Impact of a Value-based Formulary on Medication Utilization, Health Services Utilization, and Expenditures

The impact of a statewide insulin copay cap policy for insured patients with diabetes in Utah

BACKGROUND

Insulin affordability is a huge concern for patients with diabetes in the United States. On March 30, 2020, Utah signed House Bill 207 into law, aimed at capping copayments for insulin at $30 for a 30-day supply. The bill was enacted on January 1, 2021.

OBJECTIVE

To assess patient basal insulin adherence, out-of-pocket costs, health plan costs, total costs on insulin, and hemoglobin A1c (A1c) in prepolicy vs postpolicy periods.

METHODS

This study is a retrospective analysis using data from a regional health plan in Utah from October 1, 2019, to September 30, 2021. Inclusion criteria were fully enrolled members of all ages, under commercial insurance, with at least 1 fill for any type of insulin in both the preperiod and the postperiod. Adherence was measured by proportion of days covered (PDC). Paired t-tests and Wilcoxon sign rank tests were conducted to compare the health and economic outcomes.

RESULTS

Out of 24,150 commercially insured individuals, a total of 244 patients were included. Across all 244 patients, there was a significant decline in monthly median out-of-pocket costs of insulin by 58.5% (P < 0.001), whereas the monthly median health plan costs of insulin increased by 22.0% (P < 0.001). The total monthly costs of insulin (the sum of out-of-pocket and health plan costs) were unchanged (P = 0.115). Only 74 patients with enough basal insulin fills in both periods were included in the analysis for PDC changes. PDC change was not statistically significant (P = 0.43). Among the 74 patients with PDC calculations, 29 patients had A1c recorded in both periods. The change in A1c was not statistically significant (P = 0.23).

CONCLUSIONS

An insulin copayment max of $30 in Utah demonstrated lower patient out-of-pocket costs, subsidized by the health plan. PDC did not change, and HbA1c did not improve. An assessment of a longer period and on a larger population is needed.

Drug use and spending under a formulary informed by cost-effectiveness

BACKGROUND: The National Academy of Medicine has called for value-based drug formularies to address health plan prescription drug spending while maintaining access to high-value medicines. Thirty employer-sponsored plans implemented a "Value-Based Formulary-essentials" (VBF-e) program that uses cost-effectiveness evidence to inform cost-sharing and coverage exclusion. OBJECTIVE: To evaluate if the VBF-e was associated with changes in medication use and patient out-of-pocket spending and health plan spending on prescription drugs and other health care. METHODS: This was a cohort study using a difference-in-differences design from 2015 through 2019 with 1 year of follow-up after VBF-e implementation at Premera Blue Cross, the largest nonprofit health plan in the Pacific Northwest. The VBF-e exposure group was composed of all individuals aged younger than 65 years and enrolled at least 12 months prior to their employer group's VBF-e implementation date. The contemporaneous control group was composed of propensity score-matched individuals with the same inclusion criteria but their employer group that did not implement VBF-e. We prespecified the following outcomes: days of medication on hand overall and by VBF-e tier (high-value generic, brand, and specialty drugs were in tiers 1 to 3, respectively, and low-value drugs were in tier 4 or excluded from coverage); prescription drug spending; and other health care use (emergency department visits, hospital days, and outpatient visits). RESULTS: Comparing 12,111 exposed (mean age = 36.0; 49.8% female sex) participants with 24,222 control participants (mean age = 34.7; 49.6% female sex), VBF-e reduced use of low-value drugs by 0.3 days per member per month (PMPM) (95% CI = -0.5 to -0.1; 17% decrease) for tier 4 drugs and 0.4 days PMPM (95% CI = -0.5 to -0.4; 83% decrease) for excluded drugs. High-value specialty drug use increased by 0.1 days PMPM (95% CI = 0.0-0.1; 123% increase). Health plan spending decreased by $14 PMPM (95% CI = -26 to -4) and member out-of-pocket spending increased by $1 PMPM (95% CI = 1-2). Other health care use did not change significantly. CONCLUSIONS: An exclusion formulary informed by cost-effectiveness evidence reduced low-value drug use, increased high-value specialty drug use, reduced health plan spending, and increased member out-of-pocket spending without increasing acute care use. DISCLOSURES: This research was supported by a grant from the Patrick and Catherine Weldon Donaghue Medical Research Foundation's Greater Value Portfolio Program. Study Registration Number: NCT04904055.

