Specialty pharmacy: The topic that won’t
stop growing.
Grant Knowles, PharmD, CSP Ardon Health – Specialty pharmacy Vice President of Operations June 4th, 2015
Employee Benefits Planning Association
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Overview
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Healthcare spending (past and future)
$2,298 $2,501
$2,701 $2,915
$3,273 $3,660
$4,142
$4,702
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
• CMS. National Health Expenditure Projections 2006-2022. http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-
Trends-and-Reports/NationalHealthExpendData/downloads/proj2012.pdf
↑53%
Bill
ion
s
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Prescription spending (past and future)
• CMS. National Health Expenditure Projections 2010-2020. https://www.cms.gov/nationalhealthexpenddata/downloads/proj2010.pdf • CMS. National Health Expenditures Aggregate, Per Capita Amounts, Percent Distribution, and Average Annual Percent Growth: Selected
Calendar Years 1960-2009. https://www.cms.gov/nationalhealthexpenddata/downloads/tables.pdf
236 255 263 262
295 331
373
426
0
50
100
150
200
250
300
350
400
450
500↑54%
Bill
ion
s
This information is confidential and proprietary and may not be reproduced in whole or in part unless authorized in writing by an authorized representative of Ardon Health.
$90 billion dollars in reduced spend over the last 5 years
Patent cliff – generic relief
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Patent cliff – generic relief
• *First-time generics are subject to significant change as a result of multiple patent protections, patent litigation, pediatric or other exclusivities, at-risk launches, and delays between patent expiration and launch of first-time generics.
• IMS retail claims data [database online]. Fairfield, CT: IMS Health; 2014. http://www.imshealth.com.
Brand name (generic name) Uses Retail sales ($Mil)
Lipitor® (atorvastatin) High cholesterol 5,803
Plavix® (clopidigrel) Prevention of arterial thrombotic events 5,020
Singulair® (montelukast) Asthma, allergic rhinitis 3,823
Seroquel® (quetiapine) Schizophrenia, bipolar disorder 3,549
Actos® (pioglitazone) Type 2 diabetes 2,913
Cymbalta® (duloxetine) Depression, fibromyalgia, chronic pain, diabetic peripheral neuropathy
2,891
Lexapro® (escitalopram) Depression 2,590
Zyprexa® (olanzapine) Schizophrenia, bipolar disorder 2,114
Concerta® (methylphenidate extended-release)
ADHD 1,560
Levaquin® (levofloxacin) Bacterial infections 1,542
Diovan® (valsartan) Hypertension, CHF 1,430
Diovan HCT (valsartan/HCTZ) Hypertension 1,430
TriCor® (fenofibrate) Hypotriglyceridemia 1,123
Lidoderm® (topical patch) Post-herpetic neuralgia 1,066
Geodon® (ziprasidone) Schizophrenia 1,058
Provigil® (modafinil) Narcolepsy, idiopathic hypersomnolence 1,014
Aciphex® (rabeprazole) GERD, stomach ulcers 1,006
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Specialty prescriptions
An undeniable and growing proportion of healthcare spend.
This information is confidential and proprietary and may not be reproduced in whole or in part unless authorized in writing by an authorized representative of Ardon Health.
What is specialty medication?
“Certain pharmaceuticals, biotech, or biological drugs, which
may be offered by PBM*, that are used in the management of
chronic or genetic disease, including but not limited to injectable,
infused, or oral medications, or products that otherwise require special handling.”
•*PBM - Prescription Benefit Manager
•Chan, L (2009). Control Specialty Drug Cost By Making Your PBM Helpful. Managed Care.
http://www.managedcaremag.com/archives/0908/0908.specialtydrugcost.html
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Specialty medications
•Drug Trend Report – Express Script - 2014
•EvaluatePharma. World Preview 2014-2020..
