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Utilization Management Through Medical and Pharmacy Benefit


Assessing differences in utilization management between managing an IV product in terms of medical benefit vs. self-administered oral product in terms of pharmacy benefit.


Neil B. Minkoff, MD: Let me segue a bit here and jump in for a second if I may. The old-school thinking, the traditional thinking, is that it’s easier to manage the utilization. I told you I’d come back to this. It’s easier to manage the utilization on the pharmacy side than it is on the medical side. Traditionally, on the pharmacy side, you have the prior authorization [PA], so the drugs are being mailed out through specialty pharmacy, or the prescriptions are being covered on the medical side. Sometimes, there’s buy-and-bill, and you’re finding out that the patient is on the drug after it’s been infused when the bill comes in. How has that changed over the years? Do you think there’s a difference at this point between managing an intravenous product on the medical side vs. a self-administered oral product on the pharmacy benefit side? Who wants to jump in?

Michael Fine, MD: I’ll weigh in. In terms of establishing utilization criteria, it’s pretty much the same. We can say that these are the criteria that patient must meet to show that they have medical necessity for that drug. That is similar, at least for us [at Health Net of California], across pharmacy and medical benefits. The challenge in utilization management [UM] on the medical side is trying to prefer drugs. It’s easy on the pharmacy side because you control distribution of the drug, so they can’t get a drug unless you distribute it to them. As you mentioned, they sometimes infuse what they want without asking for authorization, and other times, they may not be. It’s hard to give you an example in MS [multiple sclerosis].

An example would be in oncology, where we now have a host of PD-1, PD-L1 drugs. You may have a contract with 1 of those manufacturers for their product, but the oncologist has a contract with a different manufacturer. The 1 that’s going to save you money is the 1 that’s going to have them lose money. It’s difficult to do preferences, and that’s where the challenge is on the medical side, to have preferred products, because physicians can’t inventory every single drug. It would be far too costly with the cost of some of these products today. They choose the drugs they want to use, and if that’s not the one you want to use, then it becomes a problem. It’s going to be an even bigger problem when we have 4 or 5 biosimilars for many of these drugs.

Neil B. Minkoff, MD: I want to make sure I’m nailing you down a bit. Does that cause you to prefer trying to manage in 1 channel vs. another, or does it just identify the problems in multiple channels?

Michael Fine, MD: It encourages us, and we do it to manage more on the pharmacy side than we do on the medical side. Our medical side is more open, and if we have criteria, it’s usually to determine an eligible patient as opposed to promote a preferred drug. We have some preferred drugs under the medical benefit, but it’s far less common than it is under the pharmacy benefit.

Neil B. Minkoff, MD: Kevin, what about you?

Kevin U. Stephens Sr, MD: It’s an interesting question that you’ve asked because as you do UR [utilization review], we have to look at the whole picture again. For some drugs, you administer 1 dose 3 weeks apart, but for others, you do 1 dose 6 hours apart. There are many factors that will come into play as we go from 1 drug to the next, even in the same classification, as well as adverse effects. When you look at it, some have different liver profile and kidney disease, so each client presents a whole other picture. As you use utilization management and review, it’s more difficult on the provider’s side because they are all so different, and we have to look at each patient. The good news is that, when we do UM and UR, the providers can all do peer-to-peers. The way the peer-to-peer process works is this: You have to have a similar specialty physician reviewing the case with the provider, and they can do a formal appeal. We have safety nets in place for providers, so if you have a situation that’s not the cookie-cutter model, something that is unique, the providers can plead their case for why they’re doing what they’re doing as opposed to doing it from the pharmacy benefit. We do tiers, like 1, 2, or 3, and we segregate them based on the tiering mechanism to allow for better utilization.

Neil B. Minkoff, MD: Cheryl, do you want to weigh in here? How you look at it from your point of view?

Cheryl Larson: For employers, it is harder to control utilization through the medical benefit. Even when employers implement solutions like step therapy or prior authorization, you can’t use it if the drug has been purchased and administered through the provider’s office or an outpatient facility and not through the PBM [pharmacy benefit manager] or a third party. With the medical plan, employers can put in place prior authorization to control utilization, but it’s a slow process, and requests for PA are often ignored. It’s hard to carve them out of the medical plan because of how they’re billed, which is often post-treatment, and how they’re purchased. The drugs are purchased by the office facility. We haven’t said too much about J-codes today, but J-code blocks are a way to address certain drugs that would run under the medical benefit. Those are also often delayed, and it occurs after the fact. That’s a whole other challenge.

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