Patient Access & Reimbursement: Current Challenges & Strategies

Chris MancillVice President, Government Programs & Reimbursement, EMD Serono

April 13, 2018

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● The information and views shared in this presentation are my own and do not necessarily represent any official positions of EMD Serono or Merck KGaA, Darmstadt, Germany.

Disclaimer

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This session will review the following:● the current access and reimbursement landscape for

community oncology and strategies to deal with emerging challenges

● the role of government and commercial payers, as well as Pharmacy Benefit Managers (PBMs) and the changing ways that we work with them

● the new opportunities presented by the Administration’s focus on value-based agreements and its implications for community oncology

● the growing funding gaps for patients and strategies for working with assistance programs to help them meet their needs

Topics for Today’s Discussion

215

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100

150

200

250

1991 2014

Can

cer D

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U.S. Death Rates from Cancer Decline Over Time

Source: American Cancer Society. Cancer Facts & Figures 2017. Available at http://www.cancer.org/research/cancerfactsstatistics/cancer-facts-and-figures-2017.

-25%

Since Peaking in the Early 1990s, Cancer Death Rates Have Declined byAbout 25 Percent

Increases in cancer survival are estimated to translate to the avoidance of nearly 2.1 million cancer deaths.

5

Introduction of Novel Cancer Medicines Associated with Survival Increases

Medicines are one factor driving increased survival, along with screening, earlier diagnosis, and lifestyle changes.

Change in Incidence and Survival (2004-2013)

Source: Quintiles IMS Institute. Global Oncology Trends 2017. Available at https://www.iqvia.com/institute/reports/global-oncology-trends-2017-advances-complexity-and-cost. 6

Promise in the Pipeline: More than 800 Medicines in Development for Various Cancers

Stomach CancerSkin Cancer

Prostate CancerPancreatic Cancer

Ovarian CancerMultiple Myeloma

LymphomaLung CancerLiver Cancer

LeukemiaKidney Cancer

Hematological MalignanciesColorectal Cancer

Breast CancerBrain Cancer

Bladder Cancer

Phase I

Phase II

Number of Medicines in Development in the United States,September 2015, Selected Cancer Types1

Sources: PhRMA. Medicines in Development for Cancer (2015). Available at http://phrma.org/sites/default/files/pdf/oncology-report-2015.pdf; American Association for Cancer Research. AACR Cancer Progress Report (2017). Available at http://www.cancerprogressreport.org/Documents/AACR_CPR17_Final.pdf.

1 Some medicines are being explored in more than one therapeutic category.

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Cancer Drugs Account for About One Percent of U.S. Healthcare Spending1

Cancer Medicines as a Portion of NHE Projected Total U.S. Health Care Spending, 2016

Cancer Drug Spending

$45.5 Billion2

$3.3 Trillion*

1 2016 CMS total National Health Expenditures is a projection 2 Cancer drug invoice spending and does not include discounts

Sources: Quintiles IMS Institute. Medicines Use and Spending in the US: A Review of 2016 and Outlook to 2021. May 2017; CMS, National Health Expenditures Data. Available at https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/nationalhealthexpenddata/nationalhealthaccountsprojected.html.8

Cancer Medicines Represent About 20 Percent of Cancer Spending

34%

11%8%

3%

21%

5%

18%

Medicare Treated Cancer Population, 2014

Cancer Drugs

20%

13%

10%

4%

28%

4%

20%

Commercially InsuredTreated Cancer Population,

2014

Cancer Drugs

Source: K. Fitch, et al. Milliman. Cost Drivers of Cancer Care: A Retrospective Analysis of Medicare and Commercially Insured Population Claim Data 2004-2014 (April 2016). Available at http://www.milliman.com/uploadedFiles/insight/2016/trends-in-cancer-care.pdf.9

Average Price Growth of Cancer Medicines in Medicare Part B Is In Line With Medical Inflation

Cancer Drugs

Source: The Moran Company. Trends in Weighted Average Sales Prices for Prescription Drugs in Medicare Part B, 2007-2017 (December 2017). Available at http://phrma-docs.phrma.org/files/dmfile/PhRMA-ASP-Trend-Report-final-02212018.pdf.

Weighted ASP (Oncology Drugs vs. All Other Drugs) vs Consumer Price Index – Medical (CPI-M)

The trend of volume-weighted Average Sales Price (ASP) for cancer drugs administered through Medicare Part B has been growing in line with medical inflation.

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Better Use of Cancer Medicines Can Reduce Health Care Costs

Cancer Drugs

Advanced melanoma patients who were adherent to immunotherapy experienced 10 percent lower health care costs.