1% of prescriptions
25-35% of prescription spend
15-25% increase per year x 3 years
8 out of the top 10 medications in 2013
9 out of the top 10 prescription in 2022
Cost $311 PMPY in 2014
$7,000 - $400,000/member/treatment year
28 times more costly than non-specialty
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Specialty Parameters
High Cost
$1,000-$40,000 per
Rx
Complex admin
Injection, infusion
Unique monitoring
REMS*, efficacy criteria
Specific climate needs
Specific storage or shipment protocol
Require additional
patient education
“high-touch” disease states,
adherence
Require 24/7
clinical support
High side-effects,
adherence assistance
Drugs not available in retail settings
LDD±
*REMS – Risk Evaluation and Mitigation Strategies ± LDD – Limit Distribution Drugs
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How payers define specialty
43%
66%
67%
73%
71%
81%
85%
0% 20% 40% 60% 80% 100%
Requires patient admin training
Indicated for disease already
classified as specialty
Limited distribution
Requires specialty handling
Treats orphan disease
Requiring special monitoring
High Cost
• From 91 payers with over 124 million lives • EMD Serono Injectable Digest (10th Edition).
This information is confidential and proprietary and may not be reproduced in whole or in part unless authorized in writing by an authorized representative of Ardon Health.
How payers define high cost
14%
40%
29%
17%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
<$600 $600-$800 $1000-1200 >$1,200• From 91 payers with over 124 million lives • EMD Serono Injectable Digest (10th Edition).
This information is confidential and proprietary and may not be reproduced in whole or in part unless authorized in writing by an authorized representative of Ardon Health.
Spending on traditional therapies will grow at slower rates.
Specialty spend will experience hand-over-fist growth in the foreseeable future.
This information is confidential and proprietary and may not be reproduced in whole or in part unless authorized in writing by an authorized representative of Ardon Health.
Specialty spend
$55
$124
$0
$20
$40
$60
$80
$100
$120
$140
2005 2014
$ in Billions
Specialty Spend
$1.7 trillion spend
by 2030,
estimates PCMA
•IMS - Medicines Use and Spending Shifts – April, 2015 •PCMA - Pharmaceutical Care Management Association
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Towering trends
•Drug Trend Report 2014 – Express Script
-0.5%
3.9% 4.3%
22.6% 22.3% 21.3%
9.0% 10.3% 10.9%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
2015 2016 2017
Traditional Specialty Overall
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Price of medications
•Drug Trend Report 2014 – Express Script
$669 $665 $691
$721
$311
$381
$466
$566
$0
$100
$200
$300
$400
$500
$600
$700
$800
2014 2015 2016 2017
PMPY
Traditional Specialty
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Top 10 medications in 2010
•BOLD – Indicate Specialty Medications •*Now generic products •EvaluatePharma. World Preview 2016. May 2010. Available at: http://www.windhover.com/download/blog/EP0510worldpreview2016.pdf. Accessed August 30, 2011.
Medication 2009 Sales in
Billions 2010 Sales in
Billions
1 *Plavix $5.5 $6.1
2 *Lipitor $5.6 $5.3
3 Advair $4.0 $4.0
4 *Seroquel $3.4 $3.7
5 Epogen/Procrit $3.8 $3.5
6 *Actos $3.2 $3.5
7 Abilify $3.2 $3.3
8 Enbrel $3.2 $3.3
9 *Singulair $3.0 $3.2
10 Remicade $3.0 $3.0
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Top 10 medications in 2013
•BOLD – Indicate Specialty Medications •EvaluatePharma. World Preview 2020.
Product Generic Name Company Pharmacologic
al Class 2013 2020
1 Humira adalimumab AbbVie Anti-tumour necrosis factor alpha (TNFa) MAb
5,236 6,566
2 Lantus insulin glargine recombinant
Sanofi Insulin 4,978 6,299
3 Enbrel etanercept Amgen Tumour necrosis factor alpha (TNFa)
inhibitor
4,256 4,918
4 Remicade infliximab Johnson & Johnson Anti-tumour necrosis factor alpha (TNFa) MAb
3,891 4,594
5 Rituxan rituximab Roche Anti-CD20 MAb 3,594 2,251
6 Neulasta pegfilgrastim Amgen Granulocyte colony-stimulating factor (G-CSF)
3,499 2,640
7 Januvia/
Janumet sitagliptin phosphate
Merck & Co Dipeptidyl peptidase IV inhibitor
2,946 3,255
8 Avastin bevacizumab Roche Anti-VEGF MAb 2,780 2,130
9 Epogen/
Procrit epoetin alfa Amgen + JNJ Erythropoietin 2,748 1,502
10 Revlimid lenalidomide Celgene Immunomodulator 2,489 2,603
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Top 10 medications in 2020
•BOLD – Indicate Specialty Medications •EvaluatePharma. World Preview 2020.
