Off-label use of drugs and medical devices is legal and very common. Once a manufacturer has demonstrated to the FDA that a product is safe and effective for its intended use, the product is approved with labeling describing its safe and effective use. Prescribers, however, are free to prescribe the product for any indication and patient population in any dosage or dosage form. Payers are free to block or allow off-label use, and simply allowing it can, in essence, encourage such use. Whether payers will allow or block off-label use depends upon the context.
When payers allow off-label use
Payers spend a ton of money on off-label use of drugs. A frequently-cited study found that one out of five prescriptions by office-based physicians for 160 common medications were used off-label, and most of this use had little or no scientific support. Not surprisingly, biologics are not immune from off-label use — a literature review of off-label use of biologics found that rituximab was prescribed off-label at a frequency varying between 16% and 75%. And a study of orphan drug use suggests that 24% was for off-label use, and drugs used extensively off-label had greater price increases than those with little to no off-label use.
Payers often permit off-label use when there is evidence to support it. Some coverage decisions are based on guidelines, especially if the guidelines are objective and evidence-based (e.g., NCCN guidelines). In other cases, coverage decisions may be based on peer-reviewed journal articles; it is not uncommon, for instance, for payers to require two supporting articles. A noteworthy example is how CMS covers off-label use of a therapy for a specific cancer if at least two articles in peer-reviewed journals support its use or if the use is listed in one of five approved drug compendia. Many commercial health plans have similar coverage policies for oncology products, although they often limit coverage of off-label use to mirror NCCN and ASCO guidelines.
Some state mandates require off-label coverage of cancer drugs, but these requirements do not impact self-insured health plans. That said, self-insured plans often voluntarily adopt coverage policies that resemble Medicare, Medicaid, and commercial managed care plans, as harmonizing policies across plans makes provider communications simpler, decreases confusion, makes coverage determinations more predictable, and, as a result, cuts down on appeals.
Real-world practice and experience may also support the use of off-label use. It’s hard to not cover a product that has over time emerged as a standard of care, even when there is a lack of evidence.
Payers’ views on off-label use are impacted by how desperately needed the therapy is. Rare diseases without an approved drug to treat it, cancers, and other life-threatening conditions are important examples of payer reluctance to aggressively block off-label use, even though the costs can be very high. Negative PR associated with a denial may be costlier than a very expensive medication in certain situations, even if its effectiveness is questionable. A strong case can be made for payers to shift the burden by syncing oncology formulary decisions with NCCN guidelines.
Payers know that pediatric, pregnant, and psychiatric patients are often excluded from clinical trials and tend not to block access for these patient populations.
Off-label use may also gain payer support when an on-label product is significantly more expensive. And payers will turn a blind eye when the costs of management (e.g., prior authorizations) exceed the benefits of lower utilization. Included in the costs of management are the upfront costs and the downstream costs related to appeals.
When payers block off-label use
Several countervailing conditions support payers’ restrictions or blockage of off-label use.
When the off-label use is both expensive and deemed not medically necessary, the use will be blocked. And restrictions are likely when there are approved alternatives that are substantially less expensive. Further, safety concerns and related higher medical costs can provide an economic rationale to block off-label use.
When the condition is not life-threatening, or when patient and provider advocacy is less intense, then off-label use is more likely to be blocked. But, here too, payers will implement a prior authorization only if the benefits of lower utilization exceed the costs of management.
Guidance on off-label use
While manufacturers cannot actively promote off-label uses of their products, it is true that some make — or hope to make — a lot of revenue from off-label use. It is critically important for these manufacturers to understand when evolving market conditions could impact access to their products. Manufacturers’ ability to assess payer attitudes toward off-label use of their products can help to inform forecasts, strategy, and tactics.
Manufacturers should not assume that a current hands-off approach will continue indefinitely. As budgets swell, prices increase, and competition grows, payers may add restrictions or block access to products that previously benefited from less-aggressive management. This should give manufacturers pause before increasing prices too much or too frequently. Manufacturers would also benefit from monitoring payer perceptions, which may shift in response to changing market conditions.
Manufacturers should also not consider a strategy to launch with an indication for a great unmet need and assume that payers will allow the product to be used off-label for other conditions that have existing treatment options. There is no shortage of examples of payers allowing access for some conditions and aggressively blocking or restricting use for other conditions. Assumptions supporting indication launch sequencing strategies are often flawed.
Manufacturers should prepare effective communications when payers make unsolicited inquiries about off-label use. Medical science liaisons should lawfully answer questions and share peer-reviewed journal articles and textbook chapters about such use, and these responses should be tested and refined with the same rigor as other payer communications.
With a rich pipeline of products addressing cancers and rare diseases, payer denials of off-label products may, in aggregate, go down as viable alternatives come to market. However, as costs continue to climb, payer restrictions of expensive products will surely increase. Restrictions on off-label products will also rise when conditions permit, and it is imperative for manufacturers to understand and predict these conditions.
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