F. Randy Vogenberg

The Value of SpecialtyThe Value of Specialty“Drugs”“Drugs”

F. Randy Vogenberg, RPh, PhDF. Randy Vogenberg, RPh, PhDPrincipalPrincipal

Institute for Integrated HealthcareInstitute for Integrated Healthcare, Sharon, , Sharon, MAMA

Senior FellowSenior Fellow Jefferson School of Population HealthJefferson School of Population Health

©IIH, August 2010©IIH, August 2010

AgendaAgenda

• Specialty pharmacy and related Specialty pharmacy and related biologicsbiologics

• Innovation, growth and trends Innovation, growth and trends effecting pharmacy and medical effecting pharmacy and medical benefits benefits

• Future opportunities and challengesFuture opportunities and challenges

Specialty pharmacy and Specialty pharmacy and related biologicsrelated biologics


Significance of Specialty to Significance of Specialty to an Employeran Employer• Specialty represents Specialty represents

– ~25% of dollar Rx spend today~25% of dollar Rx spend today– Projections for 2020 to 2030 = ~50%Projections for 2020 to 2030 = ~50%

• Combined spend in range of 40%Combined spend in range of 40%

• Per annum cost range $6,000 - $350,000 per Per annum cost range $6,000 - $350,000 per employee/dependent employee/dependent – avg./user $12,500)avg./user $12,500)

• 48% of Phase III NME’s are for use in 48% of Phase III NME’s are for use in ambulatory care, ~400 new products ambulatory care, ~400 new products (PhRMA (PhRMA 1Q09)1Q09)– Etanercept (Enbrel) = >$1.2 BnEtanercept (Enbrel) = >$1.2 Bn


Specialty PharmacySpecialty Pharmacy

What are Specialty Drugs?What are Specialty Drugs? Biotech and complex in natureBiotech and complex in nature Target specific illnesses such as rheumatoid arthritis, Target specific illnesses such as rheumatoid arthritis,

multiple sclerosis, hepatitis C, cancermultiple sclerosis, hepatitis C, cancer Require supervision, monitoring and testingRequire supervision, monitoring and testing Require special handling and storageRequire special handling and storage Side effects are more frequent and more seriousSide effects are more frequent and more serious Expensive – average $1,600 per monthExpensive – average $1,600 per month


Why is Specialty Why is Specialty “different”?“different”?• No standard definition exists, usual classes - No standard definition exists, usual classes -

anticoagulants, antivirals, hematopoietics, anticoagulants, antivirals, hematopoietics, MS, oncology tx, RA, infertility, hGHMS, oncology tx, RA, infertility, hGH

• Characteristically, biotech agents, may be Characteristically, biotech agents, may be derived from live organismsderived from live organisms

• May require special storage and/or handlingMay require special storage and/or handling• Administration method varies – often are Administration method varies – often are

parenteral, infusion center, home, etc.parenteral, infusion center, home, etc.• Delivery channel may vary with product Delivery channel may vary with product

(TIPS)(TIPS)• FDA requirements (e.g. clozapine) FDA requirements (e.g. clozapine)

necessitate additional clinical mgt necessitate additional clinical mgt


No single definition for specialty No single definition for specialty pharmacypharmacyHow does your organization define specialty pharmaceuticals?

Perspective from PBM and Specialty Pharmacy executives


Innovation, growth and trends Innovation, growth and trends effecting pharmacy and medical effecting pharmacy and medical

benefitsbenefitsDrugs, Devices, Diagnostics (3 Drugs, Devices, Diagnostics (3

Ds)Ds)


Examples Now On the Examples Now On the MarketMarket

• OncologyOncology– Dacogen® (Decitabine) - MDS and Dacogen® (Decitabine) - MDS and

solid tumorssolid tumors– Revlimid® (Lenalidomide) - MDS and Revlimid® (Lenalidomide) - MDS and

multiple myelomamultiple myeloma– Arranon® (Nelarabine) - T-cell ALL and Arranon® (Nelarabine) - T-cell ALL and

T-cell LBLT-cell LBL– Panitumumab - metastatic colon Panitumumab - metastatic colon

cancercancer– Nexavar ® (Sorafenib) - mRCC Nexavar ® (Sorafenib) - mRCC

metastatic renal cell carcinomametastatic renal cell carcinoma– Sutent®Sutent® (Sunitinib) - mRCC and (Sunitinib) - mRCC and

gastrointestinal stromal tumorsgastrointestinal stromal tumors• Rheumatoid ArthritisRheumatoid Arthritis

