Type 2 Diabetes | Access & Reimbursement | Detailed, Expanded Analysis Type 2 Diabetes and Obesity (US)

Publish date: February 2016

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Type 2 diabetes and obesity are chronic diseases that affect millions of Americans and represent a costly expense for the nation’s healthcare payers. In the effort to manage quality and costs associated with treating these conditions, many health insurers have turned to accountable care organizations (ACOs) to better coordinate care for large patient populations. Given the large affected population and the availability of a range of effective drugs and measurable outcomes, type 2 diabetes represents the low-hanging fruit for the ACO. As a contributor to diabetes, obesity has also become a focus of ACO management, especially since the emergence of novel branded therapies—including the latest, Orexigen Therapeutics/Takeda Pharmaceutical’s Contrave (naltrexone SR/bupropion SR)—that illicit greater weight loss but are much more expensive than generic phentermine. As ACOs work to manage diabetes care, they are faced with a broad array of branded, non-insulin therapies whose distinct mechanisms of action improve upon the effectiveness of generic metformin. These classes have become familiar to payers over the past decade: oral DPP-IV inhibitors, such as Merck’s Januvia (sitagliptin); the oral SGLT-2 inhibitors, such as Johnson & Johnson’s Invokana (canagliflozin); and the injectable GLP-1 agonists, such as Novo Nordisk’s Victoza (liraglutide). ACOs are making PCPs and endocrinologists more conscious of the long-term consequences of each prescribing decision by linking their reimbursement to the achievement of goals such as reducing hospital readmissions and total medical costs, as well as saving on prescription drug costs.

Questions Answered:

  • The novel weight-loss drugs that have launched in the United States since 2012 have struggled to gain coverage through Medicare, but their potential to help curb the diabetic epidemic increases their chances for coverage in the commercial ACO setting. What percentage of managed care organization (MCO) directors say that their commercial ACOs are more likely to cover obesity drugs in the ACO setting because of the ACO’s focus on diabetes management? What is the difference in coverage and tiering among the branded weight-loss therapies, and how widespread are formulary exclusions? How has ACO involvement affected PCPs’ and endocrinologists’ prescribing patterns for weight-loss drugs?
  • Surveyed physicians’ prescribing is influenced by a variety of factors, including the preferred therapies established by their ACOs. How do PCPs and endocrinologists value the various attributes of diabetes (and obesity drugs) differently in the ACO setting versus their normal practice? How are physicians encouraged to meet the goals of the ACO? What are surveyed physicians reporting about their ACOs’ impact on the drug choices they make? What formulary do physicians use when prescribing drugs?
  • A primary feature of an ACO is the financial incentives that are built in to hold providers accountable for the care of ACO members, but the level of accountability varies by ACO. How do MCOs hold providers in the ACO responsible for keeping drug spending in check? Do MCOs expect ACOs to take full financial risk for pharmacy as well as medical services and in what time frame? On what quality measures are physicians tracked—both general ACO measures and those relating to diabetes and obesity drugs in particular?

Scope: 

Markets covered: United States.

Primary research: Online survey of 70 PCPs and 71 endocrinologists, 30 MCO medical directors, and 11 MCO pharmacy directors.

Commercial context: Drug profiles, epidemiology tables, drug-treatment algorithms, and ACO background information.

Therapies covered: Weight-loss therapies and three classes of antidiabetic drugs: DPP-IV inhibitors, GLP-1 receptor agonists, and SGLT-2 inhibitors.

