Newer Specialty Drugs Require Payers to Revise Coverage Strategies

The groundbreaking approval of 3 CAR T cell therapies in 2017 has not only opened up the possibility of cures for patients, but also sent shockwaves through the payer community, which is responsible for a large chunk of the costs. The launch cost of hundreds of thousands of dollars plus spending on monitoring and hospitalization, it is clear that payers must revisit their traditional formulary approach.

Biosimilars have also complicated formulary decisions. Payers must now compare the safety and efficacy of these products to reference drugs to determine how to meet patient needs, while also controlling costs.

In part 1 of a 2-part interview with Specialty Pharmacy Times, Steve Johnson, assistant vice president, Health Outcomes, Prime Therapeutics, discussed how newer specialty drugs have resulted in the need for new coverage strategies.

SPT: What are some important things for payers to know about CAR T cell therapies?

Johnson: First and foremost, these are obviously very complex therapies that we say are truly innovative, offering potential cures for very difficult diseases and conditions. These therapies aren’t limited to prescribed drugs, rather they often require hospitalizations.

SPT: How should payers approach coverage decisions for CAR T cell therapies differently than specialty drugs?

Johnson: It’s fair to say that there are not any easy answers yet. Due to the complexity of CAR-T therapy, there’s a limited number of facilities and physicians that can administer these therapies, and the location of facilities may narrow access for some. In approaching coverage decisions, reimbursement and administration are dependent on a combination of the health plan as the payer and their own network relationships with providers, facilities, and hospital-integrated care delivery systems. In addition to these variables, the payer must also consider the unit cost of drug therapies and what discounts may exist.

SPT: What aspects of biosimilars should payers be aware of to make the best formulary decisions?

Johnson: It’s hard to group all biosimilars together because every one is unique. That said, I think biosimilars mark the entry of generics in the specialty space.

As patents expire and manufacturers bring forth biosimilars, the issue is now recognizing the role of these therapies. They do offer the potential of some drug cost savings, but we need to understand each biosimilar and factor in where it’s administered. Unique scenarios exist for each, as many of them may be medical benefit drugs and others may be pharmacy benefit drugs.

SPT: How may biosimilar coverage decisions become complicated?

Johnson: Coverage decisions involve understanding the costs of the biosimilars relative to the innovator product and then identifying strategies to leverage the lowest cost product. It’s a combination of evaluating the drug and its cost, and then overlaying the benefit. To measure the drug’s benefit, we need to understand the members’ out-of-pocket costs.

SPT: How do newer specialty drugs challenge “standard” cost management strategies for traditional drugs?

Johnson: For traditional drugs, we look at how a new drug compares to alternatives—brand or generic—and how to optimize the lowest cost product. New specialty drugs may be innovative products without competitors. What’s crucial for developing cost management strategies for specialty drugs is understanding their clinical merits and which members would benefit from them the most.