Designing a Value-Based Formulary for a Commercial Health Plan: A Simulated Case Study of Diabetes Medications

OBJECTIVES

The healthcare expenditure for managing diabetes with glucose-lowering medications has been substantial in the United States. We simulated a novel, value-based formulary (VBF) design for a commercial health plan and modeled possible changes in spending and utilization of antidiabetic agents.

METHODS

We designed a 4-tier VBF with exclusions in consultation with health plan stakeholders. The formulary information included covered drugs, tiers, thresholds, and cost sharing amounts. The value of 22 diabetes mellitus drugs was determined primarily in terms of incremental cost-effectiveness ratios. Using pharmacy claims database (2019-2020), we identified 40 150 beneficiaries who were on the included diabetes mellitus medicines. We simulated future health plan spending and out-of-pocket costs with 3 VBF designs, using published own price elasticity estimates.

RESULTS

The average age of the cohort is 55 years (51% female). Compared with the current formulary, the proposed VBF design with exclusions is estimated to reduce total annual health plan spending by 33.2% (current: $33 956 211; VBF: $22 682 576), saving $281 in annual spending per member (current: $846; VBF: $565) and $100 in annual out-of-pocket spending per member (current: $119; VBF: $19). Implementing the full VBF with new cost shares, along with exclusions, has the potential to achieve the greatest savings, compared with the 2 intermediate VBF designs (ie, VBF with prior cost sharing and VBF without exclusions). Sensitivity analyses using various price elasticity values showed declines in all spending outcomes.

CONCLUSION

Designing a VBF with exclusions in a US employer-based health plan has the potential to reduce health plan and patient spending.

Financial Toxicity in Cancer Care: Implications for Clinical Care and Potential Practice Solutions

Patients with cancer face an array of financial consequences as a result of their diagnosis and treatment, collectively referred to as financial toxicity (FT). In the past 10 years, the body of literature on this subject has grown tremendously, with a recent focus on interventions and mitigation strategies. In this review, we will briefly summarize the FT literature, focusing on the contributing factors and downstream consequences on patient outcomes. In addition, we will put FT into context with our emerging understanding of the role of social determinants of health and provide a framework for understanding FT across the cancer care continuum. We will then discuss the role of the oncology community in addressing FT and outline potential strategies that oncologists and health systems can implement to reduce this undue burden on patients with cancer and their families.

The American Public Health Association Endorses Single-Payer Health System Reform

Health care is a human right. Achieving universal health insurance coverage for all US residents requires significant system-wide reform. The most equitable and cost-effective health care system is a public, single-payer (SP) system. The rapid growth in national health expenditures can be addressed through a system that yields net savings over projected trends by eliminating profit and waste. With universal health insurance coverage through SP financing, providers can focus on optimizing delivery of services, rather than working within a system covered by payers who have incentives to limit costs regardless of benefit. Rather, with a SP, the people act as their own insurer through a partnership with provider organizations where tax dollars work for everyone. Consumer choice is then based on the best care to meet need with no out-of-pocket payments. SP financing is the best option to ensure equity, fairness, and public health priorities align with medical needs, providing incentives for wellness. Consumer choice will drive market forces, not provider network profits or insurer restrictions. This approach benefits public health, as everyone will have universal access to needed care, with treatment plans developed by providers based on what works best for the patient. In 2021, the American Public Health Association adopted a policy statement calling for comprehensive reforms to implement a SP system. The proposed action steps in this policy will help build a healthier nation, saving lives and reducing wasted health care expenditures while addressing inequities rooted in social, demographic, mental health, economic, and political determinants.

Cost-Effectiveness of Systemic Treatments for Metastatic Castration-Sensitive Prostate Cancer: An Economic Evaluation Based on Network Meta-Analysis

OBJECTIVES

To assess the cost-effectiveness of systemic treatments for metastatic castration-sensitive prostate cancer from the US healthcare sector perspective with a lifetime horizon.

METHODS

We built a partitioned survival model based on a network meta-analysis of 7 clinical trials with 7287 patients aged 36 to 94 years between 2004 and 2018 to predict patient health trajectories by treatment. We tested parameter uncertainties with probabilistic sensitivity analyses. We estimated drug acquisition costs using the Federal Supply Schedule and adopted generic drug prices when available. We measured cost-effectiveness by an incremental cost-effectiveness ratio (ICER).

