Managing specialty drug costs using VBID

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Jan 16, 2018

High-cost specialty drugs to treat chronic conditions such as rheumatoid arthritis (RA), cancer, hepatitis C (Hep C), immunodeficiency disorders and multiple sclerosis (MS) are a small portion of all drugs dispensed, yet they represent a disproportionate share of total drug spending.

Compared to 1990, when only ten specialty drugs were on the market, today there are more than 300. In 2015, only one to two percent of the American public used specialty drugs, yet they accounted for approximately 38 percent of total drug expenditures. The amount spent on these drugs is expected to grow by 17.7% in 2018. And, by 2020, specialty drugs are expected to represent almost half of all drug sales.

How have we gotten to this point? An unexpected, dramatic jump in medical costs, with the introduction of thirty-three specialty drugs during 2014-2015, highlighted the need for increased scrutiny on this small, but powerful subset of drugs.

Applying VBID to utilization

How can employers, providers and payers use value-based insurance design (VBID) to better manage specialty drug costs while enhancing care?

The answer: better care pathways to guide clinicians.

Prescribing a specialty drug does not have to be the automatic first step when a patient is diagnosed with conditions such as Hep C, RA, or Crohn’s disease. Insurance design can create care pathways that guide physicians in appropriate monitoring of certain chronic conditions in patients without symptoms and that meet certain criteria.

Prescribing a lower cost drug may be a more appropriate first step for other patients. That can help ensure that specialty drugs are prescribed only when medically necessary and create a more cost-effective care plan. It can also take into account the fact that high patient co-pays discourage utilization.

Take the scenario where a physician first diagnoses a patient with Hep C and considers prescribing one of the expensive new direct-acting antivirals (DAAs). In VBID, the care pathway may recommend that the physician first monitor the patient if a routine liver panel reveals that the disease is dormant and the patient has been living symptom-free for years.

Care pathways can also guide the choice of DAA, which avoid the side effects of interferon and have a better than 90% cure rate. Clinicians should select the DAA based on the virus genotype of the virus, the degree of liver fibrosis and any history of drug resistance. DAA side effects such as fatigue, headache, nausea, diarrhea, insomnia, itching and weakness can be taken into account in the protocol.

A PHM solution can help to easily identify patient populations that need ongoing monitoring, and facilitate outreach and monitoring to determine the efficacy of existing treatment regimens. Philips Wellcentive uses embedded guidelines for treatment options based on peer studies.

Physicians considering prescribing Remicade for RA, Crohn’s disease, or ulcerative colitis should first determine if the patient has any of a number of co-existing conditions, such as MS, Hepatitis B, heart failure, recurrent infections or compromised immune systems or TB. In these cases, the drug is contraindicated.

Tools to manage specialty drug utilization

Industry trends point to payers implementing more cost-saving measures, and additional VBC contracting. Care management tools available for consideration, especially in the management and treatment of rare and chronic care conditions include:

  • Tools to help identify and manage patients to ensure specialty drugs are used appropriately and effectively
  • Care pathways and plans for chronic care management
  • Remote patient monitoring
  • Cost-sharing

VBID can improve clinical outcomes and contain cost by reducing barriers to high-value clinical services and providers and discouraging use of services and providers that are of lower value, aligning consumer out of pocket expenditures with value.

The model is designed to factor in provider variations in care as well as patient-specific considerations like co-morbidities, compliance and overall health status. Some of the best practices for chronic care management include a holistic, continuous health approach using care pathways, integrated, individualized care plans, dashboards to track outcomes and tools to drive personalized care plans.

About the author

Paul Taylor

Paul D. Taylor, MD, 
CMO, Philips

Paul D. Taylor is CMO for Philips PHM. Board-certified Internal Medicine physician and entrepreneur with experience developing industry-leading Value-Based Care and Population Health Management solutions and implementing clinical quality improvement programs and systems of care at the physician, physician group, physician organization, and community levels.

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