Opportunity, Ressources, and Affordability: Multistakeholder Perspectives


On two occasions last year, the Jefferson School of Population Health convened a National Advisory Board of scientists and opinion leaders from key stakeholder groups at a high-level forum to explore different perspectives and to discuss improving access for patients who require treatment with biologic drugs. The following is the first of two articles documenting these discussions. The second article will appear in a subsequent issue of BIOTECHNOLOGY HEALTHCARE.

Biologic pharmaceuticals offer unimagined potential for preventing or delaying the course of complex chronic conditions, as well as for mitigating the associated disa bling symptoms. These biologically derived products are complex and costly to develop compared with traditional chemically based pharmaceuticals and target relatively small populations. The dilemma for stakeholders lies in making these beneficial but costly products accessible and affordable to patients for whom they are intended.

Some patients who are effectively treated with biologic drugs are unable to continue their use for nonclinical reasons, such as tolerance, compliance, and, of particular concern, affordability. Manufacturers and the healthcare system share in the responsibility for providing accurate and timely prescriptions, and for enabling patients to receive the most effective drugs for as long as is clinically necessary.

National Advisory Board members who represent a variety of disciplines (see box, next page) met and discussed biologic pharmaceuticals from the standpoints of clinical evidence, access, affordability, benefit structure, and cost-sharing. This article, based on the proceedings of the meeting, highlights the promise and the potential pitfalls as we approach the future of biologics.


A biopharmaceutical can be defined as any biology-based therapeutic that structurally mimics compounds found within the body (Nagle 2003). Biopharmaceuticals include recombinant proteins, mono clonal and polyclonal antibodies (and antibody fragments), peptides, antisense oligonucleo tides, therapeutic genes, and certain therapeutic vaccines. The definition excludes autologous products, diagnostics, and preventive vaccines.

Decisions made today about the development of biologics lay the groundwork for better decision-making processes tomorrow. Among the considerations that should be addressed are patient demand; the development of efficient industrial-plant models that save time and money;the importance of registries; moving from claims analy ses to more comprehensive analyses; and creating a system for classifying diseases (e.g., by the source). years — to academic institutions.”


From 2002 through 2006, biopharmaceuticals have experienced aggressive utilization growth, ranging from 16 À 30 percent (Mul lins 2005, Simon 2006). Over the same period, growth in total pharmaceutical utilization was slower, averaging 7 percent, and research suggests that the 2008 growth rate for traditional pharmaceuticals was expected to be as low as 4 percent (Cowen 2007). As of 2005, 175 bio logic products were on the market, and more than 400 in the phases 1 À 3 pipeline have been approved (Walsh 2005). Biologics in the late-stage pipeline target 38 disease cate gories totaling 190 indications (Na gle 2008). Among the conditions currently targeted: cancer (40 percent of biologic agents); immune-mediated inflammatory disorders (IMIDs) (20 percent); and blood disorders (11 percent). The Figure shows the number of biologic agents targeting specific IMIDs. Agents that target central nervous system disorders, such as multiple sclerosis, are another growing category in the biologics pipeline.

The majority of biopharmaceutical agents in the pipeline likely will be administered either subcutaneously or intravenously (IV), and an increase is anticipated in these modes of delivery. Because of U.S. Food and Drug Administration monitoring requirements, it is anti cipated that more than 70 percent of agents in the pipeline will require administration by a healthcare pro vider. More than 33 physician specialties, including family practice, are involved in the administration of biologics. The combination of route of administration, provider oversight requirements, and involvement of a range of specialties is likely to raise marketing and risk-management is sues (at the time of administration and beyond), and will require closer observation to determine the long-term impact.

Biologics versus chemically derived therapeutics

Traditional drugs

Large molecules (3,000 À 5,000 atoms) Small molecules (20 À 100 atoms)
Administered via injection or infusion Administered orally or transdermally
More targeted than traditional because of robust
binding with specific protein sites
More restricted binding capability
Interrupt disease processes to prevent disease
and/or its symptoms
Treat symptoms
Must be produced within living cells
Chemically synthesized
Molecular biology, industrial fermentation
Medicinal chemistry, specially chemical synthesis
Much more complex and costly production; 250 critical
tests, facilities often required prior to approval
Typical drug manufacturing in a specialty chemical plant,
40 À 50 chemical tests

97.7 months for development, 8 percent longer than
traditional; 54 À 56 percent approval in phase 3

22 percent success rate for FDA approva

65 À 75 percent approval in phase 3

30 percent success rate for FDA approval

In summary, there is a decrease in the growth of traditional drugs and a rapid increase in the growth of development of biologics. This robust pipeline is expected to offer new therapeutic options for patients with debilitating and chronic diseases.


