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LOCKTON COMPANIES Lessons Learned from Sovaldi - The Future is NOW in Specialty Pharmacy August, 2014 Presented by Bob Kordella, Chief Clinical Officer.

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Presentation on theme: "LOCKTON COMPANIES Lessons Learned from Sovaldi - The Future is NOW in Specialty Pharmacy August, 2014 Presented by Bob Kordella, Chief Clinical Officer."— Presentation transcript:

1 LOCKTON COMPANIES Lessons Learned from Sovaldi - The Future is NOW in Specialty Pharmacy August, 2014 Presented by Bob Kordella, Chief Clinical Officer of Excelsior Solutions

2 1 Chief Clinical Officer Robert Kordella, Chief Clinical Officer, has more than 27 years of diverse experience in the pharmacy industry. Bob has practiced in retail pharmacy, in a large academic medical center setting, and, for the last sixteen-plus years, has been an effective, widely known, and well-respected leader in the PBM industry. Over the course of his tenure with LDI Integrated Pharmacy Services, National Medical Health Card Systems, CVS PharmaCare, Eckerd Health Services, and TDI Managed Care Services, Bob has led clinical and PBM operations teams that successfully managed over $4 billion in annual drug spend while limiting per member per year spending growth to levels that have simultaneously drawn industry acclaim and consistently high levels of member and payer satisfaction. Bob received his Bachelor of Science in Pharmacy from the University of Pittsburgh School of Pharmacy. He went on to receive his Masters in Business Administration from The University of Pittsburgh, Katz Graduate School of Business. Meet Bob Kordella, RPh

3 2 Past Performance is no Guarantee of Future Results  Never a good idea to drive down an interstate highway with your gaze fixed in the rear-view mirror  Sovaldi isn’t an exception, it represents the new rule  That “coming tsunami” in Specialty Pharmacy has arrived

4 3 What Was Different About Sovaldi?  Seeming Surprise  Higher Unit Costs  Higher Utilization  Higher Visibility  Clear Link to Medical Management  Ethical Concerns – Is It For Everyone?  Government Role, Clinical  Government Role, Economic

5 4 Will All New Specialty Pharmacy Drug Launches Have Impact Like Sovaldi’s?  That depends…  MAJOR:  Treats what was previously untreatable, OR  Treats what was previously treatable in such a superior way that old ways will no longer suffice  High incidence disease categories  Rationale for high cost  MODERATE:  Lower incidence disease categories, OR  Lower cost premium, OR  Less potential to unlock “pent-up demand”

6 5 Did Sovaldi’s Launch Surprise You?  Clinically  Financially  “Ergonomically”  Lesson Learned: Pay attention to the wealth of information at your disposal

7 6 Why Will Specialty Rx Unit Costs Be Higher?  Higher true costs to develop  What is a true cost?  Acthar HP example  Convenience premium  Lesson Learned: The market has shifted from costs being driven down by “small molecule” patent expirations to costs being driven up by “large molecule” innovation

8 7 Why Will Specialty Pharmacy Utilization Be Higher?  Unleashed pent up demand as “watchful waiting” transforms to action driven by new oral dosage forms  Lesson Learned: Oral dosage forms will drive utilization and product adoption of new Specialty Rx products higher, faster than has historically been the case – old actuarial and underwriting models are obsolete if these changes aren’t reflected I’m going to prescribe something that works like aspirin but costs a whole lot more. -A. Bacall

9 8 Why Will Visibility Be Greater?  Initiatives to support enhanced screenings will quietly support new Specialty Rx product launches  The early lessons of Pharma direct-to-consumer advertising will be migrated to Specialty Rx  It is in Pharma’s interests to make the pool of potential customers larger  Lesson Learned: Don’t lose control of screening initiatives

10 9 Why Are Pharmacy & Medical Management Linked More Closely?  The questions surrounding new Specialty Rx drugs are not as simple as, “Formulary or Non-Formulary” or “Which tier to place it on?”  It’s evaluating 84 days of Rx at $1,000 per day vs. probability and cost of a subsequent liver transplant based on current clinical condition of patient  Lesson Learned: Your predictive analytics capabilities will be as important to your future success as your clinical capabilities, and they must work more closely together than ever

11 10 Will Everyone Be Eligible to Receive the New Meds?...Who’s to Say?  This isn’t about rationing, per se, it’s about establishing reasonable and defensible unbiased patient characteristics that point to success from a $1,000 per day (or more), 84- day long (or longer) treatment  Lesson Learned: Ethical issues will also become more prominent as Specialty Rx costs rise