Product Generic Name
Company Pharmacological
Class 2013 2020
1 Humira adalimumab AbbVie
Anti-tumour necrosis factor alpha (TNFa) MAb
5,236 6,566
2 Lantus insulin glargine recombinant
Sanofi Insulin 4,978 6,299
3 Enbrel etanercept Amgen Tumour necrosis factor
alpha (TNFa) inhibitor 4,256 4,918
4 Remicade infliximab Johnson & Johnson
Anti-tumour necrosis factor alpha (TNFa) MAb
3,891 4,594
5 Sovaldi sofosbuvir Gilead Sciences
Hepatitis C nucleoside NS5B polymerase inhibitor
136 4,567
6 Tecfidera dimethyl fumarate
Biogen Idec
Nuclear factor
erythroid 2-related factor (Nrf2) pathway activator
864 4,175
7 Nivolumab nivolumab Bristol-Myers Squibb Anti-programmed death-1 (PD-1) MAb
- 3,618
8 Eylea aflibercept Regeneron Pharmaceuticals
VEGFr kinase inhibitor 1,409 3,583
9 Imbruvica ibrutinib Pharmacyclics Bruton's tyrosine kinase
(BTK) inhibitor 14 3,564
10 Xtandi enzalutamide Astellas Pharma Androgen receptor antagonist
442 3,337
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Prescription spend distribution
255 266 275 287
124 148
181 219
379 413
456
506
0
100
200
300
400
500
600
2014 2015 2016 2017
Prescription Spend in Billions
Traditional Specialty Total
•IMS - Medicines Use and Spending Shifts – April, 2015 •Drug Trend Report 2014 – Express Script
Bill
ion
s
Expected
double again
by 2020
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Prescription spend distribution
•IMS - Medicines Use and Spending Shifts – April, 2015 •Drug Trend Report 2014 – Express Script
67%
33%
2014
Traditional Specialty
64%
36%
2015
Traditional Specialty
60%
40%
2016
Traditional Specialty
57%
43%
2017
Traditional Specialty
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Why so special?
• Treatment & cures for conditions that may have had none
• Serious benefits and serious potential for side effects
• Shifting therapies to patient administered
› More home, less hospital
› Oncology
• Biologics typically do not face generic competition after their original patent
protection has expired, thus extending high prices indefinitely
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Fueling the growth
Trend Novel mechanisms
Improved efficacy
Large patient
populations
New indications for existing
drugs
Large pipeline of new drugs
Price increases
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Specialty pipeline
• Pharmaceutical Research and Manufacturers of America. .
• EMD Serono Specialty Digest, 10th Edition
70% FDA approvals were specialty, 2012-2013
50% of approvals in 2014
>900 biologics, for more than 100 diseases
>70% for cancer, infectious diseases, autoimmune diseases, and cardiovascular disease
37% monoclonal antibodies or therapeutic proteins (e.g. Humira, Enbrel)
Focus on small (orphan) populations (e.g. Sensipar, Soliris)
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Acute become chronic
36%
30%
25%
13%
32%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Projected Percentage Increase in Cancer
Survivors Between 2010 and 2020
Prostate Cancer Lymphoma Breast Cancer Colorectal Cancer All Types
• Source: Mariotto AB, Yabroff KR, Shao Y, et al. Projections of the cost of cancer care in the United States: 2010-
2020. Journal of the National Cancer Institute. 2011; 103(2):1-12
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Growing population
76.5 87.4
97.8
24.7%
28.2% 31.5%
0%
5%
10%
15%
20%
25%
30%
35%
0
20
40
60
80
100
120
2010 2015 2020
% o
f p
op
ula
tio
n
Millio
ns
U.S. Population 55 years and over
# of people % of population
• U.S. Census Bureau, "2008 National Population Projections," August 2008.
