Design, Implementation, and First-year Results of a Value-based Formulary

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1 Design, Implementation, and First-year Results of a Value-based Formulary Watkins JW, Sullivan SD, Yeung K, Ramsey SD, Garrison LP, Wong E, Murphy C, Danielson D, Veenstra DL, Vogeler C, Burke W, McGee R University of Washington and Premera Blue Cross Seattle, WA

2 Percent of Workers Average Copay Growth of Prescription Drug Copays in Employer-Sponsored Plans Tiers 4 Tiers $100 $90 Tier 1 Tier 2 Tier 3 Tier 4 80 $80 70 $70 60 $60 50 $50 40 $40 30 $30 20 $20 10 $10 0 $0 1. Kaiser Family Foundation 2013 employer health benefits survey Year Year

3 Value-Based Insurance Design (VBID) Copay reflects the value not the cost of the intervention Attempts to align utilization with value Reduced or eliminated copays for drugs used to treat chronic conditions Improved drug adherence by 1.5% to 9.4% Kim YA, et al. Am. J. Manag. Care. Oct 2011;17(10): Choudhry NK, et al. Health Aff. (Millwood). Nov 2010;29(11): Maciejewski ML, et al. Health Aff. (Millwood). Nov 2010;29(11): Gibson TB, et al. Health Aff. (Millwood). Jan 2011;30(1): Chernew ME, et al. Health affairs. Jan-Feb 2008;27(1): Zeng F, et al. Value Health. Sep-Oct 2010;13(6): Choudhry NK, et al. J. Am. Coll. Cardiol. Oct ;60(18): Gibson TB, et al. Health Aff. (Millwood). Jan 2011;30(1): Chernew ME, et al. Health Aff. (Millwood). Mar-Apr 2010;29(3): Kelly E, et al. Am. J. Manag. Care. 2009;1(4): Maciejewski ML, et al. Health Aff. (Millwood). Feb 2014;33(2):

4 VBID studies suggest: impact on costs depends on perspective Patient Payer Patient + Payer Medication Spending : increased spending =: no statistically significant change in spending : decreased spending Non-Medication Spending Total Spending 4. Maciejewski ML, et al. Health Aff. (Millwood). Nov 2010;29(11): Chernew ME, et al. Health affairs. Jan-Feb 2008;27(1): Gibson TB, et al. Health Aff. (Millwood). Jan 2011;30(1): Chernew ME, et al. Health Aff. (Millwood). Mar-Apr 2010;29(3): Maciejewski ML, et al. Health Aff. (Millwood). Feb 2014;33(2): Melnick SJ, JMCP. Mar 2010;16(2): Choudhry NK, et al. N. Engl. J. Med. Dec ;365(22):

5 VBID studies suggest: impact on costs depends on perspective Medication Spending : increased spending =: no statistically significant change in spending : decreased spending Non-Medication Spending Total Spending Patient Payer Patient + Payer Patient: decrease in total spending 4. Maciejewski ML, et al. Health Aff. (Millwood). Nov 2010;29(11): Chernew ME, et al. Health affairs. Jan-Feb 2008;27(1): Gibson TB, et al. Health Aff. (Millwood). Jan 2011;30(1): Chernew ME, et al. Health Aff. (Millwood). Mar-Apr 2010;29(3): Maciejewski ML, et al. Health Aff. (Millwood). Feb 2014;33(2): Melnick SJ, JMCP. Mar 2010;16(2): Choudhry NK, et al. N. Engl. J. Med. Dec ;365(22):

6 VBID studies suggest: impact on costs depends on perspective Medication Spending : increased spending =: no statistically significant change in spending : decreased spending Non-Medication Spending Total Spending Patient Payer = or = or Patient + Payer Patient: decrease in total spending Payer: increase or no change in total spending 4. Maciejewski ML, et al. Health Aff. (Millwood). Nov 2010;29(11): Chernew ME, et al. Health affairs. Jan-Feb 2008;27(1): Gibson TB, et al. Health Aff. (Millwood). Jan 2011;30(1): Chernew ME, et al. Health Aff. (Millwood). Mar-Apr 2010;29(3): Maciejewski ML, et al. Health Aff. (Millwood). Feb 2014;33(2): Melnick SJ, JMCP. Mar 2010;16(2): Choudhry NK, et al. N. Engl. J. Med. Dec ;365(22):

