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The Official News & Technical Journal Of The International Society For Pharmacoeconomics And Outcomes Research

Raising the Bar in the USA: The Impact of Heightened Awareness of the Need for Health-Economic Data in the Absence of a Regulatory Mandate

Michael E. Minshall, Principal Health Economics and Outcomes Research, IMS Health®, and Adjunct Professor, Indiana University School of Medicine, Department of Public Health, Noblesville, IN, USA; and John Watkins RPh, MPH, BCPS, Pharmacy Manager, Formulary Development, Premera Blue Cross, and Clinical Associate Professor of Pharmacy, University of Washington, Seattle, WA, USA

Economic assessment of new health care technologies is practiced among an increasing number of countries around the world. Today, the United States is taking steps in requiring economic evaluation for new healthcare technologies. Michael E. Minshall and John Watkins consider some of the issues.

Health Technology Assessments (HTAs) are increasing in countries around the world. To date, HTA requirements exist in about 30 countries, including Australia, Canada, Germany, The Netherlands, Spain, Sweden and the UK. There are discussions within a number of other countries, including China and Korea, to add health economics and outcomes research (HEOR) data into HTAs, making them requirements for formulary approval and access to medical technologies, drugs and other kinds of medical treatment.

In the United States, the environment for health-economic data is changing. The US health care market contains two major segments: the public payer and the private payer groups, both representing about 50% of the market. While most HTA work completed in the United States over the past 15 to 17 years has been in the private sector, the public sector, including government entities such as Medicare and Medicaid, has initiated steps to consider HTAs for technology adoption.

Two entities in the private sector that provide a good indication of where HTAs are moving within the United States are the Academy of Managed Care Pharmacy (AMCP) Guidelines and the more recently published Wellpoint Guidelines. Additionally, USHTA requirements focus more on the budgetary impact and less on the cost-effectiveness of new health technologies. Moving forward, companies will be required to perform HTA analyses to get new technologies on formulary and covered by private and public plans.

HTA in the USA: What Led us to this Point?
The managed care revolution of the late-1980s and 1990s produced a demand for evidence-based formulary placement. Additionally, it called for the pharmaceutical and biotechnology industries to provide information on budget impact and to establish the “value” of new medicine, including clinical, economic and humanistic ideals.

Today there are about 600 different health care providers in the US private sector. Theoretically, all of them could have their own HTA requirements, as there are no mandatory national guidelines within the United States. However, when segmented by larger groups, it's evident that about 40 payers, or about 40 managed care plans, represent about 80 percent of the market.

HTA in the USA: The Existing Guidelines
AMCP Guidelines
The AMCP Guidelines are the first widely-followed and utilized guidelines for HTA in the United States. They include explicit mentions of non-U.S. bodies, such as the National Institute for Health and Clinical Excellence (NICE) in the UK, and are required by many managed care plans across the United States.

With three versions, including the latest, Version 2.1 (April 2005), which clarified the differences between budget-impact and cost-effective models, the AMCP Guidelines are an invaluable tool for referencing the appropriate steps to prepare dossiers for submissions. While not mandatory, the AMCP Guidelines are known and followed by many industry professionals for HTAs.

Wellpoint Guidelines (Version 5.1, October 2005)
Wellpoint Health Networks, with about 32 million covered lives, is currently the largest HMO in the US. The Wellpoint Guidelines establish two sets of requirements - one for new products and the other for existing products, as well as a reevaluation process and guidelines for assessing clinical performance, cost-effectiveness and system impact versus comparators.

Of particular note in the Wellpoint Guidelines is the distinction between new and existing products. The Wellpoint Guidelines call for a reevaluation process after several years, which represent a true departure from the AMCP Guidelines and other guidelines' directives.

Seven Key Elements of the Wellpoint Guidelines
Evidentiary and Analytical Standards - While the Wellpoint Guidelines state that evidence must meet accepted standards, what's of special interest is Wellpoint's position that “claims made for treatment effect, cost-effectiveness and budget impact” must be done within the Wellpoint treating environment. This demonstrates that Wellpoint is initiating an analytical standards component, monitoring clinical evidence, cost-effectiveness and budget impact over time for verification.

