Archive for April, 2011

Do Cost-Effectiveness Models Need a Reality Check?

In a thoughtful commentary published in the British Medical Journal, clinical researchers from Europe question the claims of cost-effectiveness made for many commonly used pharmacological treatments.    The authors argue that “…although there are claims that important preventive drugs such as statins, antihypertensives, and bisphosphonates are cost effective,6 7 8 9 there are no valid data on the effectiveness, and particularly the cost effectiveness, in usual clinical care. Despite this dearth of data, the majority of clinical guidelines and recommendations for preventive drugs rest on these claims.”

The authors cite a 2009 study, which examined a cost-effectiveness model of selective cyclo-oxygenase-2 (COX 2) inhibitors, as evidence of the weak external validity of claims of cost-effectiveness.  The COX-2 evaluation, which was based on a clinical trial, found that the cost of avoiding one adverse gastrointestinal event by switching patients from conventional non-steroidal anti-inflammatory drugs to COX-2 inhibitors was approximately $20,000.  In contrast, when the same analysis was conducted using the UK’s General Practice Research Database, which includes patients’ medical records in routine care, the cost of preventing one bleed was over $100,000.2

These findings are similar to work myself and others conducted several years ago on the COX-2s.  While the original cost-effectiveness model for the U.S. reported a cost per year of life saved (YLS) of about $19,000 for COX-2s when compared to non-selective NSAIDs, our revised model, which was based on actual practice, found a cost per YLS of $107,000. 

In a different study, we examined the external validity of a cost-effectiveness model of treatment options for eradication of h. pylori.  The original decision-analytic model found that the lowest cost per effectively treated patient was for the dual combination of PPI and clarithromycin ($980), whereas we found that the lowest cost per treatment was for the triple combination of bismuth, metronidazole, and tetracycline at a cost of $852.  Why the disconnect?  In the original h. pylori model, the authors had made assumptions about medication compliance and the cost of recurrence that simply did not hold up in the real-world. 

In the case of the COX-2s, the recent commentary concluded that the published cost-effectiveness analyses of COX 2 inhibitors neither had external validity nor represented the patients treated in clinical practice. They emphasized that external validity should be an explicit requirement for cost effectiveness analyses that are used to guide treatment policies and practices.  At least one academic modeler vehemently disagrees with the requirement of external validity, arguing that “it is wrong to insist that models be ‘validated’ by events that have not yet occurred; after all, the modeler cannot anticipate advances in technology, or changes in human behavior or biology. All that can be expected is that the model reflects the current state of knowledge in a reasonable way, and that it is free of logical errors.”

It is true that right when a drug comes to market, the only available data will likely be from the original clinical trials used to seek FDA approval, and the modeler will be forced to make numerous assumptions about compliance, costs, concomitant medication use, etc.  The problem is that the extent to which these assumptions are made without bias is unclear.  Research has shown that sponsorship by the pharmaceutical industry affects the results of economic models.  In a review published in 2010, researchers found that 95 percent of studies sponsored by pharmaceutical manufacturers reported favorable conclusions compared to only 50 percent of nonsponsored studies.  While it could be argued that this reflects a publication bias, the validation studies that I have described above suggest otherwise.  In each of these cases, there were key assumptions that drove model outcomes which, from a plan sponsor perspective, we found highly questionable at the time the model was first published.

Surprisingly, the issue of model validity receives relatively little attention given the central role that these models play in the field of pharmacoeconomics, as for example, in the AMCP dossier process.  The commentary authors argue that real-world comparative studies are the key to producing cost-effectiveness models that possess external validity.  This certainly will help with the quality of models post-FDA approval.  However, for models used at the time a drug is launched, ultimately, I expect that plan sponsors will have to develop their own models to ensure systematic bias is removed.

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New Study Finds Reference Pricing Saves Big Money

Since the advent of the PBMs, the concept of reference pricing for pharmaceuticals has seen multiple waves of interest and policy discussion but only minimal uptake.  Reference pricing, sometimes referred to as a therapeutic MAC, requires patients to pay the full difference between the price charged at the pharmacy and a reference price reimbursed by the insurer.  The reference price is the price of a low-cost drug in a therapeutic cluster of drugs considered clinically equivalent in the treatment of a condition.

Over the years, reference pricing has been used successfully in many countries, including Canada and Britain, to manage prescription spending without reducing quality of care.  However, concerns over complexity and member satisfaction as well as the PBM industry’s historical reliance on rebates (prior to the growth in pass-thru models) have been barriers to the adoption of reference pricing in the U.S.

A study just published in The Journal of Managed Care Pharmacy, reports the results of Arkansas’ experience with reference pricing for proton pump inhibitors (PPIs) for its state employees.  Arkansas implemented reference pricing for PPIs including esomeprazole but excluding generic omeprazole, on September 1, 2005.  Beneficiary cost share for all PPIs except generic omeprazole was determined from comparison of the PPI actual price to the $0.90 omeprazole OTC reference price per unit.

Over 43 months of reference pricing, net plan costs for PPIs fell dramatically by 49.5% PMPM compared with the preperiod, despite an increase in the pharmacy dispensing fee.  In the first quarter of 2009, the net spend for PPIs was only $2.19, despite the state’s significantly higher than average utilization of PPIs.  While PPIs costs have been declining recently for most plan sponsors as more patients use generics, the state of Arkansas’ savings greatly exceeds those of other plan sponsors without reference pricing.  The authors estimated the net savings at $1.31 PMPM over the nearly four year study period relative to a very large and diverse comparison group.  As the authors point out, the savings would have been even greater had they included generic omeprazole in the reference pricing list.

Equally important given concerns that reference pricing is too complex for the average consumer, utilization of PPIs did not change yet beneficiary costs actually decreased by 6.7% due to a large movement away from branded PPIs to OTC and generic omeprazole.  Between 2004 and 2009, marketshare for omeprazole, generic and OTC combined, grew from 57 to 86%.  Given these results, it appears that the employer did a nice job of making beneficiaries aware of lower cost therapeutic alternatives, which patients took full advantage of over the course of the study. 

The study authors make little mention of the member “noise” resulting from this plan design change; but given the large uptake in omeprazole that was observed and the state’s long-term, continued adoption of the program, it is reasonable to conclude that any member noise was manageable and likely dissipated quickly with time, as I have repeatedly seen with other types of major plan design changes.  Bottom line: This evaluation provides solid evidence that reference pricing for PPIs can save real dollars without reducing utilization.  For plan sponsors looking to optimally manage their drug spend, referenced-based pricing is worth consideration.

 

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