Health Plan Leaders Look for Ways to Distinguish Novel Treatments

Concern about the cost of underwhelming new medications and optimism about the potential of new healthcare delivery models highlighted a wide-ranging panel discussion on “Weighing the Value of Novel Treatments in Diabetes,” part of the multistakeholder conference, Patient-Centered Diabetes Care 2015.

The steady proliferation of drug options will certainly help some patients, but this often seems like a mixed blessing to the trio of health plan executives who took part in the discussion: David Brumley, MD, MBA; Edmund Pezalla, MD, MPH; and Michael S. Sherman, MD, MBA, MS.

The phase 3 trials that suffice to win FDA approval provide little general information about the comparative efficacy of the dozens of options that now exist for patients with diabetes and almost no data indicating which medication might work best for which patient. Instead, trial data typically provide nothing more than evidence of non-inferiority to metformin. The only way to infer information about relative efficacy is to compare the performance of each medication against metformin, and even that decidedly rough technique provides no reason to think newer (and typically more expensive) drug classes represent any sort of breakthrough, the panelists said.

“If you look at them, they all kind of work about the same. They’re in a very narrow range of lowering A1C [glycated hemoglobin] about 0.9 to 1.1 percentage points,” said Sherman, the chief medical officer at Harvard Pilgrim Health Care. “The pricing that comes out is not necessarily correlated very well with the outcomes.”

Sherman believes that subsequent research may demonstrate that different types of drugs will work better than others for different patients, but the absence of such data right now leaves payers, providers, and patients with little reason to choose on anything but price.

“A lot of our management strategy,” he said, “is to try to encourage people to use the lower-cost medication.”

eally been divorced to a large extent,” said Brumley, who is the senior medical director at Tufts Health Plan.

Payers can, of course, encourage such behavior by flatly refusing to cover more expensive medications, but the panelists were more inclined to support cost-sharing policies that provided some support to patients who wanted a particular medication enough to be willing to pay at least part of the bill. “It at least puts the member in a position, to some extent, of being the purchaser who’s also the end user, because that’s r

The trick, however, is to balance the incentive, to be frugal with the incentive, to stay healthy.

“We struggle with this,” said Pezalla, national medical director of Pharmacy Policy and Strategy for Aetna. “On the one hand, we don’t want all the diabetes drugs to be high-cost, high-tier because then people won’t take them. On the other hand, particularly when we get new entrants that are very expensive, the truth is, either you’re paying for it or everyone’s paying for it.”

In general, the panel members agreed that the key to maximizing value from healthcare expenditures is to provide everyone reasons to consider both costs and benefits. Healthcare plans have thus been increasing patient deductibles and co-payments for a number of years now, not just to shift costs but also to reduce waste. Existing incentive structures are far from perfect, all 3 panelists acknowledged. Overpriced treatments are still overused, while the price of cost-efficient treatments still dissuades some patients from using them. That said, healthcare plans keep tweaking cost structures to reduce both overuse and underuse, and the panelists predicted a sharp increase in the number of plans that employ strong incentive structures.

situation with large employers, which are self-insured,” said Sherman.

“If you have no co-pay, that means that premiums are higher and individuals on the exchange are paying more. There is a lack of willingness to want to do that. That is not us as a payer. Those are decisions ultimately made by those who serve the employers. It’s the same

“The second point which is impactful is the Cadillac tax, which for anyone who’s unaware, is something that will kick in in a couple of years. That means that when the benefits provided by employers exceed a certain point, there’s a 40% excise tax on the portion above that. Most of the employers that I speak to and consult with say that that is likely to result in more cost share for the individual to avoid that tax.”

Of course, patients often lack the knowledge to weigh the costs and benefits of various treatments, which is why the panelists were broadly optimistic about a wide range of initiatives designed to base provider pay on costs and outcomes instead of services provided.

The panelists acknowledged that gains from ideas such as accountable care organizations (ACOs) and patient centered medical homes (PCMHs) have, to date, been highly variable. Some of the new groups have delivered impressive results at impressive prices. Others have performed worse than the status quo.

The expectation, looking forward, is that high-performing organizations will effectively create a set of best practices that everyone can follow, and that the government and private payers will align their expectations to encourage those best practices.

of continuous quality improvement cycle or however you want to look at it. That’s going to take some time.”

“The formation of PCMHs and ACOs is a big part of our strategy. We signed a lot of agreements,” Pezalla said. “We’re looking for innovations. We’re looking for efficiency. We’re looking for groups to learn and to use that learning in sort

There was some hope that both pharmaceutical companies and medical de- vice makers could eventually be convinced to join the pay-for-performance model in ways that better aligned their incentives with those of patients and payers.

“We’re early on with our diabetes bundles, but I’m thinking [in] a couple of years, a pharma company with a strong franchise could be going to that diabetes [provider group] which is taking risk for a group of diabetics and say, ‘All-you- can-eat for this price.’ By ‘all-you-can- eat,’ of course, I mean for a fixed price necessary to get [every patient in the group’s] hemoglobin A1C or other out-comes of certain points,” said Sherman. “That’s alignment. That actually positions a pharma company as a partner and not as a supplier. I think this is very exciting. It offers a lot of opportunities for all of us.”

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