• Home
  • -
  • Uncategorized
  • -
  • Controlling New Specialty Drug Costs: Lessons from Farydak & Kalydeco

Controlling New Specialty Drug Costs: Lessons from Farydak & Kalydeco

In February 2015, the FDA approved Farydak, Unknowna new treatment for multiple myeloma. The drug’s wholesale price:  $6,860 for a 21 day cycle. But note that unless a health plan negotiates strong discounts with its PBM, a health plan’s costs are likely to be even higher than the wholesale price!

With a recommended treatment of 8 cycles of 21 days each – to be repeated for another 8 cycles if the drug is tolerated –  the aggregate cost for 1 patient could exceed $100,000.

Unfortunately, it’s almost certain that your health plan’s PBM contract leaves your health plan without any control over Farydak’s cost, since your contract is undoubtedly devoid of contract terms related to new Specialty Drugs.

Nor does your PBM contract likely provide you with any right to negotiate any discount for Farydak during the remaining years of your contract, however long it may last.

Moreover, your PBM contract probably gives your PBM “exclusive rights” to control all prescription cover matters, meaning you are without any right to “carve-out” Farydak, negotiate a discounted price for it from another vendor, and thereby control your costs.

In short, given your likely PBM contract terms, you are at the mercy of your PBM. And it can charge whatever it wants for Farydak, including the drug’s full price, or even more.

Notwithstanding all above facts, you should do what you can to control your costs for Farydak (and other new-to-market specialty drugs as well): Contact your PBM, and find out the discount it will provide. An additional suggestion: Before you do, call other specialty drug pharmacies, and determine the discount they’ll provide. Then use what you learn to try to obtain competitive pricing from your PBM.

Several other facts are worth noting about Farydak:

In November 2014, the FDA’s Oncologic Drugs Advisory Committee advised the FDA that the drug’s benefits did not outweigh its risks for relapsed multiple myeloma victims. Moreover, there was no statistically significant evidence of improved overall survival from the drug’s use.

But the FDA approved Farydak anyway for a limited indication, namely giving the drug in combination with two other drugs – Velcade (bortezomib) and dexamethasone (Decadron) – to patients who have received at least two prior treatment regimens. The FDA did so, because clinical trials provided evidence that median progression-free survival was approximately 4 months longer for patients who added Farydak to their regimen with those two drugs.

Of course, doctors are free to prescribe Farydak as they please, meaning doctors will inevitably prescribe the drug for uses where no benefits at all have been demonstrated.

Again, unfortunately, if you’ve accepted your PBM’s “standard” Formulary and Prior Authorization programs, you may be without any ability to ensure that Farydak is only dispensed for the purposes for which there is at least some modest benefit proven. On the other hand, if your PBM contract gives you the right to create customized Prior Authorizations, you should do so immediately.

Note too: Even if those on whom you typically rely (in-house, or at an outside consulting firm) are without the medical expertise to construct a customized Prior Authorization, spend the small amount of money needed to retain an outside firm to do so.

After all, if you avoid one Farydak script that otherwise would have been dispensed, you’ll save hundreds of thousands of dollars, far more than the few thousand you might spend on a customized Prior Authorization.

In March 2015, the FDA approved a new form of Kalydeco (50 and 75 mg granule packs, rather than 150 mg tablets). With a typical annual cost of over $300,000 per patient, Kalydeco is one of the most expensive drugs on the market.

Therefore, every health plan ideally would have a “default discount guarantee” in place that would ensure a guaranteed discount on this new form of Kalydeco. Even if that discount was only 10% – and note that our firm typically puts in place a default guarantee that’s far higher – the discount would likely save your plan $30,000 annually per patient.

But again, assuming you are without such a contractually guaranteed default discount, you should contact your PBM and try to ensure that Kaydeco will be dispensed with at least some discount. It is simply too expensive for your plan to absorb its full cost without any relief.