For example, if a company indicates the ICER for a new product is $20,000 per life year gained, Wellpoint will revisit this claim in three, four and five year spans to determine if its standard is met. If not, renegotiations could occur between the company and Wellpoint. For pharmaceutical and biotechnology companies, this approach suggests that cost-effectiveness claims will need to be reevaluated and verified after a given time period.

Outcomes Assessments - Wellpoint states that “where a previous submission has been made detailing the epidemiology of the disease state and the product's place in therapy, it is important to revisit this claim and confirm its relevance.” This is significant regarding the verification of claims on a cost-effective, budget- impact basis. Comparators may “shift” to different products since the first HTA was performed, potentially requiring pharmaceutical and biotechnology companies to run comparative analyses again in three to five years time.

Comparator Therapies - The Wellpoint Guidelines state that companies may be asked to revisit their choice of comparator if after several years there's a different, most-common comparator.

Outcomes Claims - The Wellpoint Guidelines set a “gold standard” with regards to randomized, comparative trials with a randomized, active comparator, as opposed to randomized controlled trials (RCTs) with a placebo comparator. Additionally, its verbiage “with particular emphasis on well designed pragmatic trials and their outcomes” is significant considering the push by pharmaceutical and biotechnology firms over the last 10 to 14 years for Phase IIIb and Phase IV trials, which are more naturalistic in design.

Quality Adjusted Life Years (QALY) - While the Wellpoint Guidelines do not mandate a generic cost-per-QALY, Wellpoint is encouraging companies to present this information, which may help bring the U.S. guidelines into alignment with other global HTA groups, such as NICE and the Pharmaceutical Benefits Advisory Committee (PBAC) in Australia.

New Data/Claims - Wellpoint favors a “Probabilistic Sensitivity Analysis” format related to cost-effectiveness analysis (CEA). This format is well known to those in the UK and academics in the United States. Many HTA bodies around the world require this technique to be used in comparative cost-effective analyses.

Budget Impact Analysis (BIA) - The Wellpoint Guidelines request that manufacturers “provide forecasts of the impact of the product on resource utilization, the pharmacy budget, the medical budget and the total costs of treating the patients in that disease or therapy area” and state that Wellpoint will assess such forecasts as part of ongoing product reevaluation. This is the largest departure or advance from the AMCP Guidelines and will necessitate extra effort and thoughts around the design, analysis, and interpretation of HTAs.

Centers for Medicare & Medicaid Services (CMS)
In the public sector, several significant issues relate to the CMS. Regarding cost effectiveness, a legislative mandate to incorporate HTA into the formulary process is possible, but its outcome is unclear at this time. CMS will likely issue guidance in the next one to two years, but there is no mandatory time table.

The role of CEA has long been at issue. In 1989, Medicare formally proposed to include CEA as one of several criterions for approving new medical technologies, but was turned away due to tremendous political opposition. Reasons for the failure included:

  • Americans desire and appetite for new medical technology,

  • Distaste for setting coverage limits,

  • U.S. population's sense of entitlement for Medicare funds,

  • Wealthy country with a shortage in health care dollars,

  • Special interest groups with political influence,

  • A fragmented U.S. health care system with multiple payers.

The Medicare Modernization Act (MMA) of 2003 contains a provision calling on the Agency for Healthcare Research and Quality (AHRQ) to conduct research on outcomes, comparative clinical effectiveness, and appropriateness of healthcare, including prescription drugs.

CMS released a Guidance document on April 11, 2006 on the National Coverage Determination (NCD) process stating, “Cost-effectiveness is not a factor CMS considers in making NCDs.” Additionally, MMA contains language forbidding Medicare from applying a “functional equivalence” standard to drugs or biologic agents, thereby eliminating the concept of “reference pricing” for drugs in the same class, which is widely practiced in Europe.

