A New Deal with Managed Care - Pharmaceutical Executive

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A New Deal with Managed Care
A PE Roundtable


Pharmaceutical Executive


Sharon Levine, MD, a pediatrician and associate executive director of the Permanente Medical Group, represented RxHealthValue-a coalition that seeks to ensure that consumers get full health and economic benefit for their prescriptions-before the US House of Representatives last fall. She claims, "There is a standard definition of value in healthcare. It's quality divided by cost. How much health are you getting for every dollar you spend?"

But who defines quality? After all, patients and physicians may demand it in ways that don't accrue to payers. "For patients, it is ultimately about how important drug therapy is to their life, mobility, and ability to be productive in the workplace," says John Seman. "And it can vary by patients. Therapies that work with some patients may not work with others. How do we mark one therapy as high value when there is a group of patients who do not respond to it?"

When companies decide that achieving a preferred formulary status is important to their commercial goals, they may employ strategies to translate value into terms payers can understand. "As long as formularies are in place and use mechanisms such as patient out-of-pocket differentials that guide and affect patient choice of therapy, then pharma companies must consider formulary placement within the overall strategy of selling their products," says Kathleen Kaa, PhD, RPh, director of payer policy at the Lash Group consultancy. "But with preferred formulary status may come trade-offs, such as price and program concessions."

"To me, that's really the value paradigm," says Michele Pesanello, associate partner for IBM Consulting Business Services, which outlines changes to the pharma industry in its report "Pharma 2010: The Threshold of Innovation." "Companies must look at what they have to do-whether it is pharmacoeconomic studies, contracts and rebates, marketing programs like DTC ads, and other services-that make the perceived value of the product higher than the actual clinical value."

Pharmacoeconomics A recent Datamonitor report pegs industry's poor performance in communicating product value to its inability to understand what payer decision makers' needs are. That's true, according to David Balekdjian, who notes from his survey that payers are increasingly relying on pharmacoeconomics to guide their formulary decisions, but that pharma companies are not yet "up to snuff" on providing that type of information.

Part of the problem is industry's slow response in shifting its business to fit the emerging paradigm. Steven Avey, MS, RPh, Foundation for Managed Care Pharmacy executive director, says, "We realized that the pharmacoeconomic models aren't going to be very good in the beginning because industry needs more experience dealing with them. Quite frankly, the United States is very late getting into the game. Pharmacoeconomics and health outcomes evaluations have been going on in Europe, Canada, and Australia for a long time."

MCOs also need to gain experience in integrating those studies into their methodology for formulary decisions and expertise in analyzing and comparing models from different companies. To that end, Kaa says she often "has to come to the defense of pharma. A managed care organization can demand certain information, but until they show how they effectively use it, there is going to be some push and pull in providing it, given the very real resource issues manufacturers face to provide this information in the required formats. Payers should be capable of saying, 'Here's the information that we require companies to submit. And here's how we actually use this information.'"

Although an entire roundtable could be dedicated to the lack of communication between pharma and managed care, attendees hailed from organizations replete with examples of effective working relationships.

Tracey Gerthoffer, PhD, RPh, senior manager of outcomes research for Pfizer, noted that those conversations are happening at Pfizer. She says the company invites managed care organizations to partner with them and provide input into their economic models well before launch. Gerthoffer also stressed the importance of reaching out to payers to find out what programs matter to them and what their issues are, throughout the product lifecycle.

Cynthia Pigg, RPh, MHA, vice-president of pharmacy for Cigna, claims that relationships with health plans develop "just like in any other business relationship. There are some pharma manufacturers that you come to trust because you have worked with them in the past, so you tell them to come in with their pharmacoeconomics model. I'll give them a lot more attention than somebody that I don't have an established relationship with or that hasn't worked to the betterment of all of us."

Pharma companies can help build trust by tailoring formulary submissions to promote appropriate use to specific populations. Steven Lo, senior director of managed care for Genentech, says, "If a manufacturer can work with the payer to help identify the appropriate patient for their therapy, a greater level of trust can occur. For those products that have a diagnostic-Herceptin is an example-companies can define an appropriate patient, like a HER 2 positive patient."

Ceci Zak, director of customer marketing for Roche, says that the company's strategy in developing the hepatitis treatment Pegasys (peginterferon) is another example of an effective way to build relationships. "We focused first on the payer, because if the payer is not going to reimburse or the challenge for them is how to handle this product, the patient will never get it. We designed the clinical development of the product and different studies to show the economic value of Pegasys. We established efficacy first, safety second, and based on the clinical trials, we established different dosing regimens for hepatitis patients which provided additional value to the payers."

But health outcomes studies may not be enough in crowded therapeutic categories. Levine says, "The pharmacoeconomic part of the AMCP dossier is still quite primitive, and there are things that hamper the robustness of the use of pharmacoeconomics studies. They are handicapped without head-to-head comparisons of drugs in a class or different therapeutic classes to treat the same condition."


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