A New Deal with Managed Care - Pharmaceutical Executive

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A New Deal with Managed Care
A PE Roundtable


Pharmaceutical Executive


"We know that the way physician office-administered drugs are going to be reimbursed is a huge issue around the success of these biologics," says Kaa. "We've got products that are in the middle of either succeeding or failing, simply because of what's happening at the physician office over reimbursement. In some cases, patient preference may not matter as much as it has traditionally. There can be instances when a physician may not administer a product due to their own reimbursement issues and feelings that their services will not be adequately financially recouped."

Because the net of therapeutic categories that contain injectables or biologics is widening, it behooves all stakeholders to figure out how to more effectively manage their cost, administration, distribution, and reimbursement.

"A lot of biologics and pharmaceuticals are coming out for diseases that have never been treated with an injectable before-dermatology, HIV, and osteoporosis to name a few," says Zak. "The challenge that we all have is how does a practitioner handle them, because, with everything that's been going on in the field of reimbursement today-sometimes, they back off and manage with what they have."

Despite those challenges, biologics and injectables pose an opportunity to create a more integrated, efficient system. The good news is that health plans can create it from a clean slate, because the management of those products is so different from conventional pharmaceuticals.

Pigg says, "Biologics and specialty injectables present many opportunities for better integration of care. Everyone has to participate in the integration. But MCOs are in the position to take a lead on it because they can look at patient care across all fronts. They have the information-the physician, hospital, pharmacy, and lab records. MCOs can take all those pieces of data and work together with providers and pharmacists to improve the care. As that value proposition is demonstrated, it allows us to open up those lines and make the care more seamless."

Specialty pharmacies, which serve narrow patient populations that take high-cost injectable drugs, have sprung up to help make that care more seamless. What they offer system users may turn that short-term fix into a long-term answer.

"The way that companies' products will distinguish themselves to not only the payers but also to patients and physicians is to provide some level of service behind the therapy," says Lo. "Specialty pharmacies are implementing a wide variety of programs, such as compliance and persistency programs. Others even include nursing support for the product."

Biologics and targeted therapies offer great possibilities to serve patient health and better unite the healthcare system, but if stakeholders fail to get out the story about their products' value, it can have a devastating effect on their business.

Levine says, "Care management and the integration of care pose a real challenge. Biologics also raise some social insurance issues-like Lilly's experience recently with FDA and their growth hormone product.

"Another issue is that there is no regulatory framework for generic biologics. How long will it be before we see that? That's one thing that has made the marketplace for prescription drugs as competitive as it is. Are we comfortable with drugs this expensive having no foreseeable end to their patent life?"

Bailey notes, "In the next few years, there will be greater communication between managed care and pharma and bio companies. It's going to continue down the path that's been established in many ways by the Academy of Managed Care Pharmacy: better communication, the building of trust, and the sharing of information. In five to ten years, pharmaceutical and biotech products will consume a greater portion of the healthcare dollar, but appropriately so because they will improve the quality of life and reduce morbidity. The hope is that, by sharing and passing along the knowledge, there will be a greater appreciation of the value that pharmaceuticals bring to overall healthcare."

Changing Roles The value paradigm will alter the way stakeholders think as they become accustomed to the new environment. As rising consumerism feeds employer to employee cost shifting, and cost shifting informs consumers about the price and value of pharmaceuticals, new roles will emerge for payers and industry.

Rother notes, "We're at the beginning of a pretty major shift, and new roles will be created by it. Much of the information about value, almost out of necessity, will find its way into the public realm. Consumers will have a much stronger voice because they'll have a lot more information at their fingertips, with the internet available to just about anybody. That information will allow consumers to become more of a factor in making decisions, along with employers and plans."

The internet will also play a role in helping recipients of a potential Medicare drug benefit compare therapies. Rother says the prescription drug benefit "is designed to tie into a searchable website that will, for the first time, give consumers price data at the retail level in their neighborhood-and it can easily be modified to give them value data. So we're going to have a much more structured, much more information-intensive environment at the consumer level starting in about six months after legislation's been active.

"Prescription benefit managers will also have a lot more market clout after they sign up a large part of the Medicare population. Because seniors take so many more drugs than the working population, I see a fairly significant

shift in the market reflecting their greatly increased purchasing clout."

In the coming years, patients will continue to become empowered through their pocketbooks. "Consumers will be brought into purchasing decisions much more than ever during the past 20 years," says Levine. "They will become increasingly sophisticated and have a much more immediate sense of themselves as payers. They will bring very different questions into the exam room. They'll ask the question today that managed care organizations have been asking for the last 20 years: 'How confident am I that the prescription given by the doctor is really the best value for me?' And that will be the fuel that drives the engine of the paradigm shift."

It is likely that the new paradigm will affect DTC efforts. Patrick Beers, senior vice-president of CommonHealth's new managed market strategy agency Solara, says, "There will be more of a shared responsibility to communicate value to the end user."

Wertheimer explains, "It can't be very long before enough of the sleeping giants, which are the employers that pay for all of this, 'get it,' so to speak, and realize that they don't have to take an MCO contract off the shelf. They ought to be saying, 'This is what we want. We want our workers to have exercise and be club members.' That becomes the goal. And I'm thrilled when I read about the employer business community groups in Minnesota and elsewhere that are doing exciting things."

But employers that adopt new health benefit models, such as consumer-directed health plans, pass the buck over to that rising tide of value-driven consumerism. That adoption, Wertheimer says, "will switch from a defined benefit to a defined contribution. Instead of the employer saying we're going to provide you with health insurance, they'll say here is $3,000 dollars to spend how you see fit.

"The role of the virtual MCO will grow enormously. It makes perfect sense for people to customize and to get this GP, this family practitioner, this pediatrician, and create their own managed care organization. Even though these people don't speak to one another, the data will." That will most likely happen through electronic medical records, which have already taken root in several systems.


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