Jan E. Berger, MD, MJâ€”Editor-in-Chief

I walked into the car dealership looking for my next car. I had done my research, and I knew in general what I wanted: something safe, with new technology, that would be fun to drive. I had it narrowed down to 3 cars and walked up to my first choice, which had both a great safety record and impressive mileage ratings. Little did I know, however, that I would quickly lose my breath due to the cost oh well, second best will have to do.

	We are all still reeling from the $80,000 price tag associated with the new hepatitis C drug. While we believe that this medication has significantly better outcomes, cure versus control, and a better side effect profile, we also know that the cost is one that most organizations will have a difficult time budgeting for in today’s environment. I was recently in Spain on a medical educational mission and asked the Ministry of Health representative how they were handling the introduction of this new medication. His response to me was that it was a good drug, but one that they, as a country, could not afford.

	This question of cost is not one that will go away. Generally, the medications that carry high price tags are those associated with conditions that afflict relatively small numbers of people. Despite this, hepatitis C, a disease that affects 3.2 million people in the United States, represents one of the first high-cost medications that would potentially be used on this many people. Soon this will no longer be the only example, as a new class of drugs to control hypercholesterolemia is coming down the pike.

	Proprotein convertase subtilisin/kexin type 9 (PCSK9) is a new class of cholesterol drug that has the potential to significantly lower cholesterol; the challenge here, is that the drug will cost significantly more than those that are presently on the market. Although prices have not been set as the drug is not yet approved by the FDA, the word around the water cooler is that the PCSK9 medications will cost around $10,000 per year. At first blush, you may say a $10,000 to $12,000 range is considerably lower than the $80,000 cost for the AbbVie and Gilead medications for hepatitis C. The stark reality, is that there are 72 million people with high cholesterol, and it is believed that for around 20 million, statins will not be used, as these patients are either unable to take them or have very high cholesterol, for which statins have proved to be ineffective. This is a 6-fold increase in the potential number of people under treatment. To further compound the issue, these new cholesterol-lowering medications will be required for a lifetime, not just 12 weeks like the hepatitis C medications.

	Please do not misunderstand me, I respect the work that the pharmaceutical industry does, and even have friends in the industry (yes, really). These new medications represent great improvement over those presently on the market, but the conundrum we face is: how do we pay for these groundbreaking drugs? A recent Managed Care Minute Weekly Poll queried if payers should be asked to cover the PCSK9 drugs for patients who can safely use statins. The survey showed that 67% of those who responded stated they should not be asked, whereas 33% said they should. Initially, this result did not surprise me, as most of the respondents were likely somehow associated with the managed care industry. They were probably the ones sitting in their offices already struggling with these types of questions: Do we cover the medication? And if so, what types of utilization management programs will be put in place? In recent articles quoting the 2 largest PBM organizations in the United States, CVS Health and Express Scripts, have been very public about this issue.

	The next question one has to ask is, how will the costs of these medications affect others in the industry? If this same question about cost and payment were posed to physicians, what would their response be? Historically, physicians have had little knowledge about the cost of medications, but this too is beginning to change as they start to take on greater cost risks in the new models of care (eg, PCMHs and ACOs). How will this change their behaviors when it comes to high-cost medications? At present, it is too early to tell.

	How would patients reply? Upward of 50% of patients have a coinsurance cost-share payment model within the pharmacy benefit. These people could be looking at a monthly out-of-pocket cost of $300 for this cholesterol medication alone. In addition, if they have a high deductible, they could face having to pay the entire amount until they reach their deductible.

	These questions of cost and value are not going to go away. They are questions that each of the stakeholder groups in healthcare will have to answer. What do you think? I look forward to hearing from you.

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Questions of cost and value are ones that each stakeholder group in healthcare will have to answer.

Sinking the Titanic 

Choice in healthcare can seem cyclical, and at this point in time we are in a period of “narrowing the playing field,” where healthcare consumers have real (or sometimes perceived) reductions in choice within the structure of their pharmacy benefit.