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Price increases
17.6%
9.8% 9.8% 10.5%
17.5%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
Copaxone Enbrel Humira Forteo Rebif
Average Annual Increase Since 2007/2008
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Size & Complexity – Small molecule drugs & Proteins
http://www.fda.gov/Drugs/DrugSafety/PostmarketDrugSafetyInformationforPatientsandProviders/ucm220037.htm
Siz
e
Co
mp
lex
ity
Aspirin 21 atoms
Small Molecule Drug Large Molecule Drug
Bike ~21 lbs..
hGh ~3000 atoms
Car ~3000 lbs.
Large Biologic
IgG Antibody ~25,000 atoms
Business Jet ~30,000 lbs. (without fuel)
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Slow biosimilars slow to market
• Made available by the Patient Protection and Affordable Care
Act
• No abbreviated approval process like small molecule drugs
• Must demonstrate safety, purity, and potency to reference
product with: › Analytical Testing
› Bioassays
› Animal studies
› Human clinical studies
• FDA Purple book › No clinically meaningful differences between biologic and reference
product in terms of safety, purity, and potency
› Interchangeable biosimilars may be substituted for the reference product
by a pharmacist without intervention from the prescribing physician
• http://www.fda.gov/Drugs/DevelopmentApprovalProcess/HowDrugsareDevelopedandApproved/ApprovalApplications/TherapeuticBiologicApplications/Biosimilars/ucm411418.htm
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Market impact - biosimilars
• Potential $44.2 billion reduction in spending from 2015 to 2024
• New competition
› Reference product (brand) will not go away
• New delivery mechanisms
› Syringe vs. Pen
› Something cooler than what is out there
• First biosimilar was approved this year
› Zarxio to compete with Neupogen
• The Cost Savings Potential of Biosimilar Drugs in the United States
This information is confidential and proprietary and may not be reproduced in whole or in part unless authorized in writing by an authorized representative of Ardon Health.
Specialty categories
• Drug Trend Report – Express Script – 2014
• Blockbuster Drugs Fill 2015 Pipeline – March 2015
• Bold – generics or soon to be generic
Rank Therapy Class Avg. Cost/Rx Medications Rx Per 1000
1 Inflammatory
Conditions $2,913.33 Humira® , Enbrel® Stelara®, 27
2 Multiple Sclerosis $4,510.06 Copaxone®, Tecfidera®, Avonex® 12
3 Oncology $6,191.29 Gleevec®, Revlimid®,
Capecitabine, Temozolomide 7
4 Hepatitis C $16,373.40 Sovaldi®, Harvoni® 2
5 HIV $1,138.48 Atripla®, Truvada® 24
6 Misc. $4,539.50 Botox® , Xyrem® 2
7 Growth Deficiency $3,852.58 Norditropin® FlexPro®, Genotropin® 3
8 Hemophilia $7,519.16 Advate 1
9 Pulmonary Arterial
Hypertension $4,023.23 Sildenafil, Adcirca®, Tracleer® 1
10 Transplant $208.00 Azathioprine, Mycophenolate,
Tacrolimus, Prograf® 25
PCSK9 – estimates up to$100 billion annually spend
2014 specialty spend was $124 billion
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Cancer
Anticoagulants
Hepatitis C
Specialty
Afinitor®
Zavesca®
Sutent®
Xyrem®
Xiaflex®
Tykerb®
Stelara®
Simponi®
Sprycel®
Rituxan® Revatio®
Revlimid®
Promacta®
Ilaris®
Procrit®
This information is confidential and proprietary and may not be reproduced in whole or in part unless authorized in writing by an authorized representative of Ardon Health.
