November 17, 2017
16 min read

Managing Care and Cost in a Profit-driven System

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Clinicians who treat patients with rheumatologic diseases are facing an ever-growing set of non-clinical challenges. The issue at hand is managed care, and the crux of the problem is that the U.S. health care system has grown increasingly cumbersome and complex, forcing clinicians to spend more time dealing with bureaucracy and less time working toward patient outcomes. Moreover, some experts believe it to be problematic that the profit-driven structure of the U.S. health care system has increased the number of non-clinical and non-medical players involved. For example, pharmacy benefit managers initially filled the role of translator in a complex pay structure system, taking some administrative work away from clinicians and helping them focus on patients. However, their role in the system has increased, often without being sufficiently or clearly defined.

Non-medical switching of therapies is another concern for physicians, with payers forcing physicians to make clinical decisions they might not have otherwise made. Drug costs are increasing. Biosimilar therapies, though effective, face an uphill battle in the approval process in the United States.

Attempts have been made to repeal Medicare therapy caps that may no longer allow patients to receive coverage for physical, speech and occupational therapy. Individual clinicians and organizations, like the American College of Rheumatology, have petitioned Congress for help. Last month, Congressional leaders developed a bipartisan framework to permanently repeal the Medicare therapy caps beginning in 2018. The framework, which was laid out in an agreement reached by leaders of the House Ways and Means, Energy and Commerce, and Senate Finance Committees, would repeal the caps and require that claims submitted above the new threshold be marked with an appropriate modifier if determined to be medically necessary. The agreement would also continue the targeted manual medical review process established in 2015 by the Medicare Access and CHIP Reauthorization Act.

Management of Care

Allan Gibofsky, MD, JD
Allan Gibofsky,

“I don’t like euphemisms and managed care is a euphemism,” Allan Gibofsky, MD, JD, professor of medicine, health care policy and research at the Weill Cornell Medicine and attending rheumatologist at Hospital for Special Surgery, said in an interview with Healio Rheumatology. “These are people who manage cost. I manage care. I have yet to encounter a company that calls and says ‘you’re not spending enough on a patient.’”

“A second euphemism is the term ‘value-based care.’ Once again, it’s usually more about the cost and not about the value to the patient,” he said.


These semantics and shortcomings are important, because these reflect a hurdle in evaluating the way patients are treated, according to Gibofsky.

“When you hear a term like ‘cost-effectiveness,’ in plain English, it means ‘Is this worth the money?’ Now we can readily measure the money spent, but it is more difficult to measure the worth or value to the patient,” he said. “Consequently, when we’re evaluating value-based care, we often default to just measuring money.”

Michael C. Schweitz, MD, chief of the division of rheumatology at Good Samaritan Medical Center in West Palm Beach, Florida, and past president and national advocacy chair of the Coalition of State Rheumatology Organizations (CSRO), zeroed in on pharmacy benefit managers (PBM) as a critical part of the problem.

“The PBM system was created to control utilization costs,” he said. “How’s that working out? They are simply not doing that. They distort the market. They initially began as an administrative arm, but have become a profit-driven machine.”

It is to solve complex problems like these that the Alliance for Transparent and Affordable Prescriptions (ATAP) was created and developed by the CSRO, which has been focused on non-medical switching and step therapy for some time. Members of the ATAP are working at the state and national levels to curb prescription drug costs in part by regulating the PBM system. However, as with any political intervention, movement is slow. Individual clinicians must continue to work toward a health care system that operates, wholly, with patient care in mind, Schweitz said.

Pharmacy Benefit Managers

In a recent statement, the ACR described PBMs as “the go-between hired by insurers to manage drug benefit programs.” While they were initially created to help patients save money, the statement goes on to say that “PBMs have recently become incredibly effective at keeping much of the savings for themselves by often pocketing the difference between the fees they charge to pharmacies and the prices they negotiate from manufacturers — prices that are almost always kept secret.”

Mark Merritt, president and CEO of the Pharmaceutical Care Management Association, addressed some of these issues in an interview with Healio Rheumatology. “The rise of PBMs is kind of like the rise of health plans, except PBMs focus exclusively on drugs,” he said. “Prescription drugs became significantly bigger part of health plans in the 1990s. This is when government programs to save money on drugs started hiring PBMs to negotiate prices on prescription drugs. PBMs have only grown because prescription drug use has grown.”


