While the high cost of prescription drugs is causing a lot of headaches for health insurers and hospitals alike, lack of drug adherence may only make the problem worse. Luckily, new types of contracts are taking aim at the problem.
One of the biggest costs to health plans is hospitalizations, readmissions and penalties tied to quality measures, all which can be affected by medication adherence, said Christie Teigland, vice president of advanced analytics at Avalere. "They'll have to pay tons of money to the Centers for Medicare and Medicaid Services if the rates are too high. They won't get star bonus rebates."
But new contracts are requiring drugmakers to take on some of that outcomes-based risk. If the medications don't achieve the desired outcomes, they offer rebates to the plan or pay money back.
"They actually have skin in the game," Teigland said. "It really benefits health plans because it reduces the cost of drugs."
Inovalon acquired Avalere in August 2015 for $140 million, adding 200 pharma and life sciences clients to its business of cloud-based data analytics and intervention platforms.
The company's database can identify beneficiaries that have low medication adherence rates, and the providers and payers associated with these patients. At the same time, Avalere serves as a strategic consultant on contracts between pharmaceutical companies and insurers that aim to cut readmission rates by a certain percent.
So far, they are the big health plans because they are the ones willing to take on the risk, said Teigland, who declined to identify the clients.
But before the contract is made, a huge amount of analytics work is done, Teigland said.
The company's MORE2 database contains information on 150 million beneficiaries nationwide, from commercial payers, Affordable Care Act exchange members, managed Medicaid and Medicare Advantage data.
Making sure medications work is part of the issue, but so is making sure patients actually take them.
In one approach, Avalere and Inovalon are working with pharmaceutical and medical device companies to help ensure adherence.
Avalere researchers analyzes large patient populations with a specific disease, such as severe mental illness, and evaluate outcomes such as adherence rates of medications for bipolar disorder and schizophrenia.
Reasons for lack of adherence can include complications of the illness, or social risk factors such as low income or homelessness. The data can show the highest percentage of the population to target for better adherence. There will be some patients who will always take their drugs, and others that will not take them, no matter what steps are taken.
The goal is to get the population in the middle, the 40 to 80 percent that are likely to be adherent, according to Teigland.
"The pharmaceutical company can't promise that they can improve adherence," Teigland said. "It's more about appropriate delivery. You have a lot better chance if get them early."
The results are also tracked and often shared with contracted providers.
"It can impact the affordability if (pharmaceutical companies) agree to a reduced price to a drug, if the plan agrees to make it a top-tier drug or to make a better copay," Teigland said. "It can have an impact on the affordability of these drugs."
Aetna and Merck have collaborated in a similar value-based arrangement to use predictive analytics to identify target populations for health and wellness services.
Working with a patient's physicians and other caregivers, the AetnaCare program supports treatment adherence, ensuring that critical social support needs are met while reinforcing healthy lifestyle behaviors.
Starting last fall, AetnaCare initially targeted patients with diabetes and hypertension in mid-Atlantic markets.
This fit in with a separate agreement between Aetna and Merck for the pharmaceutical company to offer rebates on type 2 diabetes medications, Januvia and Janumet.
"It is in everyone's interest to ensure that patients receive appropriate medicines to help patients achieve their treatment goals," said Harold L. Paz, MD, executive vice president and chief medical officer for Aetna.
The group purchasing solution
Payers searching for ways to keep drug prices down are also contacting Blink Health in New York, which purchases generic and prescription medication using scale by grouping like patients together.
"Many insurers are interested in working with us, to find ways to offer the same experience," said Blink Health cofounder Geoff Chaiken.
Chaiken said it's too soon to talk about specific payer partnerships. However in 2016, Blink Health announced it would work with pharmaceutical giant Eli Lilly to offer a 40 percent discount on Lilly insulins, including Humalog, beginning this year.
Blink acts as an insurance company, or as a third party administrator in the supply chain, but is neither. A patient goes to the Blink website and searches for their medication. If the price is lower than their copay, they purchase it online through a Blink membership card. They then present the prepaid card to the pharmacist.
"We're a new kind of payer, hired by patients rather than insurance companies," Chaiken said. "It allows us to work collaboratively with pharmaceutical companies. We're not a replacement for insurance, we're a technology company. Our technology is applicable to insurance technologies."
Chaiken is also working to find ways to ensure patients take their medications.
"Fifty percent of medications are not taken as prescribed," Chaiken said. "Two weeks in a hospital costs more than a lifetime of medications. We need to figure out how to ensure the patient gets the medication they need."
Chaiken said he founded a pharma company about 13 years ago and was exposed to the ways drug prices work and the challenges that patients face. He said he wanted Blink to focus on choice and transparency.
"What's happened in the past year-and-a-half, we've had a real fundamental change of structure of the United States healthcare system," he said. "Seventy percent of patients are on a high deductible plan. The average deductible is $1,800 in this country. For the first time, patients have really become payers, they're responsible for the majority of their medical service."
Blink was founded in 2014 by Chaiken and his brother -- the sons and grandsons of doctors -- and so far has raised $165 million in funding. Another part of the company focuses on claims processing.
"We believed there was an opportunity to leverage consumer technology and create value for everyone in the supply chain," Chaiken said.