Evaluating the Clinical Effectiveness and Cost Effectiveness of Pharmaceutical Agents

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Evaluating the Clinical Effectiveness and Cost
Effectiveness of Pharmaceutical Agents

• CDR Denise Graham, MSC, USN
• Director, PEC Clinical Operations

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Presentation Outline

• Introduction
• Provide a synopsis of the Uniform Formulary (UF)
  decision process
• Describe the process by which drugs are analyzed
  for Uniform Formulary determinations
• Describe PEC process for determining relative
  clinical-effectiveness
• Present a brief overview of the PEC process for
  determining relative cost-effectiveness
• Pharmacoeconomic Analysis
• Budget Impact Analysis

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Introduction

• 32 CFR Part 199, Civilian Health and Medical
  Program of the Uniform Services (Champus) /
  TRICARE Implementation of the Pharmacy Benefits
  Program, implements section 701 of the National
  Authorization Act for Fiscal Year 2000, which
• establishes procedures for the inclusion of
  pharmaceutical agents on a uniform formulary
  based upon the relative clinical effectiveness
  and relative cost-effectiveness (Federal
  Register / Vol. 69, No. 63 / Thursday, April 1,
  2004 / Rules and Regulations)

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DoD PT Committee Formulary Recommendations
UF
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MTF Formulary Considerations
UF
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MHS Drug Universe
Drugs not covered by TRICARE (i.e., inpt meds,
OTCs, weight loss meds, smoking cessation meds,
etc.)
BCF drugs
ECF drugs
UF
Other UF drugs
Nonformulary drugs
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Purpose of Talk

• What it is NOT Inform MTFs how to conduct
  clinical and cost evaluations
• What it is Provide an understanding of the
  in-depth analyses conducted by the PEC for
  presentation to the DoD PT Committee.

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Roles Within the Military Health System
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Committee Responsibilities

• Evaluate clinical effectiveness and cost
  effectiveness of pharmaceutical agents
• Recommend pharmaceutical agents for
• Uniform Formulary
• Basic Core Formulary
• Extended Core Formulary
• Medical necessity criteria for drugs classified
  as non-formulary (3rd tier)
• Restrictions / limitations
• Prior authorization
• Quantity limits
• TRRx and TMOP
• Recommend effective date of change from formulary
  to non-formulary (may be no more than 180 days)

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Synopsis UF Decision Process DoD PT Committee

• The DoD Pharmacy Therapeutics Committee (PT)
• Considers the relative clinical effectiveness and
  cost effectiveness of pharmaceutical agents in a
  therapeutic class in recommending the selection
  of agents for the DoD Uniform Formulary (UF) and
  the classification of a pharmaceutical agent as
  generic, formulary, or non-formulary

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Synopsis UF Decision Process DoD PT Committee
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Synopsis UF Decision Process DoD PT Committee
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Formulary Decision ProcessDrug Class Review
Process for Uniform Formulary Decisions
Day 1, F
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Formulary Decision Process Overview
Drug Class Review
New Drug Review
UF Recommendation
BCF Recommendation
ECF Recommendation
BCF Change Request
ECF Change Request
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New Drugs and the UF

• Scenario 1 New drug in an established drug
  class already evaluated by the Committee
• Scenario 2 New drug in a drug class not yet
  evaluated by the Committee
• Scenario 3 New drug in a new drug class

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Drug Class Review

• Define drug class
• Evaluate feasibility of classifying one or more
  drugs as non-formulary on UF
• Therapeutic interchangeability
• Coverage of clinical needs
• Provider acceptance
• Other factors
• Evaluate clinical effectiveness
• Evaluate cost effectiveness
• ESTOP analysis supports steps 2-4

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ESTOP Analysis

• Efficacy What is it used for and how well does
  it work?
• Safety How likely is it to cause harm?
• Tolerability Are patients likely to take it?
• Other Any other factors we can think of
• Price/Cost Key factor in cost effectiveness

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Efficacy

• Compare the drugs on what they are used for and
  how well they work
• Analysis plagued by general lack of head-to-head
  trials
• Critical evaluation of medical literature
• Meta-analyses
• Randomized clinical trials
• Other studies published abstracts
• Efficacy vs. effectiveness

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Safety

• Compare the drugs
• Contraindications
• Warnings/precautions
• Incidence and severity of adverse effects
• Other evidence of risk
• Length of time on market and provider experience
  can affect confidence in the safety profile of
  a drug.

