The New Frontier of Pharmaceuticals Maximizing pharmacy value and - PowerPoint PPT Presentation

The New Frontier of Pharmaceuticals Maximizing pharmacy value and outcomes while managing spend Amy Ball, PharmD Chief Pharmacy Officer

Agenda • Current and future trends of specialty therapies in the U.S. • Strategies employers and health plans are using to make sound clinical and economic drug coverage decisions while maximizing the value of their pharmacy benefits • Latest benefit design modifications such as partial fills, step therapy, preferred pharmacy networks, prior authorizations, reference pricing, tiered deductibles, and price transparency used to manage the pharmacy benefit and specialty drugs • Direct and outcomes-based drug contracting Health Strategy, LLC – Confidential & Proprietary Information

Pharmacy Benefit Management and the Employer By shifting responsibilities from PBMs to Plan Sponsors we achieve transparency, increase flexibility, improve quality of care, and reduce overall costs. Ecosystem Traditional PBM PBM Client / Consultant Claims Adjudication Manufacturer Revenue Contracting Retail Network Contracting Mail Order / Specialty Contracting Formulary Management Benefit Design Consulting Data Warehousing Benchmarking 3 Health Strategy, LLC – Confidential & Proprietary Information

Specialty Trend 4 Health Strategy, LLC – Confidential & Proprietary Information

Specialty Trend Specialty Trend – Pharmacy Channel • Remains the largest cost driver of commercial trend • Specialty drug spending in the pharmacy channel increased 8-11% for commercial clients of PBMs • Autoimmune and inflammatory conditions were the top spend categories followed by oncology • and MS Higher utilization, aided by newer therapies and indication expansion helped drive trend • New drugs for rare conditions will drive Specialty trend • Specialty Trend – Medical Channel • Significant spend under the medical channel with minimal line of site and routine monitoring • In 2018 the FDA approved 28 medications that would be managed under Medical channel • Increasingly see independent physicians moving to employment by a health system – increasing • hospital outpatient setting place of service utilization Top 5 drugs billed under medical in 2018 all now have biosimilars (Remicade, Neulasta, Rituxan, • Herceptin, Avastin) Cell and Gene Therapy • Hundreds of cell and gene therapies at various stages of clinical development • By 2030, there could be 60 marketed cell and gene therapies treating about 50,000 patients per • year 5 Health Strategy, LLC – Confidential & Proprietary Information

Specialty Trend • In 2019, through October, 33 Novel New Drug therapies have been approved by the FDA • 79% of these agents are considered Specialty Drugs • 36% received Priority review https://www1.magellanrx.com/documents/2019/10/magellan-rx-pipeline-october-2019.pdf/ https://www.fda.gov/drugs/new-drugs-fda-cders-new-molecular-entities-and-new-therapeutic-biological-products/novel-drug-approvals-2019 Health Strategy, LLC – Confidential & Proprietary Information

Drug Coverage Decisions 7 Health Strategy, LLC – Confidential & Proprietary Information

Drug Coverage Decisions Current State Future State • PBM makes all drug coverage decisions • Employer makes own drug coverage decisions This could be a full custom formulary or a partial • • Many times incentive for PBM to add drugs to custom formulary the formulary is driven by rebate • Evaluate all new to market drugs No transparency to true net cost • Put new drug to market block in place Bundled rebate contracts allow patent • • extension type products to be covered on the Evaluate clinical efficacy and cost-effectiveness • formulary in preferred status relative to other products already on the market Originator Brands are often favored over Early decisions mean less rebate impact because • • Biosimilars and Specialty generics no utilization and no market uptake data Products with shorter patent life are not • Ensures “Low Clinical Value” products, like patent • preferred agents and newer agents are extension products, are excluded from the chosen as preferred for longer term rebate formulary contracting • Identify opportunities to create more aggressive • PBM creates and administers PA criteria custom UM No real incentive to create aggressive criteria, • Certain specialty medications like Acthar HP • especially when PBM owns retail, mail and/or need custom PA specialty pharmacy The PA process is often a check the box with • minimal in-depth review of medical/lab data to support use 8 Health Strategy, LLC – Confidential & Proprietary Information