Merritt went on to speak directly toward the question of profit. “This is a competitive business,” he said. “The profit margin is in the low single digits, and has remained relatively low. What has grown is the volume of drug use.”

Michael C. Schweitz, MD
Michael C. Schweitz

Schweitz believes the ACR, ATAP and individual clinicians should demand transparency from PBMs.

“The more transparent this system becomes, the better,” he said. “This is what we’re doing with the ATAP. I don’t expect to solve the problem right away, but what we can do is lift the rock and shine a light on what the PBMs are doing.”

Another facet of what PBMs do involves rebates, which Dusetzina and colleagues described as “a form of price concession paid by a pharmaceutical manufacturer to the health plan sponsor or the pharmacy benefit manager working on the plan’s behalf.” They suggested that proponents believe rebates can lower drug costs, while critics have argued that “rebates have perversely increased the costs patients pay out of pocket, as well as the costs for Medicare as a whole,” according to the authors of the study.

To bring it back to semantics, while the idea of a rebate is a good one in theory, it seems to work differently in practice, Schweitz noted.

“This is an incredibly complicated and convoluted system. I have been thinking about this for a long time and even I don’t fully understand it,” he said. “One thing that’s certain, though, is that PBMs don’t help control prices. They are taking a big cut of the market share.”

Merritt acknowledged that the role of PBMs is complicated, but he offered a reason.

“The role we play is defined by people who hire us,” he said. “They all have different expectations about what they want us to do. Every payer has a different network, different ways of picking up the drugs. If one PBM didn’t serve a particular client well, then another would come and get their business. It happens all the time.”

He added that customer satisfaction is generally high among PBMs, particularly in Medicare Part D, which is where many PBMs operate.

The complicated nature of the system makes PBMs a necessary component, Merritt said.

“None of these companies has to hire a PBM,” he said. “If they could manage the system in a more affordable way, they would, but they don’t because PBMs have expertise.”

Angus B. Worthing, MD, chair of the ACR Government Affairs Committee, said in an interview with Healio Rheumatology, “We have come to know pharmacy benefit managers as the companies that process prescription transactions, but what we’re finding out more and more is that they create formularies for insurance companies based on rebates and fees garnered from drug makers. It appears that the higher the drug price, the higher the rebate and the more likely a drug gets favorable placement on the formulary.”


The more people who understand what PBMs do and how the rebate structure operates, and the more people who are trying to correct the system, the better off our health care system will be, according to Schweitz.

Mark Merritt
Mark Merritt

Despite his concerns, Schweitz said the system can be corrected, and that not all PBMs are inherently bad.

“There are three major PBMs that control the market,” he said. “They are the problem, but there are a number of smaller PBMs that are doing what they were originally intended to do. If we can get all of them to be controlling costs, then the system will be much better off.”

The market itself may lead to a course-correct, according to Schweitz. “We are in a cost bubble that is bound to burst,” he said. “People simply can’t afford drugs. Big pharma needs to take heed. PBMs need to take heed. Eventually, something is going to have to give.”

Non-medical Switching

Gibofsky and colleagues retrospectively assessed health care use and outcomes in a cohort of 158 patients who experienced a non-medical switch of their prescribed anti-tumor necrosis factor medication for cost containment reasons between 2007 and 2013. The study also included 4,804 controls. Factors undergoing evaluation included office and ED visits, along with hospitalizations 30 days, 90 days and 365 days after the switch. The researchers compared adverse events associated with medication in the two groups. At 30 days, 46.4% of patients in the non-medical switch group and 31.7% of those in the control group had an office visit, according to an adjusted analysis. This trend persisted through 90 days (71% vs. 57%) and 365 days (87.8% vs. 76.8%). No differences were reported for hospitalizations and ED visits. However, medication-related adverse events occurred in 13.8% of patients in the non-medical switch group and in 4% of controls at 30 days; in 31.6% of non-medical switch patients and in 9.6% of controls at 90 days; and in 54.7% of switch patients and in 20.3% of controls at 365 days. Subsequent medication change rates were also higher at 1 year in the non-medical switch group 27.82% vs. 13.9%.

