By Jennifer Bright and Michael Thompson
It has been standard practice for employers to rely on their plans, PBMs, and consultants to make recommendations about coverage and formularies, and define the metrics that determine value. However, there is a growing gap between the management of those functions and how value is assessed by employers, other purchasers, and patients. Here we use one example — management of depression — as a case study in how purchasers and patients could better assess value. This is particularly timely with the COVID-19 pandemic which will likely lead to more mental health issues.
Depression presents a staggering price tag with relatively poor outcomes
A 2018 report from Willis Towers Watson shows caring for employees with depression presents a staggering cost to employers: $14,967 per year in claims. Meanwhile, the Center for Workplace Health reports depression costs employers an estimated $44 billion annually in lost productivity. The primary reason behind these high prices is not the cost of the treatments, but the limited approach taken to define what’s included in the value equation. For instance, a patient is often prescribed an antidepressant based on more art than science. However, if the follow-up is poor or the drug is not a fit, the patient ends up back at square one. Sadly, the example of major depression is just one of hundreds of conditions where employers struggle to improve outcomes and costs. We currently don’t have a good way to assess which treatments offer the best value to the patient and the employer.
In late February, the Innovation and Value Initiative (IVI) convened a broad group of healthcare stakeholders to address this problem. In addition, the National Alliance of Healthcare Purchaser Coalitions (National Alliance) discussed results from
How we assess value today neglects factors most important to employers
Unfortunately, we have a long road ahead. Today, third-party entities that advise employers increasingly use value assessment evaluations, like those performed by the Institute for Clinical and Economic Review (ICER). By looking at clinical data and expected costs to assess cost-effectiveness, ICER posits a target “acceptable” launch price for a drug. It is certainly the mainstream approach and yet, these models are not set up to include data most important to purchasers and patients such as:
- a set of patient preference factors (e.g. functional status, impact on days of work, accessibility (mode of administration or clinical setting);
- impact on caregiver or family;
- related expenditures elsewhere in system (hospitalization, other medical services, office visits, adverse events, disability payments and/or workers’ compensation claims).
With depression, these factors are the most important components of value; yet, they are not the primary drivers in how coverage and formularies are managed. Furthermore, the variation in which treatments work for which individual must be considered. The drug’s price gets further obscured when PBMs adjust prices related to their rebates. Rebates play a disproportionate role in how value is assessed, because of the business model of our intermediaries, and how we typically evaluate PBM performance and value in the aggregate.
Three steps employers must take to improve value assessment
So how do we get to a better method to assess patient-purchaser value? While depression is a good case study, this is not a battle we can fight one health condition at a time, nor one drug at a time. We need to change the entire process so that a patient-purchaser “value lens” is applied upfront. First, employers have to get more engaged. Delegating this work to plans, PBMs, and consultants isn’t working and creates a passive relationship that employers can no longer afford. Even with everything else on their plate, benefits leaders need to be at the table asking hard questions, such as “does your value assessment analysis rely solely on clinical evidence or do you also incorporate real work data to better understand the patient experience and impact on indirect costs?”
Next, employers need to lay out a firm set of expectations for their plans and PBMs. This should include bringing a broader focus and greater clinical intensity into formulary discussions. Rather than just defer to their PBM, employers need to ask for data on how disease classes are being managed, and the specific drugs used by their population. They must question — and possibly remove — those that show negligible clinical value. Employers should also use their onsite clinical resources, including their chief medical officer, as a resource.
Similarly, employers should demand “real world data” for a better understanding of costs, outcomes, and value. For example, drug X for major depression may have a relatively low price tag, but cause huge losses in employee productivity due to inappropriateness, or adverse events. Sometimes employers may be the best source of this real-world data, while researchers who just look at clinical evidence may lack perspective.
Finally, employers need to influence the process and ongoing dialogue with those who perform value assessments. We must establish a universal set of metrics that assess patient-purchaser value. IVI’s convening is the beginning of a longer collaborative process to develop this list. As always, the National Alliance, through its regional coalitions, can be a trusted forum for employers to join together and engage in this work. Meanwhile, employers can take reinforcing steps, like focusing on evidence-based benefit design, so that employees have the right set of financial incentives to use higher-value treatments.
Imagine a future where we do these things. Rather than analyzing the value of drugs as an end-stage, class-by-class endeavor, we consider the value of whole categories of health interventions, defined first by the needs/preferences of end-users and end-payers. We follow, and where necessary, develop the real-world evidence to better understand impact and improve our collective efforts. The result will influence the design of clinical and health services research, and impact the collection and sharing of data in formats that are usable and relevant to decision making. Ultimately, this approach drives a value conversation that is inclusive and representative — not just of the desire for equitable price — but for the best use of resources.
