Rethinking prior authorization for topicals

November 1, 2007

The introduction of novel therapeutic options for psoriasis has increased managed care's interest in controlling costs associated with dermatological treatments. Experience with topical treatments for acne (retinoids) suggests that prior authorization (PA) may not be cost-effective and may, in fact, cost insurers more, not less.

Key Points

New options

Dr. Balkrishnan, who is also an adjunct professor with the Department of Dermatology and Center for Dermatology Research, Wake Forest University School of Medicine, Winston-Salem, N.C., says the introduction of novel therapeutic options for psoriasis has increased managed care's interest in controlling costs associated with dermatological treatments.

PA is a cost-controlling measure that encourages appropriate drug utilization while controlling costs. Healthcare payers frequently use PA to manage the escalating costs of pharmacy benefits. The process of PA regulates the dispensing of certain medications by requiring approval by the health plan of attestations from the prescriber, usually based upon explicit criteria for appropriate use.

"PA can be a successful way of managing costs. However, experience with topical treatments for acne (retinoids) suggests that PA may not be cost-effective," Dr. Balkrishnan says, explaining that the study looked at the role of managed care in dermatology and the potential impact of PA requirements for novel topical therapies for psoriasis.

The study

Researchers used a model based on recent survey data, and the total annual cost estimates for a managed care organization to cover psoriasis treatment with a topical agent - with or without PA requirements - were calculated and compared. Costs for treatment and administrative costs associated with PA processes also were included.

The study model assumed 68,000 insured patients required treatment (with an additional 1 percent to account for abuse/misuse), an average wholesale price of $100 per prescription (each prescription filled four times per year), and a cost of $20 to process each PA request.

The researchers found that the total annual costs were $28.57 million when PA was required and $27.47 million when PA was not required. "There was a total annual loss to the managed care organization of $1,101,600 associated with PA requirements," he says.

The study concluded that prior authorization is necessary to control drug costs; in this case, the use of biologic therapies in psoriasis.

"However, topical agents are now approved as front-line therapy in psoriasis. PA requirements for topical medications used in psoriasis ultimately may not be cost-beneficial to the insurer. A new two-compound product more efficacious than its components - such as one containing calcipotriene and betamethasone dipropionate [Taclonex, Warner Chilcott (US)] - and not subject to PA would be more cost-beneficial than either component alone," Dr. Balkrishnan says.

The researchers found that PA would be cost-effective only for a topical psoriasis medication costing approximately more than $600 per 30-gram tube.

"Thus, applying PA criteria could potentially erode the cost benefit of the product and possibly deny some patients from deriving optimum therapeutic benefit," Dr. Balkrishnan explains.

For the study, the comparison was based on treatment with a topical retinoid. Dr. Balkrishnan says the findings are applicable to other topical psoriasis treatments with similar usage patterns.

"Some differences between retinoids and vitamin D derivatives warrant consideration for interpreting the results of this analysis. First, topical retinoids are not used for patients with psoriasis as frequently as vitamin D derivatives. Next, unlike retinoids, vitamin D derivatives do not have any noncovered or cosmetic uses. Therefore, if PA is not cost-effective for topical retinoids (which might be used for acne), as determined in this analysis, then PA would be even less cost-effective for vitamin D derivatives such as calcipotriene or a calcipotriene/betamethasone dipropionate combination product (both 30-gram and 60-gram tube sizes)," Dr. Balkrishnan says.

Dr. Balkrishnan notes that the combination therapy of calcipotriene/betamethasone dipropionate provides rapid onset of action, lack of adverse reactions, safety in long-term use, convenience (with once-daily application) and patient satisfaction.

"With these advantages, this topical agent may delay the use of biologics, decrease inconvenience of PA and decrease office visits. Thus, if the two-compound product is not subjected to PA requirements, it will decrease the overall costs of more expensive therapy," Dr. Balkrishnan says.