The Medical Arms Race: A Payer Perspective

1
The Medical Arms Race A
Payer Perspective
2
Medical Technology Leadership Forum

• October 15, 2007

3
Richard A. Justman, MD

• National Medical Director

4
What drives escalating health care costs?

• Growing demand in an aging society
• Broad variation in clinical judgment and
  technical capabilities amongst health delivery
  institutions
• Emerging clinical technologies
• Pharmaceutical
• Mechanical
• Biological
• Surgical
• Accelerating price inflation immune to other
  economic trends

5
The Medical Arms Race

• Whats unique about the medical arms race?
• Whats in the payer tool box?
• Benefit design
• Consumer risk-sharing
• Medical management/disease management
• Contracting strategies
• High-cost biologicals
• Reimbursement policies

6
Medical Technology Review

• Supports adjudication of benefits
• Benefit exclusion for investigational or unproven
  services (usually)
• Identifies clinical quality, safety issues
• Clinical practice guidelines
• Predicts impact of new medical technologies
• Burden of illness
• Frequency of use
• Unit cost
• Appropriate vs inappropriate use
• Example Drug-eluting stents
• Off-label use
• Anti-platelet therapy

7
What we are looking for

• Medical technologies that replace existing
  technologies
• Minimally invasive vs standard approach
• Shorter hospital LOS
• Move from inpatient to outpatient setting
• Move from hospital setting to office
• Move from general anesthesia to moderate sedation
• Shorter recovery time
• Medical technologies that fill an unmet need

8
Biologicals in Oncology
9
Human Papillomavirus Vaccine

• FDA-approved June 2006
• Quadrivalent recombinant vaccine
• HPV types responsible for 70 of cervical cancers
• Recommended by ACIP for women age 9-26
• Manufacturer has requested wider recommendation
  to include males
• Competitor vaccine with wider age indication
• Required immunization for school in some states
• 24 states and DC
• Three immunizations _at_ 140/dose, plus office
  visits and vaccine administration fees
  500/series
• Does not eliminate need for cervical cancer
  screening

10
Breast Cancer Screening

• Mammography the gold standard for normal risk
  women
• March 2007 American Cancer Society Guidelines
  MRI recommended for
• BRCA mutation
• Untested first degree relative of BRCA carrier
• Lifetime risk gt20, through various models
• Prior chest radiation ages 10-30
• Certain syndromes and first degree relatives
• Cost of screening
• Mammogram 85-150
• MRI 800-2,000
• Does not include cost of increased of biopsies

11
Treatment of Age-related Macular Degeneration

• Common cause of irreversible blindness in persons
  gtage 50
• Lucentis (ranibizumab) injection
• Similar to Avastin (bevacizumab), labeled for
  treatment of colorectal cancer
• Both made by Genentech
• Lucentis injection approximately 2,000/dose
• Avastin used off-label for AMD _at_ 150/dose
• Comparative effectiveness trials unlikely
• Avastin commonly used off-label by retinal
  specialists

12
Artificial Lumbar Spinal Disc

• Surgical treatment for degenerative disc disease
• Removal of degenerated disc, replacement with
  artificial disc
• Alternative to single-level lumbar spinal fusion
• Many persons who undergo spinal fusion ultimately
  have recurrence of pain, require further surgery
• Unit cost of two procedures is roughly
  equivalent, 35,000-45,000
• Salient question Does a single RCT with
  outcomes to 24 months allow for a valid
  conclusion regarding safety and efficacy?
• CMS national non-coverage decision for
  beneficiaries age 60 and over
• AAOS no stated position

13
CT Coronary Angiography

• A minimally invasive alternative to coronary
  angiography
• Cost 800-1,500 per examination
• Cost of coronary angiography 8,000-14,000 per
  procedure
• Useful to assess a defined population of patients
  with known or suspected coronary heart disease or
  coronary artery anomalies
• Persons at intermediate risk
• Not useful for persons at either low or high risk
• Multiple slice capacity
• 8-slice up to 256-slice
• Replacement or additive technology?
• Should advanced imaging be required before
  coronary angiography?
• Normal examination---------?no coronary
  angiography
• Credentials of physicians?
• According to the 2005 Clinical Competence
  Statement on Cardiac CT and MR by the American
  College of Cardiology Foundation (ACCF)/American
  Heart Association (AHA) proven competence in CTA
  for diagnosis of CAD requires at least eight
  weeks of training and the performance of 200
  procedures. Physicians wishing to maintain skills
  need to perform at least 50 CTA procedures per
  year and complete 20 hours of continuing medical
  education every three years.

14
Drug-Eluting Coronary Artery Stents

• Intended to prevent restenosis following coronary
  angioplasty
• Cost impact
• Bare metal stents 900-1,200
• Drug eluting stents 2,350-3,195
• APC for outpatient stent placement 6,600
• DRG for DES in major cardiovascular disease
  14,600
• DRG for DES with no major cardiovascular disease
  11,000
• In stable angina, stents do not reduce risk of
  AMI or all-cause mortality
• Small increased risk in late stent thrombosis
• Associated with off-label use
• Associated with early discontinuation of
  anti-platelet therapy
• 60 off-label use
• Multi-vessel disease
• Long lesions (gt30 mm)

15
Genetic tests and Personalized Medicine

• Examples
• HER2/neu overexpression
• Oncotype DX
• AmpliChip
• No central repository
• Possibility of redundant testing
• Inadequate coding matrix
• Need for correct reimbursement, reliable
  administrative data
• Role of genetic counseling
• Example BRCA testing for breast cancer

16
Areas of Special Need

• Promising new treatments lacking a current base
  of clinical evidence
• Role of clinical trials?
• Conditions for which little effective treatment
  is currently available
• Non-surgical treatment for non-localized solid
  tumors
• Conditions for which available treatments have
  unacceptable morbidity, mortality
• Allogeneic BMT and GVH disease
• Conditions that occur too infrequently to
  establish a robust base of clinical evidence
• Metachromatic leukodystrophy

17
Observations

• No uniform process for evaluating clinical
  evidence
• Experts frequently draw differing conclusions
  from the same clinical evidence
• Inconsistencies in CMS review process
• Role of professional specialty societies unclear
• Process of review frequently unclear to
  physicians, consumers, employer groups,
  purchasers of health care, regulators, public
  policy makers
• Some services intended as replacement costs are
  actually additive costs
• Off-label use may increase risk without
  increasing benefit