Industry Voices: Personalized medicine will drive management, restrictions by health plans

Rhonda Greenapple is the president and founder of Reimbursement Intelligence [1].

Personalized Medicine Will Drive Management, Restrictions by Health Plans

Scientists and researchers alike were optimistic and excited by the announcements made at the 2008 American Society of Clinical Oncology (ASCO) Annual Meeting in Chicago regarding advances in personalized medicine. 

One drug at the cusp of economic uncertainty, ImClone Systems's Erbitux, has been proven to be effective in 64 percent of individuals with the normal K-ras gene, but deemed ineffective in those with mutated K-ras genes. Payors are frustrated that there is a hit or miss as to whether these expensive products work. 

Plans have been taking a hard line on these products with over 30 percent of major health plans requiring prior authorization for Erbitux before to allowing an oncologist to administer. In addition, Medicare Drug plans are increasing their use of cost sharing where the patient pays 20-30 percent of the cost of the drug as opposed to a flat co-pay.

To better understand the significance of "personalized medicine" to managed care, Reimbursement Intelligence conducted a survey of Medical and Pharmacy Directors at 50 top managed care plans covering more than 100 million lives.  The survey was fielded over a 72 hour period and the data was analyzed and reported in 24 hours.

Payors Anticipate Use of Erbitux to Decline by 15-30 percent

The recent survey revealed that about 37 percent of payors believe Erbitux will be restricted to second-line treatment after Avastin. In addition, 49 percent prognosticate that the use of Erbitux will decrease by 15-30 percent as a result of the narrowed target market and perhaps as a consequence of mandatory K-ras marker testing.

Third Tier Placement and Administrative Hurdles May Further Threaten Erbitux

Of those surveyed, 62 percent believe Erbitux will be placed on third tier or third tier with a prior authorization.  In addition, 41 percent believe their plan will change their prior authorization (PA) criteria. 

Nearly two-thirds of payors (62 percent) reported that they will require the K-ras test prior to approval of Erbitux use. Third tier placement and new PA requirements may be a further threat to the success of Erbitux, since higher co-pays and administrative hurdles at the retailer may decrease script compliance.

Payers would have to pay $500 to $1000 to test for the mutation to determine who is an appropriate patient.  This would encourage plans to further restrict off label and look for future products to push Erbitux to third line.

As we move forward, it is critical for biotech companies to proactively develop a managed care strategy to educate on the value of a targeted approach in improving health outcomes. - Rhonda Greenapple