12 11 What Role Will Government Play Clinically?  Many State Medicaid agencies have stepped in to work with plans to develop and implement regional or state-wide utilization management criteria  Lesson Learned: Avail yourselves of this opportunity if available in your state, or seek to lead such an initiative if one doesn’t exist

13 12 What Role Will Government Play Financially?  Some State Medicaid agencies have stepped in to work with plans to develop and implement reinsurance initiatives to mitigate the financial ramifications of high-cost Specialty Rx products  Lesson Learned: Sustainability is a concern as more products launch

14 13 What’s a Plan to do…  Watch out for combination therapies in Hepatitis C  2 separate pills/copays replaced with 1 pill/1 copay  Therapies will be significantly more expensive  $84K for Sovaldi versus $100K - $150K for combination product  Plans should not be covering all of these products for all patients. Suggestions: Evaluate formulary status, add appropriate utilization management controls and screenings  Be alert for first-in-class products that now offer drug therapy in addition to or replacing medical treatments  Anticipate increased costs due to drug regimen add-on. Not all new specialty therapies replace prior options.  Consider appropriate Utilization Management criteria  Not every drug has to be (or should be) available for all patients. Qualify patients prior to approving s:\filepath

15 14 Conclusion  Sovaldi has fundamentally transformed how payers must think about and deal with Specialty Pharmacy  Clinical, Economic, Ethical, Financial, and Regulatory minefields abound  The Specialty Rx pipeline is rich and more transformative products that share many of the characteristics of Sovaldi are queuing up to launch

16 15 Appendix The Specialty Drug Pipeline (as of August 2014) s:\filepath

17 16 Specialty Pipeline – Hepatitis C Drug NameDisease Treated Approx. Approval Date Route of Admin Projected Costs Current Disease Treatments Recommended Potential Action ledipasvir / sofosbuvir* Hepatitis C genotype 1 Oct. 2014Oral $100 - $150K per tx course Sovaldi, Olysio, Incivek, Victrelis Evaluate formulary status PA/UM and qualify appropriately (genotype 1) ABT-450 / ritonavir/ ombitasvir / dasabuvir* Hepatitis C, genotype 1 Dec. 2014Oral $75 - $90K per tx course Sovaldi, Olysio, Incivek, Victrelis Evaluate formulary status PA/UM and qualify appropriately (genotype 1) MK-5172 / MK 8742* Hepatitis C, genotype Oral $80 - $100K per tx course Sovaldi, Olysio, Incivek, Victrelis Evaluate formulary status PA/UM and qualify appropriately (genotype 1) daclatasvir / asunaprevir Hepatitis C, genotype 1b Dec. 2014Oral $80 - $100K per tx course Sovaldi, Olysio, Incivek, Victrelis Evaluate formulary status PA/UM and qualify appropriately (genotype 1b only) The three genotype 1 products and the combination therapy of Sovaldi + Olysio are transforming the Hepatitis C class dramatically. The combination of two drugs in one tablet represents the next evolution of oral treatment in Hepatitis C. *Combination therapies (such as the above three) will compete with Sovaldi/Olysio and continue to increase costs

18 17 Specialty Pipeline – Cystic Fibrosis, Multiple Sclerosis & High Cholesterol Drug NameDisease Treated Approx. Approval Date Route of Admin Projected Costs Current Disease Treatments Recommended Potential Action LumacaftorCystic FibrosisJune 2015Oral $300K per year First in class PA/UM for gene mutation; qualify appropriately Lumacaftor is considered to be an orphan drug because it treats a very specific gene mutation in cystic fibrosis. Its use will be rare, but its costs will be material when required. *Screening test under development. Lemtrada Relapsing Multiple Sclerosis Nov. 2014IV $40K per year Copaxone, Avonex Not initial therapy; consider step or PA for trial of initial therapy drugs Lemtrada will be a mixed bag of benefits and costs. In the short-term it will likely displace less expensive Rebif therapy, but in the long-run it will be more effective at preventing relapses leading to better outcomes and lower costs. Evolocumab Hypercholeste- rolemia 2015Sub Q $10 - $18K per year Statins Close monitoring of FDA approval status Currently slated for narrow (and rare disease state) approval. However, if approved for broader treatment, could replace or be adjunct therapy with statins for cholesterol treatment. If granted broad approval, expect significant treatment protocol and cost increases for cholesterol therapy. Evolocumab has potential to redefine clinical management of high cholesterol with significant cost impacts against a mature (generic-heavy) statin category

