Health Affairs, 25, no. 4 (2006): w276-w278 (Published online 6 June 2006) doi: 10.1377/hlthaff.25.w276 © 2006 by Project HOPE	New Online   Senate Health Reform Bill   Rewarding Providers   Public Option Policy Brief   Health Reform & Abortion   Delivery System Reform

This Article Abstract Reprint (PDF) Submit a response to this article Alert me when this article is cited Alert me when Comments are posted Alert me if a correction is posted Services E-mail this article to a friend Similar articles in this journal Similar articles in PubMed Alert me to new issues of the journal Add to My Personal Archive Download to Citation Manager Reprints & Permissions Citing Articles Citing Articles via Google Scholar Google Scholar Articles by Heaton, A. H. Search for Related Content PubMed PubMed Citation Articles by Heaton, A. H. Related Collections Access To Care Health Reform Insurance Coverage Managed Care - Medicaid Medicaid Pharmaceuticals State/Local Issues Consumer Issues Evidence-Based Medicine

Web Exclusives

PERSPECTIVE

The DERP: Is It An Effective Methodology?

Abstract

 
The Drug Effectiveness Review Project (DERP) is a process with challenges as well as rewards. This Perspective explores the issues that hamper the DERP’s effectiveness and discusses the changes it has generated in the drug review process for pharmacy and therapeutics (P&T) committees. The need for more timely and substantial evidence is a key barrier to all drug review processes; here I offer some alternative methods for comparing new drugs that have few comparators. A perfect process is a long way off. However, continuing to explore the methodologies in place today can lead us to more effective processes and metrics.

The success of the DERP, originally developed in Oregon as one means to better manage its Medicaid costs, is affected by several external factors. First, evidence-based medical data are lacking for new drugs, which renders any evidence-based evaluation of new versus existing drugs impossible. Second, the reliability of existing evidence has proved to be questionable, as several newer drugs (Vioxx, Seldane, Fen-Phen) have shown, leaving us to question the quality of the evidence we have at any given time. Third, politics at state levels determine what evidence ultimately gets put to use.

How we will know when we have arrived is an unresolved question, but one that is worthy of debate. Perhaps this debate will stimulate further questions or metrics, thus moving closer to a viable process to analyze and make informed decisions about the effectiveness of the drugs on the market.

Net cost, not cheap, is the goal. Let me begin the debate with some observations about the role of government in this process. Although we have a long way to go to be able to benchmark the DERP’s success, there are some positive outcomes. To paraphrase the old real estate saying, "It’s application, application, application." The DERP work products increasingly are being used by state Medicaid programs to justify a cost-minimization strategy with respect to formularies. In the drive to "therapeutic equivalence," we have state Medicaid programs using the DERP as "close enough for government work." Once therapeutic equivalences have been established for drugs within a therapeutic class, discussions with manufacturers can drive supplemental rebates resulting in net cost minimization.

"Buy more at 25 percent off" is an American intoxication that does not always serve us well. Picking one superior product would be defeating the government’s purpose to extract maximum or supplemental rebates from drug companies. If a superior product is chosen using evidence-based methodology, the manufacturer may actually raise the price or "premium-price" the product to match the level of value or clinical superiority. Although the DERP process generally does not consider price, it might actually drive product prices down or up. However, negotiations with manufacturers are an essential part of pharmacy cost management and should not be ignored.

Ironically, pharmaceutical companies spend hundreds of millions of dollars to market product differentiation, while society spends a pittance to demonstrate the therapeutic equivalence of drugs within a given therapeutic class. We are trying to treat a population of individuals as well as possible within budget restraints. The reality is that 80–90 percent of the population can use one drug, leaving only a small group who cannot tolerate that particular drug and need one or two other choices in a given class. We don’t need eight angiotensin-converting enzyme (ACE) inhibitors. Critics of the government methodology ignore the generic drugs that were first in class at one time and were the only drugs for use in the entire population.

Rationale for access. So, to those who cry "Access," or "Rationing," we reply, "Rationale." In other words, give us the hard evidence for open formularies. Limiting the choices of drugs in any given class is not really about rationing, it is about pharmacy and therapeutics (P&T) committees analyzing the choices available and making decisions based on efficacy, safety, and uniqueness, then matching those qualities to the populations they are serving. The rationale is if that population has access to the most medically effective drugs at the lowest net cost, the goal for enabling access has been met because people are not being denied medically effective therapies. The only option they may be denied is access to the brand-name drug they have seen touted on TV at the lowest copayment in their plan.