If you look at the 2015 plan designs in pharmacy benefit, you can see a reduction of choice in a number of areas, including point of distribution and drug choice. Choice of distribution has been a part of benefit design as far back as 2000, in the form of mandatory mail rules that were put in place for certain chronic condition medications. However, it is also worth noting that this feature of plan design was most commonly found in large and mid-size employers that were utilizing pharmacy benefit managers that owned their own mail order facilities (eg, Caremark, Medco, and Express Scripts [ESI]).

More recently, the choice of using a retail store for medication pickup has also come into play as part of plan design. Many other payers utilized a less stringent model of design by allowing consumers the choice of retail or mail routes for receiving medications, though the choice was somewhat influenced by the mail order option being made to be more financially attractive with a reduction in out-of-pocket costs.

Discussions regarding narrow retail networks began around 2005—it was not unusual for a consumer to find that one of the local pharmacies in their neighborhood was not within their pharmacy benefit network&mdash;and in 2007, the discussion gained momentum when Caremark was acquired by CVS. Many Caremark clients were concerned that the new CVS Caremark would preclude Walgreens from being in their retail network; CVS reassured its clients, meanwhile creating an out-of-pocket differential and other advantages such as maintenance choice (90-day supply at retail) for the consumer, hoping to “gently” steer their choice to CVS.

Further, in 2011, a contract argument between Walgreens and ESI resulted in Walgreens being cut out of most of the ESI client retail networks for a period of time. In order to decrease dissatisfaction for those affected clients, ESI offered price concessions in return for the ability to narrow the retail network. What occurred was an initial test to see how the consumer would react to this type of plan design and reduction of choice—the initial change was a disruption that caused neither significant angst for the consumer nor a significant long-term decrease in medication adherence rates. This episode, and the subsequently learned lesson that consumers are not overly concerned about this type of design, was the beginning of an era of narrowed retail choice that not only continues today, but has been on the rise.

In addition to decreasing choice regarding where a consumer receives their medications, the choice of the medication itself has also narrowed. Initially, we saw 2-tier plan designs, but during the last 15 years we have seen an increase in the number of medication tiers, with some pharmacy plan designs having as many as 5. Furthermore, the consumer cost responsibility has increased, and likewise has the cost differential between tiers, with differentials of $35 or more. This out-of-pocket model has been utilized as a means of continuing to grant the consumer some level of choice while still steering them to the most cost-effective medication.

We have begun to see a new, narrower plan design emerge with closed formularies and the exclusion of certain drugs. Historically, we have only seen these closed formularies in a minority of plan designs, including the VA pharmacy benefit and a few other payer organizations. Over the last 3 years, PBMs, such as ESI and CVS Caremark, began to create exclusion lists—the 2015 lists for these 2 PBMs include approximately 100 drugs not covered by these organizations’ clients. In the last 2 or 3 months, these exclusion lists, which come about through exclusivity contracts with manufacturers, have received a great deal of attention due to the recent decisions to cover only certain hepatitis C drugs: ESI only offers the new hepatitis C drug from Abbvie, and CVS Caremark only the hepatitis C drug from Gilead.

Why are we seeing this narrowing of choice within pharmacy benefit? Although it may be over-simplifying the issue, it comes down to one word: cost. As healthcare costs continue to increase, payers are looking harder and harder for ways to take some level of control. Initially, we saw employers and health plans passing increasing costs onto the consumer, but we have come to a point where we cannot increase the cost share much more than we already have. Therefore, it is necessary to look at other methods of cost control. By narrowing choice in both the point of distribution to the consumer, and the choice of medication, payers and their PBM partners are able to reduce some of the costs through contractual arrangements with retail pharmacies and pharmaceutical companies. An example of this includes the aforementioned recent exclusivity arrangements in regard to the highly effective, but extremely expensive, hepatitis C medications. By negotiating exclusive contracts, payers and PBMs have been able to bring down the costs of these drugs to a more manageable level.

One may ask whether we truly know the implications of these types of plan design. I would argue both yes and no: we do know that generics and preferred brand tiering have been utilized for over 15 years with no known significant negative implications. In fact, experts such as Will Shrank

 have found that in some cases, these plan designs actually improved medication adherence and health outcomes. We also know that pharmacy and therapeutics committees within both PBMs and health plans review these formularies as clinicians look to ensure that appropriate medications are included. Finally, all players have appeal processes in place to make certain that necessary medications are available to the consumer.