Focused industry
•Drug Trend Report 2014 – Express Script
Top 10
89%
Others
11%
% spend of
top 10
specialty
classes
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Focus
•Drug Trend Report 2014 – Express Script
2%
2%
2%
3%
4%
9%
12%
13%
17%
26%
0% 5% 10% 15% 20% 25% 30%
Transplant
Pulmonary Arterial Hypertension
Hemophilia
Growth Deficiency
Misc. Specialty Conditions
HIV
Hepatitis C
Oncology
Multiple Sclerosis
Inflammatory Conditions
% Makeup
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Manufacturer attention
• Blockbusters require smaller populations
› $10.3B – Sovaldi (Hepatitis C)
• Development cost of orphan drugs can be lower with a higher
anticipated return
› Avg. orphan drug cost per patient per year $137,782
› Avg. non-orphan drug cost per patient per year $20,875
• New report shows orphan drug market to reach $176 billion by 2020. EvaluatePharma. New release. October 29, 2014
• Succeeding in the rapidly changing U.S. Specialty market.
https://www.imshealth.com/deployedfiles/imshealth/Global/North%20America/United%20States/Managed%20Markets/5-29-
14%20Specialty_Drug_Trend_Whitepaper_Hi-Res.pdf
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Determining value
Gleevec Tarceva
Displaced prior therapy and drastically improved 5-year survival
to 89% in CML
•Fojo T, Grady C. How much is life worth: cetuximab, non–small cell lung cancer, and the $440 billion question.
Journal of the National Cancer Institute. 2009;101(15):1044-1048.
•CML = chronic myeloid leukemia
Improves survival by 10 days when giving with the standard of care for pancreatic cancer.
Prior
Therapy
for CML
$43,100 per
life-year
saved
$410,000 per
life-year saved
30%, 5-year survival
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Financial Assistance
Does cost mattes? Evidence: • 3.8% reduction in adherence for every $10 in patient cost
• Patients with a cost <$100 initiate therapy:
› 37% more than those with >$200 › 14% more than with $101-$200
• Patients using financial assistance:
› 30% more likely of achieving an medication possession rate (MPR) >80%
Non-adherence:
A $300B problem
• Non-adherence/persistence? › Not starting therapy
› Not continually staying on therapy
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Financial Assistance
• Ardon Health financial assistance for 2015:
› Avg. medication cost: $4,652
› Avg. copay/coinsurnace: $292
› Avg. assistance: $278 › Avg. patient out-of-pocket cost: $14
Copaxone Avonex Rebif Gilenya Betaseron
Pt Cost $0 $0 $0 $0 $0
Monthly
Max $2,500 - - - -
Annual
Max $12,000 - $12,000 $12,000 $9,500
• Types of funding
› Manufacturer assistance* › Need based-assistance
› Charitable assistance
*Government programs (Medicare &
Medicaid) are not eligible for most
manufacturer assistance
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Cost share burden
Hepatitis C. treatment = ~$94,000 for 12-
weeks
Coinsurance – Patient Pay
10% - $9,400
20% - $18,800
30% - $28,200
40% - $37,600
50% - $47,000
Multiple Sclerosis = ~$54,000/patient/year
Coinsurance – Patient Pay
10% - $5,412
20% - $10,824
30% - $16,236
40% - $21,648
50% - $27,060
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Top strategies
• Prior Authorization (PA) – Limit to evidence-based uses. › FDA approved indications
› Off-label: national clinical guidelines & peer-reviewed articles
• Step-therapy for conditions with multiple evidence-based
treatment modalities › Requires the use of cost-effective therapies prior to initiation
• Value-based cost share › Exclusive specialty tiering
• Waste Mitigation: › 30-day supply on all treatments options
› Consider lower supplies for therapies with high discontinuation rates (15
day)
• Selecting preferred specialty pharmacy partner
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Benefit design strategies
12%
23%
30%
44%
55%
58%
94%
0% 20% 40% 60% 80% 100%
Lower cost share to improve adherence
Allow 90-day supply for stable patients
Implement value-based benefit design
Create specialty drug benefit for all drugs
Create cost share tier for specialty
Equalize cost share between RX and
medical benefits
Limit specialty products to 30-day supply
Strategies implemented or will be in 12 months
• From 91 payers with over 124 million lives • EMD Serono Injectable Digest (10th Edition).