Chronic conditions. En général, evidence-based medicine supports more aggressive treatment of chronic diseases. There is a marked difference between the treatment of a patient who has been recently diagnosed with a chronic illness and one who has lived with the disease for years. The existing fragmentation in methods and types of payments and benefits unduly complicates appropriate combination treatment.

Biomarkers. We must strive to understand how biomarkers can be used to identify appropriate patients for biologic therapies while remaining alert to the possibility of missing a patient who does not have a particular biomarker.

When working with proteins, some patients may be nonresponsive because of genetic differences.

Once a nonresponder is identified, it is important to identify a means for eliminating toxicity in that patient. This type of research could become a major collaborative effort between NIH and pharmaceutical companies.

It may be helpful to calculate the economic impact of a biomarker; for instance, the concept of bio markers could be used to develop a cost model (for payers) for appropriate resource utilization.

Implications for clinical trials. More creativity must be permitted with respect to clinical trial design. Because the diseases targeted by bio logic products are less common than those targeted by traditional pharmaceuticals, enrolling sufficient numbers of patients in a clini cal trial may present difficulties. Trials also must take biological and clinical endpoints into account. The subjects’ responses to the drug must be well defined (for example, immediate reduction in joint pain or an antiinflammatory response that decreases heart disease long term).

We must expand the research base on the additive benefit of drugs. Expert panelists believe that a complex and chronic condition such as rheumatoid arthritis (RA) is best treated with combination therapy. Yet clinical trials are generally structured to show the benefit of a single agent in isolation. This could lead to delivery of an unnecessarily high dose of each agent, when a lower dose of each might suffice if the drugs are used in combination.

Nonclinical factors
. Physicians have long thought that the immune disorder systemic lupus erythemetosus was more prevalent among African-Americans. New studies have shown that the important varia ble is not race nor is it public health access, but socioeconomic factors, stress, and diet.


. Barriers to patients receiving appropriate biologic drugs include patients’ perceptions regarding the safety of biologics, their differing abilities to adhere to a treatment regimen, and the often daunting administrative processes implemented by payers. Aussi, board members stated that there is reason to believe that individual patients respond differently to different biologic agents.

Other barriers notwithstanding, affordability is of utmost concern to patients. According to Christopher Goff, Esq., president and CEO of the Employers Health Purchasing Corp. of Ohio (EHPCO), copayments are a common feature of all health plans, whether public or private. EHPCO’S specialty pharmacy program covering 400,000 lives, reports that its members bear $1.2 million in costs (copayments plus deductibles) for a total of 15,000 prescriptions grossing $33.4 million each year. The average copayment per prescription is $77.32, and the average copayment plus deductible is $79.38. Statistics for 2006 show an average cost of $2,200 per prescription; the highest costs are associated with conditions targeted by biologic drugs (e.g., cancer, RA, and multiple sclerosis).

To illustrate the issue of afforda bility from the patient’s perspective, advisory board member John Hardin, MD, related the circumstances of a case in his rheumatology practice. A 58-year-old firefighter had to retire early following six years of battling RA. Treatment with a first-line drug (metho trexate) was ineffective, leaving the patient with nodules on his entire body within two to three weeks. An allergic reaction to a first-line biologic drug led the physician to prescribe an alternate biologic agent that caused the patient’s symptoms to disappear. The patient’s relief was short-lived, because he could not afford the high copayment. The patient’s condition deteriorated dramatically, and the physician’s appeals to the insurer were unsuccessful. Although the patient eventually began to respond slowly to a third biologic, the impact on his physical and mental health was enormous.

Key message from the advisory board

Averages can be misleading. Large organizations like EHPCO have hundreds of plan copayment designs — a few with no copayment and others with 25 À 40 percent coinsurance. Although the average looks reasonable, it masks serious access and affordability issues.

Physicians. Growth in the use of biologics for treatment of chronic conditions is having an effect on physicians. For instance, growth in the number and types of drugs (particularly bio logic agents) for the treatment of RA is changing the economic picture for rheumatology specialists. The use of biologics in clinical practice is labor intensive, and the reimbursement for IV administration and monitoring is negligible. Payers’ administrative processes (e.g., prior authorization, appealing denials of coverage) often are time consuming and can further complicate appropriate treatment for individual patients.

There also is a concern among physicians that the guidelines for the use of biologics will become overly stringent, making it difficult to treat patients who do not fit a specific profile. Advisory board members suggested that “Guidelines similar to those applied to epoetin alpha might be applied to other drugs; for example, a certain number of joints must be affected to use the drug.”

Key message from the advisory board

The physician, as a patient advocate, appeals to the insurer. Assuming that IV administration is a covered benefit, the physician should clarify whether the denial was based on medical necessity or on coverage limits. The former can be argued effectively, but the latter cannot.