RESULTS

The mean costs were approximately $392 000 with androgen deprivation therapy (ADT) alone and approximately $415 000, $464 000, $597 000, and $959 000 with docetaxel, abiraterone acetate, enzalutamide, and apalutamide, added to ADT, respectively. The mean quality-adjusted life-years (QALYs) were 3.38 with ADT alone and 3.92, 4.76, 3.92, and 5.01 with docetaxel, abiraterone acetate, enzalutamide, and apalutamide, added to ADT, respectively. As add-on therapy to ADT, docetaxel had an ICER of $42 069 per QALY over ADT alone; abiraterone acetate had an ICER of $58 814 per QALY over docetaxel; apalutamide had an ICER of $1 979 676 per QALY over abiraterone acetate; enzalutamide was dominated. At a willingness to pay below $50 000 per QALY, docetaxel plus ADT is likely the most cost-effective treatment; at any willingness to pay between $50 000 and $200 000 per QALY, abiraterone acetate plus ADT is likely the most cost-effective treatment.

CONCLUSIONS

These findings underscore the value of abiraterone acetate plus ADT given its relative cost-effectiveness to other systemic treatments for metastatic castration-sensitive prostate cancer.

Strategies to Reduce Low-Value Cardiovascular Care: A Scientific Statement From the American Heart Association

Low-value health care services that provide little or no benefit to patients are common, potentially harmful, and costly. Nearly half of the patients in the United States will receive at least 1 low-value test or procedure annually, creating risk of avoidable complications from subsequent cascades of care and excess costs to patients and society. Reducing low-value care is of particular importance to cardiovascular health given the high prevalence and costs of cardiovascular disease in the United States. This scientific statement describes the current scope and impact of low-value cardiovascular care; reviews existing literature on patient-, clinician-, health system-, payer-, and policy-level interventions to reduce low-value care; proposes solutions to achieve meaningful and equitable reductions in low-value care; and suggests areas for future research priorities.

Availability of Cost-effectiveness Studies for Drugs With High Medicare Part D Expenditures

IMPORTANCE

Prescription drug spending in the US requires policy intervention to control costs and improve the value obtained from pharmaceutical spending. One such intervention is to apply cost-effectiveness evidence to decisions regarding drug coverage and pricing, but this intervention depends on the existence of such evidence to guide decisions.

OBJECTIVE

To characterize the availability and quality of cost-effectiveness studies for prescription drugs with the greatest Medicare Part D spending.

DESIGN, SETTING, AND PARTICIPANTS

In this national cross-sectional analysis, publicly available 2016 Medicare drug spending records were merged with 2016 US Food & Drug Administration Orange Book data and the Tufts Medical Center Cost-Effectiveness Analysis (CEA) Registry. All studies published through 2015 that evaluated the cost-effectiveness of the 250 drugs for which Medicare Part D spending was the greatest in US-based adult patient populations were included. Data were analyzed from September 2018 to June 2020.

MAIN OUTCOMES AND MEASURES

The presence and quality of published cost-effectiveness analyses for the 250 drugs for which Medicare Part D spending was greatest in 2016 were assessed based on the inclusion of key cost-effectiveness analysis elements and global ratings by independent reviewers for the Tufts CEA Registry.

RESULTS

Medicare Part D spending on the 250 drugs in the sample totaled $122.8 billion in 2016 (84.1% of total spending). Of these 250 drugs, 91 (36.4%) had a generic equivalent and 159 (63.6%) retained some patent exclusivity. There were 280 unique cost-effectiveness analyses for these drugs, representing data on 135 (54.0%) of the 250 drugs included and 67.0% of Part D spending on the top 250 drugs. The 115 drugs (46.0%) without cost-effectiveness studies accounted for 33.0% of Part D spending on the top 250 drugs. Of the 280 available studies, 128 (45.7%) were industry sponsored. A large proportion of the studies (250 [89.3%]) did not meet the minimum quality requirements.

CONCLUSIONS AND RELEVANCE

In this cross-sectional study, a substantial proportion of 2016 Medicare Part D spending was for drugs with absent or low-quality cost-effectiveness analyses. The lack of quality analyses may present a challenge in efforts to develop policies addressing drug spending in terms of value.