This information is confidential and proprietary and may not be reproduced in whole or in part unless authorized in writing by an authorized representative of Ardon Health.
Benefit design strategies
• From 91 payers with over 124 million lives • EMD Serono Injectable Digest (10th Edition).
52%
73%
72%
81%
87%
91%
91%
0% 20% 40% 60% 80% 100%
Exclude coverage of some non-preferred
products
Require trial time of preferred drug before
non-preferred
Require trial of >1 preferred drug before non-
preferred
Select preferred drugs by indication
Require trial of 1 preferred drug before non-
preferred
Create coverage guidelines across RX and
medical benefit
Develop stricter PA for some non-preferred
drugs
Strategies implemented or will be in 12 months
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Specialty, Pharmacy?
US population
~320 million
~0.9/RX /patient/month
Specially RX’s are ~1%
# of US pharmacies
~67,000
Typical retail
pharmacy dispenses:
~1,075 RX/week
~11 specialty Rx/week
Specialty pharmacy, experience:
~500-5000 specialty RX/week
Specialization
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Making it Right
• Specialty medication can make up 80% or more of a patient’s health care spend
• Is it appropriate to start?
• Is it appropriate to continue?
Right medication
• Is it the initiation of therapy?
• Is it continuation of therapy?
Right dose
• Is it being taken it?
• Is it at the correct frequency?
Right time
This information is confidential and proprietary and may not be reproduced in whole or in part unless authorized in writing by an authorized representative of Ardon Health.
Sp
ec
ialty
Se
rvic
es
Proactive adherence management
Provide disease specific patient education & management
Reimbursement and eligibility coordination
Provide 24/7 access to RN or pharmacist
Preventative measures for drug waste, abuse and misuse
Ensure appropriate dose of medication
Flexible shipping distribution direct to patient’s home, business, or MD
First-level claims denial and appeals processing
Patient-assistance programs
In-office, in-home training capability
Audit capabilities
Benefit design, formulary support
Expertise in benefit investigations, prior authorization, appeals
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Connectivity
• Connecting patient’s with support programs › Patient receiving injection training
◦ 40% more likely to have a MPR >80%
› 24/7 pharmacist support
› Advocacy groups › Medication disposal services › Case management integration
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Continued Assessment/Counseling
• Every fill:
› Proactive refill call (at least 7 days)
› Adherence assessment
› Side effect assessment
› Appropriateness assessment
• Improved adherence
› Better outcomes
› Reduced waste
• Decreased side effects and increased knowledge
› Reduced premature discontinuation
› Reduced additional health cost
• Appropriateness check
› Proper patient outcomes
› Reduce waste
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Waste mitigation
Focus
• Target highly discontinued
medications • e.g. oral oncology
• Limited duration efficacy medications
Partial fill programs
• Dispensing 14-15 day supply of therapy
• Duration of 1-3 months
• Increased healthcare touches
• Shown to save $1,000/patient
Khandelwal N, Duncan I, Ahmed T, Rubinstein E, Pegus C. Impact of clinical oral chemotherapy program on wastage and hospitalizations. J Oncol Pract. 2011;14:e25s–e29s. doi: 10.1200/JOP.2011.000301.
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Compounds
• What is a compound?
› combining, mixing, or altering ingredients of a drug to create
a medication tailored to the needs of an individual patient • What’s in the limelight?
› Topical pain compounds
• Why?
› High cost - $500-$10,000
› AWP prices have risen substantially
› No MAC pricing
› 128% increase in trend in 2014
› Intense marketing
• Can topical pain compounds be helpful?
› Limited evidence that the active ingredients, in combination, have been
evaluated by the FDA for safety and/or efficacy
› Many include 10-15 different active ingredients
◦ combining products from the same drug class.
◦ 10-20 time the commercially manufactured medication.
• What’s being done
› Restrictions on use and/or cost.
• Drug Trend Report – Express Script – 2014