Employers/purchasers. Health-care costs tend to increase as one moves along the continuum from health/wellness to risk reduction/ prevention to disease management. Advisory board member Randy Vogenberg, RPh, PhD, cofounder and chief strategic officer of Employer-Based Pharmaceutical Strategies, noted that 85 À 90 percent of current medi cal care is reactive (i.e., focused on acute care). We must begin to build more tertiary prevention and risk reduction into health benefit designs via education initiatives and appropriate drugs.

Forward-thinking employers have focused on reducing or dropping copayments in order to improve access to medications that have been shown to reduce complications of chronic conditions. Although the increased costs associated with eliminating copayments may be minimal, such initiatives are difficult for other employers and coalitions to replicate, depending on the specific population.

Unfortunately, traditional benefit designs are not applicable to biologic agents. “Biotechnology prices are such that all patients will reach maximums for out-of-pocket costs,” said Vogenberg. When considering treatment options for less prevalent diseases, such as RA or anemia, metrics must include disability, absenteeism, and long-term healthcare costs in addition to the cost of the drug. The emerging proactive model for medicine focuses on outcome surveillance and an interactive algorithm of care.

Another challenge for employers is the huge gap in literature with respect to biologic pharmaceuticals. Employers cannot wait for evidence to be developed — they must cover biologics for employees now, though health plans and CMS sometimes refuse to pay for these drugs without evidentiary justification.

Vogenberg encouraged employers to address problems by focusing on the underlying issues and moving toward better outcomes without losing sight of the associated costs. His recommended strategy:

1. Look at the number of products and what will be in the market basket.

2. Estimate the cost for bio logics using the organization’s demographics and claims data.
3. Develop cost comparisons with the organization’s historical claims experience and other employers’ claims experiences.
4. Project future experience by using national and regional data on prevalence rates and predictive models based on best practices.

Other considerations for employers include specialty pharmacy programs, consumer-directed and similar health plans with measures and feedback built in, and engaging employees in accounta bility.

Value-based purchasing is another concept that will have a significant impact on biologics. The key is to invest in better outcomes for the dollars spent.

Key messages from the advisory board

Complex scientific topics, such as biomarkers and large-molecule pharmaceuticals, must be presen ted to employers in a more intelligible way. The larger question for employers is how to coordinate therapy and achieve better outcomes for employees. Employers need a thoughtful, incremental, “stepped” process for addressing biologic agents and a process to facilitate the transition from “cost shifting” to true “costand-accountability sharing” through means that will not adversely affect the patient. Advisory board members discussed the following:

Infusion facilities
. Large employer sites, such as Johnson & Johnson and Disney, are opening infusion facilities, staffed with nurses and/or nurse practitioners, to administer maintenance doses of bio logic medi cations. A sufficient volume of patients is necessary for these sites to break even.

Collect and analyze data. Identify a robust analytics group to moni tor medical data including behavioral data; for example, days lost from work plus emergency room visits. Track patients with RA and ulcerative colitis in high-deductible health plans (e.g., some CDHPs). The advisory board concurred that “Health plan design is the key, and catastrophic coverage is the hook. If out-of-pocket costs are fixed, these plans will attract individuals with more advanced stages of illness.”

. Stand-alone specialty pharmacy benefits are not financially feasible as a carve-out with a rider. “A pharmacy benefit is not insurance, but rather a group-purchase exercise,” advisory board members concluded.

Training for collective bargaining. Large employers should educate their organizations’ leaders prior to collective bargaining meetings. The George Meany Center for Labor Studies is one provider of this type of training.

Payers. Faced with escalating prices for healthcare products and services, public and private payers are under great pressure to pursue such aggressive cost-saving benefit-design strategies as copayments and deductibles. Recent marketplace trends reveal a marked increase in the prevalence and magnitude of copayments despite growing evidence that these may have a detrimental effect on certain patient populations.

Studies indicate that chronically ill patients who receive routine care cut their medication use by 8 À 23 percent when their copayments are doubled. Currently, there is a great deal of variation among health plans and employers with respect to copayments; for example, Kaiser Permanente is relying less on prior authorization and, instead, is targeting appropriate patients and tracking them.

Health plans are aware that changing the copayment also changes the price structure. Récemment, there has been a movement to allow the pharmaceutical industry to buy down copayments. Health plans have responded by considering prior authorization and step therapies (similar to those used for proton pump inhibitors and hyperlipidemia therapies).

High copayments and other barriers to access are of particular concern for patient populations with conditions targeted by biologic drugs. As an example, one panelist related pending market research indicating that 60.5 percent of the 1.16 million diagnosed and treated patients with RA are considered to be “bio-eligible,” but of this subgroup, only 46.8 percent receive bio logics.

The reality for payers is managing costs. Managed care plans struggle with clinical decisions. Medical directors need help from the manufacturer to understand the important elements in making these decisions.