The effects of oral anticancer parity laws on out-of-pocket spending and adherence among commercially insured patients with chronic myeloid leukemia

BACKGROUND: Over the past 12 years, 43 states and Washington DC have implemented oral anticancer medication parity laws in response to the burden of pharmacy cost sharing. Parity laws are designed to provide equal coverage and cost sharing between orally and parenterally administered anticancer medications for patients in commercial, fully insured health plans (FIHPs). However, there is considerable state-level variation in the requirements to achieve compliance with parity laws, and the clinical and economic effectiveness of parity is not fully known. OBJECTIVES: To (a) understand the impact of parity laws on out-of-pocket (OOP) spending and adherence to tyrosine kinase inhibitors (TKI) among commercially insured patients with chronic myeloid leukemia (CML) and (b) compare these effects across states with and without per prescription or per 30-day OOP spending limits as part of their parity laws. METHODS: Patients aged 18-64 years with CML, at least 1 pharmacy claim for a TKI, and residence in a state that implemented oral anticancer parity legislation between January 1, 2007, and January 1, 2017, were identified from the IBM MarketScan Commercial Claims and Encounters database. A propensity score-weighted difference-in-difference approach was used to measure the impact of parity on OOP spending and adherence in the 6 months after the first pharmacy claim for a TKI (index date) for patients enrolled in FIHPs (subject to parity) and self-funded health plans (SFHPs; exempt from parity). OOP spending was standardized to a 30-day equivalent amount and adjusted to 2017 US dollars. Adherence was assessed using the proportion of days covered (PDC), and patients were categorized as adherent with PDC ≥ 0.80. RESULTS: Of 1,887 patients initiating a TKI before or after their state's parity law, 678 (35.9%) were enrolled in FIHPs (480 before vs 198 after parity), and 1,209 (64.1%) were enrolled in SFHPs (688 before vs 521 after parity). Implementation of parity laws was not associated with any changes in mean OOP spending; however, it was associated with a reduced likelihood of paying $0 per 30 days across all states (adjusted difference-in-difference [aDD] OR = 0.662; 95% CI = 0.535-0.820) and states without OOP spending limits (aDD OR = 0.654; 95% CI = 0.508-0.848), but not in states with limits. Nonsignificant but directionally opposite changes at each end of the OOP spending distribution were observed for states with and without OOP spending limits, with increased spending observed at the 75th, 90th, and 95th percentiles in states without limits. Mean PDC and adherence showed a nonsignificant increase among FIHP and SFHP patients across all states, states with limits, and states without limits. CONCLUSIONS: Oral anticancer parity laws are not associated with reduced OOP spending or improved adherence in a commercially insured sample of patients with CML. These findings were consistent for states that included OOP spending limits as a component of their parity laws. DISCLOSURES: This study did not receive any external funding. Spargo, Yost, Raju, and Schroader are or were employees of Xcenda, which receives contracts from various industry partners unrelated to this work. There are no other conflicts of interest to disclose.

Opportunities and Challenges of Value-Based Health Care: How Brazil Can Learn from U.S. Experience

The movement toward value-based care is occurring in many countries of the world. The increasing population, longer life expectancy, and rising cost for high-tech care necessitates that government and private payers around the world devise new ways to ensure that health care dollars are spent on the most effective interventions. In this Viewpoints article, we present the value-based care transformation that is currently in its infancy in Brazil, which has a mix of private and public payers but still largely reimburses based on a fee-for-service model. We contrast that with recent experience in the United States, where value-based care is slowly but surely becoming the norm. The Brazilian system has many opportunities to learn from the U.S. shift to value-based care-including the development of quality measures, transition to value-based payment, and leveraging data to rank performance across Brazilian health systems. Pharmaceutical manufacturers in Brazil can play a role, as well, with value-based agreements and partnerships with payers. Each country will travel on its own path to value-based health care, but the opportunity to learn from each other presents one of the best chances for success. DISCLOSURES: Abicalaffe received funding from Janssen Latin America for the preparation of this manuscript. Schafer is employed by Precision Value, a marketing agency that works with pharmaceutical manufacturers.

Evolution of the AMCP Format for Formulary Submissions

DISCLOSURES

No funding was required for this project. The authors are or have been members of the Format Executive Committee.

Indication-specific pricing of drugs: a utopian idea, a pragmatic proposition or unrealistic in economically constrained settings?

The concept of indication-specific pricing (ISP) of drugs means that the cost of a drug will vary depending on the reasons for its use. ISP is a novel concept and its beneficial or detrimental effects are unknown. Experience from richer countries suggests that it is fraught with many administrative, ethical and regulatory challenges. It seems, though, that prices of some drugs have been set using this model. The barriers, real and potential, to the implementation of ISP in low- and middle-income countries are discussed. Implementation of ISP is impractical in such environments because of the large impoverished population, low frequency of health insurance, generally poor health infrastructure, lack of regulatory oversight, and the fact that most healthcare expenditure is borne personally.