– Orencia®Orencia® (Abatacept) - T-cell co- (Abatacept) - T-cell co-stimulation modulatorstimulation modulator

– Rituxan ®Rituxan ® (Rituximab) - RA and non- (Rituximab) - RA and non-hodgkin’s lymphomahodgkin’s lymphoma

• HematologyHematology– Cera®Cera® - 1x month continuous - 1x month continuous

erythropoiesis receptor activatorerythropoiesis receptor activator• OphthalmologyOphthalmology

– Lucentis®Lucentis® (Ranibizumab) (Ranibizumab)

• GastroenterologyGastroenterology– Cimzia®Cimzia® (Certolizumab) - Crohn’s (Certolizumab) - Crohn’s

disease, once monthly injectiondisease, once monthly injection– Lubiprostone - chronic constipation & Lubiprostone - chronic constipation &

IBSIBS

• OsteoporosisOsteoporosis– Boniva®Boniva® (Ibandronate IV) - injection (Ibandronate IV) - injection

every 2-3 monthsevery 2-3 months– Preos® (Parathyroid hormone) - SC Preos® (Parathyroid hormone) - SC

injectioninjection

• VaccinesVaccines– Gardasil® - Human Papillomavirus Gardasil® - Human Papillomavirus

vaccinevaccine– Zostavax® - prevention and Zostavax® - prevention and

treatment of herpes zoster and post treatment of herpes zoster and post herpetic neuralgiaherpetic neuralgia

– RotaTeq® - rotavirus vaccine for RotaTeq® - rotavirus vaccine for gastroenteritis in infantsgastroenteritis in infants

• DiabetesDiabetes– Vildagliptin®Vildagliptin® - new class, incretin - new class, incretin

enhancersenhancers


Pipeline in General (industry Pipeline in General (industry wide)wide)

• 4+% growth in Phases I, II, III4+% growth in Phases I, II, III– Accelerating now due to Accelerating now due to

•merger/acquisitionsmerger/acquisitions

•Change in R&D investmentsChange in R&D investments

• ~750 “specialty” drugs ~750 “specialty” drugs – 35% are oral35% are oral– 25% of pipeline are “specialty”25% of pipeline are “specialty”

Source: FDC Reports, 2006, 2007, 2008.


Specialty: Incidence Beyond Specialty: Incidence Beyond Rare or Unusual Chronic Rare or Unusual Chronic DisordersDisorders

Source: Bear Stearns, Health Care Distribution, “Specialty Pharmacy Services, Among the Fastest-Growing Areas of Health Care,” November 2003, p. 25.

Number of Patients Affected in the United StatesInfertility 6,000,000Moderate/Severe Allergic Asthma 4,200,000Hepatitis C 4,000,000 Rheumatoid Arthritis 2,500,000Moderate/Severe Psoriasis 1,500,000 Oncology 1,300,000HIV/AIDS 900,000 Crohn’s Disease 400,000Multiple Sclerosis 300,000Renal Disease 300,000RSV prophylaxis 90,000Pulmonary Arterial Hypertension 25,000 Growth Hormone Disorders 20,000Hemophilia 20,000

©IIH, August 2010©IIH, August 2010Source: Banc of America Securities LLC

New “Specialty” Drugs Are New “Specialty” Drugs Are Escalating Rapidly & Impacting Escalating Rapidly & Impacting Medication SpendMedication Spend

• U.S. biotech companies had sales of $32.3 billion in 2003.• U.S. biotech companies sales are predicted to be $1 Trillion in 2010.

Specialty Drug Industry Growth, 1990-2005E

100

240

369

29

92

197

600

100

100

200

300

400

500

600

700

1990 1995 2000 2005E$0

$10

$20

$30

$40

$50

Drugs in Development Drugs on Market Product Revenue ($Billions)

$17B

$46B

Num

ber

of

Spe

cia

lty D

rugs

Pro

duc

t R

even

ues

($

Bill

ions

)

What about Dose What about Dose Forms?Forms?

The Trend for Oral Agents—small The Trend for Oral Agents—small molecules but not all molecules but not all

biologic/biotech!biologic/biotech!