Key message from the advisory board

Consider these hypothetical questions: What if a biologic agent was discovered for treating hypertension? What would the introduction of an expensive treatment for a prevalent condition do to the health-care system? If payers take the necessary steps to address the cost and access issues surrounding biologics today, a major crisis might be avoided in the future.

Payers would benefit from a rational, stepwise method to determine at what level of severity a bio logic agent should be covered for a given condition. In the absence of biomarkers for a specific condition, sequencing could be used.

A Rand Corp. study of benefit design and specialty drug use (including biologics) concluded that once appropriate patients are identified, “It makes little economic sense to limit coverage” (Goldman 2006). There was general agreement among advisory board members that the ‘right drug for the right patient at the right time’ is the correct approach, and that copayments are not appropriate for biologics.

It is useful to understand the true clinical value and cost of a given bio logic to the health plan. Payers should collect and report data on the number of patients who discontinue treatment with biologics due to caps on pharmaceutical benefits and coverage.

In collaboration with the academic community, payers also would benefit from such investigations as a study of the impact of increases in copayments specific to biologics, and a paper that describes a value-based structure for phar maceutical treatment of specific conditions targeted by biologics.

Manufacturers. Biologic agents present a huge economic challenge for their manu facturers because they are extraordinarily expensive to develop but target relatively small patient populations. Alternate strategies for providing these agents to bio-eligible patients include copayments, rebates, and cost reduction.

Lowering the cost of the drug often is ineffectual; for instance, if a patient’s household income is $9,000, reducing the cost of the drug to $7,000 will not help.

Copayment foundations are another option. These foundations target specific conditions such as Crohn’s disease and ulcerative colitis, and are designed to offset differential costs for patients who are below the poverty level. Généralement, these have restrictions and rules, such as getting a specified percent of funding from a source other than biopharmaceutical manufacturers and “blinding” the benefit to ensure equal access for all treatments for all conditions.

Key messages from the advisory board

RA is a heterogeneous disease and statistics represent different populations. Manufacturers would bene fit from studying regional variations by epidemiology; for example, investigate whether RA is more
likely to be diagnosed in large urban areas with major medical centers than in rural areas with fewer health care resources.

From a public health perspective, the fact that less than 50 percent of RA patients are treated raises the question of mild disease or some spectrum of disease. Is there an untreated population for whom resources are not the issue? Look for disparities associated with race, ethnicity, and economic status.

Consider the importance of complementary and alternative medicine. These modalities are psychologically powerful. Some health professionals are concerned that if patients self-treat, disease progression will not be monitored.

Study the impact of increases in patient copayments specific to biologics. Aussi, study patient-reported outcomes. These are important and an increasingly larger part of clinical trials and registries.

Economic evidence is as important as clinical evidence. Drugs that treat symptomatic disease are less elastic than those that treat asymptomatic disease. The pharmaceutical industry should conduct studies that answer important questions such as, “What is the net cost of a biologic for treating RA?” and “Which patients are best treated with which drugs?

Manufacturers must rethink clini cal trial design. Dosing to effectiveness rather than to toxicity may aid in approval rates for biologics. Calculate how much testing is necessary up front — the cost of the agent does not permit multiple dosing studies. A Bayesian approach to trial design would reduce the number of subjects needed — a major advantage in terms of time and cost.


Biologic pharmaceuticals are becoming integral to the future treatment of a variety of conditions with complex etiologies. For patients and their physicians, these agents pro mise more effective control of complex conditions and improved quality of life. For employers and for society in general, biologics offer a means for improving productivity of, and decreasing disability for, people with debilitating diseases.

It also is clear that our nation’s economy — particularly with respect to healthcare spending — is stretched to its limit. Patients are unable to keep up with rising deductibles and copayments for expensive thera pies. Health insurers and purchasers struggle to contain costs. Manufacturers bear increasing costs to develop and test agents that target smaller populations.

It is time for all stakeholders to work toward being part of the solution and the science.

The advisory board pointed out the need for more data collection and study. The challenge lies in determining where to expend resources to get the critical answers. The focus should be on defining the appropriate use for biologic agents, generating evidence, and communicating the results broadly via the business press and the media. The ultimate goal is to ensure that the “right drugs get to the right patients
for the right duration.”

When the board reconvened, it focused on identifying solutions for purchasers and payers; in particular, designing a stepwise protocol and an economic model that incorporates cost considerations, afford-ability, and quality-of-life criteria. Part 2 of this series will focus on these discussions in the next issue of BIOTECHNOLOGY HEALTHCARE.


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Janice L. Clarke, RN, BBA, and Alexis Skoufalos, EdD, have received educational program support from Centocor OrthoBiotech Inc. David B. Nash, MD, MBA, has received support for educational programs and policy meetings from Centocor OrthoBiotech Inc. Eric Toppy is an employee of Centocor OrthoBiotech Inc. He is a stockholder in Johnson & Johnson.

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