However, we do not know how far is too far regarding narrowing the choice of pharmacy networks and medication formularies, and it seems we are at the point where if consumers want choice, they will need to pay for it. I would like to see a thoughtful, non-biased study on this topic to assure us all that we are not achieving short-term savings at the price of significant long-term health and cost implications. I do understand that cost responsibility transfers from one payer to another in the US system— unlike in many other countries&mdash;and I am not advocating a single payer system, but we need to fully understand the implications of our plan design decisions. What are your thoughts on recent changes in pharmacy plan designs? I look forward to hearing from you.

Narrowing consumer choice is the big issue for 2015.

Narrowing Choice

It has often been said that physicians are the greatest influencers of which medications are prescribed to patients due to their “power of the pen.” Over the years, this sway has created an environment in which pharmaceutical manufacturers and healthcare insurers spend a great deal of time and money on “educating” the provider regarding the drug choices that they are making.

This may seem silly to you but I want you to think about it for a minute. There is good medical evidence that medical marijuana is effective for glaucoma, cancer, and at least 35 other medical conditions. Two states, Washington and Colorado, have made the drug legal in general and 21 states have legalized medical marijuana. The days of only “stoners” smoking or ingesting marijuana are changing, as are attitudes. Acceptance of marijuana has been increasing.

This increasing use of medical marijuana, both legally and illegally, creates a number of questions. First, will health plans begin covering medicinal marijuana in states where it has been legalized? You may laugh, but in fact, Susan Pisano, a spokeswoman for America’s Health Insurance Plans, has been asked this question. Today, insurers have a number of barriers to overcome before even considering the idea.

	1. Marijuana remains illegal federally. This has created a significant amount of confusion in states where it has been legalized either for medicinal purposes or for recreational purposes.

	2. Most health plans do not cover any medications that are not FDA approved. As we all know, FDA approval requires expensive clinical studies focused on safety and efficacy.

	3. Those who support the use of marijuana for medical purposes cite research that shows that it is effective. They also point out that there are FDA-approved medications that use part of the marijuana plant. Marino, an appetite stimulant for patients with AIDS, contains tetrahydrocannabinol, which is an active ingredient of marijuana.

	4. Today, marijuana is considered a Schedule 1 controlled substance due to its high potential for abuse and the belief that it has no accepted medical use.

Interestingly, the American Medical Association (AMA) seems a bit more open to considering the idea of marijuana as a potentially reasonable medication for their patients. The AMA has asked for a change in marijuana’s classification so that studies can be done to better answer the questions around safety and efficacy. Currently, physicians cannot prescribe marijuana. Even in states where it is legal, they can only recommend it.

These issues have spread outside of the medical community to include our courts of law. In 2012 a case was brought before the United States Court of Appeals for the DC Circuit in an attempt to change the Schedule 1 classification. The appeal was unsuccessful but the conversation continues.

A second question that arises is that of the quality and consistency of marijuana.

Today, there are no standards associated with consistency in strength or in quality. This becomes a challenge in both safety and efficacy. How does a physician prescribe it and how does a patient know how much to take? This is a question that needs to be answered prior to widespread coverage of medicinal marijuana.

Medical marijuana can be costly. Some utilizers of the drug are spending in excess of $100 per day. That being said, many of the medications that it would be replacing are also expensive. In fact, for some people it would take only a small amount of marijuana to address their medical needs and this could actually save them money.

So how do you estimate the cost of the drug? Today, the cost of medical marijuana is not regulated. Each dispensary charges what the market will bear. In order for the drug to be covered, it is likely that some cost regulations will need to be put in place. If that does not occur, a cost and coverage protocol for health plans needs to be designed, as has been discussed for years now.

Will marijuana be coming to a pharmacy near you? Pharmacy.com found that 70% of respondents to a questionnaire said that a retail pharmacy would be their preferred choice for purchasing marijuana if legal.

