Performance Enhancing Pharmaceuticals

Alan H. Heaton, BS (Pharm), Pharm. D., RPh.

Director of Pharmacy BlueCrossBlueShield of Minnesota

Local Performance?

Key Minnesota Health Care Cost and Economic Indicators 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Health care cost MN economy Overall inflation Workers' wages 1995 1996 1997 1998 1999 2000 2001 2002 Notes: health care cost is MN privately insured spending on health care services per person; MN economy is gross state product; overall inflation is consumer price index for the Twin Cities area; workers’ wages is average weekly wages for Minnesota workers.

Source: MDH, Health Economics Program

Under Performing in Key Diseases

• Diabetes epidemic • 17 million Americans • 300,000 new cases of Type 2 in children each year • Significant under-utilization of diabetes medications • Coronary Heart Disease – Recent guidelines suggest tripling number of people using of lipid agents – 29% of adults with high blood pressure (60 million) versus 25% in 1988 – Only 31% at high risk (older than 60 years, female, blacks) able to maintain blood pressure control Of those with hypertension and diabetes only 25% adequately treated JMCP. March 2003;9:Supp3.

American’s Blood Pressure Climbing Again. USA Today. July, 2003.

Kotchen et al. University of Wisconsin. 44,000 responses from government National Health and Nutrition Examination Study. Over 15-year period.

Nationally, Hyper Performance on Drugs

$3,000 $2,500 $2,000 $1,500 7.6% 8.6% 9.4% 9.9% 10.4% 12.0% 13.8% 16.0% 14.0% 12.0% 10.0% 8.0% 6.1% $1,000 $500 4.9% 5.8% 6.0% 4.0% 2.0% $0 1980 1990 1995 1998 1999 2000 2001 2002(e) 2005(e) 2010(e) 0.0%

Health Care Costs Pharmacy Costs as % of Health Care Costs Source: Health Care Financing Administration

Drivers of Drug Performance

Prescription costs are increasing annually at 14-21% Trend Drivers

     Therapeutic shift from inpatient to outpatient care with drug therapy Direct-to-consumer (DTC) advertising and consumer demand Existing drugs — expanded applications and more aggressive treatment guidelines New drug “improvements” and “new markets” Price inflation

Implications

 More users  More prescriptions per user  More expensive mix  Higher unit costs

Utilization + Mix = 70% of Performance

Price Inflation Leveraging

Components of Prescription Drug Trend

20% 10% 35% 35% Mix



Mix

– type of prescription drugs used by population 

Utilization

– number of prescription drugs used by population 

Price Inflation

– average year-over-year increase in the cost of each prescription 

Leveraging

– erosion of effectiveness of fixed cost-sharing over time

Utilization

Traditional employer cost management strategies have not effectively addressed utilization and mix 1 Towers Perrin – “Employers, Prescription Drugs & PBMs”, 2003

Pharmaceutical Manufacturers

Comparison of Top 50 Drugs

50% Contributing Most to One-Year Spending to All Other Drugs and Total Market (2000-01) 43.3% 40% 31.7% 30% 17.1% 20% 10.1% 8.9% 10% 6.7% 6.3% 5.5% 1.1% 0% Top 50 Rest of M arket Total M arket C HANGE IN SALES Top 50 Rest of M arket Total M arket C HANGE IN UTILIZATIO N Top 50 Rest of M arket Total M arket C HANGE IN AVERAGE PRIC E Adapted from Prescription Drug Expenditures In 2001: Another Year of Escalating Costs. A Report by The National Institute for Health Care Management Research and Education Foundation Rev. May 6, 2002.

Performance: Top 10 Drugs 2003

US sales in

billions

of dollars • Lipitor • Zocor • Prevacid • Procrit • Zyprexia • Epogen • Nexium • Zoloft • Celebrex • Neurontin 6.8

4.4

4.0

3.3

3.2

3.1

3.1

2.9

2.6

2.4

Current Performance

Members, Cost/Rx, Utilization and PMPM By Age and Gender

70 180 60 M ($59)

Cost/Rx

($56) F ($53) 160 140 50 40

Members

(1,129K) F (584K) M (545K) F ($55)

PMPM

($48) M ($40) 120 100 80 30 60 20 40 10

Util

(10.3) F (12.5) M (8.0) 20 0 0-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39

Age

40-44 45-49 50-54 55-59 60-64 65-69 70-74 75+ 0

The New Yorker

, October 27, 2003

“We make a healthy difference in people’s lives by utilizing pharmacy benefits that feature

access

,

affordability

, and

appropriateness

.”

Appropriate Therapy?

An estimated 44,000-98,000 people die each year in hospitals because of medical errors - Institute of Medicine report 57,000 people die each year because of omission – they don’t benefit from known therapies - NCQA

Appropriate Therapy!

National

543 4230 881.9

MN

Pharmacy $ per capita Total Healthcare $ per capita 569 3575 Death Rate per 100,000 792.2

» KFF 1999

Promoting Appropriate Treatment

• •

Care Support SM

disease management program

PrimeImpact SM

provider education programs – Prime Pharmacist : Provider discussions – 20 minute presentations/round tables at key clinics – National / Local treatment guidelines – Cost-effective prescribing • Generic drugs • Formulary drugs – Care pilot program • Blue Cross provider incentives – Key clinical measurements – Generic utilization

Measuring the Impact of Collaborative Pharmaceutical Care May 27, 2004

Study Architects: Alan Heaton, BCBSM Brian Isetts, College of Pharmacy Dave Miller, Fairview/University Clinics Wallace Wadd, Prime Therapeutics, Inc.

