How the reimbursement landscape has changed since Sovaldi
As CMS contemplates an experiment with value-based payment models, private payers and PBMs are already finding that such methods can decrease their reliance on some of the blunt instruments they've used to beat down drug costs.
Experiments with new reimbursement tools were catalyzed by the launch of Gilead Sciences Inc.'s Sovaldi sofosbuvir, as commercial plans and PBMs found their traditional cost-containment tools inadequate. The drug was so much more effective and tolerable than previous treatments that a tsunami of pent-up demand had gathered behind the December 2013 launch, and formulary tiers, prior authorization, step therapy and price caps would not have been sufficient to manage utilization and costs.
Private payers initially responded by denying access to all but the sickest patients on Sovaldi's broad label, and by expanding or creating formulary exclusions, which were swiftly applied to increasing numbers of other expensive drugs.
But the launch of Sovaldi - and its promise of greatly improved outcomes - also catalyzed refinements to existing cost-management tools, and development of new ones that can be applied in a more nuanced fashion to reimburse based on the value drugs provide to patients and payers.
Now, PBMs including Express Scripts Holding Co. and Prime Therapeutics LLC have begun to offer specialty pharmacy services to target expensive drugs to subgroups of patients most likely to benefit, and to keep them on their meds. Express Scripts told BioCentury it has been able to deploy these services in a way that makes it less reliant on drug exclusions.
For expensive new drugs with benefits that could reduce total healthcare costs, payers and PBMs are testing a range of new delivery and payment models.
For example, Aetna Inc., Prime, Cigna Corp. and Harvard Pilgrim Health Care Inc. have each disclosed at least one outcomes-based contract in the last year that ties the benefits a drug provides in the real world to the amount of reimbursement. Cigna strives to make outcomes-based contracting a central element of all of its formulary decisions for new specialty drugs.
Express Scripts and CVS Health Corp. are also testing indication-based payment models for drugs with more than one indication on the label. These models will pay different amounts for the same drug depending on its efficacy and safety in different indications. Meanwhile, Harvard Pilgrim is trying to enlist drug sponsors to participate in a