Posts by viroger

The Shrinking Value of Best-In-Class & First-In-Class Drugs

Posted on Friday, July 24, 2015

Roger Longman for In Vivo Magazine, July/August 2015 Issue Incumbency ain’t worth what it once was. Pharma companies are spending billions to create advantages that won’t have significant lasting power. Smart followers can do as well – for less. As payors struggle to control their spend on specialty drugs, they will be less likely to allow best- or first-in-class drugs to gain dominant market shares. To do so, they are crafting strategies to restrict physicians from widespread prescribing of new, expensive drugs. For pharma, market incumbency will be far more difficult to achieve. Payor-friendly market followers who leverage the groundwork laid by their predecessors could achieve higher ROI.   Click here to read the full...

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The Drug Assessment Process: Inadequate and Costly

Posted on Wednesday, January 16, 2013

The more I study it, the more I believe the process of drug assessment by payers and providers needs some serious attention (we’ll pay plenty at the Real Endpoints Symposium, March 11-12). But driving action requires concern — and so, who cares?  Answer is: anyone interested in improving the dismal economics of healthcare.  As we noted here, drug-spend inflation is skyrocketing, thanks largely to the cost of new drugs and, in particular, new specialty drugs.  And the best mechanism we have for controlling those costs is the process, led by Pharmacy & Therapeutics committees, for assessing the value of drugs and establishing utilization guidelines.  But best, in this case, doesn’t mean adequate. Most obviously, the process is redundant.  Several hundred payers and several thousand hospitals all have P&T committees, with associated clinical pharmacy specialists and other research infrastructure, looking at the same materials about the same drugs…and by and large coming up with pretty similar answers. It’s slow and under-productive.  Based on our admittedly unscientific survey, P&T committees at most mid-sized and smaller plans meet quarterly and make decisions on, maybe, 13-15 new drugs per year.  They don’t have the time or bandwidth to re-assess new data on existing drugs that could change their formulary status. It’s oddly limited. ...

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Why Payers Don’t Really Control the Drug Benefit — and Why They Need to

Posted on Tuesday, January 8, 2013

It’s certainly the biggest change in healthcare in my business lifetime: the transformation from a fee-for-service economy fueled by abundant dollars to an essentially capitated world of financial tradeoffs.  The transformation will likely take longer than we expect. (What transformation doesn’t?) Still, payers and providers –and the various big and small service providers hoping to serve them — are already trying to improve  swaths business processes as diverse as connectivity, transparency, and consumer communication (see the David Shaywitz/Tony Wolff skeptical take on at least the digital aspect of all this) . But relatively little of this re-engineering aims at the purchase and management of drugs.  (We’ll be talking about the most important innovations at the Real Endpoints Symposium, March 11-12, in Philadelphia). There are a few experiments on the margin.  Some payers are playing with tougher formularies (e.g., UnitedHealth de-preferred major market leaders Januvia and Humira, with significant success in moving the former’s market share to Onglyza and less success with Humira).  “Pathways” in oncology (attempts to standardize physicians on specific drugs) show promise.  And now that Medicare, through its star ratings, is paying plans to improve adherence, there’s an opportunity for new models that predict when patients will adhere to their meds and when they won’t. (For the...

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Payers, Churn & What It Means for Total Cost of Care

Posted on Tuesday, October 2, 2012

One question we get from pharmaceutical and diagnostic clients quite frequently: do payers really care about lowering the costs of care if the cost savings don’t show up for a few years?  The problem they’re talking about is churn: a payer invests in a new cost-saving therapeutic program … only to see the savings redound to his payer-competitor when the patient switches plans (which they do every 3-5 years). Take adherence.  It should be an obvious win-win for patients, payers, and pharmaceutical companies (shameless plug: we’ll be defining what’s wrong and what could be right with adherence at our Real Endpoints Symposium, Nov 1-2, in Philadelphia). But, by and large, solutions to improving adherence have been elusive.  “We made a huge investment in adherence,” one head of managed markets at a major drug company told us.  “And we’ve gotten zero return.  Zero.  We can’t even bring up the subject to top management.” Adherence would be a tough nut to crack even if providers, payers and pharma were completely aligned.  It’s enormously difficult and expensive to get people to take their medicines as they should.  But the problem’s been compounded because payers haven’t always been particularly helpful in the process.  One reason: they haven’t felt the economic need to spend...

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What Payers Want: An Interview with GSK’s Jack Bailey

Posted on Monday, October 1, 2012

Jack Bailey, the man in charge of GlaxoSmithKline’s US goverment affairs, public policy and payer marketing business unit, knows his company has to change. As providers and payers move from the incentives of a fee-for-service model to one that focuses on value, and are exploring new approaches such as risk-sharing and bundled payments, drug firms like GSK need to make sure that a “new medicine [has] a compelling value proposition, particularly for payers,” said Bailey. Bailey will outline just how GSK’s doing that, as well as discuss how it’s adapting its strategy to address a payer-centric marketplace, at the Real Endpoints Symposium in Philadelphia Nov 1-2.  To get a sense of what he’s going to say, and to hear a fuller discussion of the summary you’re reading now, you can click here to listen to our pre-Symposium interview. The problem is that discerning what Bailey calls “the voice of the payer” within a drug development program isn’t easy. Real Endpoints believes payers are consumed with their own financial and medical management issues, new structural changes, horizontal mergers and consumerization efforts.  They can’t focus much attention on something so comparatively minor and, in the case of development stage drugs, irrelevant to the next few years’ expense structure. In spite of...