Ensuring trustworthy use of artificial intelligence and big data analytics in health insurance

Technological advances in big data (large amounts of highly varied data from many different sources that may be processed rapidly), data sciences and artificial intelligence can improve health-system functions and promote personalized care and public good. However, these technologies will not replace the fundamental components of the health system, such as ethical leadership and governance, or avoid the need for a robust ethical and regulatory environment. In this paper, we discuss what a robust ethical and regulatory environment might look like for big data analytics in health insurance, and describe examples of safeguards and participatory mechanisms that should be established. First, a clear and effective data governance framework is critical. Legal standards need to be enacted and insurers should be encouraged and given incentives to adopt a human-centred approach in the design and use of big data analytics and artificial intelligence. Second, a clear and accountable process is necessary to explain what information can be used and how it can be used. Third, people whose data may be used should be empowered through their active involvement in determining how their personal data may be managed and governed. Fourth, insurers and governance bodies, including regulators and policy-makers, need to work together to ensure that the big data analytics based on artificial intelligence that are developed are transparent and accurate. Unless an enabling ethical environment is in place, the use of such analytics will likely contribute to the proliferation of unconnected data systems, worsen existing inequalities, and erode trustworthiness and trust.

Value-Based Insurance Design: Current Evidence and Future Directions

Value-based insurance design (VBID) is an approach to designing insurance to align the use of health care services with some notion of value. While there is substantial federal interest in VBID and a growing body of evidence of its effects among populations covered by employer-sponsored plans, much of the focus has been on VBIDs that solely reduce cost sharing for certain treatments. The minority of VBIDs that have identified and increased cost sharing for low-value treatments have produced some promising results. Looking to the future, health plans should continue to develop and benefit from innovations in formulary design and health information technology that distinguishes and incentivizes high-value drugs in a patient-specific manner. DISCLOSURES: No funding contributed to the writing of this article. The author has nothing to disclose.

Adoption of Cost Effectiveness-Driven Value-Based Formularies in Private Health Insurance from 2010 to 2013

BACKGROUND AND OBJECTIVE

It is unclear whether private insurance benefit designs align with the most widely used ex-US definition of value, the incremental cost-effectiveness ratio (ICER). A large Pacific Northwest private insurance plan explicitly implemented a tiered formulary based on cost-effectiveness estimates of individual drugs in 2010, resulting in cost savings to the plan without negatively affecting patient health service utilization. Given the pressures of rising costs, we investigate whether employer-based private health insurance plans have adopted value-based cost-sharing approaches that are in line with cost-effectiveness estimates.

METHODS

At the drug level, we identified five drug tier designations (0-4) that are tied to increasing ICER ranges in a large claims dataset from 2010 to 2013. We used a random effects model to evaluate whether out-of-pocket (OOP) cost levels and trends were associated with drug value designation, controlling for generic status and list price, and whether the associations varied by insurance plan type and insurance market concentration, as measured by the Herfindahl-Hirschman Index (HHI). We also estimated the weighted mean cost effectiveness of the drug claims in the sample by year and generic status using the formulary's cost-effectiveness value ranges.

RESULTS

The 2010 volume weighted mean OOP cost for a 30-day supply of drugs in tiers 0 through 4 were $US6.87, $US22.62, $US62.22, $US57.36, and $US59.85, respectively (2013 US dollars). OOP costs for cost-saving and preventive drugs (tier 0) decreased 5% annually from 2010 to 2013 (p < 0.01); OOP costs for drugs costing under $US10,000/quality-adjusted life-year (QALY) (tier 1) decreased 4.5% annually (p < 0.01) and OOP costs for drugs costing over $US50,000/QALY (tier 3) and $US150,000/QALY (tier 4) decreased by 2.4% and 2.2%, respectively (p < 0.01 and p = 0.046). OOP costs for drugs valued between $US10,000 and $US50,000/QALY did not change significantly (p = 0.31). Average ICER estimates increased for generic drugs and did not change for brand name drugs.

CONCLUSION

OOP costs for prescription drugs are decreasing across value levels, with OOP costs for higher-value drugs generally decreasing at a faster rate than lower-value drugs. The relationship between cost sharing and value remains tenuous, however, particularly at higher ICER levels, likely reflecting the persistence of traditional formulary structures and increasing use of generic drugs over brand name drugs.

