Analysis of Economic Impact Analysis of Economic Impact of Early Interventions in of Early Interventions in

Patients with Patients with Rheumatoid Rheumatoid ArthritisArthritis

in a hypothetical company in a hypothetical company experiencing high growthexperiencing high growth

By Todd S. ReesePharmD Candidate, 2007

Midwestern University

Prepared for CaremarkFebruary, 2007

Rheumatoid ArthritisRheumatoid Arthritis DefinitionDefinition: : a chronic autoimmune a chronic autoimmune

disease characterized by disease characterized by inflammation of the joints, inflammation of the joints, frequently accompanied by frequently accompanied by marked deformities, and ordinarily marked deformities, and ordinarily associated with manifestations of a associated with manifestations of a general, or systemic, affliction.general, or systemic, affliction.

The American College of Rheumatology has defined the following criteria for the diagnosis of rheumatoid arthritis:

Morning stiffness of >1 hour. Arthritis and soft-tissue swelling of >3 of 14 joints/joint groups Arthritis of hand joints Symmetric arthritis Subcutaneous nodules in specific places Rheumatoid factor at a level > 95th percentile Radiological changes suggestive of joint erosion

At least four criteria have to be met to establish the diagnosis

RA RA TreatmentsTreatments CorticosteroidsCorticosteroids DMARDsDMARDs

NSAIDsNSAIDs MethotrexateMethotrexate SulfasalazineSulfasalazine D-PenicillamineD-Penicillamine AzathioprineAzathioprine HydroxychloroquineHydroxychloroquine

ChloroquineChloroquine Intramuscular goldIntramuscular gold CyclosporineCyclosporine LeflunomideLeflunomide

Etanercept (Enbrel)Etanercept (Enbrel) Adalimumab (Humira)Adalimumab (Humira) Anakinra (Kineret)Anakinra (Kineret) Infliximab (Remicade)Infliximab (Remicade) Rituximab (Rituxan)Rituximab (Rituxan)

The cost of therapy depends heavily on the severity and progression of the disease

Facts about RAFacts about RA RA affects 2.1 million Americans.RA affects 2.1 million Americans. There are 2.5 times as many women as there are men There are 2.5 times as many women as there are men

with RA. with RA. Onset of RA is usually middle-age, but it often occurs Onset of RA is usually middle-age, but it often occurs

in the 20s and 30s. in the 20s and 30s. There is a There is a high riskhigh risk of disability and mortality in of disability and mortality in

people with RA. people with RA. Rheumatoid arthritis joint damage occurs early, often Rheumatoid arthritis joint damage occurs early, often

within the first two years of the disease.within the first two years of the disease. Arthritis and related conditions, such as RA, cost the Arthritis and related conditions, such as RA, cost the

U.S. economy nearly U.S. economy nearly $86.2 billion$86.2 billion per year in medical per year in medical care and indirect expenses, including lost wages and care and indirect expenses, including lost wages and production. production.

RA accounts for 22% of all deaths from arthritis and RA accounts for 22% of all deaths from arthritis and other rheumatic conditionsother rheumatic conditions

Persons with RA are two times more likely to die than Persons with RA are two times more likely to die than persons of the same age without RA in the general persons of the same age without RA in the general populationpopulation

QuestionsQuestions

What are the direct costs to a What are the direct costs to a company who has employees with company who has employees with RA?RA?

What are the indirect costs to a What are the indirect costs to a company who has employees with company who has employees with RA?RA?

Can these costs be lowered?Can these costs be lowered?

Guggle is a hypothetical Internet search engine company based in the United Guggle is a hypothetical Internet search engine company based in the United States which has experienced extensive growth in the past ten years. States which has experienced extensive growth in the past ten years.

Currently it is a company with Currently it is a company with 7,9427,942 full time employees. With constant full time employees. With constant acquisitions (most recently “BoobTube.com”) and expansions, this company acquisitions (most recently “BoobTube.com”) and expansions, this company requiresrequires 20%20% yearly growth in its workforce. yearly growth in its workforce.

Guggle, being a proactive, ecological friendly, people-oriented business wishes Guggle, being a proactive, ecological friendly, people-oriented business wishes to make sure that the workforce is taken care of in terms of health insurance to make sure that the workforce is taken care of in terms of health insurance and health benefits. and health benefits.

One of the founders was recently diagnosed with RA and knowing firsthand the One of the founders was recently diagnosed with RA and knowing firsthand the nature of this disease, he wants to make sure that his company's health plan is nature of this disease, he wants to make sure that his company's health plan is taking care of the people of Guggle. But business-savvy partner ALSO wants to taking care of the people of Guggle. But business-savvy partner ALSO wants to make sure that the company's PBM is utilizing their resources in an optimal make sure that the company's PBM is utilizing their resources in an optimal manner.manner.

