Thursday, July 24, 2008

4th Tier Drugging

In today’s July 24 New England Journal of Medicine Perspective, Thomas Lee (a physician executive at Partners Health System) and Ezekiel Emanuel (a physician ethicist at the NIH) tackle how health insurers are resorting to 'tiering' to manage the high cost of biologic drugs.

Their opinion piece points out that biologic drugs (other than vaccines) can cost from $50,00 to $100,000 per year. The average health insurer is contending with a rising number of biologics and an increasing number of indications. As a result, plans are turning to placing biologics on a “4th Tier,” which may require the enrollee to pay a percent of the total cost of the drug. If the co-pay on a $100,000 drug is 33%, the financial burden could be considerable and put potentially life-saving treatment out of reach.

Drs. Lee and Ezekiel then go on to note that this approach is a blunt two pronged method of cost control that is divorced from quality and that 1) incents consumers to not take advantage of potentially lifesaving therapy and b) for those who accept the therapy, transfers cost from the insurer to the patient. They report that 86% of Medicare drug plans and 10% of private commercial plans use a Tier 4. Furthermore, since the number of enrollees is small and the total health spend (compared to other big ticket items in the overall health care budget) is relatively small, their plight is unlikely to garner much attention.

So far so good, but Drs. Lee and Emanuel’s solutions simply fail to pass muster. They suggest society needs to get smarter about which biologics are given to which patients. Those smarts can be achieved though evidence and consensus based guidelines. We should expert health insurers to administer/enforce the guidelines. If a treatment option is questionable, patients should only be allowed to access a biologic by participating in a clinical trial. If this is done right, they encourage the physician community to support this approach instead of undermining it.


The Disease Management Care Blog suggests these eminent academics spend one day in the shoes of an average HMO Medical director. Managed care organizations and their medical directors already rely on guidelines to enforce the pharmacy benefit for high cost drugs. It’s because that approach doesn’t work very well they have been forced to rely on the beneficiary-patient to act as a “speed bump” in the decision making process.

Guidelines don’t work well because a) they are often out of date thanks to new – and often substandard - research and b) they are authored in such a way to give physicians interpretive leeway. Physicians will use any new data and leeway when they believe is in the best interest of their individual patient. Their loyalty to the patient will always supersede any prior agreement over guidelines and insurance coverage. Insures have little hope that they would be trusted by the very physicians Drs. Lee and Ezekiel claim to represent.

The DMCB offers up five other suggestions which are hardly original and go unexamined in the Journal piece:

Take the biologics out of the pharmacy benefit and place them in the medical benefit: One reason why biologics are such a tempting target is because their cost represents an appreciable fraction of the total pharmacy spend. The medical spend is much larger and unlikely to be whipsawed by these agents, many of which have been in the medical benefit anyway. One could argue these agents belong in the medical benefit because the line that separates the inpatient and outpatient treatment settings are becoming increasingly blurred.

Cap the exposure to the beneficiary: Since biologics may be used for years, it’s reasonable to limit the out of pocket to some amount after some period of time. This may require the use of publicly funded risk pools. However, the beneficiary still has some ‘skin in the game.’

Make continuing coverage contingent on a clinical response: if there is an insufficient benefit, measured by objective criteria, coverage past a defined period of time is denied. This doesn’t necessarily mean any clinical response. There’d have to be an appreciable clinical response that matches the value of the biologic.

Deploy disease management: unless the physician is already doing this, remote monitoring can assure compliance, assess response, address untoward reactions and help patients and their physicians achieve maximum value for the dollar.

Create drug registries: short of the expensive and time consuming prospective clinical trials favored by our friends in academia, we need a database that allows us to track outcomes in these populations. As the outcomes become apparent, we’ll better understand the value of what we’re paying for.

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