Cubic News

Protecting Your Plan from the Gravy Train

February 2012

Although full-product direct-to-consumer advertising (DTCA) is illegal in Canada, most Canadians are exposed to this type of advertising through media spillage from the United States. Everyone is familiar with the often parodied commercials: 10 seconds of smiling couples happily holding hands, while a soothing voice explains how your life can be improved with a simple product, followed by 45 seconds of side effects verbalized in rapid-fire fashion, layered on top of screens littered with disclaimers in size 4 font.

Proponents of full product DTCA argue for patient empowerment, collaborative health care, and earlier diagnosis of potential ailments, while opponents argue against biased information, undue pressure on physicians to prescribe inappropriate therapy, and the financially-based motives of the advertisers. Overall, everyone agrees that DTCA results in an increase in the prescribing rates of the drugs being advertised, but are at odds when deciding if this is good or bad for the health of the patients receiving these medications.

For the plan sponsor, the story is less ambiguous today. As DTCA almost exclusively markets new and expensive brand name therapies, an increase in the prescribing rates of these advertised medications will typically lead to an increase in overall plan spending. Given that most plan sponsors are not measuring relevant health metrics such as changes in adherence with therapy or the total cost burden of a given disease state across a plan, and are only looking at drug costs as a line item, DTCA is not thought of highly by those paying the bill.

What is interesting to see is that DTCA is becoming more sophisticated. Let’s consider the recent media pot stirred by celebrity chef, Paula Deen. After striking a deal with Novo Nordisk, she has begun appearing in various DTCAs endorsing Victoza®, a once-daily, non-insulin injectable drug to treat her type II diabetes. While traditional oral therapy with generic gliclazide costs roughly $25 for a three month supply, treatment with Victoza® would run approximately $465*. The issue at hand goes beyond the minimum $1,760 yearly difference in treatment costs for a single diabetic claimant – it’s the fact that this increased cost comes with arguably no improvement to the patient in terms of clinical effect, or safety profile based on the information that is available today. Even compared to a novel oral therapy with a similar mechanism of action, such as Januvia®, treatment with Victoza® over a one-year period would result in an extra $795 of submitted costs to the plan per individual for little or no additional clinical benefit.

In short, it’s going to take all the butter and southern comfort in the world for Paula Deen to make this kind of cost premium appetizing for most plan sponsors.

Celebrity endorsement with DTCA helps illustrate why plan sponsors must be more sophisticated when managing their plans. If increases in drug utilization and spending within certain disease states has a positive impact on a company’s absence and disability experience, and reduces the overall cost burden to an employer of a given disease, this would be a useful investment on the drug plan side. However, if additional drug spending in certain areas is not providing additional value to an employer, the investment could have better been made elsewhere. If plan sponsors aren’t measuring anything, how will they know what’s happening?

DTCA highlights two key opportunities. For pharmaceutical manufacturers, they need to look more seriously at plan sponsors and assisting private payers in measuring the health outcomes and return on investment for spending that has gone towards their products. Given the cost pressures that exist for most employers, pharmaceutical companies need to realize the pot of money to invest in products like Victoza is not unlimited. If they want to see investments made in these areas, they need to help plans measure the return. For plan sponsors, recognizing that containing plan costs is not going to get any easier moving forward, they need to become more active in managing their plan experience. Solutions such as evidence-based therapeutic decisions, in the form of multi-tiered-formularies, and properly structured prior authorization programs are not going to get any less valuable or relevant over time.

At the end of the day, if stakeholders like plan sponsors and manufacturers don’t get more sophisticated in measuring the return on their investments, and finding creative solutions to achieve better health outcomes in a sustainable manner, the missed opportunities will severely reduce their options down the road. That may not be what Paula Deen had in mind when she answered Novo Nordisk’s call, but it’s something those of us who manage these plans for a living (as opposed to making sauces) better start taking seriously.

* All estimated drug costs are based upon current Ontario pricing (i.e. pharmacy acquisition cost), do not include pharmacy markups, and do not include dispensing fees.

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