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Harvard Pilgrim Obtains Risk-Based Contract for Pricey Repatha

Amgen agrees to discount and pay-for-performance clause on cholesterol drug

Health insurer Harvard Pilgrim Health Care has struck a deal with drug maker Amgen for its new cholesterol-lowering drug evolocumab (Repatha). In addition to providing a discount, Amgen will be at risk financially if health plan members' cholesterol levels aren't lowered enough.

 According to Modern Healthcare, insurers and pharmacy benefit managers (PBMs) have aggressively pursued discount negotiations with drug makers to stem the tide of rising drug costs, and Harvard Pilgrim's deal with Amgen is one of the first to add a pay-for-performance element on top of the discount. It's uncertain if this tactic will catch on or do anything to curtail high drug pricing.

“The pharmaceutical segment has remained primarily in a traditional 'pay-for-pill' model,” Harvard Pilgrim Chief Medical Officer Dr. Michael Sherman said. With the latest deal, Amgen is “putting their money where their mouth is,” he said.

The retail price of a year's supply of evolocumab is $14,100, slightly less than the $14,600 price tag of alirocumab (Praluent, Sanofi-Aventis U.S.), the other major cholesterol drug approved by the FDA this past summer. Harvard Pilgrim did not negotiate any agreement for alirocumab, which means evolocumab will be on its preferred formulary. The PBM Express Scripts said last month it would cover prescriptions for both medications.

Sherman declined to say how much the price was reduced. All contracts with pharmaceutical companies have confidentiality clauses that prohibit those terms from being disclosed, but Sherman said the discount was “material.”

Amgen executives recently told investors that they would not disclose discounts given to third-party payers. For the blockbuster hepatitis C drugs made by Gilead Sciences, the average discounts were around 50% of the sticker price, but the drugs still cost more than $40,000 for a course of treatment, raising questions about whether discount negotiations broadly help the system.

A report this year from the Institute for Clinical and Economic Review said the new class of cholesterol drugs, called PCSK9 inhibitors, which go after a person's “bad” cholesterol, are extremely overpriced. Based on cost-effectiveness measures, those drugs should cost $2,520 per year, the group said.

Unique to the deal, Amgen will have to provide larger rebates to Harvard Pilgrim if patients' low-density lipoprotein-cholesterol levels are not lowered to “what was observed during clinical trials.” Harvard Pilgrim can also receive additional rebates if the drug is used more than a predetermined amount, which essentially lowers costs on a per-prescription basis. The insurer said it still wants to encourage patients to use lower-cost statins.

Insurers have experimented with risk-sharing with drug companies in the past. Cigna did it with Merck's diabetes medications, and Health Alliance Medical Plans, owned by Urbana, Illinois-based health system Carle Foundation, created a value-based deal for the osteoporosis drug Actonel. Sherman said he believes conversations about value-based contracting for prescription drugs will become more commonplace.

“We hope that the pharma companies will finally start to realize this is the right way to align with the health care delivery and financing system,” Sherman said.

Source: Modern Healthcare, November 10, 2015.

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