Pharmaceutical Commerce - May/June 2013 - (Page 14)

Brand Marketing & Communications Pharma product pricing is payers’ No. 1 concern Industry confronts healthcare’s changing oncology practices High-priced new products Cost of hospitalizations Ability to compare and analyze pharmacy and medical benefit use of oncology drugs Need to increase use of generics continued from page 1 Appropriate use of biomarkers Pathway implementation (Askin et al. Key Practice Indicators in Office-Based Oncology Practices: 2007 Report on 2006 Data, Journal of Oncology Practice Benchmarking Report: 2007, Vol. 5., Issue 8). While the administration of IV chemotherapy was historically confined to hospital settings, a variety of factors—including improved delivery methodologies for infusion, improved supportive care, and the desire for more personalized, convenient, local options for oncology care— has led to the development of a robust national network of independent, community-based oncology practices. Today, an estimated 80% of cancer care in the US is carried out in these community-based oncology settings, says Jane Quigley, RN, senior principal at IMS Health (Plymouth Meeting, PA). “We believe that community-based oncology care is the most efficient, cost-effective way to deliver oncology care, and numerous studies of community- vs. hospital-based oncology groups have shown significant cost differences (with lower costs in the community settings) with virtually no difference in clinical outcomes,” adds Grant Bogle, SVP at McKesson Specialty Health (The Woodlands, TX). Nonetheless, the pendulum swing has begun its reverse course in this arena, and in recent years, more than 700 community practices have merged with other sites of care or closed altogether, the result of shrinking margins from insurers and government, and the rising cost of new therapies. “Independent oncology practices have a right to make a healthy ROI while meeting important objectives related to patient care and supporting the demanding clinical trial process, yet the current reimbursement strategies imperil this,” adds Barry Fortner, Ph.D., SVP at ION Solutions, a division of AmerisourceBergen Specialty Group. While the ability for independent oncology practices to run for cover by selling themselves to larger hospital-based oncology groups may offer one solution, Fortner says that the loss of independence among oncology practices is “a disturbing trend with troubling implications for drugmakers, providers and patients.” Industry observers agree it should be cause Chemotherapy via community oncology is less expensive OnPathway Treatment (N=1,095) Total Med Oncology Cost Chemotherapy OffPathway Treatment (N=314) Cost Savings (On vs. Off ) $18,042 $27,737 $9,695 $11,839 $18,762 $6,923 Oncology–related Outpatient visits $1,124 $1,060 $64 Supportive Care Medications $4,374 $7,198 $2,824 Length of Episode in Months Source: Mckesson, based on 2012 Avalere Health study 2.8 5.1 5.4 5.5 5.7 6.1 for significant alarm—and Appropriate use of hospice 6.5 organized advocacy—among Compliance and persistency with oral oncology drugs 6.8 stakeholders throughout the Cost of emergency room visits 6.9 oncology spectrum. Movement of community-based care to hospital-affiliated practices 7.4 “The development of a Role of 340B 7.9 robust system of independent Mean rating across 48 respondents community oncology over Source: Xcenda Payer Pulse, 2013 the last 20 years has been fundamental to the story of success in the war on cancer, and I don’t believe the pharma turned into an attractive revenue stream for hospital systems. industry is being outspoken enough about the pressures this And 340B pricing doesn’t just negatively impact independent sector is experiencing, and legislators and policymakers must oncologists. Pharma manufacturers, seeing an increasing get involved,” he adds. “There is a new fragility to community proportion of their drug sales going through the 340B oncology that should not be taken for granted, and pharma program, aren’t happy with the situation either. PhRMA, needs to work closely with payers and CMS to reexamine the Biotechnology Industry Organization, the National pricing strategies and go-to-market strategies to remove Community Pharmacists Assn. and the Pharmaceutical Care some of the financial disincentives now facing community Management Assn., among others, issued a white paper* oncologists.” Toward that end, ION Solutions is working highlighting the lack of HHS oversight. with a physician-led initiative called Community Counts “Although participation in the 340B program is technically ( to educate about the quality voluntary for drug manufacturers, opting out of the program and economic aspects of community-based oncology and results in discontinuation of the Medicaid reimbursement for advocate for its ongoing survival. all of the manufacturer’s