Speaker 1:
Welcome to TD Cowan Insights, a space that brings leading thinkers together to share insights and ideas shaping the world around us. Join us as we converse with the top minds who are influencing our global sectors.
Charles Rhyee:
Hello, my name is Charles Rhyee, TD Cowan's Healthcare Technology and Distribution Analyst, and welcome to a special edition of the TD Cowan Future Health podcast. We're recording this at our ninth Annual Future Health Conference on September 10th, and I'm joined by Harold Carter, Senior Vice President of Pharma Trade Relations at Express Scripts, which is part of Evernorth and the Cigna Group. And we've just hosted Harold for a fireside chat, and we're here to expand on some of those conversations a little bit further. So Harold, thanks for being here with us today.
Harold Carter:
Thanks so much for having me.
Charles Rhyee:
So we talked a lot just a few moments ago on the chat, but I think what we talked a lot about is a lot of the value-based care programs that Express Scripts has really been a pioneer of, and obviously the most recent one being the launch of EncircleRX. But maybe just stepping back, talk about sort of where Express Scripts started with, I think in terms of SafeGuardRx and how that has evolved over time.
Harold Carter:
Yeah, definitely. We have been very heavy in the value-based contracting and solutions area for over a decade at this point. Certainly going back years to what we did, taking a hard stance against the high cost of hepatitis C to more recently in classes such as inflammatory conditions. So think about disease states for Crohn's or rheumatoid arthritis where we negotiated with drug manufacturers that if for some reason a patient fell off therapy, there was a credit that went back to the plan sponsor that covered the vast majority of that drug. Because at the end of the day, we want to make sure that healthcare dollars that are being spent are only for value add. And when patients that we see sometimes in these categories, that 25, 30 percent of those patients that are new to therapy stop, those are dollars that are wasted into the healthcare system and our plan sponsors deserve that value back so that they continue to find ways to provide an affordable benefit.
Charles Rhyee:
Was that a difficult conversation to have with pharma? What was the resistance level maybe from pharma companies, or did they understand the benefits for them because that would give them more access to patients perhaps? How do those conversations start and where is that in terms of your relationship with pharma companies today? Are they excited to be part of these programs?
Harold Carter:
Yeah, I mean there's always going to be some that are looking forward to working in these spaces and there's some that are not. But we fundamentally believe that these are products, some of them are potentially groundbreaking ones, that if the data's there, you need to sort of put your money where your mouth is and stand behind those products. And so from our perspective, that's never a difficult conversation as we work on the behalf of our clients in this space. So never a difficult conversation from my seat. It sometimes may be a little bit difficult for those that I'm sitting across the table from.
Charles Rhyee:
Yeah, I can imagine. You know, GLP-1s obviously a really hot topic these days, certainly over the last couple of years with its benefits for weight loss and now for cardiovascular as well. You mentioned back in March at the Analyst Day, the new offering of... Was it called EncircleRX, right? A tailored risk-bearing option for GLP-1s? Maybe talk about decision making to launch this program. What was the thought process behind that? And maybe describe the program first as well.
Harold Carter:
Yeah, definitely. So if you look at more macro from a GLP-1 perspective, in every conversation that we have with our clients, it's around GLP-1 spin. What does the future of GLP-1s look like? And looking in the pipeline, you see new indications that could potentially be for kidney disease, sleep apnea, cardiovascular disease. We know that this class is going to grow quite significantly because of that, and some indicators may suggest that it could be a hundred billion dollar market by 2030. And so with that in mind, we knew that there were steps that we need to take in support of our plan sponsors to really put some additional tools in place to manage not just the spend of this, but also ensure that patients are getting... That our own treatment that we're setting them up for the best success possible. And so within Encircle within itself, it really aligns to some of our key core competencies, our supply chain excellence, our clinical expertise, as well as the choice in modularity that we're able to work with our clients on.
And within the sort of pieces of the program, there's a few steps that we take. One is looking at that longitudinal data to really understand which patients are going to be the most successful. Then putting in the right tools from a criteria perspective to ensure that those are the patients that we're opening up access to. And then also putting in controls around additional enhanced monitoring, preventing fraud, waste and abuse, and taking some additional steps there. And so that's certainly been a core component of it. And as part of this, our clients will receive guarantees on their trend. We'll use weight loss as an example, giving them a 15% trend cap that if it goes over that, then we're going at risk for the fee for the program. We've gotten great support and feedback from our clients. We've had about 5 million lives enrolled up to this point and we continue to see more of our clients want to participate. And so again, a great example where we're able to really look at a challenge that our clients are seeing, wrap solutions around it and really partner with them on solving some things long term.
Charles Rhyee:
I mean, given the growth in this category so far, 15% sounds really amazing. How are you able to guarantee such a modest trend increase given where all the growth is coming from?