19 18 Specialty Pipeline - Miscellaneous Drug NameDisease Treated Approx. Approval Date Route of Admin Projected Costs Current Disease Treatments Recommended Potential Action AlexionHypophosphatasia2015Sub-Q $200 - $300K per year First in class Examine medical claims for evidence of these patients; pharmacy data will not indicate With the incidence of hypophosphatasia most recently estimated to be one in three hundred thousand, the need for this orphan drug will be rare, but the costs will be material when it is required. Alexion is considered to be a “breakthrough therapy” meaning that its mechanism of action is superior to any previous treatments. Ruconest Hereditary Angioedema July 2014IV $200K per year Berinert, Kalbitor, Firazyr Consider allowing as first line therapy as HAE is life-threatening Ruconest has the potential to displace Berinert, Kalbitor, and Firazyr in the treatment of acute attacks of Hereditary Angioedema with a single IV dose. Received final orphan drug designation in July. There are 6,000 to 10,000 patients in the US who seek treatment for acute HAE attacks annually. CerdelgaGaucher DiseaseAug. 2014Oral $240K per year Cerezyme, Vpriv, Elelyso, Zavesca Consider allowing as first line therapy for convenience and efficacy Cerdelga, an oral therapy, has the potential to displace traditional infused treatments for Gaucher disease. Costs will offset somewhat as this therapy replaces other available treatments.

20 19 Specialty Pipeline - Miscellaneous Drug Name Disease Treated Approx. Approval Date Route of Admin Projected Costs Current Disease Treatments Recommended Potential Action AmigalFabry DiseaseJune 2015Oral $100 - $300K per year Fabrazyme Keep watching – could be approved as combo therapy ($$$) Amigal, an oral therapy, has the potential to displace traditional Fabrazyme therapy in the treatment of rare Fabry disease, however it may also be approved to be used in combination with Fabrazyme, in which case cost impact will be more material, although the incidence of Fabry disease is low. **Screening test under development Esbriet Idiopathic Pulmonary Fibrosis Nov. 2014Oral$100K per year Oxygen, pulmonary rehab, lung transplant Expect to cover; may help defer/prevent lung transplants Esbriet would be the first drug treatment in this disease that currently affects between 100,000 and 200,000 patients in the US, and so has the potential to reduce lung transplant rates in advanced disease. Synageva Lysosomal Acid Lipase (LAL) Deficiency Jan. 2015IV$250K per yearFirst in Class Rare occurrence disease; qualify appropriately Synageva is considered an orphan drug drug due to low incidence of LAL deficiency, with only 8 cases of the early onset form per year, and approximately 4,000 patients with the late onset form in the US currently. secukinumab Moderate to Severe Plaque Psoriasis Oct. 2014Sub-Q $5K per month ($60K per year) Methotrexate, Enbrel, Humira, Stelara, Remicade “Me too” drug – no clear therapy advantage; consider costs for formulary placement Secukinumab will compete primarily with well-known high cost therapies in the treatment of moderate to sever plaque psoriasis at similar costs

21 20 Specialty Pipeline – Cancer Therapies Drug NameDisease TreatedApprox. Approval Date Route of Admin Projected Costs Current Disease Treatments Recommended Potential Action idelalisib Indolent non- Hodgkin’s Lymphoma Aug. 2014Oral $10 - $12K per month Rituxan, Treanda, Arzerra “Me too” – evaluate cost/appropriateness for formulary pembrolizumab Refractory melanoma & non-small cell lung cancer Oct. 2014IV$120K per yearYervoy “Me too” – evaluate cost/appropriateness for formulary palbociclib Hormone sensitive advanced breast cancer Jan. 2015Oral $5 - $10K per month First in Class Potential to be blockbuster. Hung up with FDA for data issues nivolumab Squamous non-small cell lung cancer June 2015IV $150K per tx course Yervoy “Me too” – evaluate cost/appropriateness for formulary daratumumabMultiple Myeloma2015IVUnknown Velcade, Kyprolis, Pomalyst, Revlimid Game changer for therapy options; expect to cover panobinostatMultiple MyelomaNov. 2014Oral $54K per tx course Velcade, Kyprolis, Pomalyst, Revlimid To be given in combination with Velcade olaparib BRCA mutation- positive ovarian cancer Summer 2016Oral $12 - $15K per month First in Class Likely delays with FDA approval Daratumumab has the potential to improve patient outcomes in multiple myeloma patients, but cost is yet unknown. Other oncology therapies are expected to have moderate impact at similar costs to existing therapies.

22 21 Contact Martha Allen, VP Business Development Excelsior Solutions 7401 Metro Blvd, Suite 210 Edina MN (o) (952) (m) (612) Please check out our team and client testimonials at: For questions or more information:

23 22 Our Mission To be the worldwide value and service leader in insurance brokerage, employee benefits, and risk management Our Goal To be the best place to do business and to work © 2012 Lockton, Inc. All rights reserved. Images © 2012 Thinkstock. All rights reserved.


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