DIRECT COSTSDIRECT COSTS

Those costs which are directly Those costs which are directly associated with the diseaseassociated with the disease

MedicationsMedications

Doctor VisitsDoctor Visits

HospitalizationHospitalization

DIRECT COSTSDIRECT COSTSThe direct costs of RA are hard to pin down since the disease is treated on a patient-specific basis. Various studies indicate a wide variation in the cost of this disease.

DIRECT COSTSDIRECT COSTS

DIRECT COSTSDIRECT COSTS

Assumptions for use of this data:1. Must utilize a managed care delivery

system2. Must represent costs for all severities of

the disease3. Figures were adjusted to 2005 dollars

On average, the annual DIRECT cost of RA is $11,688 in 2005 dollars

DIRECT COSTSDIRECT COSTSTo make the model more like the real world, patients were categorized according to their level of disease severity using Health Assessment Questionnaire (HAQ) scores.

DIRECT COSTSDIRECT COSTS

The results from the study show that as time progresses, patients are scored and distributed in the HAQ categories in the following pattern:

HA

Q 1

(<

0.5)

HA

Q 2

(0.

5-1.

1)

HA

Q 3

(1.

1-1.

6)

HA

Q 4

(1.

6-2.

1)

HA

Q 5

(2.

1-2.

6)

HA

Q 6

(2.

6-3.

0)

HA

Q 7

(D

ecea

sed)

Y0

Y1

Y2

Y3

Y4

Y5

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

Percent

HAQ Scores

Year

HAQ Disease Progression

Y0

Y1

Y2

Y3

Y4

Y5

DIRECT COSTSDIRECT COSTS

Employees with more severe forms of the disease cost more. The Swedish study showed that participants progressive HAQ categories fell into the following percents of total cost:

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

Percent

1 2 3 4 5 6

HAQ Score

Percent of Total Cost

Series1

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

Percent

1 2 3 4 5 6

HAQ Score

Percent of Total Cost

Series1

Assumptions:Assumptions: Currently it is a company with Currently it is a company with 7,9427,942 full time full time

employees. employees. In the first year analyzed, In the first year analyzed, 1%1% equates to equates to 79 79

employeesemployees with RA in various stages of disease with RA in various stages of disease progression (dependents not considered in progression (dependents not considered in analysis).analysis).

This company requires This company requires 20%20% yearly growth in its yearly growth in its workforce. workforce.

DIRECT COSTSDIRECT COSTSUsing the Swedish study figures correlated with the average annual direct costs and extending the progression of the disease into the future, the model predicts the following direct costs:

Total Six Year Cost: $ 5,521,451

DIRECT COSTSDIRECT COSTSare not the ONLY issue!are not the ONLY issue!

This model looked at the progression of the disease and includes the indirect costs associated with this chronic illness in terms of lost productivity.

INDIRECT COSTSINDIRECT COSTS

A timescale was developed to project the cost to the company in terms of lost productivity due to RA and assign value to that lost productivity in terms of LOST REVENUE.

=

INDIRECT COSTSINDIRECT COSTSGroups of employees are separated into degrees of illness depending on their responses to the Health Assessment Questionnaire. The HAQ groups are given a “Productivity Factor,” based on the severity of the illness. As the disease progresses, and even with treatment, employees become less and less productive. A scale was designed as follows:

This scale was modeled after one study which states that workers with RA on

average are 4% less productive.

Guggle had annual sales in 2005 of Guggle had annual sales in 2005 of $6,138,560,000$6,138,560,000

This year there are This year there are 7,9427,942 full time employees. full time employees. Simply put, each employee is therefore Simply put, each employee is therefore

responsible for creating responsible for creating $772,924$772,924 in sales.in sales.This is a simplification of the system. Obviously, a majority of the employees contribute much less to the overall sales of the company while a few contribute a lot more. And, when some employees are not as productive, other employees step in to make up the difference.

Due to time restrictions, the average sales/employee figure was used for

this model.

Remember our Progression of Illness from the Swedish study? This was used to develop the INDIRECT COST analysis.

Remember our Progression of Illness from the Swedish study? This was also used to develop the INDIRECT COST analysis.

(79 Employees) (26.6%) (99%) ($772,924) = $16,134,898

Under normal productivity, this amount would be $16,297,877 for employees in category HAQ 1.That’s a LOSS of $162,979!

Looking at the entire HAQ scale AND the Productivity Factors, a “Productivity Quotient” was derived for this year:

This means that these 79 employees in their various disease states with RA are only 97.2% as productive as they could be without the disease!What

about the future?

Using the HAQ Scores from the Swedish Study and the yearly planned growth for Guggle, a Productivity Shortfall projection scale was developed:

Even with 20% growth in the workforce, the progression of the disease has a serious effect on productivity! By the end of the sixth year, productivity has seriously suffered! What does this cost the

company?