A few additional facts to note about Kalydeco:

The drug was originally approved in 2012 in tablet form for individuals who are 6 and older with 1 of 10 genetic mutations causing cystic fibrosis. The FDA’s new approval extends use to children between the ages of 2 and 5 with any of the 10 identified genetic mutations.

There are only about 300 children in the United States that fit this description. But there are many other 2 to 5 year olds – and individuals who are 6 and older – who suffer from cystic fibrosis and do not have any of the identified 10 genetic mutations.

In fact, although approximately 3,400 people are eligible for treatment with Kalydeco in the US, Canada, Europe and Australia based on the approved indications, there are approximately 75,000 people in those countries who are suffering from cystic fibrosis.

For this reason, ideally you would have the contractual right to customize a Prior Authorization to limit dispensing to the drug’s approved uses.

But if you don’t have such a right, contact your PBM anyway, try to determine whether any Prior Authorization is in place, and if not, argue that your PBM should implement a strong Prior Authorization immediately.

Implementing Specialty Drug Controls & Taking Action To Control Your Costs 

Farydak and Kalydeco make clear that prescription drug costs cannot be controlled simply by putting in place a PBM’s “standard” contract once every three years, and then ignoring all drug matters thereafter.

Instead, your health plan needs to negotiate and execute an entirely different form of PBM contract that will provide your plan with extensive controls over new-to-market specialty drugs. Thereafter, your health plan needs to engage in ongoing activities to take advantage of its new controls. Those activities include the following:

First, your health plan should not simply allow your PBM to add every new-to-market specialty drug onto the Formulary. You should require written approval before any new Specialty Drug is added.

Second, your plan’s PBM contract should contain a “default discount guarantee” that will automatically be provided, for every newly added drug. Coupled with that guarantee, your PBM contract should have a “right to renegotiate” a better discount for any drug, whenever an improved discount might become available. To take advantage of those rights, you’ll need on an ongoing basis to contact third party specialty pharmacies, and determine the discounts they would offer. And then you’ll need to tell your PBM that you want to improve your guarantees, for all drugs where better rates are available.

Third, to ensure your PBM acts in good faith, your PBM contract should have explicitly contain a “carve-out right”, and you should make sure it does not give your PBM exclusive control over all prescription coverage matters. With such provisions, whenever you try to exercise your “right to renegotiate”, if your PBM isn’t willing to provide you with competitive discounts, you can “carve-out” the relevant drugs, and have another vendor dispense them, but still have your PBM adjudicate the relevant claims.

Fourth, you should not accept a “standard” Formulary – or the “standard” Prior Authorization programs – or any other “standard” Programs (like Step Therapy and Quantity Limit Programs) for that matter – from your PBM. Your PBM contract should allow you to customize all of the above, and should require your PBM to provide you with “net cost” information – and other support – to enable you to do so. With such tools in hand, you should take advantage of them, focusing on your highest-cost drugs first, and then moving onto others.

Take Advantage of Our Coalition Contract, If You Can

Our National Prescription Coverage Coalition contract with our PBM contains all the above-described provisions: (i) A strong “Default Discount Guarantee”; (ii) a quarterly “right to renegotiate” that guarantee to improve our pricing for any new Specialty Drug, as well as for all existing Specialty Drugs; and (iii) a “carve-out” right, to provide our Coalition with negotiating leverage.

As a result, we have just put in place new guaranteed discounts for Farydak and Kalydeco, as well as numerous other specialty drugs that the FDA has recently approved.

Our Coalition contract also allows us to review Envision’s Prior Authorization and other Savings Program protocols, and implement customized protocols if need be. Our expert staff is systematically reviewing and ensuring that there are strong utilization management programs in place on these two drugs, as well as many others, for our Coalition Members.

If your PBM contract is about to expire – or you have the right to terminate it at some point in the near future – call us and we’ll talk with you about joining our Coalition.

Even if you’re not in a position to join our Coalition – please feel free to contact us, as we may be able to help you negotiate guaranteed discounts – and implement customized utilization controls – with your PBM in any event.

# # #

To read other Rx Drug Alerts, go here.