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Tolerability

• Compare the drugs on
• Frequency of administration
• Ease of administration
• Frequency of irritating or uncomfortable side
  effects
• Available measure discontinuation rates during
  clinical trials
• Often underestimates likelihood of
  discontinuation during real use
• Must be compared to discontinuation rate in
  placebo arm

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Other factors

• Utilization patterns
• Competitive forces
• Patent life expectancy
• time to generic availability
• Political factors
• Packaging issues
• Operational considerations

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Price/Cost

• Key factor in cost effectiveness comparison
• Should compare all direct medical costs (not just
  drug acquisition cost)

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Feasibility of Non-Formulary Recommendation
Therapeutic Interchangeability

• Extent to which agents are similar in
• Clinical attributes
• FDA indications and off-label uses
• Patient populations
• Clinical outcomes

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Feasibility of Non-Formulary RecommendationCovera
ge of Clinical Needs

• Should be able to meet clinical needs of at least
  90 of patients without using the drug(s)
  classified as non-formulary on the UF
• Related Questions
• Do patients failing one agent typically respond
  to another agent in the same class?
  (inter-patient variability)
• Do providers typically try multiple agents in
  this class before moving on to another therapy
  option?

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Feasibility of Non-Formulary RecommendationProvid
er Acceptance

• Willingness of providers to use formulary drugs
  and refrain from using non-formulary drugs
• New patient starts
• Willingness to use a particular agent in a class
• Duration on the market, available safety data
• Switch patients from non-formulary to formulary
• Willingness to abandon current therapy
• Perceived likelihood of similar clinical outcome
• Perceived level of work involved in making switch
  (i.e., supplemental visits and lab tests)

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Feasibility of Non-Formulary Recommendation
Other Factors

• Utilization patterns
• Level of competition in drug class
• Political issues

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Clinical Effectiveness Evaluations

• UF Rule states
• Committee will evaluate the relative clinical
  effectiveness of pharmaceutical agents by
  considering information about their safety,
  effectiveness, and clinical outcome.
• The terms clinical utility or clinical value
  might be synonyms for clinical effectiveness?

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Clinical Effectiveness Evaluations

• UF Rule has high threshold for UF inclusion
• It is presumed that pharmaceutical agents in a
  therapeutic class are clinically effective and
  should be included on the uniform formulary
  unless a pharmaceutical agent does not have a
  significant meaningful therapeutic advantage in
  terms of safety, effectiveness, or clinical
  outcome over the other pharmaceutical agents
  included on the uniform formulary

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Clinical Effectiveness Evaluations

• No gold standard method or format for comparing
  clinical effectiveness
• Some possibilities for describing the relative
  clinical effectiveness of agents in a drug class
• Divide into groups (AC are more effective than
  BD)
• Rank order (AgtCgtBgtD)
• Rank order and describe the differences
• A a lot better than C
• C somewhat better than B
• B just barely better than D
• Must state the because in all cases

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UF Final Rule Relative Cost-Effectiveness

• The UF final rule states
• If a pharmaceutical agent in a therapeutic class
  is not cost-effective relative to other
  pharmaceutical agents in that therapeutic class,
  it may be classified as a non-formulary agent
  (Federal Register / Vol. 69, No. 63 / Thursday,
  April 1, 2004 / Rules and Regulations)
• Note
• The Uniform Formulary uses the term
  cost-effectiveness generically to refer to the
  four common types of pharmacoeconomic analyses
  cost-minimization, cost-effectiveness,
  cost-benefit, and cost-utility

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PECs Process for Determining Relative Cost
Effectiveness

• To determine the relative cost-effectiveness of
  agents within a therapeutic class and to inform
  healthcare decision makers on the value of a
  particular decision, the PEC performs two types
  of analyses
• A pharmacoeconomic analysis
• A budget impact analysis

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Evaluating Cost Effectiveness

• Maj Wade Tiller, USAF, BSC
• PEC Clinical Operations

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Pharmacoeconomic AnalysisDefinition

• Identifies, measures, and compares the costs
  (i.e., resources consumed) and consequences
  (clinical, economic, and humanistic) of
  pharmaceutical products and services (Bootman,
  et al., Principles of Pharmacoeconomics 2nd Ed.,
  New York, St. Martins Press,1996)

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Pharmacoeconomic AnalysisDetermining Type

• The evaluation of the relative cost-effectiveness
  of agents within a therapeutic class begins once
  the relative clinical effectiveness of the agents
  has been determined
• The type of pharmacoeconomic analysis performed
  is dependent upon the kind of outcomes being
  considered and the extent that these outcomes
  differ between the agents within a therapeutic
  class

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Pharmacoeconomic Analysis Determining Type
(contd)

• An evaluation of agents within a therapeutic
  class that suggests no significant differences in
  clinical outcomes is best analyzed utilizing a
  cost-minimization analysis
• If significant clinical differences are noted
  between agents within a therapeutic class, one of
  the following analyses would be used depending on
  the kind of outcomes being measured
• Cost-effectiveness analysis
• Cost-utility analysis
• Cost-benefit analysis

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Pharmacoeconomic AnalysisPerspective, Costs
Consequences

• The perspective adopted is that of the DoD MHS
• Costs included in the model are those relevant
  direct medical costs borne by the DoD MHS
• Consequences (outcomes) included in the model are
  determined during the clinical effectiveness
  review
• Reported RCT outcomes, meta-analyses, etc.

