinstein, Pharm.D., founder and principal of EB Rubinstein Associates.

Express Scripts’ preferring of Viekira Pak “on their national preferred formulary doesn’t come (to me) as a huge surprise, given that hep C is the new industry multiplier,” says Stephen Cichy, founder and managing director of Monarch Specialty Group, LLC. “Where I’m caught off-guard is CVS’s response that they’re going exclusive with Harvoni and Sovaldi on the CVS Standard Commercial, Exchange, Med D and Medicaid formularies for 2015. This situation is like an 800-pound gorilla sitting on a lifeline, with ESI [i.e., Express Scripts] choosing to toy with one side of the rope, and Caremark choosing the other. The first side that loosens the rope without the gorilla falling wins.”

One potential downside of exclusive deals, points out Paul Urick, president, Managed Markets & Industry Relations for Burmans, is that if an exclusive multiyear deal is in place, “it could be difficult for a new drug to get a foothold” in the treatment space.

Randy Vogenberg, Ph.D., principal and partner at the Institute for Integrated Healthcare, agrees. For example, he tells SPN, Merck & Co., Inc., which is conducting clinical trials for hepatitis C therapies, is now “locked out by the two largest PBMs.”

“Hep C, like many other complex diseases, requires some finesse in treatment, hence the current dilemma brought about by these preferred product deals,” says Vogenberg. “Since it is not a simple brand drug switch to a similar generic, this is just the beginning of conundrums that will be facing the PBMs and further roiling patients and providers who increasingly hold the real financial risk.…Competition in the hep C market is another example that illustrates the way PBMs today can put patients in a bind under the guise of saving money that nobody ever really sees.”

It remains to be seen what approaches other PBMs will take to manage the hepatitis C drugs. Sean Karbowicz, Pharm.D., director, Rx Policy & Clinical Business Development, OmedaRx, tells SPN that his company is “carefully considering the evidence around the new hep C drugs to determine what flexibility we’ll have. We use that evidence as a lever to negotiate for lower drug costs on behalf of our members. I’ll say that it’s not clear cut at this point, and we’re really trying to wrap our arms around the comparative effectiveness and safety right now. The fact that there are increasing options means that payers, patients, and providers will have choices — and we’re doing our best to provide transparency on how well these products actually work, so patients can make informed decisions.”

OmedaRx is “also comparing our current experience with Sovaldi versus what the clinical data suggested we’d see in practice. If price is a reflection of value, Sovaldi’s pricing implied it was to be a tremendous value, and I’m not sure it has delivered on its promise for everyone who was treated. How Sovaldi has performed will also inform our go-forward strategy to some extent.”

“We do need real-world experience with the new drug,” adds Urick. At Burmans, “We are taking more of an informed approach that would work with health plans and doctors for what is best for the patient.…We want to prefer drug treatment based more on the success of the patient for the benefit of all parties as our top priority. Apart from our traditional pharmacy fulfillment, we spend a lot of time with doctors so that they understand, are informed and have all of their questions answered with respect to product preference and how it is aligned with the true clinical success of the patient. We would not have a problem with preferring a product from this perspective because it would draw a direct benefit to the patient, health plan and manufacturer.”

© 2015 by Atlantic Information Services, Inc. All Rights Reserved.

The AIS Blogs recently took a big-picture look at hepatitis C, examining who has it, how they get it, and why treating hep C is important. Join the conversation at the AIS Blogs.

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