Navigating the Rising Costs of Biologics: Strategies for Integrated Delivery Networks

Elie M. Bahou, PharmD, MBA, senior vice president and system chief pharmacy officer at Providence, emphasizes the use of formulary management, negotiation tactics, in-house specialty pharmacies, patient assistance programs, utilization management, and data analytics to manage the rising costs of biologic medications while ensuring financial sustainability and optimal patient outcomes.

Bahou worked on the Institute for Value-Based Medicine^® (IVBM) event hosted in partnership with The American Journal of Managed Care^® and Providence that was held in Seattle, Washington on August 29, 2024.

This transcript has been lightly edited for clarity.

How do integrated delivery networks (IDNs) ensure financial sustainability while managing the rising costs of biologic medications?

Yeah, good question. So, how we do it here is really through a succinct structure of, No. 1, formulary management. We have what's called a P&T [pharmacy and therapeutics] committee, a governance structure that we implement guidelines to use cost-effective biologics and promote what are called "biosimilars" instead.

We've got about 8 tactics. We negotiate discounts and contracts. We use our purchase power—about $2.2 billion—to obtain volume discounts and rebates from these pharmaceutical companies, and link the payments for biologics to their effectiveness and how they improve patient outcomes. The [next] point is we also have an in-house specialty pharmacy—the name of it is Credena Specialty—that we own and operate. And what we do there is we manage and distribute and administer biologics internally wherever possible to reduce costs. So we fill prescriptions for our health plan at that pharmacy called Credena. And then we also have patient assistance programs that really help offset the co-pay of these expensive drugs. So a lot of times, these drugs have co-pays of 20% of $3000—so it'd be $600—the patient can't really afford it. So, we have patient co-pay assistance programs that we assist the patient in getting so that they can get their medication, make sure that they're compliant, and get better.

Another tactic is what we call UM, or utilization management. It's really employing evidence-based type of criteria to ensure biologics are prescribed whenever possible. And then finally, and lastly, we use a lot of good data analytics, advanced analytics, to optimize treatment protocols and to reduce costs.

That's what we do. So 8 different tactics. So by combining these 8 tactics together, we can effectively truly control the financial impact of these biologic medications, which are expensive, as you know.

What are the key challenges IDNs face in managing biologic medication costs, and how can they overcome these challenges while maintaining quality care?

Yeah, another good question. It's really a follow-through to that [other question]. As we stated, biologics are very expensive due to complex production process. To mitigate, what we do is we utilize biosimilars, we negotiate volume discounts, and we engage in value-based type of contracting. There's regulatory and market dynamics such as exclusivity and patent laws that sometimes restrict access to more affordable biosimilars. So we stay updated on a regular basis on those changes and advocate for more favorable type of policy.

I'll throw a couple more things—expensive meds can lead to poor adherence, as you can imagine, so affecting treatment outcomes. What we do is we focus on patient education, make sure they understand why it's important to take it, and offer them that patient assistance program that we spoke about earlier to close that gap with their co-pay. Depending on how much they make, these pharmaceutical manufacturers actually pay for, sometimes, the entire medication.

So again, it's a collaboration among multiple different stakeholders in my department as the chief pharmacy officer, and we use EHR, electronic health records, to improve communication and coordination with our doctors, with our pharmacists, with our nurses, with all of that. So by really strategically addressing what I talked about, we can effectively continue to manage our biological costs and medication costs while ensuring the optimal patient outcomes.