Finally, CMS encourages the use of data from practical clinical trials. This includes increasing emphasis on health outcomes actually experienced by patients, such as quality of life, functional status, duration of disability, and morbidity and mortality, as well as decreasing emphasis on outcomes that patients do not experience directly, such as changes in laboratory values, radiographic response, sensitivity/specificity, physiologic parameters, and other intermediate/surrogate outcomes.

Toward More Rigorous Health-Economic Decision- Making: One Payer's Experience
Premera Blue Cross, a Blue Cross Blue Shield affiliate, is a commercial PPO operating primarily in the Pacific Northwest and covering 1.6 million lives (1.2 million pharmacy lives). Premera recognizes that HTA is necessary today because of rising health care spending as a percentage of US gross domestic product (GDP) and a realization that this trend simply cannot continue, as it is becoming increasingly difficult for employers to provide full drug coverage for their employees.

HTA in the U.S. private sector is extremely varied, however much is being done to advance the concept of value-based technology assessment. Compared to Wellpoint, Premera Blue Cross is much smaller and has fewer internal resources to support HTA, but it deals with the same basic issues. These include data limitations and evidence gaps caused by factors such as ethical limitations on study design, industry sponsorship of clinical trials, and the time and logistics required to conduct large-scale, long-term outcome studies. To best handle these gaps, most organizations in the U.S. follow a pure evidence-based medicine (EBM) doctrine, focusing exclusively on the clinical evidence and often limited to large-scale, well-designed RCTs and rigorous meta-analyses.

Like other organizations, Premera focuses on high-quality, RCT evidence and tries to incorporate best available evidence, which sometimes includes observational study results. Since 2001, Premera has been considering CEA when such information is available. Best available evidence implies a willingness to trade a certain amount of rigor for speed. This more pragmatic approach includes modeling data, CEA and BIA, when reasonable models are available.

Burden of Proof Always Lies with the New Technology
A cardinal principle of EBM is that the burden of proof always lies with the new technology. This is contrary to predominant U.S. cultural assumptions. There is a very strong sense in the United States that newer is always better, unless proven otherwise. But in EBM, older is generally better, in that more is known about the older product, such as its weak points and strengths. Given the choice, Premera will usually choose the proven, older technologies versus newer ones.

Figure 2 outlines the general thought process Premera pharmacy and therapeutics (P&T) committee members use to evaluate a new product. The product must be safe, effective and cost-effective for the new technology to be adopted. The first three steps with drugs are in the realm of Premera's P&T, an external committee on which no Premera staff are allowed to vote. The fourth step, BIA, is done internally on the business side.

Premera uses the term “value” in its public statements, which essentially is a lay term for incremental cost-effectiveness. If the new product costs more than the comparator, adoption requires demonstration of a clinically meaningful improvement in outcome and offsetting cost savings - usually from the payer perspective. However, if the new product costs less than the comparator, adoption requires a lesser standard of clinical evidence, assuming there are no hidden costs to offset savings and basic safety and effectiveness are achieved.

Figure 3 outlines Premera's HTA drug review process, which was created for pharmaceutical products. This process is now being expanded to include other technologies.

Three Examples regarding the Need for Targeted Diagnostics Gleevec (imatinib) and Iressa (gefitinib) - Lowering the number needed to treat (NNT) improves cost-effectiveness. To do this effectively, more responsive and sicker patients must be targeted, which becomes increasingly important as the cost of the technology increases.

For example, in the case of Gleevec (imatinib) and Iressa (gefitinib), small molecule, targeted oncology therapies, Gleevec came to market with genetic markers that identify the responders; Iressa did not. A review of patients who received each of these drugs through Premera in 2006 found that 364 individuals had received Gleevec, while only 11 were treated with Iressa. These numbers suggest that both physicians and payers respond favorably to specific markers that guide them in patient selection.

