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What Do US Payers Consider When Evaluating Specialty Therapies for Coverage?

U.S. payers commonly rely on efficacy, safety and other data when deciding whether or not to cover medical treatments. These factors frequently appear in their decisions to cover specialty therapies as well, including orphan drugs for rare disease treatment.

Lack of data and confusion over how to measure value complicate payers’ efforts to provide clear, consistent guidelines regarding coverage. As payers struggle to make clear and consistent decisions, providers and patients struggle as well. Access to standardized, transparent data and communication platforms can improve payers’ ability to access the information they need to make better coverage decisions.

Top Payer Considerations When Evaluating Specialty Therapies

The factors payers consider in evaluating specialty therapies are, on their face, similar to those used when evaluating any purchase. Does the product work as intended? Are more effective options available? How do we balance the effectiveness of this purchase against its cost? What regulations inform or limit our decisions?

Efficacy, Safety and Reliability

Efficacy, safety, reliability and patient tolerance of medications continue to play a large role in both physicians’ and payers’ decision-making.

When data on these topics is scarce or unreliable, U.S. payers may hesitate to cover a certain therapy. For instance, MCPHS University-Boston Professor of Pharmacy Practice Michael C. Angelini notes that 66 percent of participants in clinical trials for schizophrenia discontinue treatment. High dropout rates, both at the trial stage and after a medication is approved, can impair data that payers use to make coverage decisions.

Safety and tolerability also affect payers’ decisions and may be reflected in the data. These issues arise even with commonly-used, non-specialty therapies. For example, in patients with bipolar disorder, long-term use of lithium may result in renal issues in as many as one in five patients (20 percent), says Angelini.

Drug Costs

Price continues to play a role in U.S. payers’ coverage decision-making, even when the results are confusing, inconsistent or a poor fit to treatment data.

In a November 2021 study published in Health Affairs, researchers Kelly L. Lenahan, Donald E. Nichols, Rebecca M. Gertler and James D. Chambers examined U.S. payers’ use of “step therapy,” a program that requires patients to try less expensive treatment options. Only if less expensive options fail will the payer allow a patient to “step up” to more expensive medications.

Lenahan, et al. found that two-thirds (66 percent) of the policies examined required only one step. In 22.7 percent of the policies, two steps were required. Fewer than ten percent (7.6 percent) required three steps, and three percent of the policies had four or more steps.

The researchers also found that 55.6 percent of the policies required step therapy protocols more stringent than clinical guidelines. Just over one in three policies (34 percent) matched clinical guidelines, while 4.2 percent required patients to try medications that weren’t in clinical guidelines.

Regulator Input

While payers do consider indications identified by the Food and Drug Administration (FDA), their coverage decisions don’t always align perfectly with the FDA’s approval or clearance decisions. For example, in a 2018 study published in Health Affairs, James D. Chambers and fellow researchers examined 3,417 drug coverage decisions by several U.S. commercial health plans, encompassing 302 separate drug-indication pairs.

Their analysis found that while 52 percent of the coverage decisions were consistent with FDA labeling, only 16 percent of the drug-indication pairs were covered the same way by all plans. One-third (33 percent) of the plans had more restrictive requirements than the FDA indicated. Plans were also more likely to restrict coverage for cancer-related drugs than other medications, but less likely to restrict coverage for rare disease-related treatments.

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What Is “Value”?

Value-based healthcare has become a popular topic in recent years, as the healthcare industry seeks to control costs by finding new ways to compensate providers and pharmaceutical companies. Often, these approaches to care turn value into a simple equation, balancing value against the quality of healthcare and its costs, notes Sachin H. Jain at Forbes.

Many value-based initiatives seek to take advantage of scale, relying on bulk purchasing and other high-volume factors to reduce individual costs, writes Caroline Bodian at Oak St. Health. These methods do little to help U.S. payers address specialty therapies, however.

Although the entire healthcare industry is interested in value, U.S. payers rarely agree on how to define it. In one study, Andrew P. Brogan and fellow researchers surveyed payers in the United States to learn more about how they assess value. The researchers found that while U.S. payers are concerned about value, they do not define “value” consistently, nor do they feel themselves well-positioned to influence value in the larger pharmaceutical industry context.

Payers’ top two concerns about value focus on their limited impact on pharmaceutical pricing and their limited ability to implement value-based tools, like incremental cost per quality-adjusted life-year thresholds.

A comparison of U.S. payers’ answers with answers from non-U.S. payers found that outside the U.S., payers tend to have options that U.S.-based payers do not. In Germany, for instance, payers can compare patient-relevant benefits with predetermined data-based treatment comparators to better inform their price negotiations. These options both better define “value” and help payers work toward achieving it.

Better data can help U.S. payers make scientifically sound decisions about covering specialty therapies. Solid data can also help reassure payers that their decisions offer high value.

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Collecting Better Data for Better Payer Decisions

Variations in how U.S. payers assess value or approve coverage can have profound impacts on patient treatment. “For patients switching between insurers or employers, these differences in coverage can potentially disrupt their care, especially for people living with chronic conditions,” writes Dan Leonard, president and CEO at the Association for Accessible Medicines.

Regulators at both the state and federal levels have sought to reduce disruptions and standardize payers’ decision-making. In California, for instance, healthcare plans may not create their own clinical criteria for determining medical necessity in pre-authorization decision-making, write Kaye Pestaina and Karen Pollitz at KFF, a nonprofit organization that focuses on national health issues.

Rather, payers must use criteria developed by independent non-profit associations that are consistent with generally-accepted standards of care. In New York and Michigan, laws further regulate prior authorization use, while a federal bill seeks to boost the transparency of prior authorizations under Medicare.

Standardization and transparency offer two ways for U.S. payers to gain access to better information about drug coverage. Another is to push toward standardizing and centralizing data from patients, pharmacies, providers and pharmaceutical manufacturers.

When data is centrally located and interoperable, U.S. payers can see in real time how a patient is responding to a particular treatment. They can gather information on specialty therapies’ performance. This information provides insight on how a specialty therapy’s efficacy, safety, tolerability and reliability stack up against its cost.

Currently, U.S. payers seek to balance various factors in order to achieve a nebulously-defined goal of “value.” With access to deeper data, payers can more clearly define value and work to achieve it in covering specialty therapies. The result may be better cost controls and improved patient outcomes.

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