How to make value-based health insurance designs more effective? A systematic review and meta-analysis

Value-based health insurance designs (VBIDs) are one approach to increase adherence to highly effective medications and simultaneously contain rising health care costs. The objective of this systematic review was to identify VBID effects on adherence and incentive designs within these programs that were associated with higher effects. Eight economic and medical databases were searched for literature. Random effects meta-analyses and mixed effects meta-regressions were used to synthesize VBID effects on adherence. Thirteen references with evaluation studies, including 12 patient populations with 79 outcomes, were used for primary meta-analyses. For qualitative review and sensitivity analyses, up to 19 references including 20 populations with 119 outcomes were used. Evidence of synthesized effects was good, because references with high risk of bias were excluded. VBIDs significantly increased adherence in all indication areas. Highest effects were found in medications indicated in heart diseases (4.05%-points, p < 0.0001). Each additional year increased effects by 0.15%-points (p < 0.01). VBIDs with education were more effective than without education, but the difference was not significant. Effects of VBIDs with full coverage were more than twice as high as effects of VBID without that option (4.52 vs 1.81%-points, p < 0.05). These findings were robust in most sensitivity analyses. It is concluded that VBID implementation should be encouraged, especially for patients with heart diseases, and that full coverage was associated with higher effects. This review may provide insight for policy-makers into how to make VBIDs more effective.

Specialty Drug Coverage Varies Across Commercial Health Plans In The US

We analyzed specialty drug coverage decisions issued by the largest US commercial health plans to examine variation in coverage and the consistency of those decisions with indications approved by the Food and Drug Administration (FDA). Across 3,417 decisions, 16 percent of the 302 drug-indication pairs were covered the same way by all of the health plans, and 48 percent were covered the same way by 75 percent of the plans. Specifically, 52 percent of the decisions were consistent with the FDA label, 9 percent less restrictive, 2 percent mixed (less restrictive in some ways but more restrictive in others), and 33 percent more restrictive, while 5 percent of the pairs were not covered. Health plans restricted coverage of drugs indicated for cancer less often than they did coverage of drugs indicated for other diseases. Using multivariate regression, we found that several drug-related factors were associated with less restrictive coverage, including indications for orphan diseases or pediatric populations, absence of safety warnings, time on the market, lack of alternatives, and expedited FDA review. Variations in coverage have implications for patients' access to treatment and health system costs.

Are the Benefits of Value-Based Insurance Design Conclusive?

Questions about the clinical significance of improvements to medication adherence resulting from value-based insurance design (VBID) policies persist in the literature. Given the lack of conclusive evidence about effectiveness, in addition to concerns about the cost of implementing VBID programs, it is perhaps not surprising that VBID is not more widely used by managed care plans. Although VBID holds promise for improving chronic medication use, additional evidence is needed if VBID is to become universally adopted. DISCLOSURES: No funding contributed to the writing of this article. The author currently receives funding from Blue-Cross Blue-Shield of Minnesota for unrelated research.

How Much Does Medication Nonadherence Cost the Medicare Fee-for-Service Program?

BACKGROUND

Medication adherence is associated with lower health care utilization and savings in specific patient populations; however, few empirical estimates exist at the population level.

OBJECTIVE

The main objective of this study was to apply a data-driven approach to obtain population-level estimates of the impact of medication nonadherence among Medicare beneficiaries with chronic conditions.

RESEARCH DESIGN

Medicare fee-for-service (FFS) claims data were used to calculate the prevalence of medication nonadherence among individuals with diabetes, heart failure, hypertension, and hyperlipidemia. Per person estimates of avoidable health care utilization and spending associated with medication adherence, adjusted for healthy adherer effects, from prior literature were applied to the number of nonadherent Medicare beneficiaries.

SUBJECTS

A 20% random sample of community-dwelling, continuously enrolled Medicare FFS beneficiaries aged 65 years or older with Part D (N=14,657,735) in 2013.

MEASURES

Avoidable health care costs and hospital use from medication nonadherence.

RESULTS

Medication nonadherence for diabetes, heart failure, hyperlipidemia, and hypertension resulted in billions of Medicare FFS expenditures, millions in hospital days, and thousands of emergency department visits that could have been avoided. If the 25% of beneficiaries with hypertension who were nonadherent became adherent, Medicare could save $13.7 billion annually, with over 100,000 emergency department visits and 7 million inpatient hospital days that could be averted.