Like other state and federal laws, pharmacist licensure would have to change. Like medical doctors who cannot actually prescribe marijuana, pharmacists are prohibited from dispensing marijuana. Today, pharmacists are used to counseling on medications and dispense controlled substances. In addition, they give advice on OTC herbs and vitamins, which are also not regulated by the FDA. It is not that far-fetched to consider pharmacists dispensing marijuana for medical use.

A number of retail pharmacies have begun to research their ability to dispense marijuana in states where it is legal. It is not as easy as one would think. Even in states where marijuana has become legal for medicinal use, it is not easy for dispensaries to open their doors. It is a complicated process and one I will not go into here. That being said, don’t be surprised to see the retail pharmacies wanting to get involved.

I do believe that the time will come when we see health plans cover medical marijuana. How do I see this working?

	1. States would need to adopt rules governing a patient’s ongoing relationship to a physician. New Hampshire, for example, stipulates that a patient must have at least a 90-day relationship with the physician.

	2. The physician must have special training in the uses of marijuana. This type of requirement has been used with certain medications that are high risk.

	3. Coverage of medical marijuana would be for those conditions where there is consensus of efficacy. In Connecticut, for example, a patient must have one of 11 conditions in order to buy medicinal marijuana.

	4. The patient must have tried other medications without relief of symptoms.

	5. Patients would have to get their medical marijuana at a pre-approved dispensary or pharmacy.

None of these rules are unenforceable. In fact, they look very similar to other medications that contain prior authorization and narrow network coverage.

Let the conversation continue. It may not happen today or tomorrow, but I believe that in the not-too-distant future, health plans will try to differentiate themselves by covering medicinal marijuana.

One day health plans may cover medical marijuana in states where the drug has been legalized, but there are still barriers to overcome.

A New Drug Class: Will Marijuana Find Itself on a Planâ€™s Formulary?

I love going to conferences, as it gives me time to both learn and reflect on new ideas and challenges in healthcare. This spring, 

The American Journal of Pharmacy Benefits

) held a conference focusing on Patient-Centered Diabetes Care. One of the presentations at the conference covered new models in payment, including bundled payments, as we transition from traditional fee-for-service medicine. This is one of those areas that holds great potential to address a number of issues, but also creates a number of questions and challenges that need to be addressed. To date, bundled payment models have primarily focused on surgical areas.

Why are we discussing bundling for chronic conditions? Historically, the United States has paid for care through a volume-and-service model. We all know that this is not sustainable. Payments through the bundling model would reimburse a lump sum on the basis of what would be expected as good quality care. The Commonwealth Fund’s publication on bundling payments opined that this model has the potential to better integrate and coordinate care.

As the issue of bundling is discussed, many questions arise, including how to address the heterogeneity of the population with a condition, how to define what is covered under the bundle, who controls the finances and the care of the patient, and how to aggregate data.

The goal of this column is not to discuss these issues in specific terms. But we are in a sort of “experimental phase” with many of these new models, and we will not have all the answers from the start. What we do need to have is inquisitiveness, transparency, and the willingness to work together to address these issues openly in a way that leads us over time to the best method of meeting the goals of a bundled-payment model.

We should also look at places where bundling already exists, like in Special Needs Plans associated with CMS, and in countries such as the Netherlands that have had bundling for years.

I am lucky enough to be part of an organization that takes its healthcare leaders abroad to learn about the healthcare systems in other countries and bring some of that knowledge back to the United States in order to address the challenges we face here. TPG-International Health Academy went to the Netherlands in 2013 and learned about their use of “care groups.” These care groups bundle care to pay for treatment of a condition over a set period of time. This initiative has been in place for several years, and it continues to evolve as they learn more about how to operate the program more efficiently and effectively. We also learned that there is not uniformity in what is covered, or the associated costs—they too continue to learn.

I am excited about moving forward with new payment models and plan designs. My hope is that we will all be willing to share both our successes and failures during this journey. Learning from one another—whether in the United States or abroad&mdash;will help us find answers in a more efficient and effective manner.

I hope that those of you who have started down the path of bundled payments will share your experiences with me. I will be waiting to hear from you.