Collaborative Pharmaceutical Care (CPC) Project History

• FPS Wins BHCAG Silver Prize (5/2000) • AHC/FV grant awarded (7/2000) • BCBSM partnership initiative (3/01) • Care delivered to patients (8/01 – 7/02) • Claims programming query (1/03 – 6/03) • Archives of Internal Medicine Article (8/03) • BCBSA Best Practices presentation (10/03) • Minnesota Physician article (11/03) • J of Gen Int Med manuscript (submitted 4/04) • Pinnacle Award Announcement (5/04)

Results: Clinical, Drug Therapy Problems

• 629 drug therapy problems (2.2 /patient) • 6.4 medical conditions/patient • 7.9 drug therapies/patient • 207 problems (33%) w/ OTC medications • 64 DTP’s (10%) - drugs from friends and family •

85% of patients had at least one problem

ECHO

• • •

Economic

outcomes – Total health care costs – Pharmacy costs $481 to $411 pppm $161 to $170 pppm

Clinical

outcomes – HEDIS measures improved (HTXN, Lipids) – Peer review, 90% of therapeutic goals attained

Humanistic

outcomes – Patient satisfaction (CAHPS) – Quality of life (SF-12)

Appropriate Therapy

Minnesota initiatives • Avandia or Actos being used in Type II diabetic patients with liver dysfunction or heart failure • Metformin prescribing in Type II diabetic patients with medical contraindications – Targeted mailings are being used to identify physicians prescribing this combination • Asthma intervention to help physicians identify patients at risk for repeat ER visits

Aligned Strategies: ROI

For every $1 spent on ACE Inhibitors, there was a decrease of over $6 on hospital costs in patients with CHF $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 $1,674 $10,617 3 Year Drug Therapy Hospital Costs Avoided

Source: The SOLVD Investigators, NEJM 325(5):293-302, 1991

Integration and Simplification

One call does it all

• One ID card for both medical and pharmacy • One telephone number for customer service support for health and pharmacy benefits for members • One Account Manager for medical and pharmacy • One integrated Flexible Spending Account, that includes automatic cross-over of pharmacy claims • One feed for

Care Support SM

• One eligibility feed • One customized web site • One SPD • One contract • One set of reports • One billing invoice

Predicting Performance?

• Aging Population – Americans over 65 is expected to nearly double by 2025 • Aggressive treatment guidelines – Earlier use of drugs for cholesterol reduction • New drugs in FDA approval process – Over 4,700 currently in development (

371Biotech, Specialty

) • Marketing dollars spent on existing drugs – DTC • Pricing practices of drug manufacturers • Disengaged patients and providers

Designing Performance

• Formulary Maintenance – Lowest net cost • Benefit Designs – Closed, co-pay or coins (feature mandatory generics) – 3 Tier • Gen, Form brand, Non form brand • Form gen, Form brand, non form • Gen, single source brand, multi source brand – Hybrids – CD, high deductibles

Formulary Performance:

Value-Based Purchasing

• Value-based purchasing represents an attempt to create incentives that reward quality and cost effective care • Examples: – Oregon rx drug initiative – evaluate which drugs are the most effective within each class – MN DHS MA DFC-PDL

Brand/Generic Cost

Cost Per Rx

$100 $90 $80 $70.68

$70 $60 $50 $40 $30 $20 $10 $0 $12.83

$74.68

$14.29

$80.00

$16.70

$89.65

$18.33

$95.71

$19.10

1999 2000 Brand 2001 2002 Generic 6 m o 2003

Employer Performance

• National data suggest the following: – For the most part, employers are not dropping coverage – Employers are paying about the same share of premiums as before – Benefit sets are changing: higher deductibles, tiered Rx copays, etc.

 shifts some additional cost onto employees – A few employers are looking to new models of health insurance • Minnesota-specific employer survey results, though still preliminary, are consistent with this trend Source: Kaiser Family Foundation/Health Research and Education Trust, 2003 Employer Health Benefits Survey; MDH, 2002 Minnesota Employer Health Insurance Survey

35%

Total PMPM Trend 2000-2003

Over the past 12 - 18 months, Pharmacy Management strategies have been focused on slowing the rapidly escalating drug trend. The rate of increase in utilization and prescription cost has declined over the last year.

30% 25% 20% 15% 10%

9.5% 9.1% 12.1%

5% 0% Jan Feb Mar

0.9% 1.3%

April May

7.1%

Jun

9.0% 6.6% 0.5%

Jul

0.2%

Aug Sep

2.2%

Oct

-0.1%

Nov Dec -5%

2000 2001 2002 3Q YTD 2003

Biotech, Specialty Products

Skin Disorders Respiratory Disorders Neurologic Disorders Infectious Diseases Heart Disease Digestive Disorders Diabetes Cancer Autoimmune Disorders AIDS/HIV 4.1% 5.1% 5.9% 12.7% 4.1% 4.6% 2.7% 7.0% 5.7% 48.1%