Table of contents

  • Detailed, Expanded Analysis Type 2 Diabetes and Obesity (US)
    • Actionable Recommendations to Optimize Market Access
    • Successes and Stumbles
      • United States: Reimbursement Success and Stumbles
    • Key Stakeholders in the Road to Market Access
      • Key Stakeholders in the Path to Formulary Access
      • Stakeholder Dynamics in the Road to Reimbursement
    • Key Market Access Roadblocks
      • Key Market Access Roadblocks for Weight-Loss and Antidiabetic Agents in ACOs
    • Reimbursement Dynamics
      • United States: Commercial Managed Care Organizations
        • Reimbursement Summary
        • Formulary Inclusion Drivers
        • Pricing and Reimbursement Drivers
        • Restrictions and Prior Authorizations
        • Accountable Care Organization Dynamics
    • Pricing and Reimbursement, Policy, and Coverage: Impact on Prescribing
      • Patient Share in Key Payer Channel
        • Patient Share: Antiobesity Drugs
        • Impact of ACOs on Prescribing—Obesity
        • Patient Share: Antidiabetic Drug Classes
        • Impact of ACOs on Prescribing—Type 2 Diabetes
        • Patient Share: Antidiabetic Drugs
        • Top Prescribing Drivers for Antiobesity and Antidiabetic Drugs in the ACO Setting vs. Normal Practice—PCPs
        • Top Prescribing Drivers for Antiobesity and Antidiabetic Drugs in the ACO Setting vs. Normal Practice-Endocrinologists
      • Impact of Payer Policy on Prescribing
        • Payer Restrictions Encountered by Physicians
        • Physician-Reported Most-Encountered Restrictions
    • Methodology
      • Methodology: Survey Design Overview
      • Primary Market Research Methodology - Physicians
        • Methodology: Surveyed Physician Profile and Demographics
      • Primary Market Research Methodology - MCOs
        • Methodology: Surveyed MCO Profiles and Demographics
    • Appendix
      • Physician Survey
        • Weight-Loss Drugs Prescribed by Physicians
        • Physician-Reported Patient Share of T2 Diabetes Drug Classes
        • Breakdown of Patient Coverage by Insurance Type
        • Types of Payers with Whom ACOs Contract - Current Participants
        • Types of Payers with Whom Future Participants Expect ACOs to Contract
        • Characterization of Physician Practice
        • Number of ACO Contracts in Which Physicians Participate
        • Number of ACO Contracts in Which Physicians Expect to Participate in 12 Months
        • Percentage of Physicians' T2 Diabetes and Obese Patients in an ACO
        • Number of Patients Currently in Physicians' ACOs
        • Percentage of Obese and Diabetic Patients Expected to Be in ACOs in 12 Months
        • Physician-Reported Patient Share of Weight-Loss Drugs
        • Impact of ACO Involvement on Physicians' Prescribing of Weight-Loss Drugs
        • Physician-Reported Patient Share of DPP-IV Inhibitors in Diabetes
        • Impact of ACO Involvement on Physicians' Prescribing of DPP-IV Inhibitors
        • Physician-Reported Patient Share of SGLT-2 Inhibitors in Diabetes
        • Impact of ACO Involvement on Physicians' Prescribing of SGLT-2 Inhibitors
        • Physician-Reported Patient Share of GLP-1 Inhibitors in Diabetes
        • Impact of ACO Involvement on Physicians' Prescribing of GLP-1 Inhibitors
        • Payer Restrictions Encountered by Physicians
        • Basis of Physician Compensation in ACO Model
        • How ACOs Are Structured to Financially Encourage Physicians
        • Physician Experience with Higher Compensation in the ACO
        • Influence of Increased ACO Compensation on Drug Choice - PCPs
        • Influence of Increased ACO Compensation on Drug Choice - Endocrinologists
        • General ACO Metrics on Which Physician Performance Is Tracked
        • ACO Metrics Related to Obesity
        • ACO Metrics Related to Type 2 Diabetes
        • Anticipated Basis of Physician Compensation in ACO in 12 Months—Future ACO Participants
        • How ACOs Will Be Structured to Financially Encourage Physicians in 12 Months—Future ACO Participants
        • General ACO Metrics on Which Physician Performance Will Be Tracked in 12 Months—Future ACO Participants
        • ACO Metrics Related to Obesity on Which Physician Performance Will Be Tracked in 12 Months—Future ACO Participants
        • ACO Metrics Related to Type 2 Diabetes on Which Physician Performance Will Be Tracked in 12 Months—Future ACO Participants
        • Primary Challenges Facing Physicians in the ACO
        • Formulary Use by Physicians in ACOs
        • Physician Reaction to Conflicting Formularies
        • Designation of Preferred Obesity and Diabetes Drugs in the ACO
        • Anticipated Formulary Use by Future ACO Participants
        • Anticipated Designation of Preferred Obesity and Diabetes Drugs in the ACO—Future Participants
        • Use of Protocols and Guidelines for Drug Prescribing in the ACO
        • ACO Encouragement/Discouragement of Type 2 Diabetes Drug Classes
        • Sources of ACO Guidelines
        • Future Participants' Anticipation of ACO Protocols and Guidelines for Type 2 Diabetes and Obesity Drugs
        • Future Participants' Anticipation of ACO Encouragement/Discouragement of Diabetes Drug Classes
        • ACO Encouragement/Discouragement of Specific Diabetes Drugs