There are 10 steps that need to be taken to help payers more adequately address the problem of inappropriate prescribing of pain medications.

A Bundle of Joy: How Does the Trend of Bundled Payment Affect the Pharmacy Benefit?

Let’s take a moment and think back to 2006. That was the year that Medicare Part D went into effect, and Part D providers were challenged to create pain management programs, which were required by the Centers for Medicare & Medicaid Services as part of the program. Now let’s fast-forward 9 years to 2014. Payers—both public and private&mdash;continue to struggle to address this issue.

I am often asked to help my clients identify ways to address problems that they themselves are unable to address. I begin these consulting assignments by first making sure that there really is a problem to solve. In this case, there is.

The next step is to benchmark previous attempts to address the problem; analyze success and/or failure attributes; and the final step is to identify new opportunities to address the problem.

So let’s take a moment to ask ourselves—is there a problem with inappropriate prescribing of pain medications? The Centers for Disease Control and Prevention (CDC) points out that in a 9-month period in a small Kentucky community, a 53-year-old mother, her 35-year-old son, and 7 others died after overdosing on pain medications they received from a Florida pain clinic. The CDC found, by looking at 2007 statistics, that prescription pain medications killed twice as many people as cocaine and 5 times more people than heroin. Further statistics from Columbia University showed that opioid addiction tripled over a 10-year period, with 0.3% of the population being affected. Drugs most commonly abused are benzodiazepines and opioids.

One important issue to consider is that there are multiple reasons for people to take pain medications—not all prescribing of pain medication is nefarious. In fact, we as a healthcare system are often underprescribing pain medication. This may be due to fear of being perceived as an overprescriber of these medications. But more often than not, it is due to the fact that providers have limited education on pain management, and that the physician and the patient have not found the correct pain management solution that addresses the very real pain that the patient may be experiencing.

The next question we have to ask ourselves is, “Should we care about this issue?” I contend that we should care. The problem of inappropriate prescribing and utilization of these medications carries both human consequences— with more than 22,000 deaths in 2010&mdash;and financial consequences. A report from the Tufts Health Care Institute found that insurers, both public and private, spend approximately $72 billion annually on inappropriate pain medication use and diversion.

The real story behind the statistics, though, often varies. Often, physicians believe they are appropriately prescribing pain medication, but they are unaware that a patient is doctor shopping. On the other end of the spectrum is the physician that purposefully prescribes inappropriate and dangerous amounts of pain medication in order to create a flow of patients who are seeking easy access to pain medications.

As I stated above, the second step in looking to create an effective solution is to look at present or past activities that focused on the problem. Initially, many health plans and pharmacy benefi t managers (PBMs) addressed the problem through a single-pronged approach—either proactively through quantity limits and refi ll restrictions or retrospectively through claims analysis. These solutions often did not fully address the problem for a variety of reasons: systems did not communicate with each other, leaving data gaps; and patients and physicians learned to game the system in order to meet their needs.

More recently, all 50 states have either created prescription drug monitoring programs or have some type of legislation that discusses the need for such programs. Unfortunately, the degree to which these programs are actively used varies greatly.

So we know we have a problem, and that past attempts at addressing the problem have fallen short. The final question, then, needs to be, “What can we do in order to be more successful in curtailing this problem of inappropriate prescribing of pain medications?” I believe that the fi rst step is to engage all stakeholders in this discussion. This is a very important foundational step, and unless we do this, we are resigning ourselves to another “partial” solution. I believe that up until recently, payers have taken a more passive role in addressing the problem. It could be that they do not have an understanding of the depth or implications of the problem. Another barrier to success is one that I have seen quite often, which is the payer saying there is little they can do. This generally means that they have not taken the time to really think about the options.

To conclude, there are 10 steps that we need to take if we want to start seriously addressing this issue:

1. Gain a better understanding of pain and pain management.

2. Make sure that providers are given greater understanding of how to address and treat pain within their populations.

3. Make sure that there are legitimate pain centers available for those patients whose pain is not controlled through fi rst-line resources. We do not want to create people who become addicted to pain medications due to a lack of appropriate expertise in the fi eld of pain management.