“What we found was within the first year, non-medical switching with biologics and anti-TNF inhibitors was associated with increases in side effects, lack of efficacy, subsequent medication use and use of resources,” Gibofsky said, and then he spoke directly to the issue of non-medical switching. “Payers define formularies. Formularies are predicated on the cost of agents within a category.”


All of this makes clinical decision-making unnecessarily complicated, according to Gibofsky. “If I’m a doctor and I want a patient to stay on a therapy because the patient is stable, then I should be able to continue that therapy,” he said.

The leadership of the ACR is aware of this issue, according to Sharad Lakhanpal, MD, president of the ACR and clinical professor of internal medicine at UT Southwestern Medical Center Rheumatology Associates. “Rheumatologists and their patients are being asked to switch their medicines, especially the biologics, by insurance companies and their contracted pharmacies for non-medical reasons,” he told Healio Rheumatology. “The motive here seems to be purely financial based on contracts and discounts negotiated by pharmacy benefit managers with the insurance and pharmaceutical companies. This is not in the interests of our patients and their health and well-being. If patients are doing well on stable treatment, they should not be asked to change it to make more profit for the insurance companies and their pharmacy benefit managers.”

Worthing put a personal spin on the issue.

“We’re hearing story after story of patients getting pushed from the drug their rheumatologist has chosen with them, to a less appropriate drug,” he said.

It may be useful to consider the issue from a broader perspective, Gibofsky added.

“Think of the parable of the blind men and the elephant, where the person feeling its trunk described it as being a thick snake, and the one feeling its leg said it was like a tree trunk, and the one who felt its tail said it was like a rope, and so on. Health care is siloed. If you are a lab analyst, you’re concerned about lab costs. If you’re a physician, you’re concerned about physician costs. When you switch drugs, for no other reason to save money, it might result in untoward effects and increased costs in another domain. Many non-clinicians don’t realize this.”

Nguyen and colleagues searched the Medline and Web of Science databases for studies that involved 25 or more patients and measured the impact on one or more clinical, economic, resource utilization or medication use behavioral outcome. They classified outcomes depending on whether they led to a positive, negative or neutral response. The analysis included 96 outcomes from 29 studies that involved the following six disease categories: cardio-metabolic; immune-mediated; acid suppression; psychiatric; hormone replacement therapy; and pain. Clinical outcomes were reported in 60.4%, while 21.9% were resource utilization; 13.5% were economic; and 4.2% dealt with medication use behavior. The direction of association was negative in 33.5% of outcomes and neutral in 55.2%, while 11.5% of non-medical switches yielded positive outcomes. When the researchers stratified the findings by outcome type, a negative association was reported for clinical outcomes in 20.7% of cases; economic outcomes in 69.2% of cases; resource utilization in 38.1% of cases; and medication use outcomes in 75% of cases. Conversely, positive associations with non-medical switching ranged from 4.8% to 17.2% in the outcome subgroups. The analysis also included 32 outcomes involving patients with stable or well-controlled disease. In these cases, 68.8% had a negative association and 31.3% had a neutral direction of association. Among 64 outcomes in patients without disease stability, non-medical switching yielded negative outcomes in 15.6%; neutral outcomes in 67.2%; and positive outcomes in 17.2%.


“Non-medical switching was more often associated with negative or neutral effects than positive effects on an array of important outcomes,” the researchers concluded.

In a cohort with slightly less of a negative impact of non-medical switching, Glintborg and colleagues investigated disease activity and retention rates associated with a non-medical switch from originator (INX, Remicade) to biosimilar infliximab (Remsima, CT-P13) in a cohort of 802 Danish patients. Of these patients, 403 patients had rheumatoid arthritis; 120 patients had psoriatic arthritis; and 279 patients had axial spondyloarthritis. They assessed disease activity 3 months before and 3 months after the switch. Patients had been treated with INX therapy for a median of 6.8 years, while the median follow-up duration was 413 days. Results indicated the pre-switch and post-switch disease activity was similar. Similarly, no difference was reported for crude 1-year retention rates, with CT-P13 yielding a rate of 84.1% and the historic IFX cohort yielding a rate of 86.2%. Absolute retention rates were 83.4% for CT-P13 and 86.8% for INX, which the researchers noted also were similar. Fifty-four percent of patients withdrew for lack of effect, while 28% withdrew due to adverse events. Longer CT-P13 duration was reported among patients who had been treated with INX for more than 5 years.