Source: Gupte-Singh K, Lin J, Lingohr-Smith M, Menges BL, Rao S. Adherence to cancer therapies and the impact on healthcare costs among patients with advanced melanoma in the USA. Proceedings of the 22nd Annual International Meeting International Society of Pharmacoeconomics and Outcomes Research (May 2017); Available at https://www.ispor.org/ScientificPresentationsDatabase/Presentation/70971?pdfid=49558.

$51,991 $48,263

$41,830 $37,549

All-Cause Costs Melanoma-Related Costs

Difference in Total Healthcare Costs by Adherence Status for Advanced Melanoma Patients

Low Adherence

High Adherence

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Patients Face Medical and Non-Medical Cost Burdens

Cancer Drugs

More than 40 percent of patients say medical and non-medical costs cause equal financial hardship.

Top Patient Financial Concerns1

Source: CancerCare. Financial Hardship Associated with Cancer (2017). Available at https://media.cancercare.org/publications/original/349-financial_hardship.pdf.

NON-MEDICAL MEDICAL

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1 Among patients (n=110) diagnosed with cancer in the past five years and surveyed by CancerCare in April 2017.

A Cancer Diagnosis Impacts Productivity and Employment for Patients and Caregivers

Caregivers

Sources: CancerCare. Financial Hardship Associated with Cancer (2017). Available at https://media.cancercare.org/publications/original/349-financial_hardship.pdf; Yabroff et al. Financial Hardship Associated with Cancer in the United States: Findings from a Population-Based Sample of Adult Cancer Survivors (2016), DeMoor et al. 2016. Employment implications of informal cancer caregiving (2016); Yabroff & Kim. Time costs associated with informal caregiving for cancer survivors (2009).

More than

25%of cancer caregivers made extended employment changes

67% of patients who were

employed full-time when diagnosed either stopped working or reduced their

work hours

Patients

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Out-of-Network (OON) Utilization Contributes to High of OOP Costs

Out-of-pocket (OOP) costs can be high when insurance does not cover the services patients need. For cancer patients with high OOP spending, a large portion of their costs are due to OON services.

7%

7%

10%

41%

Low (10th percentile)

Moderate (50th percentile)

High (90th percentile)

Highest (99th percentile)

OO

P Sp

endi

ng P

erce

ntile

Percent of Total Out-of-pocket Costs Incurred Out of Network, All Cancers (2011)

Source: G. Dieguez, et al, Milliman Research Report. A Multi-Year Look at the Cost Burden of Cancer Care (2017). Available at http://www.milliman.com/insight/2017/A-multi-year-look-at-the-cost-burden-of-cancer-care/.

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Benefit Design Is a Barrier for Some Cancer Patients

Some plans place treatments for certain high-cost conditions on the highest drug formulary cost sharing tier (sometimes called adverse tiering).

Source: Avalere Health PlanScape®, a proprietary analysis of exchange plan features, April 2016. This analysis is based on data collected by Managed Markets Insight & Technology, LLC.

50%

23%

Antiangiogenics*

Molecular Target Inhibitors*

Percentage of Silver Plans Placing All Drugs per Class on Specialty Tier, 2016

*There are no generic drugs available in this class. All products are single-source.

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High Cost Sharing Leads to Abandonment or Delays in Cancer Treatment

Highest cost sharing group was six times more likely to delay treatment than the lowest cost-sharing group.

Source: Doshi JA, Li P, Huo H, Pettit AR, Armstrong K. Higher patient cost sharing is associated with prescription abandonment and delay in fills of novel oral oncolytic prescriptions. Proceedings of the 22nd Annual International Meeting International Society of Pharmacoeconomics and Outcomes Research (2017). Available at https://www.ispor.org/ScientificPresentationsDatabase/Presentation/73657?pdfid=49504.

9%13%

29%

38%

45%

<$10 $50.01-$100 $100.01-$500 $500.01-$2000 >$2000

Oral Oncolytic Abandonment Rate byPatient Out-of-Pocket Amount

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“What we should be doing is, those techniques that drive such good net pricing in Part D, what can we take from the learnings there into Part B?”

“I think we need to rethink how we are structured and how

we’re paying for these new drugs.”

“I think we need to rethink how we are structured and how we’re paying for these new drugs… the Part B program in particular may not have contemplated these types of new drugs coming out in the market.”

“I think where the government doesn’t have negotiation, it’s worth looking at that.”

Part B “was constructed a

long time ago, in a different era” with different

drugs and types of therapy.

What Is CMS Going to Do?