drugs,” explains Meadow Green, a commercial planning analyst at Kantar Health (Horsham, 340B drug pricing—unintended consequences PA), “so manufacturers have strong financial incentives to While hospital-based systems are expanding their remain in the 340B program.” geographic reach with these newly acquired community “Hospitals don’t really have any incentive to change 340B, oncology practices and growing the number of prescribing and the program is saving money for the government so oncologists who are able to benefit from preferential 340B they have no incentive to change it, so it’s really up to the pricing policies, “insurance companies are not happy about pharma industry to take on the issue to fight the cause,” adds this trend, because there is ample published evidence that Wen Shi, practice director in brand management and pricing shows that the cost of care in hospital-based oncology at Campbell Alliance (New York), the consulting arm of practices tends to be much higher than it is in community- inVentiv Health. “No one else will be fighting to improve the based oncology settings,” says Michael Kolodziej, MD, FACP, situation and rein in 340B.” national medical director for oncology solutions for Aetna (Hartford, CT). The rise of oral oncology agents “As reimbursement rates continue to fall, new direct-toWith infusion-based chemotherapy having long customer strategies may begin to break into the market,” dominated cancer care, the recent rise and ongoing success of states Denise Von Dohren, a VP at Omnicare Specialty Care newer oral oncology agents would seem to be a slam dunk for Group (SCG; Cincinnati, OH). “This alternative channel all stakeholders in the continuum of cancer care. For patients, would allow the drug makers to contract with healthcare the ability to receive a given cancer agent in pill form provides providers and distribute the consigned inventory of an order- a more-convenient, less-painful, less-invasive treatment to-cash third-party logistics provider, essentially creating one option. “This era of oral oncolytics is certainly making it a very point of sale,” she explains. exciting time in oncology, but these high-priced innovations When it comes to more-favorable drug pricing, a growing also have implications for the sales channel,” says Bogle of number of hospital-based oncology practices are able to McKesson Specialty Health. benefit from provisions of the 340B Drug Pricing Plan, which Meanwhile, a host of factors may be hampering the market allows specified hospitals (and their affiliated oncology clinics) penetration of oral oncolytics today. For instance, as noted, IV to purchase drugs at discounted prices, regardless of the and injectable therapies are typically purchased, maintained, patient’s private or government insurance reimbursement. dispensed and reimbursed through the buy-and-bill model, This preferential-pricing policy typically pertains to hospitals and are reimbursed through the patient’s medical benefit. with a high population of Medicare, Medicaid and uninsured By comparison, oral oncolytics are typically prescribed by patients, as these institutions are seen as safety-net providers the oncologist but are then dispensed directly to the patient in healthcare. through a specialty pharmacy, and are reimbursed through According to a recent New York Times article (“Dispute the patient’s pharmacy benefit. As a result, the choice to select Develops over Discount Drug Program,” Feb. 12, 2013), the an oral drug over a competing IV or injected option literally program now includes one-third of the nation’s hospitals and represents a loss of potential revenue for private oncology has tripled in number since 2005. More hospitals are expected practices. to enter the 340B program under the Affordable Care Act, “The distribution channel selected by the manufacturer as more hospitals become eligible for inclusion due to an has an impact on the success of a new oncology product, and increasing number of Medicaid patients passing through. the trend in oral oncology is to require limited (or in some The 340B discount is the average manufacturer price instances, exclusive) use of a specialty pharmacy network, in (AMP) reduced by a minimum rebate percentage of 23.1% an effort to maximize adherence and data availability while for most branded drugs (but experience says the discounted rate can be 20–50%). The ability to buy drugs at this discount, but to charge private insurers and CMS a market price, has * 14 Visit our website at May | June 2013

Table of Contents for the Digital Edition of Pharmaceutical Commerce - May/June 2013

Pharmaceutical Commerce - May/June 2013
Table of Contents
Top News
Brand Marketing & Communications
Supply Chain/ Logistics
Information Technology
Manufacturing & Packaging
Legal & Regulatory
Meetings and Editorial Index

Pharmaceutical Commerce - May/June 2013