Harold Carter:
Definitely. So as part of this, there's a few key components. The criteria and the steps that we're taking there to really make sure it's strong and that only the patients that need it are the ones that get access. Secondly is through the way that we've been able to work with manufacturers on giving our plan sponsors optionality to choose from on how they're managing this. And then last but not least is looking at how we're using our digital tools such as our partnership with Omada Health to make sure that we're supporting these patients through their journey. And so when you look at the partnership that we formed there, part of that's using the Therapeutic Resource Center clinicians that we have on our side and their clinical expertise and then bringing it together with the behavioral health and lifestyle modification changes that Omada Health has to follow that patient through their journey to make sure that if they're not responding or hitting their key metrics, that they stop therapy because the data indicates that if they're not losing the weight that they need to.
And then also working on setting goals long-term for those patients that if they meet those goals, maybe long-term some of these patients can continue to meet the outcomes they need potentially without the medication. That's not a requirement that they have to stop the medication. But again, the core piece of this is that it's not just the drug that's important, it's about all the other support that we put around that patient as they're going through this.
Charles Rhyee:
So when you think about this kind of using tools and partnering and really kind of focusing not just on making sure the right person gets the right drug, but now you're also thinking about making sure that they're successful on their therapy. And in this instance we're talking about Omada Health. But when you think about the broader opportunity at Express Scripts and integrating let's say digital tools or other kind of behavior modification, how important do you think this will be in terms of where you go with pharmacy benefits beyond just negotiating unit cost?
Harold Carter:
When we think about everything that we do, it's really going to... The concept is not to your point. It's not just about unit costs, but it's actually about the member experience and how do we engage patients and meet them where they are to ensure that they're able to get the appropriate access to treatment, to focus on the right outcomes. If I skip and just look at what we've done with our oncology benefit services that we just announced, that was really about creating a digital experience for the patient so that they have the ability to choose a top provider when they're going through oncology treatment, to have someone that's navigating through them with the healthcare system where they can be on the phone, they can work and use their app to engage, et cetera. So a lot of when we think about digital tools, that's going to be such an important part of the healthcare system going forward, and we're ingraining that in a lot of our solutions today and we'll continue and enhance that over time.
Charles Rhyee:
A lot of this, when you talk about engaging members and the member experience, you see a lot of companies who are going to that market really trying to create a recognized brand. Historically, when you look at PBMs, they're more B to B kind of entities. Most people don't even know who their PBM is. They have the card, need to look at the back.
Harold Carter:
Yeah.
Charles Rhyee:
Is that something that needs to change for you guys? Is that something that you guys think about in terms of how to go to market now because we're trying now to engage members more directly?
Harold Carter:
Yeah. So we do have a number of steps that we've taken to engage with our brand to patients, but we have a lot of flexibility to work with our clients under their name and co-branding, things of that nature, so that it is a seamless experience for the member themselves. And so when I think about it, yes, it is important for us to think about brand-to-brand recognition and how we engage there, but we are able to communicate and reach out to patients from so different angles. There's a lot of different, I would say, scenarios that we can sort of situate ourselves in to sort of meet those appropriate outcomes.
But yeah, I definitely think you're starting to see us take more of an acting role of making sure that the patient knows who we are, things of that nature. But when you think about it, it's only a small percentage of the population that engages us day-to-day. And so focusing on how we work with our clients to connect to the other tools that they're using so that that patient has a singular experience, that's going to be tremendously important. And we have a number of things such as solutions, like what we call care navigation, things of that nature, that really get to the heart of what you're talking around, around that member experience and that brand recognition.
Charles Rhyee:
Yeah. Okay. That makes sense. Maybe switching gears here, I want to ask you about biosimilars, and that's something that we talked about in depth just a few minutes ago here on stage. Obviously you guys have now made a decision to take Humira off the National Formulary starting next year. Talked about Quallent Pharmaceuticals being an entity to partner to bring biosimilar Humira to market. Maybe talk a little bit sort of the decision making behind that decision, sort of the decision tree to get to that. Obviously some of your peers are doing something similar. What's that mean for the biosimilar market, the health of it perhaps, and the opportunities that you see for it?
Harold Carter:
Quallent Pharmaceuticals has been around since 2021 and was built to really focus on safe, affordable, and uninterrupted access at that time to generics. We knew that there was opportunities to move that into the biosimilar space, so been around for a number of years. As we look at the biosimilar strategy that we've taken, it's a very thoughtful process in really balancing access and affordability for our plan sponsors as well as for our members. And we knew it was really important that as we partnered there, to look for biosimilars that had the same profile as that of the Humira formulation that most patients are using today. So we saw a lot of patent thickets and games that were played that caused some variation of... If those initial biosimilars, their profile, if they align to Humira or not.