        • ACO Encouragement/Discouragement of Specific Obesity Drugs
        • PCP-Reported Important Attributes in Drug Choice—ACO vs. Normal Practice
        • Endocrinologist-Reported Important Attributes in Drug Choice—ACO vs. Normal Practice
        • Use of Electronic Health Records in the ACO
        • Features of EHR Systems Used in ACOs
        • Usefulness of EHR in ACO Job Performance
      • MCO Survey
        • ACO Membership by Plan Type
        • Anticipated ACO Membership by Plan Type—Future ACO Participants
        • Frequency of P&T Committee Meetings
        • Individuals with Most Influence on MCO Formulary Decisions
        • Responsibility for Formulary Development
        • Ranking of Most Influential Factors on Formulary Placement of Weight-Loss and Antidiabetic Drugs
        • Preferred Comparator for Emerging Weight-Loss Agents
        • Preferred Comparator for Emerging Antidiabetic Agents
        • Number of ACO Contracts Reported by MCOs
        • Number of ACO Contracts Anticipated by MCOs in 12 Months
        • Estimated Percentage of MCO Membership in an ACO
        • Anticipated Percentage of MCO Members in an ACO in 12 Months
        • Percentage of Contracted Physicians Expected to Be in ACOs
        • Top Reasons MCOs Contract with ACOs
        • Indications Most Likely to Result in Better Outcomes in ACOs
        • Indications Most Likely to Result in Reduced Costs in ACOs
        • Ways in Which ACOs Are Held Accountable for Drug Costs
        • Ways in Which ACOs Will Be Held Accountable for Drug Costs—Future Participants
        • How ACOs Are Structured to Encourage ACO Physicians
        • How ACOs Will Be Structured to Encourage ACO Physicians—Future Participants
        • General Performance Measures Tracked by ACOs
        • Obesity- and Diabetes-Related Performance Measures Tracked by ACOs
        • MCO Expectations for ACOs Assuming Full Risk for All Services
        • Time Frame of Anticipated ACO Movement to Full Risk
        • MCO Reimbursement of Weight-Loss Therapies
        • MCO Reimbursement of Weight-Loss Therapies in 12 Months
        • MCO Reimbursement of Antidiabetic Therapies
        • MCO Reimbursement of Antidiabetic Therapies in 12 Months
        • Preferred/Nonpreferred Status of Weight-Loss Drugs
        • Preferred/Nonpreferred Status of Antidiabetic Drugs
        • Impact of ACO Focus on Diabetes on Weight-Loss Drug Coverage
        • Employer Purchase of Drug Riders for Weight-Loss Agents
        • Impact of ACOs' Diabetes Focus on Coverage of Antidiabetic Drug Classes
        • Use of Value-Based Benefit Designs for ACOs
        • Drugs and Services Encouraged by a Value-Based Benefit
        • Restrictions on Use of Weight-Loss Drugs in MCOs' Largest Commercial Plans
        • PA Requirements on Weight-Loss Drugs in MCOs' Largest Commercial Plans
        • Reauthorization Requirements for Weight-Loss Drugs
        • Time Frame for Reauthorization of Weight-Loss Drugs
        • Restrictions on Use of Antidiabetic Drug Classes in MCOs' Largest Commercial Plans
        • PA Requirements on Antidiabetic Drug Classes in MCOs' Largest Commercial Plans
        • Reauthorization Requirements for Antidiabetic Drug Classes
        • Time Frame for Reauthorization of Antidiabetic Drug Classes
        • Formulary Use in the ACO
        • Formulary Applied to ACO Members' Claims at Point of Sale
        • Outlook for Dedicated ACO Formularies in Three Years
        • MCO Responses to Conflicting ACO/MCO Formularies
        • ACO Impact on Restrictions of Weight-Loss and Antidiabetic Drugs
        • Most Influential ACO Levers of Control
        • MCO Optimism About ACO Outcomes Achievement
        • Outcomes Achieved by ACOs
        • Shared Savings Produced by ACOs
        • Percentage of Savings in ACOs with Shared Savings
        • MCO View of Pharma's Role in Making ACOs Work
        • Survey Analysis: Commercial Plan Tier and Cost Structure
      • Additional Information
        • Physician-Reported ACO Incentives
        • General ACO Metrics Tracked as Part of Physician Performance
        • Obesity Metrics Tracked in the ACO
        • Diabetes Metrics Tracked in the ACO
        • MCO Advice Regarding Pharma Partnerships in the ACO
        • MCO Reimbursement of Antidiabetic Drugs
        • Other Information (commercial context)

Author(s): Chris Lewis

Chris Lewis serves as primary research manager, Access and Reimbursement, with responsibility for coordination, content review and content generation of the market access and reimbursement insights at DRG. Content is based on online surveys of managed care organizations and physicians and expert analysis of reimbursement and prescribing patterns of key therapies treating various disease states. Lewis was an analyst/senior analyst for the group’s HealthLeaders-InterStudy subsidiary for eight years, specializing in the managed care and pharmacy benefit management industries. Throughout her tenure, she has produced the Health Plan Analysis reports for California, New York, New Jersey, Connecticut, and Pennsylvania and authored DRG’s series of pharmacy benefit manager profiles. She has also conducted numerous webinars for the group. She is a seasoned journalist with a in communications from California State University, Sacramento.