CONCLUSION

Medication nonadherence places a large resource burden on the Medicare FFS program. Study results provide actionable information for policymakers considering programs to manage chronic conditions. Caution should be used in summing estimates across disease groups, assuming all nonadherent beneficiaries could become adherent, and applying estimates beyond the Medicare FFS population.

Do interventions that address patient cost-sharing improve adherence to prescription drugs? A systematic review of recently published studies

INTRODUCTION

Poor prescription drug adherence is common, jeopardizing the benefits of treatment and increasing the costs of health care in the United States. A frequently reported barrier to adherence is patient out-of-pocket (OOP) costs. Areas Covered: This systematic review examines interventions that address patient cost-sharing to improve adherence to prescription drugs and reduce costs of care. Twenty-eight published studies were identified with 22 distinct interventions. Most papers were published in or after 2010, and nearly a third were published after 2014. Expert Opinion: Many of the interventions were associated with improved adherence compared to controls, but effects were modest and varied across drug classes. In some studies, adherence remained stable in the intervention group, but declined in the control group. Patient OOP costs generally declined following the intervention, usually as a direct result of the financial structure of the intervention, such as elimination of copayments, and costs to health plans for prescription drugs increased accordingly. For those studies that reported drug and nondrug costs, lower health plan nondrug medical spending generally compensated for increased spending on prescription drugs. With increasing health-care spending, especially for prescription drugs, efforts to improve prescription drug adherence in the United States are important. Federal policies regarding prescription drug prices may have an impact on cost-related nonadherence, but the content and timing of any policies are hard to predict. As such, employers and health plans will face greater pressure to explore innovative approaches to lowering costs and increasing access for beneficiaries. Value-based financial incentive models have the potential to be a part of this effort; research should continue to evaluate their effectiveness.

Price elasticities of pharmaceuticals in a value based-formulary setting

Empirical estimates of price elasticities of demand (PED) for pharmaceuticals suggest that they are relatively price inelastic. However, in many settings, a medication and its substitutes and complements face simultaneous differential changes in prices that affect the observed "composite" PED. We exploit an implementation of a value-based formulary (VBF) that utilized drug-specific incremental cost-effectiveness ratios (ICERs) to inform drug copayments, resulting in increases in copayments for some medications and decreases in copayments for others. We first show theoretically that by changing the price of a medication and its substitute in opposite directions, VBF designs can leverage cross-price effects to increase the range of composite PEDs. We then empirically estimate PED and welfare effects using a consumer surplus approach. Overall PED was -0.16, similar to the RAND Health Insurance Experiment estimate. However, there was substantial dispersion of PED across the VBF copayment tiers ranging from -0.09 to -0.87 with a statistically significant trend aligned with the levels of value as reflected by the ICER estimates (p < 0.001). The net welfare increase was $147,000 for the cohort or $28 per member over the postpolicy year. Further experimentations of VBF designs with alternative cost-effectiveness thresholds, copayment levels and value definitions could be quite promising for improving welfare.

The potential price and access implications of the cost-utility and budget impact methodologies applied by NICE in England and ICER in the US for a novel gene therapy in Parkinson's disease

Background: NICE in England, and ICER in the US both use cost-utility analyses (CUA) and budget impact analyses (BIA) to assess value for money and affordability, however the thresholds used differ greatly. Objective: To perform a cross-country comparison of the results of the CUA and BIA and detail the implications for reimbursed price and volumes, for a novel gene therapy for Parkinson's disease (PD). Methods: A Markov model was built to perform country-specific CUAs and BIAs Findings: The US ceiling price identified through CUA is ~ 1.8 times higher than in England (aligning to our previous US/UK price comparison analysis of high-cost drugs). However, the net budget impact corresponding to these price levels would limit number of patients treated in order not to exceed the BIA threshold. Performance-based annuity payments can increase patient access at launch without exceeding the thresholds while reducing payers' data uncertainty. Conclusion: Our cost-utility analysis in PD shows a difference in price potential between the US and England that aligns with what is observed in practice for other high-cost drugs. Furthermore, the budget impact threshold operational in England imposes a greater downwards pressure on price and/or volumes than the one applied by ICER in the US.

