Novant Health is an integrated health network based in Winston-Salem, NC. Novant's 1,600 physicians and 28,000 employees serve North Carolina, South Carolina, Virginia, and Georgia across 14 medical centers and more than 630 locations. In our recent conversation with Joe Maki, we discussed how Novant Health has evolved their P&T processes to recognize the pharmacoeconomic impacts of ultra-high-cost drugs (UCHDs).
You can also learn more about Novant Health's system P&T processes by reviewing key takeaways from Novant Health's 2019 Advisory Board meeting presentation P&T 2.0: Evaluating drugs based on total cost of care.
Reducing costs through system P&T
Question: Ultra-high-cost drugs or "UHCDs" is a new term for many people. How does Novant Health differentiate between the current mix of high-cost, provider-administered specialty medications and the UHCDs we're seeing emerge from the pipeline?
Dr. Joe Maki: The drugs included in this category have changed a lot over the last eight years. Five years ago, what we would consider "UHCDs" were just chemotherapies. Then came the gene therapies, and now we're seeing breakthrough monoclonal antibody agents falling into this category. We realized as an organization that we needed a definition for UHCDs to help us think about how to manage them.
The first thing we did was establish financial cut offs. We are focused on drugs that will cause new spend in our health system over $1 million in a year, whether it's from the administration of a single dose or total annual utilization. There are several drugs in this category that we have recently worked on. Tepezza was the first one that hit finance's radar. It was eye opening how fast it came on the scene and how much of it we use. Of course, Aduhelm has also been a big one.
These drugs are forcing us to think beyond oncology and gene therapies. Even though something like CAR-T makes the UHCD realm, drugs like Tepezza and Aduhelm are creating a new category from what we've previously seen. Not only because of how expensive they are, but also because they are used by different specialties within the health care system than we've seen with high-cost drugs in the past.
For instance, Tepezza is the first drug on the market to treat thyroid eye disease. Historically, we didn't have any pharmacy costs associated with this condition. Now we're looking at $300K or more per patient.
Q: How has your P&T process evolved to manage UHCDs?
Dr. Maki: One thing that has changed for us is getting finance more engaged in the P&T process, especially for these ultra-high-cost drugs. Our finance team used to question us often about why a drug was so expensive or whether our projections were really accurate. So, we added a financial assessment team to our P&T committee that includes individuals from operational finance, revenue cycle, managed care, and pharmacy. This team reviews inpatient and outpatient drugs that meet certain criteria. Giving finance the opportunity to weigh-in up front has been a big success—finance enjoys more visibility into the process, they trust the numbers, and they provide value in how we look at these products.
We also worked with our managed care team to build a calculator to project anticipated payment. It has our contracts loaded in, as well as what percent of patients likely to receive this drug are covered by each payer. This allows us to predict how much we'll be reimbursed, compared with our projected expenses.
After three months of utilization, the financial assessment team looks back at what we were ultimately reimbursed for purchasing and administering these UHCDs. We want to make sure we see the expected payments and don't run into any issues.
Q: What factors, other than financial, do you consider when evaluating UCHDs?
Dr. Maki: Our P&T process is moving in the direction of evaluating pharmacoeconomics from a broader value and ethical framework. For example, for a drug like Tepezza, we need to understand not only the direct clinical and financial impact of the patient-level decisions, but also what the broader economic impact will be both at the population level and over time. By that I mean, we want to see if the quality-of-life improvement justifies the cost.
We recently hired a pharmacoeconomics manager to help us with this. She is a pharmacist with a two-year residency focused on pharmacoeconomics. One of her big areas of focus is conducting medication use evaluations and providing analyses to the P&T committee. She also works with our residents to give them an opportunity to gain pharmacoeconomics experience.
Her expertise was really valuable when Aduhelm came to market. She worked with our health care economist to review the literature and partnered with the chief medical officer to form our organizational stance. This all still needs to go through the P&T committee to be finalized.
Q: Have you been pursuing partnerships with any external stakeholders to better manage UHCDs?
Dr. Maki: Yes, we stay close to our pharma partners on these issues, though we have to recognize that manufacturers have an incentive to increase utilization of their drugs. What's most helpful is that they are frank with us about different payer coverage policies, and they connect us with other health systems that are using the drugs successfully. This helps make onboarding simpler by providing guidance around coding and patient assistance programs. We ultimately make our own decisions, but we have found manufacturers to be helpful partners.
We have also seen significant value with external analytics vendors. Insurers and manufacturers have already used these vendors' products to develop sophisticated tracking of long-term outcomes. Health systems can accelerate their capabilities in this area by partnering with these vendors in a similar fashion. Health systems generally have terrific patient-level encounter detail, however the longitudinal data may not exist in the usual places, such as the electronic health record. Analytics vendors can help close data gaps by identifying where we have helpful data available and what data we are missing.
Q: What advice do you have for other pharmacy leaders who are beginning to bring these drugs through the P&T process?
Dr. Maki: My biggest advice is to strengthen the relationship between finance and pharmacy. Start by identifying what support you have or lack from finance. As I mentioned before, engaging finance via the financial assessment team made a huge difference at Novant Health. It gives finance more visibility and trust in the process and also provides value in how we look at these products.
Beyond that, you need to be more sophisticated in how you're thinking about costs and reimbursements. I think there are three key factors.
1: Make sure you're getting reimbursed.
At these cost levels, you need to ensure a 100% success rate at getting reimbursed when you administer these drugs. Every UHCD that comes to market needs a team comprised of providers, nurses, finance, managed care, pharmacy, and other ancillary staff to map out the patient journey and ensure reimbursement.
2: Evaluate episodic costs.
Look at the costs of technology and drugs more broadly than the single encounter. CAR-T is a good example here. With a government payer, the drug itself has a negative margin. But there are additional ways the health system benefits from treating that patient—like lab costs, administration costs, etc. For the episode, the system may come out even or better on CAR-T even though it's losing money on the drug itself. And when you look even further across the next 12-24 months, keeping the patient in the system may have further benefits, both to the patient and to the system.
3: Connect the dots to support value-based care strategy.
With these really expensive drugs and technologies only increasing in numbers, you have to start thinking about longer-term outcomes. This is the future. Health systems are slowly figuring this out, but it's taking a while to move from a transactional mindset to a longer-term outcomes perspective. It requires working not only with historical partners like manufacturers, but also adding additional players to that conversation, to include internal teams like value-based operations and analytics, and external partners like commercial and government payers.
Although 75% of organizations have a system P&T committee, many fall short in realizing their full potential to reduce unwarranted spend. Download our research report to learn 15 steps to optimize the P&T process.
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