DIRECT and INDIRECT COSTS:

Total SIX YEAR Cost to Guggle: $33,898,100

A Little Side NoteA Little Side Note

A Productivity Factor scale was A Productivity Factor scale was developed from recent research which developed from recent research which suggests that suggests that on averageon average, workers , workers are are 4% less productive4% less productive with RA. with RA.

This is certainly a conservative approach…

A Little Side NoteA Little Side Note

What if the disease progression has a What if the disease progression has a greater effect on productivity?greater effect on productivity?

In other words, what happens to cost when the severity of the disease has a more

pronounced effect on productivity?

DIRECT and INDIRECT COSTS:

Total SIX YEAR Cost to Guggle: $33,898,100

DIRECT and INDIRECT COSTS:

Total SIX YEAR Cost to Guggle: $91,455,446 Depending on how the disease affects

the workers, it can have a dramatic effect on the bottom line!

Back to the QuestionsBack to the Questions

What are the direct costs to a What are the direct costs to a company who has employees with company who has employees with RA?RA?

What are the indirect costs to a What are the indirect costs to a company who has employees with company who has employees with RA?RA?

Can these costs be lowered?Can these costs be lowered?

What causes the high What causes the high costs?costs?

““Disease severityDisease severity is the main cause of is the main cause of hospitalization…”hospitalization…”

“…“…hospitalization costs are the hospitalization costs are the largestlargest contributor of direct costs…”contributor of direct costs…”

““Medication costsMedication costs are frequently the are frequently the second largest contributor to direct second largest contributor to direct costs…”costs…”

-- Tore K. Kvien-- Tore K. Kvien

Study: Epidemiology and Burden of Illness of Rheumatoid Study: Epidemiology and Burden of Illness of Rheumatoid Arthritis, Pharmacoeconomics 2004Arthritis, Pharmacoeconomics 2004

The ProblemThe Problem

The FOCUS is too often placed at The FOCUS is too often placed at disease ONSET disease ONSET

The SolutionThe Solution

Instead, the FOCUS should be Instead, the FOCUS should be SCREENING and PREVENTION SCREENING and PREVENTION

Screening and Screening and PreventionPrevention

Using Screening and Prevention services, including Lifestyle Interventions, companies can get ahead of the onset of disease to lower costs

Screening and Screening and PreventionPrevention

By preventing and/or slowing the progression of the disease, companies can significantly reduce costs

INTERVENTIONINTERVENTION

This model assumes that This model assumes that INTERVENTIONINTERVENTION will significantly will significantly reduce the progression of Rheumatoid reduce the progression of Rheumatoid Arthritis.Arthritis.

Interventions include:Interventions include: PrescreeningPrescreening Lifestyle Change and Exercise ProgramsLifestyle Change and Exercise Programs Patient Education/Behavior Modification Patient Education/Behavior Modification

ProgramsPrograms Aggressive Medication TherapyAggressive Medication Therapy

How much can be saved?How much can be saved?

Savings AnalysisSavings Analysis

The model starts with the year zero The model starts with the year zero Swedish Study HAQ results and Swedish Study HAQ results and assumes that assumes that with Interventionwith Intervention, , patients will stay in their respective patients will stay in their respective HAQ categories longer:HAQ categories longer:

Savings AnalysisSavings Analysis

With Intervention, Guggle can save $7.8 Million over the course of six years!

SummarySummary

Rheumatoid arthritis is a debilitating, Rheumatoid arthritis is a debilitating, progressive disease. While it affects only progressive disease. While it affects only 1-1.5% of the population, it has extensive 1-1.5% of the population, it has extensive costs to employers in terms of both direct costs to employers in terms of both direct and indirect costs.and indirect costs.

Utilization of various forms of Utilization of various forms of interventions, specifically early in the interventions, specifically early in the disease process, can help to dramatically disease process, can help to dramatically lower these costs.lower these costs.

Q & AQ & A

for attending:for attending:

Analysis of Economic Impact of Early Analysis of Economic Impact of Early InterventionsInterventionsin Patients with Rheumatoid Arthritisin Patients with Rheumatoid Arthritisin a hypothetical company experiencing high growthin a hypothetical company experiencing high growth

By Todd S. ReesePharmD Candidate, 2007

Midwestern University

Prepared for CaremarkFebruary, 2007

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Variation in Resource Utilisation and Treatment Costs for Rheumatoid Arthritis: A Variation in Resource Utilisation and Treatment Costs for Rheumatoid Arthritis: A Systematic Literature Review” Pharmacoeconomics 2005; 23 (3): 243-257Systematic Literature Review” Pharmacoeconomics 2005; 23 (3): 243-257

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