Using Performance-Based Risk-Sharing Arrangements to Address Uncertainty in Indication-Based Pricing

BACKGROUND

The rise in pharmaceutical expenditures in recent years has increased health care payer interest in ensuring good value for the money. Indication-based pricing (IBP) sets separate, indication-specific prices paid to the manufacturer according to the expected efficacy of a drug in each of its indications. IBP allows payers to consistently pay for value across indications. While promising, a limitation of IBP as originally conceived is that efficacy estimates are typically based on clinical trial data, which may differ from real-world effectiveness. An outcomes guarantee is a type of performance-based risk-sharing arrangement that adjusts payments according to prospectively tracked outcomes. We suggest that an outcomes guarantee contract, which has been used by some payers, may be adapted to achieve indication-based prices supported by real-world effectiveness.

OBJECTIVE

To illustrate the potential of an outcomes guarantee to achieve indication-based prices aligned with real-world value, using a case study of trastuzumab for the treatment of metastatic breast and advanced gastric cancers.

METHODS

We estimated costs and outcomes under traditional IBP (i.e., expected value IBP) and outcomes guarantee frameworks and calculated incremental cost-effectiveness ratios (ICERs) comparing treatment with and without trastuzumab. Efficacy data came from pivotal trials, whereas effectiveness data came from observational studies. We adjusted trastuzumab prices in order to achieve target ICERs of $150,000 per quality-adjusted life-year under each framework and for each indication.

RESULTS

To achieve the ICER target under traditional IBP, the unit price of trastuzumab using efficacy evidence was adjusted for metastatic breast and advanced gastric cancers from an average sales price of $9.17 per mg to $3.50 per mg and $0.93 per mg, respectively. Under an outcomes guarantee, the unit price of trastuzumab using effectiveness evidence was adjusted for metastatic breast cancer and advanced gastric cancer to $8.66 per mg and $0.20 per mg, respectively.

CONCLUSIONS

Like expected value IBP, outcomes guarantee contracts can also vary payment based on indication. In addition, an outcomes guarantee can also reduce uncertainty regarding effectiveness and better align payment with the actual value of a treatment.

DISCLOSURES

No funding supported this study. Carlson reports consulting fees from Genentech, Pfizer, and Seattle Genetics. The other authors have no conflicts of interest to disclose. Study concept and design were contributed by Carlson, Yeung, and Li. Yeung, Carlson, and Li collected and analyzed the data. The manuscript was written primarily by Yeung, along with Carlson and Li, and revised by all the authors.

The Importance of Economic Perspective and Quantitative Approaches in Oncology Value Frameworks of Drug Selection and Shared Decision Making

The debate around value in oncology drug selection has been prominent in recent years, and several professional bodies have furthered this debate by advocating for so-called value frameworks. Herein, we provide a viewpoint on these value frameworks, emphasizing the need to consider 4 key aspects: (1) the economic underpinnings of value; (2) the importance of the perspective adopted in the valuation; (3) the importance of the difference between absolute and relative measures of risk and measuring patient preferences; and (4) the recognition of multiple quality-of-life (QoL) domains, and the aggregation and valuation of those domains, through utilities within a multicriteria decision analysis, may allow prioritization of QoL above the tallying of safety events, particularly in a value framework focusing on the individual patient. While several frameworks exist, they incorporate different attributes and-importantly-assess value from alternative perspectives, including those of patients, regulators, payers, and society. The various perspectives necessarily lead to potentially different, if not sometimes divergent, conclusions about the valuation. We show that the perspective of the valuation affects the framing of the risk/benefit question and the methodology to measure the individual patient choice, or preference, as opposed to the collective, or population, choice. We focus specifically on the American Society of Clinical Oncology (ASCO) Value Framework. We argue that its laudable intent to assist in shared clinician-patient decision making can be augmented by more formally adopting methodology underpinned by micro- and health economic concepts, as well as application of formal quantitative approaches. Our recommendations for value frameworks focusing on the individual patient, such as the ASCO Value Framework, are 3-fold: (1) ensure that stakeholders understand the importance of the adopted (economic) perspective; (2) consider using exclusively absolute measures of risk and formal patient-preference methodology; and (3) consider foregoing safety parameters for higher-order utility considerations.

DISCLOSURES

No funding was received for conceptualizing, writing, and/or editing this manuscript. Waldeck and White are employees of, and received stock option grants from, Celldex Therapeutics. Van Hout and Botteman are employees and shareholders of Pharmerit International. Pharmerit International is a research contractor for Celldex. All authors have retained editorial control of the content of the manuscript. Conceptualization of this viewpoint article was contributed primarily by Waldeck, along with Botteman, White, and van Hout. Data analysis and revision of the manuscript was contributed equally by all the authors. The manuscript was written by Waldeck, Botteman, van Hout, and White.