So we're able to sort of address that high concentration interchangeability and you're seeing that being picked up by patients and plan sponsors. So as what was recently announced last week that we see about 25% of those eligible patients are using the zero dollar private label Humira. And as mentioned before, we will be moving forward on our formulary to exclude Humira for 2025. What's important to keep in mind here is that Quallent Pharmaceuticals bringing private label biosimilar to the marketplace is one thing. Our formulary process is still something very different. We look at what's the lowest net costs to our plan sponsors. Not what's the value to the organization, but what's the lowest net cost to our plan sponsors. And what you've seen on the formulary is yes, Quallent's private labels on, but we actually have a number of other biosimilars on the formulary such as some of the low WAC ones, et cetera. And so have a number of options for patients as well as providers to choose from.
Charles Rhyee:
Okay, that's interesting. If I can ask a little bit about the low WAC pricing, and I think you said earlier on stage that that's sort of the more prevalent biosimilar that's being prescribed or being dispensed. Is that correct?
Harold Carter:
So what you're seeing today is that from a formulary perspective, we're giving options for our plans to choose from, but you're seeing in all cases where a low WAC biosimilar is included as options on all of our formularies. And you're continuing to see the growth that's associated with those products picking up the market share.
Charles Rhyee:
Does that make a challenge when you're thinking about rebate guarantees for clients? I think the old argument had been that oh, it's great to have Humira on the National Formulary because it's heavily rebated, so it kind of gives you an access to a pool of rebate dollars to spread across... Maybe I'm thinking about that the wrong way, but...
Harold Carter:
So when we make formulary decisions for the National Formulary, any of our standard formularies, it's always going to be focused on what's the lowest net cost for plan sponsor. It's not going to be how much rebates that we get, what's the lowest net cost. And a great example of not just the decision here, but also when you think about insulin where there was the unbranded, I think it was 25 or 35 dollar insulin for Eli Lilly that went on our formulary because it was the lowest net cost. And so our decisions aren't made from a formulary perspective based on rebate dollars, it's on what's the lowest net cost for the plan sponsor. And we were able to work in these unique models with our clients, consultants and things of that nature. But again, from a formulary perspective, amount of rebate dollars or if you're getting rebates isn't what's driving that decision. It's what the net cost is.
And I'd be remiss to just say that first and foremost, it actually goes through our P&T, our pharmacy and therapeutics committee. They indicate if a drug is an include, an exclude, an optional. If an include, it means that we have to put it on formulary. If it's an exclude, we can't. And if it's optional, it really comes down to looking at two drugs that are competing against each other and how do we get to that net cost savings.
Charles Rhyee:
Thanks for clarifying that because I think that's really helpful and helps people understand that a little bit better. I think sometimes there's confusion around sort of the decision-making process.
Harold Carter:
Definitely.
Charles Rhyee:
Obviously we're talking about Humira here. Where do you see this going? What are the opportunities to take this model for, particularly as we think of other biosimilars coming for different drugs?
Harold Carter:
It's a great question. We announced last week that there would be a Stelara biosimilar that was a zero dollar copay. More details to come. But as you look between now and 2030, there's about a hundred billion dollars in spin on the specialty side that's set to lose its patent where there will be a biosimilar generic to the marketplace. And so this will represent significant opportunity for our clients in the marketplace to really take additional expense out of the system and leverage that savings to help manage costs of new drugs that are coming to the marketplace. So significant opportunity there and we'll continue to innovate as an organization and make sure that those options are available to clients as well as members as we've talked about.
Charles Rhyee:
Are there opportunities still are right in Crohn's and more of a Part D drug? What about Part B? Is that an opportunity to bring some of these kind of programs into that part of the market?
Harold Carter:
Yeah. So as we look through Part B "as in boy", there's certainly going to be opportunity from a biosimilar perspective. You've actually already seen a lot of the biosimilars. So if you go back down memory lane, there was initial slow uptick of biosimilars in competition to Remicade. The marketplace had to work through some of the complexities of that, but you saw a significant uptick of biosimilars on the Part B "as in boy", side and the medical side that was out there. You're seeing uptick obviously that happened with Part B "as in boy" as well. And I think we'll have to wait and see how some more of that plays out. But a good amount of that spin that we talked about certainly sits on the Part B side. What IRA and all those things mean to it, I think there still has to be some clarity on how that plays out since we know that the government will negotiate some drugs on that side for I believe, 2028.
Charles Rhyee:
I think we'll leave it there, Harold. Really enjoyed having you here with us at our Future Health Conference and good luck with everything going forward and we'll look forward to how EncircleRX and other programs develop as we go along.
Harold Carter:
Sounds good. Thank you.
Speaker 1:
Thanks for joining us. Stay tuned for the next episode of TD Cowan Insights.
