Blue Cross and Blue Shield

N.C. Blues Continue Trend Toward 'Value-Based' Drug Formularies

Reprinted from DRUG BENEFIT NEWS, biweekly news, data and business strategies for health plans, PBMs and pharmaceutical companies.

In the latest move toward "value-based" drug formularies, Blue Cross and Blue Shield of North Carolina (BCBSNC) said Dec. 27 that it will waive copayments on all generic drugs that treat congestive heart failure, high blood pressure, high cholesterol and diabetes. The Blues plan also said it will move more than 40 brand drugs to a lower-cost drug category. The new policy, which started Jan. 1, follows on the heels of other health plans that are lowering copays on "high value" drugs as a way to prompt therapy compliance and avoid more costly medical treatments.

BCBSNC's "Medication Dedication" program, which is available to members who receive coverage through their employers, is designed to make Rx drugs more affordable, and to encourage members with chronic conditions to take their medications as directed, the plan said. "The failure of patients to follow medication plans is a significant problem," Ron Smith, M.D., vice president of employer health and pharmacy at BCBSNC, said in a prepared statement.

The Centers for Disease Control and Prevention estimates that roughly 125,000 people die each year of cardiovascular problems because they did not take their drugs as prescribed, according to BCBSNC. The problem costs an estimated $100 billion annually, the company added. "By targeting these four prevalent chronic conditions, BCBSNC believes members will stay healthier and, in the long run, keep their overall medical costs down," the insurer said.

"We do expect medical cost savings, but the timeline for realizing those are a few years out," says a BCBSNC spokesman, who declined to provide specific dollar estimates. The spokesman also declined to say how much the reduced and waived copays would cost the insurer in the short run.

Interest in value-based insurance designs is growing, as large employers and early adopters show that their programs boost compliance and cut down on hospital visits. But some also caution that lowering drug copays alone will not solve persistent Rx adherence problems, and that the expected return on investment could be years away.

Among recent developments, Aetna, Inc. on Dec. 5 unveiled "Aetna Healthy Actions Rx-Savings," an incentive program for self-funded plans that lets employers pay part or all of certain employees' copays. The program, which was made available to self-funded customers on Jan. 1, is designed to encourage compliance with therapies shown to effectively manage conditions of high-risk members, Aetna said.

Eligible employees are those with high-risk clinical profiles and those who take drugs for certain specific chronic conditions, including asthma, diabetes, high cholesterol, high blood pressure and heart disease, according to Aetna. The program recommends discounts of up to 100% off generic copays and up to 50% off preferred brand copays.

Blue Cross and Blue Shield of Michigan HMO subsidiary Blue Care Network also is considering expanding its program, launched in March 2006, that lowers the $40 copay for brand-name asthma control medications to the $10 generic copay level.

The program — which aimed to reduce dependence on rescue medications and eliminate some hospitalizations — has resulted in a 20% to 25% increase in utilization of controller medications, says Kim Tonkavich, director of pharmacy health centers at Blue Care Network. "We saw decreases in hospitalization and ER visits, but we need more than just one year's data to validate that because [of] the changes that can occur in asthma," he says. Factors that can affect the data on asthma include changing allergen and mold levels, Tonkavich adds.

Additional therapeutic categories under consideration for similar copay reductions in 2008 include diabetes and cardiovascular conditions, he says in an interview. No decision had been made as of DBN press time.

Return on Investment Not Likely in Short Run

Tonkavich says the data suggest compliance improves as a result of lowering copays, but that some of the improvements are marginal.

"If you're in a therapeutic category that has a very high percentage of members on a particular therapy, and only an extremely small subset of that global population changes their [compliance] habits, you've lost the revenue from that copay for everyone for just that small subset," he says. "What plans are struggling with is how do we motivate these noncompliant individuals."

Helen Sherman, Pharm.D., director of pharmacy services at RegenceRx, the PBM division of The Regence Group, says value-based prescription benefit designs are an area of focus and growth for the industry.

The concept generally means a "higher plan contribution for medications that provide value," she tells DBN. For example, some plans are covering all diabetes drugs at 100% in an effort to remove any barriers in treating diabetes. At Regence, the approach will be to focus on a higher plan contribution for drugs that are proven to deliver the best outcomes, Sherman says.

"Given the broad range of approaches, there's likely to be a dilemma in determining the effectiveness of value-based benefits," she contends. "However, value-based benefit designs, along with outcomes-based designs, are fundamental in the future of health care. So even with the limitations today, there is value in continuing to evolve today's design."

The Cleveland Clinic employee health plan, which covers 63,000 individuals, launched a cholesterol program in 2006 with a copay of $6 for a 90-day supply of generic statins and $8 for the same supply of branded Lipitor or Crestor. By contrast, copays for brand statins were almost $100 for a 90-day supply before the program. The program resulted in a 20% increase in complete adherence to its population of statin users, according to the plan. In 2008, the program will set Lipitor and Crestor copays at $30 for a 90-day supply, while keeping the generic copay at the same level.

Copay reduction programs can be "hard to justify" on a cost basis in the short run, says Estay Green, Pharm.D., director of pharmacy benefits at Cleveland Health Network, a Northwest Ohio regional network of hospitals and physicians that contracts with managed care organizations.

"But our initiative for our entire organization is to make employees and patients that we see at the clinics healthier," he says in an interview. Costs savings, in fact, may not be seen until 15 years down the road, he adds. For this reason there hasn't been a big push by large health plans to get behind the concept, Green says.

Two major barriers have hindered greater adoption of value-based programs, says Mark Fendrick, M.D., professor of internal medicine at The University of Michigan and co-director of UM's Center for Value-Based Insurance Design. They are that people wanted a third-party actuarial assessment of the costs, and needed a vendor from which to buy the program. An actuarial model to assess costs is now available through human resources consulting firm Hewitt Associates LLC. And Aetna and other health plans now provide the product, Fendrick tells DBN. "This allows us to go beyond discussions of the concept…to make this a reality."

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