4. Work with all stakeholders, including governmental entities and the public, to create systems that help identify patients with potential substance abuse issues.

5. Create plan designs and incentives for prescribers and pharmacies to actively participate in an effective system.

6. Encourage health plans and PBMs to work with physicians and provider organizations to align goals and agree to take appropriate action when necessary. Plans are often reluctant to reach out to providers and discuss these situations. I understand that this type of outreach can be uncomfortable, as I have had to do this a number of times. If we all agree—and this includes providers&mdash;that there is an issue, we should be able to get over our defensiveness and have productive conversations.

7. Create broad-based longitudinal data collection systems that can easily be accessed by everyone on the healthcare continuum on a real-time basis.

8. Require use of this data proactively, prior to a prescription being written, and then retrospectively, through data analysis.

9. Have systems within e-prescribing programs and electronic medical records that would require physicians to monitor these data prior to a prescription being finalized.

10. Utilize pharmacies as a second-level “safety net” for the identification of prescriptions that should not be filled.

Where there are gaps in successful solutions, entrepreneurs can be found trying to address the issue. This is the case in pain management. Interestingly, I am seeing a rise of new companies, such as Sterling Labs and Millennium Labs, that work with payers to help to identify potentially inappropriate prescribing patterns. I will be interested to see if these companies can help payers and society as a whole to address this signifi cant problem.

The Ongoing Challenge of Pain Medications

October 1, 2013, was an exciting day for me. No, it was not when I won the lotto or got down to my high school graduation weight. It was the day that we in the United States began on a route toward covering all US citizens for basic healthcare. It was also the next step in furthering the transition of individuals to healthcare consumers. Just as Medicare recipients are being asked to decide on whether they are going to enroll in Medicare Advantage or which Medicare Part D plan they will choose, we are now asking those that previously  did not have healthcare coverage which plan they are going to choose. There are some that have concerns as to whether this relatively novice group of individuals will be able to make such a decision. I believe that people will learn and adjust. Will it take time? Yes. Will it take help, education, and support from others? Absolutely. What makes me so sure? Walk through any big-box  store. People are making purchasing decisions all the time. What I do fi nd a bit quizzical is that we have seen the transition from individual to healthcare consumer by both the vulnerable and seniors. I believe it is time that we consciously begin to educate those who are covered  by employers to become conscious consumers. Some employers have begun this journey and others have not. We have seen a few bold moves from organizations such as Walgreens that have moved their employees to private exchanges where they are being asked to take on greater responsibility for their health and healthcare decisions. I look forward to seeing both the quality and financial  results associated with this move.

So where do others begin to help their employees or health plan members to become more consumer savvy if they are not ready to take the giant step that Walgreens did? If you look at the history of the pharmacy benefit, this is often used as the benefits “laboratory.” It is the area where many employers first tried value-based insurance design (VBID) prior to using VBID in the medical benefit. It is also the birthplace of price transparency. Caremark and other pharmacy benefi t managers (PBMs) began with their price transparency tools almost 10 years ago. (I only know this because my team was responsible for creating the tool.) Both of these design models support a consumer-focused model of health insurance. The 1 challenge that I continue to hear mentioned by those organizations that are utilizing these benefit tools is that consumers are not utilizing these tools to the degree the organizations would like them to. (I will focus on consumer engagement in a future column.) Although we still struggle with utilization of the tools that exist today, we need to continue to evolve into a more consumer-focused world.

So now it is time to take the next step. Health plans and employers, I challenge you to work with your consultants and your PBMs to create a consumer-focused benefit. Consider leveled plans (like the “metals” in the exchanges). Use consumer-focused decision support tools that your employees/members can use with their physicians. Align the consumer incentives to yours as the payer and the providers. By utilizing a crawl-walk-run methodology we can help people to become more actively involved in understanding and using their health benefits.

We all need information in order to make good decisions for ourselves. We also need to feel confi dent in our ability to understand and make decisions. Most of us feel a level of confi dence using the information available to us when we go to buy a car or a refrigerator. Let’s be honest, aren’t decisions about our health just as important as a car or refrigerator?

It is now time for health plans and employers to create a consumer-focused benefit.