“In 802 arthritis patients treated with INX for median [more than] 6 years, a nationwide non-medical switch to CT-P13 had no negative impact on disease activity,” the researchers concluded.

Sharad Lakhanpal, MD
Sharad Lakhanpal

Another thing to consider is that drugs that are cheaper to buy may always not be cheaper to use, according to Gibofsky.

“If you focus on acquisition costs and ignore utilization costs, it may not be entirely in the patient interest,” he said.

Other Components

For Gibofsky, the concept of quality-adjusted life-years (QALYs) is at the heart of the current discussion.

“It’s an arbitrary number, where if you were above a certain QALY threshold, you were deemed to be inefficient in providing care, and if you were at or below it, you were efficient,” he said. “We started using this term almost 50 years ago, and it hasn’t been significantly adjusted since. I continue to see $50,000 as the benchmark for defining what a QALY should be, but what does that represent and to whom?”

Gibofsky discussed ways care should be measured — cost or outcomes — and suggested that even patients can get caught up in the profit wheel. He offered the example of azithromycin (Zithromax, Pfizer). “The previous treatment involved patients being treated four times a day for 10 days,” he said. “Then Zithromax comes along, and it’s five pills, an easy course of therapy. Turns out that many patients were angry that they were paying the same amount of money for five pills as they traditionally were for the 40-pill regimen. People would say, ‘This medicine is too expensive? I’d say, ‘As compared to what? The 3 days in the hospital that you prevented or the 3 days of missed work you prevented? As compared to non-resurgence because you completed course of therapy rather than abandoned it?’ We’re all looking for a benchmark for value, but unfortunately this kind of logic doesn’t always work.”


The ACR has targeted specialty drug copays as another action area. Insurance companies are increasingly placing biologic and biosimilar therapies in a “specialty tier,” which requires beneficiaries pay a portion of the cost of the drug as opposed to the traditional copay system.

“Specialty drug copays are the out-of-pocket costs patients pay to obtain specialty drugs like biologics and newer expensive small molecules,” Worthing said. “Insurance companies are increasingly forcing patients to pay a percentage of the drug price, instead of a fixed dollar amount, and the copay can be hundreds or thousands of dollars a month.” As a result, patients are forced to either find money they do not have or reduce or skip medications.

Petition Lawmakers

A key function of the ATAP, with backing from the ACR, is to make lawmakers aware of these issues. “Members of Congress and their staff have told us that high drug prices are a priority for lawmakers,” Worthing said. “They generally understand that drug prices are too high in the United States.”

For Lakhanpal, non-medical switching is a critical point of action. “The ACR is opposed to non-medical switching as it is not in the best interest of the patients and could potentially be detrimental,” he said. “The members should contact their legislators and educate them about this important issue and ask them to make laws to prevent this nefarious practice.”

Worthing suggested that clinicians should inform lawmakers of their personal anecdotes about the dangers of non-medical switching.

“We are making sure that Congress hears those stories,” he said. “ACR is working with the ATAP to increase transparency in the system and shed light on the perverse incentives that could be raising prices and out-of-pocket payments for patients.”

As many patients with arthritis defer medications due to cost, it is of utmost necessity to remove the barrier of high copays for patients, according to Worthing. “Could the Patients Access to Treatments Act — which eliminates specialty tier copays — pass into law? It has had more than 100 bipartisan cosponsors in the last two Congresses, so it has momentum,” he said. “We had more than 100 meetings on Capitol Hill at our fly-in in September helping generating support. These efforts and our work with coalition partners will hopefully get it through the House and introduced in the Senate.”

Worthing added that since 2013, there has been broad bipartisan support to fix the perennial problem that forces Medicare beneficiaries to self-ration their rehabilitation every year. “The ACR and the [Association of Rheumatology Health Professionals] ARHP are hoping to get this done in 2017 so our patients can get the services they need to reduce arthritis pain and get back to hobbies, independent living and improved quality of life,” he said.