AptamersAptamers

• Known as chemical antibodiesKnown as chemical antibodies

• Possibly replace monoclonal Possibly replace monoclonal antibodies for use inantibodies for use in– TreatmentTreatment– DiagnosesDiagnoses– Drug developmentDrug development


NanotechnologyNanotechnology

• Drug delivery innovationDrug delivery innovation

• Traditional and Biologic drugsTraditional and Biologic drugs


Vaccine DevelopmentVaccine Developmente.g. Merck, GSK, Novartis, Pfizere.g. Merck, GSK, Novartis, Pfizer

0

50

100

150

200

250

300

350

400

450

1996

2007

Source: adapted from Pharma Voice, 2007.


Plan Sponsors Can’t Forget Plan Sponsors Can’t Forget DiagnosticsDiagnostics

• LaboratoryLaboratory– +20 % genetic testing+20 % genetic testing

•+3 % non-genetic testing+3 % non-genetic testing– Diagnostic and biomarkersDiagnostic and biomarkers– Drug dosing and delivery applicationsDrug dosing and delivery applications

•250 on market, 300 coming250 on market, 300 coming

• ImagingImaging—single and combined techniques—single and combined techniques– ClarityClarity– SpecificitySpecificity– SensitivitySensitivity

Future opportunities and Future opportunities and challengeschallenges


Today's’ Payer Today's’ Payer Population Population Initiatives Initiatives Control Rx Utilization and CostControl Rx Utilization and Cost

• Stakeholder focused on traditional plan designStakeholder focused on traditional plan design– Reimbursement by location or site of administration Reimbursement by location or site of administration

not patient carenot patient care– PBM IHM contracts, not include Specialty valuePBM IHM contracts, not include Specialty value

• Generics are the strategy—especially through Generics are the strategy—especially through mail ordermail order

– Does not address specialtyDoes not address specialty • Friendly step therapy to patient & providerFriendly step therapy to patient & provider

– Soft “PA”, Multi-tier, Electronic, user friendly editsSoft “PA”, Multi-tier, Electronic, user friendly edits– Not necessarily benefits plan sponsor/employerNot necessarily benefits plan sponsor/employer


… … Payer Payer Population Population Initiatives to Initiatives to Control Rx Utilization and CostControl Rx Utilization and Cost

• Conundrum around Off-Label UseConundrum around Off-Label Use– rFactor VIIA (NovoSeven)rFactor VIIA (NovoSeven)– cancer medications and combinationscancer medications and combinations– Guidelines help but still “squishy”Guidelines help but still “squishy”

• Not great with Genomic medicationsNot great with Genomic medications– Pharmacology and Molecular biology, Pharmacology and Molecular biology,

not chemistrynot chemistry


Opportunities for positive Opportunities for positive changechange

• Address specialty pharmacy and Address specialty pharmacy and biologic products more specificallybiologic products more specifically

• Assess total cost of care impact and Assess total cost of care impact and holistic value proposition as a holistic value proposition as a business strategybusiness strategy

• Understand where you are at today Understand where you are at today then move towards where you want then move towards where you want to beto be


SummarySummary

• Specialty requires you to understand the Specialty requires you to understand the total impact of all benefits on the total impact of all benefits on the organization,organization, and health coverage strategyand health coverage strategy

• Specialty is important today and action Specialty is important today and action needed now as we go into future plan yearsneeded now as we go into future plan years – There will be technologic “explosions” in many aspects There will be technologic “explosions” in many aspects

of health care, including the 3 “D”sof health care, including the 3 “D”s– Specialty/biotech present real challenges—personalized Specialty/biotech present real challenges—personalized

medicinemedicine

• Insurance trends will rise beyond PPACA Insurance trends will rise beyond PPACA effects in the absence of effective effects in the absence of effective integrated benefitsintegrated benefits – Defining coverage, utilization and incorporating Defining coverage, utilization and incorporating

behavioral based benefit designs for consumer centric behavioral based benefit designs for consumer centric outcomes are critical success factorsoutcomes are critical success factors

Thank YOU !Thank YOU !

F. Randy Vogenberg, PhD, RPhF. Randy Vogenberg, PhD, RPh

Institute for Integrated HealthcareInstitute for Integrated Healthcare

Sharon, MASharon, MA

[email protected]@vogenberg.com

Date post:	15-Jan-2015
Category:	Health & Medicine
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F. Randy Vogenberg

Health & Medicine