Clearly, the United States Pharmacopoeia (USP) requirements for formularies benefited from the DERP process by requiring only two agents needed per key therapeutic class.² But going forward, this process seems to have been abandoned when it comes to new drugs. New Centers for Medicare and Medicaid Services (CMS) guidance is dictating that new agents be added, rendering moot any P&T committee decision process.³

Acceptance of the DERP is spotty. Commercial uptake of the DERP has been spotty at best. The Academy of Managed Care Pharmacy’s dossier is gaining traction among managed care organizations for the initial formulary discussion guide.⁴ However, it has similar limitations with respect to new brand-name products: lack of evidence. It does seek to tackle the cost-effectiveness question directly, but often information is not adequate. Use of the DERP is more difficult for new drugs. The reliance on randomized controlled trails (RCTs) as the evidence on which a P&T committee may make decisions is a strength when the RCTs are available. Unfortunately, often the most pressing formulary decisions for new drugs or a new chemical class have to be made without the RCTs because the trials are not published and it is difficult to find comparators for the drugs first to market or for a new chemical class.

The DERP process has not had passive uptake by the prescribing community. Because of the years-long gap of medical knowledge, let alone evidence, from physician bookshelf to patient bedside, "mandate, not educate" appears to be the most effective method for the DERP process. Step edits or prior authorizations based on DERP criteria and findings can be used to accomplish quickly what it takes a generation of education to do.

A loose equation driving our pharmacological decisions commercially has been V = [QO ÷ C], or value equals quality outcome divided by cost. There is little value in a "cheap" drug if that drug does not produce optimal outcomes. For example, a higher-cost drug that can be taken once a day might produce a better long-term outcome than a less expensive alternative taken three times a day. Why? Because the patient is more likely to take the once-a-day pill than to take one three times a day. The result is a more effective medical outcome, since the medication is being taken in the right dose at the right intervals.

In another scenario, the choice of the most effective drug could be determined by population demographics. We’ve learned through studies that the elderly respond differently to some drugs than younger populations and that some drugs are more or less effective in certain ethnic populations. If these variables are not considered, value is diminished, and costs are likely to rise, despite a low net cost.

Formulary decisions come in many flavors; for example, organizations that are accredited by the National Committee for Quality Assurance (NCQA) review their formularies annually.⁵ The DERP process has not really had an impact on this type of review. Because many formularies are dominated by generics, class reviews of therapies that have existed for years, like generic drugs, are often easy. Because they are cheap, above-the-line quality outcomes don’t matter as much. However, generic amiodarone can kill you just as dead as the brand-name product. Consequently, safety is still a foremost consideration.

Local decisionmakers make local decisions. It is not the role of the DERP to dictate clinical practices at the local level, because the DERP methodology does not readily accommodate local variables or large demographic differences, nor should it. The sample size of local practices or practitioners is often the political ingredient that limits the potential uptake of any evidence-based therapeutic use of drugs.

WE 'VE BECOME AN evidence-based society, at least on TV. There is always one correct answer by show’s end. Unlike on TV, though, we have many choices at different economic cutpoints. I started practice the year the term "HMO" was coined. I have yet to see limited resources, especially now in the Part D implementation year. We need more evidence for the use of evidence. Publish the results of the Medicaid programs that use the DERP as a cost-savings tool. Is there a return on that investment?

A new grade level of practical functionality could be created to avoid the access issue associated with drug cost. Grade A would be the best choice for 80 percent of the population. Grade B, second choice, works for 80 percent of the remaining 20 percent. Grade C works for 80 percent of what is left. Then 99.2 percent of a population would have access, coverage, and appropriate choice of providers. Going up the grades from A to B to C would be based on patient factors, intolerance, toxicity, or lack of response, not economics. Reliance on generic usage in certainly Grade A and possibly the others would drive economic benefits for all users of the DERP.

Editor's Notes

 
Alan Heaton (Al_Heaton{at}bluecrossmn.com) is director of pharmacy for Blue Cross and Blue Shield of Minnesota in Eagan, Minnesota, and a member of the Drug Formulary Review Committee, Minnesota Department of Human Services.

NOTES

Top NOTES

 

1. P.J. Neumann, "Emerging Lessons from the Drug Effectiveness Review Project," Health Affairs 25 (2006): w262–w271 (published online 6 June 2006; 10.1377/hlthaff.25.w262).[CrossRef][Medline]
2. U.S. Pharmacopeia, "USP’s Initial Medicare Model Guidelines," http://www.usp.org/healthcareInfo/mmg/initialGuidelines.html (accessed 30 May 2006).
3. Centers for Medicare and Medicaid Services, "Medicare Modernization Act: 2007 Final Guidelines—Formularies," http://www.amcp.org/data/nav_content/Final%20CY%202007%20Formulary%20Guidance%2Epdf (accessed 30 May 2006).
4. See P.J. Neumann, "Evidence-based and Value-based Formulary Guidelines," Health Affairs 23, no. 1 (2004): 124–134.[Abstract/Free Full Text]
5. National Committee for Quality Assurance," What Does NCQA Review When It Accredits an HMO?" http://www.ncqa.org/Programs/Accreditation/mco/mcostdsoverview.htm (accessed 30 May 2006).

                      What's this?