Biologics Under Part D: Coinsurance, Cost Containment And Coverage Overlap

Coinsurance appears to be the preferred cost-sharing method for biologics in Medicare Part D plans, according to an analysis of plan formularies by "The Pink Sheet."

Based on formularies provided on the websites of seven of the 10 prescription drug plans offered nationwide, five plans use a percentage of the drug's cost for biologic cost-sharing, while only two plans use flat copays (see chart: " ¹ Biologics Under Medicare Part D ").

YouRx (Medco), AARP Medicare Rx (UnitedHealthcare/Ovations) and SilverScript (Caremark) all established separate formulary tiers for most biologics, with 25% coinsurance beneficiary cost-sharing.

Prescription Solutions (PacifiCare) also uses an across-the-board coinsurance rate for biologics, although at a higher level (33%). Wellcare's level of coinsurance varies by plan region, rather than adhering to a standard nationwide level.

The remaining two plans - AdvantraRx (Coventry) and Aetna - use copays ranging from $20 to nearly $60, depending on the plan option in which the beneficiary is enrolled and the formulary tiering of the product.

Formulary information was not available on the websites of Cigna, Community Care Rx (MemberHealth/National Community Pharmacists Association), or Wellpoint at the time of compilation.

Caremark VP-Specialty Pharmacy Services Marketing Adina Safer told the Pharmaceutical Care Management Association annual meeting Oct. 25 that she had expected most biologics covered by Part D plans "to be on the fourth tier with a percentage copay, presumably a 25% copay."

Specialty pharmacies have highlighted the opportunity to use pharmacy benefit manager-type formulary management tools to control biologics utilization (² (Also see "Specialty Pharmacies Adopting PBM Formulary Management Practices" - Pink Sheet, 31 Oct, 2005.), p. 21).

The structure of the Part D benefit may provide little incentive for private plans to manage utilization of biologics and other high cost drugs (³ (Also see "Medicare Rx Plans Likely To Focus On Managing Use Of Low-Cost Drugs" - Pink Sheet, 2 May, 2005.), p. 19).

However, plans are using a variety of techniques to drive utilization towards preferred products in all four biologics categories analyzed: blood formation products, hepatitis C therapies, TNF inhibitors and multiple sclerosis therapies.

In the red blood cell factor category, the Prescription Solutions and Wellcare formularies include Johnson & Johnson's Procrit , but not Amgen's Epogen , while YouRx covers Epogen, but not Procrit.

AARP Medicare Rx requires step therapy for patients to receive Epogen, but not for Procrit. AdvantraRx places Procrit on a lower cost-sharing tier than Epogen.

Of Amgen's two white blood cell factor products - Neupogen (filgrastim) and filgrastim's pegylated version Neulasta - Prescription Solutions and Wellcare do not include Neulasta on formulary, while AdvantraRx places Neulasta on a higher cost-sharing tier.

In the hepatitis C category, four plans cover either Roche's Pegasys or Schering-Plough's PEG-Intron , but not both. The remaining plans cover both products.

For the anti-TNF agents, Medco employs the most complex utilization management, placing Amgen/Wyeth's Enbrel , Abbott's Humira and J&J's Remicade on separate tiers: three, two and five, respectively.

Enbrel has the highest cost-sharing on Medco's YouRx formulary, with 75% coinsurance, compared to a $17 copay for Humira and 25% coinsurance for Remicade.

AdvantraRx places Enbrel on a lower cost-sharing tier than Humira and Remicade. Prescription Solutions does not include Humira on its formulary.

AdvantraRx also uses formulary tiering to drive utilization to preferred products in the multiple sclerosis category, positioning Biogen Idec's Avonex and Teva's Copaxone on a lower cost-sharing tier than Pfizer/Serono's Rebif .

Both Aetna and Wellcare do not cover Rebif, while the remaining four plans cover all three products on the same tier.

Another challenge in managing biologics under Part D is that many of the products may also be reimbursed under Medicare Part B for different diagnoses and in different settings. Part D plans cannot cover drugs for uses already reimbursed under Part B (⁴ (Also see "Part B/Part D Drug Coverage Shifts Should Await 2008, CMS Tells Congress" - Pink Sheet, 18 Apr, 2005.), p. 20).

During the Avalere Medicare Prescription Drug Congress in Washington, D.C. Nov. 1, Caremark Chief Medical Officer Janet Berger noted that there are over 600 drugs that could be covered under either Part B or Part D.

Caremark's SilverScript formulary includes "drugs that were required by CMS to be on there or drugs that are at some time Part D-delivered drugs," she explained.

One practice consistently used across the Part D plans for biologics management is prior authorization.

Berger said that one reason PDPs use prior authorization is to ensure that drugs that could be reimbursed under either Part D or Part B are reimbursed under the correct program. Caremark requires prior authorization for nearly all of the fifteen biologics included in "The Pink Sheet" analysis.

"The area in the short term that we will probably all have to utilize" to separate Part B and Part D uses "is the prior authorization system," Berger said.

When reimbursement requests are submitted for drugs that could be reimbursed under Part B or Part D, we will "call the physicians and...ask them 'what is this drug being used for?' and 'under what arena will it be given?'" she explained.

"The problem with this is, it's disruptive, it's inconvenient, it's very resource intensive and therefore costly," Berger said. "It will be something [about which] we will all hear a great deal from physicians and patients."

One alternative to using prior authorization to differentiate between Part B and Part D would be for the Centers for Medicare & Medicaid Services, health plans and PBMs to establish lists of Part B and Part D drugs, she suggested.

Another option is to develop "a better way of getting diagnosis codes, so we can decrease that overlap of B versus D. This can be done through prescription information, through sharing of data, through diagnoses from the physician's office and ultimately, we hope, through e-prescribing," Berger said.