Evidence-Based Diabetes Management

Comparative Effectiveness Research and Formulary Placement: The Case of Diabetes

Published Online: July 02, 2013
Michael E. Chernew, PhD; Rick McKellar, BS; Wade Aubry, MD; Roy Beck, MD, PhD; Joshua Benner, PharmD, ScD; Jan E. Berger, MD, MJ; A. Mark Fendrick, MD; Felicia Forma, BSc; Dana Goldman, PhD; Anne Peters Harmel, MD; Rebecca Killion, MA; Darius Lakdawalla, PhD; Douglas K. Owens, MD; and Joe Stahl, MA
As the nation transforms its healthcare system—with or without the Affordable Care Act (ACA)—it must face the challenge of how to maintain, or even improve, the quality of care. This requires the system to be more nuanced; to encourage use of those healthcare services that produce greater health and discourage the use of those that produce less. Implementation of this simple idea requires first identifying the clinical benefit associated with different services.

Unfortunately, we cannot always identify when services improve health, as health benefit is dependent on the specific clinical scenario and patient population. In diabetes care, this is often borne out by the existence of complex comorbidities and complications. Understanding the clinical nuances of when and to whom services render the greatest benefit requires more research. The type of research that addresses this issue is commonly labeled comparative effectiveness research (CER)—although CER by other names has been around for years. Recognizing the need for stronger evidence-based practice, the ACA invested in greater CER by establishing the Patient-Centered Outcomes Research Institute (PCORI) which will commission independent CER.1

Starting in 2011 and moving forward, PCORI will act as a funding source for independent research institutions to conduct CERrelated research and will synthesize these findings and make them available to the public. 

CER is especially important in diabetes care because of the pervasiveness and multifaceted nature of the disease. Diabetes is one of the nation’s most prevalent chronic conditions, with over 8% of the US population living with the disease.2 In part due to its chronic nature and because of several widely accepted high-value treatments, the management of diabetes has become a widespread benchmark of quality. For example, most standard quality measurement systems, including the Healthcare Effectiveness Data and Information Set and most pay-for-performance systems, include a series of diabetes-related measures. These include clinical services (eg, eye and foot exams) as well as drug management for hyperglycemia, hypertension, and hypercholesterolemia. Due in part to the effectiveness of treatment and disease management as compared with non-treatment, the US Preventive ServicesTask Force recommended diabetes screening as a high-value preventive service and in turn the ACA has mandated payers to provide diabetes screening without patient cost-sharing. While there is broad consensus that several treatments are clinically effective, there is still great opportunity for CER to elucidate the optimal combination of treatments for each patient population.

There is also an opportunity to gain much more value for the money we spend on the treatment of diabetes.The American Diabetes Association estimated around $116 billion in medical expenditures associated with treating diabetes in 2007, and perhaps as much as $58 billion in reduced worker productivity.3 Pharmaceuticals represent about 12% of total healthcare expenditure, but could potentially have a sizable spillover effect on inpatient and emergency department visits, as well as substantially reduce the risk of costly complications such as cardiovascular complications, amputation, and end-stage renal disease.4,5 In addition, despite the proven value of early and aggressive treatment, diabetes-related medications generally share the same problematic adherence patterns seen in prescription use. While the drivers of adherence are many and complex, benefit design (and, specifically, member cost-sharing levels) has been tied to significant changes in patient behavior regardless of the clinical value of the medication.6 Thus payers, and especially pharmacy benefit managers (PBMs) who play a pivotal role in managing formularies, have an opportunity to use CER to improve the value of spending on patients with diabetes.

The promise of CER will be realized only if patients, providers, insurers, and other stakeholders act on the findings. This can be done in several ways including supply side initiatives (Value-Based Purchasing [VBP]) and demand side initiatives (Value Based Insurance Design [VBID]). In the case of pharmaceuticals, VBID entails using CER to guide formulary placement. Specifically, the alignment of clinical knowledge and financial incentives can promote an efficient delivery system. The status quo generally has failed to align quality improvement and cost containment initiatives. In fact, in some instances, these actually compete with each other, contributing directly to inefficiency.In most situations, formulary placement and patient copayment amounts are based on the cost of a drug within its sub-class of therapeutically similar alternatives (eg, dipeptidyl peptidase-4 [DPP-4] X vs DPP-4 Y), not the value of the drug relative to treatments for other disease areas (eg, a DPP-4 vs an acne therapy), relative to alternative therapies for the same disease (eg, a DPP-4 X vs a thiazolidinedione [TZD] or a glucagon-like peptide-1), or relative to varying uses of the product (eg, a DPP-4 as first-line or fourth-line therapy). As a result, patients face the same out-of-pocket costs for all drugs on a given tier regardless of the relative therapeutic value provided.

A more thoughtful approach would be to use CER to guide and target formulary placement more efficiently and effectively. The idea of using CER to guide formulary placement is an important component of the principles of VBID. The basic VBID premise is to align patients’ out-of-pocket costs with the value (defined as benefit relative to cost) of health services. This approach to designing benefit plans recognizes that different health services have different levels of value. By reducing barriers to high-value treatments (through lower costs to patients) and discouraging low-value treatments (through higher costs to patients), these plans can achieve improved health outcomes at any level of healthcare expenditure. This can be incorporated at 3 levels of sophistication—across disease areas (eg, diabetes vs acne), within disease areas (eg, DPP-4s vs TZDs), and within drug (eg, DPP-4 use first vs fourth line, or for patient x vs patient y, etc). The broadest application, and the easiest to implement and communicate, would be the entire class of diabetes medications placed on a tier that incentivizes (or avoids dis-incentivizing) adherence. A more refined approach would reserve preferred tier placement for diabetes treatment sub-classes. Finally, and both most coherent and most difficult, individual medications or services could be tiered according to specific needs or actions of a patient (ie, according to indication, place in therapy, program participation, etc). However, such an alignment of incentives is only possible in the setting of improved clinical evidence. Driven by CER, VBID represents a clinically sensitive, fiscally responsible approach that advocates keeping patient out-of-pocket payments low on high-value services and raising them on services of no or marginal clinical value. Such an alignment of clinical and economic incentives facilitates patients making appropriate choices both because evidence suggests that formulary positioning can influence patient  decisions on what product to use (ie, formulary positioning can drive positive change to more high-value use and not just lower-cost use), and to mitigate against the unintended consequence of increasingly higher cost sharing. When faced with higher costs, patients often make poor clinical decisions, which in fact could, in some cases, lead to greater overall costs.8-10 By using incentives to encourage the use of high-value services and discourage the use of low-value ones, VBID has the potential to achieve marked increases in the efficiency of the healthcare system. More health can be achieved at any level of spending. In the case of diabetes, VBID has already been implemented in several large corporations. Recognizing the clinical and potentially cost-saving value of diabetes medication, both Pitney Bowes and Marriott International, Inc, implemented a VBID program that reduced the copayments for diabetes treatment and a handful of other chronic conditions.11 The University of Michigan took a related approach that focused solely on diabetes treatment, lowering copayments and coinsurance for diabetes-related office visits and medication.12 These initiatives all identified the clinical and potential economic benefit of incentives-based disease management among diabetics and lowered out-of-pocket expenses across the board. This broad-stroke approach is a first, blunt step to aligning copayments with value. Refining the approach by adjusting formulariesbetween classes of diabetes-related therapies to incentivize high-value use may prove effective at guiding patients to more efficient treatments. Going yet another step, there is potential for incorporating clinical nuance that differentiates the value of individual medications based on the profile or behavior of a specific patient.

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Issue: May/June
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