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Zeke Emanuel: Re-Incentivizing Pharma & Device Companies to Solve Technology’s Data Problem

Posted on Friday, September 28, 2012

Zeke Emanuel would like to set the record straight. He’s not against new medical technology. Indeed, the UPenn med school and Wharton professor calls the profusion of industry-generated new technologies “a great thing”. But his support is necessarily tempered — a wariness born from his days as a health policy advisor in the Clinton and Obama administrations. Emanuel’s willingness to critique newer, costlier innovations that deliver results no better than older, cheaper technologies has made him a lightning rod for critics who argue he’s in favor of rationing (as well as death panels, which he was famously accused of inventing as part of his role in fashioning the Affordable Care Act). He also happens (with another dozen and a half similarly influential panelists) to be a speaker at the Real Endpoints Symposium on Nov 1-2 in Philadelphia. The unfortunate truth, says Emanuel, is that advances in healthcare technology have generally not delivered the kind of productivity benefits Moore’s law describes in computer processing. But that won’t always be so. Future technologies, he believes, will not only increase the quality of healthcare, particularly in areas which haven’t seen much progress, but also “lower costs and do it more efficiently.”  That double goal is “what technology is supposed to do…we just...

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The Requisite Data: A Discussion with United’s Lew Sandy

Posted on Monday, September 17, 2012

What goes around comes around. “Employers are asking: what proportion of your reimbursement [spending] on physicians, hospitals…or pharmaceutical companies is performance-based,” says Lewis Sandy, MD, SVP Clinical Advancement at UnitedHealth and principal in its Center for Reform and Modernization.  (Click here for audio excerpts of the interview).  “And we’re being scorecarded against that.” Which means, for product companies, that either risk-sharing is going to be the dominant marketing tool to payers (if your drug achieves X result in my population, I’ll pay your price – if not, not) or that drug companies will need their kind of data ahead of time. We interviewed Sandy in preparation for the Real Endpoints Symposium, Nov 1-2, where he’ll be speaking in a panel discussion with Martin Mackay, president of R&D at AstraZeneca, and Bob Galvin, the CEO of Equity Healthcare, probably the leading company in managing employer health costs and quality.  To hear more of our interview with Lew Sandy, click here. As to the kind of data that United’s looking for, it’s not necessarily tied to  cost-effectiveness, says Sandy, though that’s the area of greatest controversy. The most important issues relate to clinical efficacy. But Sandy’s definition of efficacy and a pharmaceutical company’s are very different.  Drug companies focus on the...

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Drug Targeting & Reimbursability: It Ain’t Easy

Posted on Friday, January 6, 2012

All things being equal, insurers prefer a drug that’s designed to work for a person with a specific genotype than one targeting a more general group of patients. The notion makes sense medically. It should make sense economically too — less drug gets wasted on people who won’t benefit and who might incur expensive side-effects in the bargain. That’s the promise of personalized medicine,  and it’s why new drugs focusing on more specific populations than their competitors should have reimbursability advantages. But all things are rarely equal. Some highly popular drugs – Abbott Laboratories’ Humira, for example – generate a ton of rebate income for payers. Moving to a more targeted rheumatoid arthritis therapy makes sense in the abstract, but could certainly lose a payer a chunk of change it had been counting on if its preference for the new drug violates its contract with Abbott. And then there’s science, which sometimes seems to follow no rules at all.  For example, Eli Lilly showed in its development of Plavix-competitor Effient that up to 30% of people don’t effectively activate Plavix thanks to a mutation in the CYP2C19 gene responsible for making the enzyme required to metabolize the drug.  In individuals with this mutation, therefore, Plavix shouldn’t work. Medco seized...

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Reimbursement as Environment

Posted on Monday, November 28, 2011

Who controls reimbursement? Talk to a drug company, or most pharmaceutical analysts, and the answer is payers.  Talk to payers and the answer is far more complicated – and not one where they claim overall control of the process. The fact is reimbursement doesn’t come down to a decision; it’s an environment.  And like any environment, its effects have multiple causes. I don’t pretend to fully understand why sales of Dendreon’s prostate cancer therapy, Provenge, have so dramatically underperformed the company’s, analysts’ and even some payers’ expectations.  But while plenty of people think that insurers simply choked on the $93,000 price and set up huge obstacles to its reimbursement, that’s not really true (roughly 90% of commercial plans actually pay for it without restrictions any more severe than those imposed on the more expensive and far more successful Yervoy).  Instead, at least one of the problems is that urologists, the primary prescribers of the drug, aren’t used to the buy-and bill-model, particularly when it’s employed for very expensive drugs.  At a time when physician budgets themselves are stretched, owning those costs – even for a short period of time – makes a doctor look hard at the value provided by the medicine. Meantime, in the summer of 2010 CMS...

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Healthcare’s Topeka Problem

Posted on Tuesday, November 22, 2011

You might have heard that, for about a month, domestic abusers in Topeka roamed free. Not because the community encourages wife-beaters.  But because it couldn’t afford to prosecute them.  County DAs, dealing with a 10% budget cut, said they didn’t have the money to go after misdemeanors, including domestic abuse.  So they sent the cases over to Topeka city prosecutors, who, suffering under similar economics, likewise claimed they couldn’t afford to prosecute under the local Topeka law.   In an attempt  to push the cases back on the county, the city council repealed the law and its jails freed 18 domestic-abuse suspects, at least one of whom went on to beat again. If you’ve got a finite pot of prosecutorial money, what do you prosecute? Domestic abuse or, say, drunk driving? And if you’ve got a finite pot of health care money, what do you fund?  Cancer therapy or hip replacements? Just like Topeka’s city councilors, health plan administrators are going to start deciding who gets health care and who doesn’t.  Think about the poor schmoes who have to run Medicaid plans — and somehow have to figure out, when the Feds start cutting back, whether to use this year’s budget money for the new Hep C protease inhibitor...

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