CBI Rare Disease Leadership Summit December 7, 2006 Building An Effective Reimbursement Plan for Orp

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CBI
Rare Disease Leadership Summit

December 7, 2006 Building An
Effective Reimbursement Plan for Orphan Drugs

• Lessons From Medicaid and Private Insurers

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(No Transcript)
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Agenda

• Private insurance environment
• Medicaid
• Distribution considerations
• Recommendations
• Medicare discussed by Jayson Slotnick,
  BIO

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Tag Associates Overview
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• U.S. reimbursement planning and problem solving
• Payer research competitive analysis
• Strategic planning reimbursement forecasting
• Advocacy with major payers

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Orphan Drug Involvement

• Betaseron
• CytoGam
• Botox
• Remicade

• Prolastin
• Bexxar
• Immune globulin
• INOmax

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I. Private Insurance Environment
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No Reimbursement Incentives

• Orphan drug development is encouraged by
  legislated economic incentives, but
• There are no national or state government Orphan
  drug reimbursement incentives
• Unlike cancer, HIV/AIDS, ESRD
• Just another expensive drug that may or may not
  be misused

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Implication

• As coverage becomes more dependent on evidence,
  rare disease patients may not be able to access
  the treatments that manufacturers are given
  incentives to develop
• E.g. 7 NORD High Priority Access Problem drugs
• http//www.rarediseases.org/pdf/Final_ltr_CMS_011
  006_V2.pdf

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Off-Label Coverage?

• What if a patients diagnosis is slightly
  off-label for an Orphan drug?

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Betaseron Example

• Labeled for relapsing MS
• At launch, clinicians did not agree on diagnosis
  terminology
• An MS patient whose physician used terminology
  that differed even slightly from labeling would
  almost always be denied Betaseron coverage

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Bexxar/Zevalin Example

• At Oxford, no prior authorization needed for
  relapsed or refractory low-grade, follicular, or
  transformed B-cell non-Hodgkin's lymphoma, in
  patients with rituximab-refractory follicular NHL
  as a single course of treatment
• Coverage usually denied for every other use

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Payer Cynicism

• Some medical and pharmacy directors believe the
  Orphan Drug Act is being abused to gain
  undeserved advantage for drugs that would be
  marketed in any event
• Orphan drugs that present an economic threat
  because of broader use will be tightly
  controlled

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Recent Examples

• Vidaza (azacitidine)
• Approved 2004 for myelodysplastic syndrome (MDS)
• Coverage policies prohibit use in sickle cell
  anemia, solid tumors, other cancers
• See e.g. http//www.bcbst.com/MPManual/Azacitidine
  .htm

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Recent Examples - 2

• Apokyn (apomorphine)
• Approved 2004 for treating Parkinson's during
  episodes of "hypomobility," so-called "off
  periods" in which the patient becomes immobile or
  unable to perform activities of daily living

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Recent Examples - 3

• Apokyn restrictive coverage policies
• Limit drug quantity
• Require prescribing by neurologist
• Require fail first with other (less expensive)
  Parkinsons treatments
• See e.g. http//www.bsneny.com/content/neny_prov_
  guid_Apokyn.pdf
• http//www.tuftshealthplan.com/providers/pdf/phar
  macy_criteria/Apokyn.pdf

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Recent Examples - 4

• Retisert (fluocinolone acetonide intravitreal
  implant) for the treatment of chronic
  non-infectious uveitis
• Not covered by some insurers
• Reliable evidence does not support efficacy
  compared to standard treatment
  http//www.tuftshealthplan.com/providers/pdf/Retis
  ert.pdf
• Cost is 22,000 vs. 45 for 30 months of steroid
  treatment http//www.pswi.org/irx/FAIImplant.pdf

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The Value of Evidence

• Revlimid (lenalidomide) approved for MDS
• Covered by Cigna for multiple myeloma before FDA
  approval for that indication on strength of 2
  studies http//www.cigna.com/health/provider/phar
  macy/coverage_positions/ph_6120_coveragepositioncr
  iteria_lenalidomide_revlimid.pdf

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P T Committee Review

• National and larger regional plans are likely to
  have P T review of an Orphan drug eligible for
  Rx benefit
• Smaller plans may not
• Too few patients
• Medical benefit drugs are often
  not given P T review
• Medical Director decides