Drug Coverage Decisions 2018 Drug Approvals • Helps employers take control over 23 of nearly 100 drugs approved in 2018 exceed what drugs to cover, rather than annual WAC cost of $35K having PBM making decisions which Drug Annual cost of treatment Indication may be based on rebates Takhzyro $573,820 Hereditary angioedema Tegsedi $449,800 Hereditary polyneuropathy Vitrakvi $399,069 Solid tumors • Below are examples of drugs, and Tibsovo $317,733 Acute myeloid leukemia Galafold $315,250 Fabry disease the estimated cost to employers, that Symdeko $292,000 Cystic fibrosis Xospata $273,750 Acute myeloid leukemia PBMs often cover Lorbrena $195,345 Lung cancer Palynziq $178,120 Phenylketonuria • Duexis - Advil and Pepcid - $2,300/Rx Talzenna $177,39 Breast cancer Jynarque $170,002 Kidney disease • Vimovo - Nexium and Aleve - $2,000/Rx Vizimpro $150,865 Lung cancer Braftovi $133,546 Melanoma • Sil-K Pad - wound dressing - OTC alternatives Mektovi $133,546 Melanoma - $5,000/Rx Erleada $132,860 Prostate cancer Tavalisse $114,975 Chronic immune thrombocytopenia • DermacinRx Pad – lidocaine/emollient - Daurismo $94,780 Acute myeloid leukemia Oxervate $94,400 Neurotrophic keratitis $11,000/Rx Copiktra $76,909 Lymphoma Symtuza $42,366 HIV Sympazan $37,960 Lennox-Gastaut syndrome Tiglutik $37,800 Amyotrophic lateral sclerosis (ALS) Biktarvy $35,839 HIV https://www.goodrx.com/blog/prescription-drugs-approved-in-2018-list-prices-over-30k-per-year/ 9 Health Strategy, LLC – Confidential & Proprietary Information

There were only 836 cancer therapies counted by PhRMA in 2015 compared to over 1,100 in clinical trials today https://endpts.com/phrmas-new-report-counts-each-cancer-drug-in-the-us-pipeline-which-has-now-swelled-to-over-1000-in-the-clinic/ 10 Health Strategy, LLC – Confidential & Proprietary Information

Tipping Points Lead to Transformation FDA Historical Review 1906 Congress passed the Pure Food & Drugs Act 1980s Development of expedited review Tipping Point: Upton Sinclair’s The Jungle programs • Established a regulatory agency to protect the nation’s supply of • Tipping Point: HIV/Aids crisis • food and drugs “I aimed at the public’s heart and by accident hit the stomach” • 1992 Priority Review for serious or life-threatening 1930 the agency was officially named the Food & Drug • Administration (FDA) conditions Review and provide decision in 6 months • 1938 Congress passed the Food, Drug, & Cosmetic Act Shortened the standard process by about 4 months • Tipping point: elixir sulfanilamide/base diethylene glycol • Manufacturer tested appearance, flavor and fragrance 1992 Accelerated Approval Pathway • Mandated drug + its ingredients must be shown to be safe • Allowed approval based on surrogate markers • All NDA required pre-human testing safety data • Requires post approval studies to confirm clinical benefits • Ended marketing of proprietary mixtures of untested ingredients • 1997 Fast-track Pathway 1962 Keefauver – Harris Amendment Rolling review with goal to reduce the duration of clinical Tipping point: DES to prevent miscarriages despite evidence of • • trials ineffectiveness Harmful exposure of 5-10 million women and fetuses • Required manufacturers to show substantial evidence of efficacy 2012 Breakthrough Therapy Programs • 1/3 of all marketed drugs lacked even a single effective use and Goal to abbreviate the overall drug development process • • were removed Drug shows great promise in early phases • Shortened median development time (4.8 years) to • approval https://www.smithsonianmag.com/science-nature/origins-FDA-what-does-it-do-180962054/ https://www.fda.gov/about-fda/fdas-evolving-regulatory-powers/milestones-us-food-and-drug-law-history https://www.fda.gov/patients/learn-about-drug-and-device-approvals/fast-track-breakthrough-therapy-accelerated-approval-priority-review 11 Health Strategy, LLC – Confidential & Proprietary Information

Accelerated Approval Pathway Allowed approval based on surrogate markers Oncologic surrogate endpoints include: •  Response Rates (tumor shrinkage)  Objective overall response (ORR)  Progression-free survival (time to tumor growth)  Time to progression (time to tumor growth)  Disease-free survival (time to recurrence)  Recurrence-free survival (time to recurrence)  Metastasis-free survival 12 Health Strategy, LLC – Confidential & Proprietary Information