7 VBID studies suggest: impact on costs depends on perspective Medication Spending : increased spending =: no statistically significant change in spending : decreased spending Non-Medication Spending Total Spending Patient Payer = or = or Patient + Payer = = Patient: decrease in total spending Payer: increase or no change in total spending Patient + Payer: no change in total spending 4. Maciejewski ML, et al. Health Aff. (Millwood). Nov 2010;29(11): Chernew ME, et al. Health affairs. Jan-Feb 2008;27(1): Gibson TB, et al. Health Aff. (Millwood). Jan 2011;30(1): Chernew ME, et al. Health Aff. (Millwood). Mar-Apr 2010;29(3): Maciejewski ML, et al. Health Aff. (Millwood). Feb 2014;33(2): Melnick SJ, JMCP. Mar 2010;16(2): Choudhry NK, et al. N. Engl. J. Med. Dec ;365(22):

8 Limitation of Previous VBIDs Have not formally defined value Have not identified low value drugs Copay decreases offset by copay increases Lower resolution Not all drugs within a therapeutic area have the same value

9 Value-based Formulary Designed by Premera Blue Cross Tier Pre-VBF Copay Post-VBF Copay Preventive $0 Tier 1 $10 $20 Tier 2 $30 $40 Tier 3 $50 $65 Tier 4 $100 Tier Typical Case ICER threshold Special Case ICER threshold Preventive Cost-saving and preventive Cost-saving and preventive Tier 1 Cost-saving or < $10,000/QALY Cost-saving or <$50,000/QALY Tier 2 $10,000-50,000 /QALY $50, ,000 /QALY Tier 3 $50, ,000 /QALY >$150,000 /QALY Tier 4 >$150,000 /QALY, or insufficient evidence to determine ICER Insufficient evidence to determine ICER

10 Implementation: Coverage and Tier Decisions Clinical Evidence Synthesis Pharmacy & Therapeutics Committee Drug Coverage (Y/N) Policy Implementation

11 Implementation: Coverage and Tier Decisions Clinical Evidence Synthesis Pharmacy & Therapeutics Committee Drug Coverage (Y/N) Policy Implementation Drug Coverage (Y/N) CEA Evidence Synthesis Value Monograph Value Assessment Committee Copay Tier (Preventivetier 4) Co-Payment Tier Implementation

12 Evaluation: Objectives To assess the impact of the VBF on drug spending from the health plan perspective To assess the impact of the VBF on drug use and adherence in key disease states

13 Evaluation: Methods Drug Plan Costs Compare observed and expected plan costs per member per month (PMPM) Autoregressive integrated moving average Prior thirty-six months of plan costs, adjusting for the overall pharmacy trend Drug Use and Adherence 3 key disease states: diabetes, hyperlipidemia and hypertension Interrupted time series Comparison group using three employer-sponsored plans that also experienced increased copays but was not exposed to the VBF

14 Drug Plan Costs Evaluation: Results Decreased by 11%, or $7.82 PMPM, compared to the expected costs Drug Use and Adherence Generally had no significant impact on medication use and adherence Slightly more likely to use antihypertensive medications Slightly more likely to adhere to antihypertensive medications

15 Limitations and Next Steps Heterogeneity of ICERs Limited CEA evidence prevents optimal placement of drugs Evaluation: next steps Longer duration of study Additional cost perspectives Patient medication spending Patient and Payer non-medication spending Total healthcare spending

16 Discussion Among the first drug plans to formally use CEA to determine drug copays Early evaluations suggest that the VBF was able to reduce drug spending from the health plan perspective Despite overall copay increases, utilization of and adherence to drugs used to treat diabetes, hypertension, or dyslipidemia were not negatively impacted

17 Acknowledgements Collaborators Premera Blue Cross: John Watkins PharmD, MPH Carol Vogeler MS Edward Wong PharmD Chad Murphy PharmD Dan Danielson MS University of Washington & Fred Hutchinson Cancer Research Center Wylie Burke MD, PhD Louis Garrison PhD Scott Ramsey MD, PhD Sean Sullivan PhD David Veenstra PharmD, PhD Funding National Center for Advancing Translational Sciences of the National Institutes of Health under award number TL1TR000422: The content is solely the responsibility of the authors and does not necessarily represent the official views of the National Institutes of Health.

18 Questions?