Drug Example: Exenatide (Byetta) - Exenatide is a new diabetes drug with a completely new harmacology. While it is fairly expensive compared to alternatives, when Premera first examined it, the company consulted with local opinion leaders who thought that it would have a place in therapy but had difficulty in defining the most cost-efficient patient population. To aid in determining the most efficient patient population for treatment with exenatide, Premera utilized the CORE Diabetes Model, which was licensed by the drug manufacturer, Amylin Pharmaceuticals. The information Premera sought included:

  • What is its place in therapy? - New mechanism, costs more than alternatives - No long-term clinical endpoint trials - Probably a good drug, But for whom?

  • CORE Diabetes Model - Markov model structure using Monte Carlo simulation and tracker variables - Submodels account for comorbidities and interactions between comorbidities - Very flexible user inputs for cohort and treatment characteristics

  • Test case (Hypothesis: change in patient weight would affect diabetes outcomes) - Assume cohort on Metformin - Baseline HbA1c = 8.5% + 1 - BMI = 35 kg/m2 + 5 (base case = 27.5 kg/m2) - Add exenatide vs. comparator agent or vs. continuing metformin monotherapy

Exenatide was compared to generic glyburide, which costs about 5%as much as exenatide, pioglitazone (Actos), insulin glargine (Lantus), and continuation of metformin. (Note: the metformin only treatment is referred to as “placebo” in Table 1 that follows.)

Table 1 lists the results for the above treatment options, modeled over a 30- year time horizon. All comparisons yielded incremental cost-utility ratios of less than $50,000 per QALY for all treatments.

Diagnostic Example: Oncotype DX - In this test for early-stage breast cancer, a 21-gene panel gives a risk score that correlates with the likelihood of distant recurrence of disease after surgery.

Details of the test include: • 21 gene diagnostic panel for estrogen receptor positive, node negative breast cancer - Risk score (range 0-100) predicts likelihood of distant recurrence - Stratified risk: low (<18), med (18-30) high (>30) • Draft guidance document for dossier submission was provided to the manufacturer • Resulting submission was reviewed for medical policy determination - Should Premera cover this test? - If so, for which patients?

The proposed rationale for cost-effectiveness is Chemotherapy (CT) avoidance in low-risk patients and the basing of treatment strategies on test results can lead to more informed decisions, improved outcomes and a potential to reduce overall cost of care. In the Premera evaluation, the key question was whether the results would be actionable for providers. When Premera consulted the Premera Oncology Advisory Panel, a representative group of community-based oncologists, the vast majority of them said they would probably not advise their patients to forego chemotherapy simply because of this test result. As a result of this evaluation, Premera approved the test under very limited conditions in a subgroup of patients who would be on the borderline and for whom the test might actually make a difference. This exercise reaffirmed the principle that test results must be actionable in order to be eligible for coverage.

The United States is moving, albeit slowly, towards some type of nationalized, cost-effectiveness requirement. What form that takes, whether it will be a QALY format or straight mortality, is unclear at this time. Moreover, it is

highly likely that the requirements for private payers and public payers will remain disparate and a multi-faceted approach to value determination will remain a necessity in the US marketplace for manufacturers.

CEA will be rated at varying degrees of importance by major coverage groups in the United States, including: the private sector, with HMOs and PPOs; the public sector, with the CMS and government systems; and fee for service, which is a smaller part. It's inevitable that CMS becomes more involved in HTA processes. As part of the MMA of 2002, the U.S. Congress mandated that CMS incorporate a technology assessment process based on economics. Since CMS oversees a tremendous part of the medical market in the United States, CMS can be considered a “bell-weather” entity that other groups may follow in both the public and private sectors; however, only time will tell.

It may take many years for the United States to achieve a nationalized, costeffectiveness requirement, and the country may never get there. The United States spends about 14% of its GDP on healthcare, a tremendous part of its entire GDP, and there are many competing interests with input into the process. In short, a great number of people have a say about what happens with U.S. health care dollars.

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