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Commercial Payers Are Using A Variety of Tools to Control Access to Oncology Therapies

59%

35%

31%

Contracting for preferred first-line therapies

Using clinical pathways to determine treatment regimens

Utilizing one or more value frameworks* in determining reimbursement

Current and Anticipated Payer Measures to Manage Oncology Costs (Q1 2017)

*Value Frameworks: NCCN Evidence Blocks, ASCO Value Framework, etc.

Source: Zitter Health Insights, Managed Care Oncology Index (2016).20

Manufacturers and Health Insurers Are Pursuing Novel Outcomes-Based Contracts (OBCs)

Source: PhRMA Member Survey, Barriers to Value-Based Contracts for Innovative Medicines (2017). Available at https://www.statnews.com/wp-content/uploads/2017/03/PhRMA_ValueBased_MemberService_R2122-2.pdf; Avalere Health. Payer Perspectives on Outcomes-Based Contracting (2017).

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16

Late 1990s-2013 2015-2017

Private Sector Risk-Sharing Contracts Announced

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About 35 percent of payers with outcomes-based contracts have or are considering OBCs in oncology. The Administration has also signaled willingness to allow OBCs for government programs.

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Value Based Contracts

Value Frameworks

Quality Measures

Enabling the Cancer Drug Market’s Move to Value

Expand value-based contracts by modernizing outdated regulations.

“[R]egulatory reforms can address these concerns and encourage more robust competition within the drug market.”

Scott Gottlieb & Kavita Patel

Develop better data and tools to support informed decision-making by patients, physicians and payers.

“[E]merging approaches for assessing drug value are welcome….The frameworks will require refinement, however, before they're ready to be broadly applied.”

Peter Neumann & Joshua Cohen

Close gaps in clinical and patient-focused quality measures.

“All phases of the cancer care continuum…need new measures.”

National Academy of Medicine

Sources: S Gottlieb, K. Patel. A Fair Plan for Fairer Drug Prices, Health Affairs; P. Neumann, J. Cohen. Measuring the Value of Prescription Drugs, NEJM; Institute of Medicine. Delivering High-Quality Cancer Care: Charting a New Course for a System in Crisis (2013).

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Payers Are Increasingly Exploring Novel Ways to Manage Specialty Drugs

Source: Conti RM, Landrum MB, and Jacobson M. The impact of provider consolidation on outpatient prescription drug-based cancer care spending (2016).

Restrictions like this one can be disruptive to the practice of oncology care. Providers should be ready to express their concerns to payers that make such changes.

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● Cigna recently announced that it will no longer allow buy-and-bill reimbursement for certain providers that purchase so-called “limited distribution drugs,” a term that could be applied to most oncology drugs

● Instead, the payer will mandate that these products be ordered and delivered by a specialty pharmacy provider

Pharmacy Benefit Managers (PBMs) Are Targeting Physician Dispensing

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● Since 2011, PBMs have consolidated into just a handful of major corporations that control about 80 percent of covered lives in the United States

● A leading PBM, CVS Caremark, recently attempted to decertify physicians dispensing oral oncology therapies from its pharmacy network

● This move, which was swiftly and successfully opposed by groups like COA, would have left patients without access to their medications from the provider offices where they are treated

Source: Frier Levitt. Pharmacy Benefit Managers’ Attack on Physician Dispensing and Impact on Patient Care: Case Study of CVS Caremark’s Efforts to Restrict Access to Cancer Care. Available at https://www.communityoncology.org/wp-content/uploads/2016/08/PBMs_Physician_Dispensing-WhitePaper_COA_FL.pdf.

There Are Many Resources Available to Help with Patient Needs, But Keeping Track Can Be A Challenge

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● A handy reference for manufacturer programs is the ACCC Patient Assistance & Reimbursement Guide1

● In the past, it was hard to find a centralized resource for not-for-profit and foundation assistance programs; however, ACCC recently added these aspects as well

Source: ACCC. 2018 Patient Assistance & Reimbursement Guide. Available at https://www.accc-cancer.org/home/learn/publications/patient-assistance-and-reimbursement-guide.

Your Input to Manufacturer Partners Is Absolutely Critical in Designing Patient Access Services

Your feedback and thoughts for improvement are greatly appreciated.

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● Please give your manufacturer partners feedback on their patient access and reimbursement services●We cannot design and implement these

programs without your input● Each company has different approaches, but

consider taking advantage of available opportunities to provide feedback

With So Many Threats and Changes Looming, What Can We Do?

Network to amplify your voice and make your manufacturer partners aware of your concerns, so you can leverage them on issues of mutual interest.

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● There is no better advocate for community oncology than COA● Be involved and be an advocate for your

profession, and encourage your peers to do the same● Participate in Congressional fly-ins and Hill

Days and make your representatives in DC aware of your concerns