Hepatitis C Medications: The Burchfield Group's focused look at Utilization

By Steve Anderson
Mon, Feb, 08, 2016 @ 08:02 AM

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Hepatitis C medications have likely impacted your 2015 budget. They are poised to potentially impact future year’s budgets and may break your budget if you are not aware of how this category is impacting prescription spend and total health care costs. Analyzing the first year’s utilization in your plan will help you prepare better.

Hepatitis C medications like Sovaldi (FDA approved Dec. 2013), Harvoni (FDA approved Oct. 2014), and Viekira Pak (FDA approved Dec. 2014) have been the hot topic of conversations in the pharmaceutical industry since even before their release. These are life-saving medications that can cure Hepatitis C in the majority of patients and help avoid costly medical expenses in the future. Though overall utilization of these products is proportionally low across most populations, their high claim costs have ballooned annual drug costs for plans. The Burchfield Group analyzed what trends occured with these new Hepatitis C medications during 2015.

 

Pricing High & Consistent

Since the release of these medications, pricing at the point of sale has been steady month over month. Furthermore, Burchfield did not observe significant differences in pricing between dispensing pharmacies or adjudicating PBMs. It is understood that rebates on the products may lower the plan costs by 30 percent or more, depending on the PBM/Health Plan arrangement with the manufacturers.

 

The average cost per 28 days of supply is $28,000 for Solvadi, $32,000 for Harvoni, and $29,000 for Viekira Pak. With a standard course of treatment being 12 weeks for most patients, the total cost of treatment can approach six figures. These costs do not account for other medications that a patient may take in concert nor the value of any rebates.

 

In December 2014, Express Scripts formed an exclusive arrangement with AbbVie (Viekira Pak) and in January 2015, CVS Caremark formed an exclusive arrangement with Gilead (Solvadi and Harvoni). These exclusive arrangements come with increased rebates from the manufacturer. Other savings opportunities may exist. For example, one unique offering with Express Scripts is a treatment cap guarantee for Viekira Pak, regardless of length of treatment, as well as a refund guarantee for patients who discontinue therapy.

 

Burchfield has identified clients who may be eligible for additional savings based on these guarantees. Plans should inquire what Hepatitis C treatment guarantees have been established, when those guarantees will be reconciled and consider hiring an auditor to validate the PBM’s reconciliation.    

 

Utilization is Key

Burchfield observations:

  • Most plans hit peak Solvadi utilization five to seven months after FDA approval
  • Five to seven months after Solvaldi’s peak, use dropped by about 75% to 80%
  • The start of similar trend patterns are observed with Harvoni and Viekira Pak

 

Burchfield noticed a significant difference in the utilization of Hepatitis C medications between clients. PBMs and plans have differing Prior Authorization (PA) criteria. It is important for plans to work with their PBMs to ensure proper authorization review protocols are in place. As part of their formulary exclusivity arrangements with manufacturers, some PBMs removed a disease severity score component from their PA process. There was concern that utilization would increase in response to the patient selection criteria being relaxed. Though Burchfield has not witnessed a drastic utilization increase correlating to this specific change in PA criteria, all PA components should be monitored for changes that may have significant impact.

 

Unlike maintenance medications where patients take the medications for the rest of their lives, Hepatitis C medications are typically effective with just one course of therapy for most patients. There has been a pent up demand for these new Hepatitis C medications from patients who have lived with Hepatitis C for years with limited success from prior earlier treatment options. Once this patient population has been identified and completed their therapy, utilization is expected to drop significantly. Only newly infected or newly diagnosed Hepatitis C patients will seek treatment.

Editorial Note: On January 28, 2016, Merck was approved for their new Hepatitis C product, Zepatier. With a new entrant to the Hepatits C combined with a reported list price of $55,000 for a 12 week treatment, expect a follow-up from The Burchfield Group once utilization and trend patterns can be observed.

 

Mr. Anderson is the Lead Financial Analyst at The Burchfield Group. He is responsible for leading the workflow of the financial analysts, developing and maintaining financial models and tools, evaluating PBM financial proposals and modeling plan design impacts. For more information, call 800-778-1359 or send a note to burchfieldgroup.com/contact/.

The Burchfield Group helps self-insured employers optimize the value of their PBM and specialty pharmacy relationships. As an independent consulting firm you can trust that our recommendations are always aligned with your best interests.

Copyright © 2016 The Burchfield Group. All rights reserved. No part of the content contained herein may be transmitted, redistributed, copied, stored, downloaded, abstracted, disseminated, circulated or included as part of any other service or product. For all permissions, please contact ewood@burchfieldgroup.com.

 

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