Predictive modelling for your specialty drug spending

• Galexos (simeprevir) — The 150 mg capsules represent a new once-daily oral protease inhibitor on the market that is used with peginterferon and oral ribavirin. Galexos has a daily cost of approximately $480. It is not an option for patients with sulfa allergies.
• Sovaldi (sofosbuvir) — The 400 mg tablets represent a once-daily medication in a new class called polymerase inhibitors and represent the first all-oral regimen for certain types of hepatitis C. It has a daily cost of approximately $720. Most patients will require 12 to 24 weeks of Sovaldi treatment, compared with 24 to 48 weeks for Galexos, so the overall costs are reasonably similar, and, clearly, they are both incredibly expensive.

That being said, these are game-changing drugs for many hepatitis C patients, and that term is not used lightly when discussing this disease. In the past few days, I have fielded six calls on the medication from plan sponsors and advisors seeing it hit their plans for the first time.

These trends, and the buzz around hepatitis C, all support the notion that, while lower generic prices and patent expirations were a nice bonus for Canadian plan sponsors over the past three years, things are about to get significantly more complicated.

One tool that is surprisingly underused by Canadian plans is using claims data to predictively model the impact of future specialty drug claims based on the plan’s existing disease state and demographic profile, and current therapeutic mix. This is an important consideration for the following reasons:

• How does a plan know what its contingent liabilities are moving forward without understanding (and quantifying) the risk for increasing in utilization and spending within its future specialty experience given that less than 1% of all claims can cost a plan more than 20% of its total drug spend?
• How does management determine what level of stop-loss coverage the plan will require so it can determine what premium makes the most sense?
• The insurance industry fundamental of the past dictating the future means much less in the drug plan benefit than it does in other benefit lines. Looking at historical claims data without a predictive lens (i.e., simply looking at retrospective claims and assuming a basic pattern will continue) doesn’t work looking at this area.
• If a plan sponsor is looking to strategically plan what its drug benefit needs to look like moving forward and what changes need to be considered to keep the financial performance acceptable without cost shifting to members, how can it design a plan without knowing what impacts are likely to be seen on the specialty side?

This is where general industry benchmarks have very little meaning for an individual plan sponsor. Sure, it’s nice to know if your plan has been phenomenally lucky to have a low incidence of catastrophic disease states, or profoundly unlucky to wind up with a substantial specialty experience driven by a high proportion of recurring claims, but what does that tell a plan about the future so it can proactively manage the experience?

A given plan’s risk for additional specialty claims needs to consider the following:

• current demographic and disease state profile of the claimants within the experience (how can you benchmark specialty drug use today or in the future if you aren’t considering the demographics and existing disease state profile of the plan in question and accounting for these factors accordingly?);
• current plan design elements and location of the plan;
• current mix of acute versus chronic specialty claims;
• current saturation rates of disease within the population; and
• current treatment distribution of treatment regimens among claimants within a given disease (e.g., those treated with specialty versus those treated with traditional therapies only).

There’s isn’t a tremendous amount of value in noting that specialty drugs are expensive, or that they will continue to strain a plan’s resources—the market is well aware of that. In fact, we seem to be reminded of that on a daily basis. What is valuable for a plan is understanding what its own situation will look like moving forward, based on its own unique experience, so it can plan accordingly and look at responsible ways to provide necessary health benefits to plan members in a sustainable manner.

An understanding of future liabilities on the cost side by examining transactional-level drug claims data will also allow plans the ability to integrate absence and disability data to measure concrete return on investment from these innovative therapies.