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Medical Director Is Key

• MCO Pharmacy Directors are less involved with
  Orphan drugs than most others
• If medical benefit, it is usually the Medical
  Directors decision
• If Rx benefit, may never get to P T

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Gleevec and Orfadin

• Two of the few Orphan drugs subject to formulary
  control (oral)
• 3rd or 4th tier with prior authorization
• 4th tier coinsurance affordability barrier
• Use limited to label

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Payment

• For clinician administered drugs, typically 80
  AWP
• Specialty providers often paid less via
  negotiated contracts
• AWP will be going away
• Replaced by ???
• Pricing driven by reimbursement

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II. Medicaid
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Medicaid Orphan Drug Policy?

• November 2006 survey of 20 states
• AK, AL, CA, GA, MA, NC, ND, NE, NH, NJ, NM, OH,
  PA, SC, TN, UT, VA, WA, WV, WY
• No special treatment for Orphan status
• Though cancer, mental health, HIV are often
  exempted from prior authorization

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Informal Policy

• However, there is often recognition of urgency
  and willingness to adapt
• If state has 6 month wait (NH) they may waive if
  asked
• It isn't so much that drugs in orphan status are
  treated differently than other drugs, but rather
  that the upfront work to determine how and under
  what circumstances a drug is to be covered, is
  discussed and, hopefully, handled in a straight
  forward manner with the manufacturer Medicaid
  Pharmacy Director

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Determine If Special Controls Apply

• High cost populations often receive special
  management
• Where high cost high cost (rather than
  specified diseases), Orphan drug patients will be
  included

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Payment

• Follows the usual formula for that state
• Typically AWP minus 12 - 14
• For all state formulas, see
• http//www.kff.org/medicaid/upload/State-Medicaid
  -Outpatient-Prescription-Drug-Policies-Findings-fr
  om-a-National-Survey-2005-Update-report.pdf

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Rebates

• January 2007 Manufacturers must pay Medicaid
  rebates (15.1) on drugs administered in Dr.
  offices and hospital O/P depts.
• Good Makes Orphan drugs more affordable to
  cash-strapped Medicaid programs
• Bad Some manufacturers have not recognized and
  budgeted for this

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III. Distribution Considerations
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Specialty Distribution

• For Orphan products, a two-edged sword
• Very helpful, almost essential for many products,
  but
• Can cause conflict with some payers
  distribution/patient management programs

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Specialty Distribution - 2

• Distributors typically press for exclusivity
• For reimbursement, manufacturer is often best
  served by having several distributors

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IV. Recommendations
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In General

• Expect no reimbursement break from Orphan
  status
• Orphan status does not obviate the need to prove
  the drugs value
• What would a payer want to see/need to know to
  pay your asking price?
• Find out (market research)
• Target Medical Directors

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Assume Private Payers Will Be Skeptical At Best

• If you are developing an Orphan drug primarily or
  exclusively for a rare disease, you must make a
  special effort with payers to show them the
  limits
• If Orphan status is a technical advantage to help
  develop a product for broader use, expect access
  restrictions until value is proven

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Patient Assistance

• Insured patients may need cost sharing assistance
• If medical benefit, coinsurance could be 20
• If Rx benefit, may be 4th tier
• coinsurance rather than copay

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Plan Conservatively

• Your market is defined by the label
• Carefully consider the reimbursement implications
  of every limiting phrase
• Marketing an Orphan drug beyond its Orphan
  indication will create payer backlash
• Research, analyze, plan

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Medicaid

• Build Medicaid rebate into revenue projections
• Be sure you have signed rebate agreement that
  covers this drug
• If state has post-marketing waiting period, ask
  whether it can be waived based on Orphan status

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Distribution

• Single-distributor arrangements should be avoided
  unless you are confident that all payers will
  deal with the only game in town

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Final Word

• Beware of killing
  the goose
• Yesterdays FDA price and market strategy view
  unlikely to be shared by payers
• NORD, BIO and other stakeholders should consider
  the risk to rare disease patients of blockbuster
  profit from Orphan drugs

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• __________________________________________________
  ______________
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• www.taghealthcare.com