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Pharmacoeconomic AnalysisCost Data

• Medication Costs
• Manufacturers Submitted Blanket Purchase
  Agreement Price for the MTF and TMOP.
• If a manufacturer declines the opportunity to
  submit a price, then the drug is evaluated at the
  Big 4 Federal Supply Schedule (FSS) price for the
  MTF and TMOP
• Federal Ceiling Price (FCP) for TRRX
• Manufacturers submitted unit prices and
  utilization data are used to determine the total
  weighted average cost per day of treatment by
  point of service (POS) venue
• Utilization data is obtained from PDTS

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Pharmacoeconomic AnalysisCost Data

• Other Direct Medical Costs
• Costs associated with adverse events, drug
  therapy monitoring, etc
• MHS Management and Analysis Reporting Tool (M2)
  data
• TRICARE pricing file

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Pharmacoeconomic AnalysisConsequence Data

• The primary consequence or outcome measure is
  established as part of the relative clinical
  effectiveness determination
• Primary outcome data can be obtained
• From the literature
• Directly from M2 database

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Pharmacoeconomic AnalysisCMA Example

• Cost Minimization Analysis (CMA)
• Is a type of pharmacoeconomic analysis comparing
  two or more alternative therapies in terms of
  costs because their outcomes (effectiveness and
  safety) are found to be or expected to be
  equivalent
• Compare drug A versus drug B for treatment of GERD

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CMADetermining Cost
Drug POS Strength Price Tabs Disp Days TX Avg Tabs / Day of TX Cost / Day of TX Total Cost Wgtd Avg Cost / Day of TX
A TMOP 25mg 0.50 100 91 1.1 0.550 50 0.697
A TMOP 50mg 0.75 150 143 1.05 0.788 113 0.697
A TMOP Totals Totals 250 234 163 0.697
A MTF 25mg 0.50 600 500 1.2 0.600 300 0.713
A MTF 50mg 0.75 800 762 1.05 0.788 600 0.713
A MTF Totals Totals 900 1262 900 0.713
A TRRX 25mg 1.00 325 310 1.05 1.050 326 1.19
A TRRX 50mg 1.25 375 357 1.05 1.313 469 1.19
A TRRX Totals Totals 700 667 795 1.19
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CMADecision Tree Results

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Pharmacoeconomic AnalysisLimitations

• This model does not account for other factors,
  revenue, and costs associated with a potential
  decision to place one or more agents into the 3rd
  tier, such as
• Market share migration
• Co-pays
• Medical necessity processing fees
• Switch costs

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Budget Impact AnalysisPurpose

• In general, Budget Impact Analyses (BIA) are
  performed to provide insight into the budget
  impact of the inclusion of a new intervention to
  address the issue of affordability
• The DoD PEC performs a BIA to
• First, to validate results of the
  pharmacoeconomic analysis in the determination of
  relative cost effectiveness
• Second, to provide an estimate of the MHS budget
  impact of a decision to move one or more agents
  of a therapeutic class to the 3rd tier for each
  point of service

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Budget Impact AnalysisDescription

• Models the MHS budget impact dynamics of a UF
  decision to place one or more agents of a
  therapeutic class into the 3rd tier
• Factors included in the model
• Market share migration
• Change in utilization among therapeutic class
  agents as beneficiaries migrate from 3rd tier to
  2nd tier agents
• Costs associated with migration from 3rd to 2nd
  tier agents
• Medical necessity processing fees
• Provider costs associated with switching patients
  from 3rd tier to second tier agents
• Revenue generated from 3rd tier copays

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Budget Impact AnalysisAnalysis

• Perform the 3rd tier shuffle
• Model two time horizons
• First Year
• Reflects tier determination/pricing impact, costs
  associated with the migration of patients from
  3rd tier to 2nd tier agents, and revenue
  generated from 3rd tier copays
• Second Year (after the dust settles)
• Reflects tier determination/pricing impact and
  revenue generated from 3rd tier copays only

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Budget Impact AnalysisResults

• 1st and 2nd year post-decision costs are compared
  for the different 3rd tier selection scenarios
• The relative cost-effectiveness of placing one or
  more agents of a therapeutic class into the 3rd
  tier of the uniform formulary is determined

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Uniform Formulary RecommendationConclusion

• When making an UF recommendations the DoD PT
  Committee considers
• the relative clinical effectiveness analysis
• and the relative cost effectiveness analysis
  (pharmacoeconomic analysis and budget impact
  analysis)

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BCF or ECFDecision

• A Basic Core Formulary or Extended Core Formulary
  decision for a therapeutic class
• Is considered only after the uniform formulary
  decision is made
• Only considers the uniform formulary agents i.e.,
  agents in the 3rd tier are not eligible
• Is made using the same process that was used for
  the uniform formulary decision, except with BCF
  or ECF pricing

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Synopsis UF Decision Process Director, TMA

• The Director, TRICARE Management Activity (TMA)
• Considers the determinations and recommendations
  of the DoD Pharmacy and Therapeutics Committee,
  as well as comments and recommendations of the
  Beneficiary Advisory Panel, in making the final
  decisions regarding the UF

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