Regarding other specific legislation, Congressional leaders are encouraged to support the Patients’ Access to Treatments Act (H.R. 2999), a bipartisan bill that would require insurance plans to limit the patient financial burden for drugs placed on specialty tiers. The ACR has also targeted medical therapy caps. Bipartisan legislation dealing with this issue is the Medicare Access to Rehabilitation Services Act of 2017 (H.R. 807 and S. 253).

“In 1997, Congress instituted arbitrary caps on Medicare outpatient physical therapy, speech language and occupational therapy services without basis in data or quality of care, but rather in order to balance the federal budget,” Worthing said. “Since then, Congress has acted 16 times to temporarily prevent implementation of therapy caps — much like they did to prevent implementation of physician reimbursement cuts from the old sustainable growth rate (SGR) — and the current exemption expires on Dec. 31, 2017. Legislation to repeal these caps failed to pass by a narrow margin as part of the bill to repeal the SGR.”

How Providers Can Help

Angus B. Worthing
Angus B. Worthing

Lakhanpal suggested that individual clinicians can take part in the political advocacy of the ACR and ATAP. “They can do this through the ACR’s Legislative Action Center,” he said. “They can either use one of the templates available or send an email about any issue that matters to them.”

“Some of this may have to be done at the state levels also,” Lakhanpal added. “The college, state organizations and individual members should engage in effective and persistent advocacy on this. They should also let their thoughts be known to the insurance companies and pharmacies. Individual rheumatologists can also get their patients involved in the process. The patients make great advocates, and we should empower them.”

Gibofsky took a broader view. “All stakeholders need to be informed about why certain decisions are being made,” he said. “When decisions are made solely on the basis of cost, it is important for the prescriber to be aware of it. When a prescriber makes a decision based solely on economics, if a patient has an adverse outcome, it may be difficult to defend.”

The law is often not on the side of the doctor, according to Gibofsky. “There is a strong line of case law establishing that when a physician complies without protesting the decision of the payer, the responsibility is going to fall on the shoulders of the physician and not the payer,” he said. “In a typical scenario, the payer will claim to make payment decisions and not treatment decisions. They will say, ‘You are free to prescribe whatever you want, we are free to pay whatever we want.’ There are appeals processes, but it may delay the ability to obtain reimbursement. In the meantime, what is happening with the patient?”


Most clinicians involved in organizations like the ATAP must decide which battles they are going to fight. “In a perfect world, all prescribing decisions would be in the hands of the prescriber,” Gibofsky said. “If a doctor wants to use a drug and it is in accordance with accepted scientific principles, there ought to be no impediment to use of that drug.”

However, Gibofsky noted the likelihood of total autonomy by clinicians may not be entirely feasible.

“In the real world, we ought to see cooperation between professional societies and payers such that if the professional society derives an algorithm and/or treatment care plan, so long as the care plan is followed to by prescriber, the prescriber ought not to have to deal with justifying their work,” he said. “Unfortunately, we are nowhere near this, at least not in rheumatology.”

For example, the professional societies and scientific literature uniformly recommend methotrexate (MTX) as first-line therapy for most diseases. “And yet there are still managed cost companies that require you to justify the use of MTX as first-line therapy,” Gibofsky said. “There is no reason MTX should require prior authorization. There is no reason prior authorization should be necessary for prednisone and yet, these situations exist. If this happens even once, it’s too much.”

Gibofsky stressed the importance of all players arriving at the same place.

“We need to get to a consensus that prescribers should be making prescription decisions,” he said. “These decisions should be based on clinical factors and not solely cost of care. The more we put the responsibility of decision-making in hands of doctors, the better it is for patients.” — by Rob Volansky

Disclosures: Gibofsky reports he is a stockholder in AbbVie, Amgen, Bristol-Myers Squibb, Pfizer, Johnson & Johnson, GSK and Regeneron; is a consultant for AbbVie, Amgen, AstraZeneca, Pfizer, Horizon, Iroko, Relburn, Celgene, Takeda and Medac; and is a speaker for AbbVie, Amgen, Pfizer and Celgene. Lakhanpal, Merritt, Schweitz and Worthing report no relevant financial disclosures.