Population Health: The Call to Community - Pharmaceutical Executive

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Population Health: The Call to Community


Pharmaceutical Executive


PE: One reason why big Pharma has not fully embraced an outcomes agenda is the difficulty it has in leveraging good data. Making data transparent and shareable is complicated by competitive issues, while key outcome indicators are often missing due to the health system's failure to integrate the various parts of the delivery chain. Asking drug companies to perform head-to-head comparison trials against a close competitor or even one its own products requires a big leap of faith. How do you open the floodgates and get people to trust and have confidence in data as the arbiter of access?

Nash: It requires a change in behavior motivated by incentives to make this change economically feasible. And it starts in one place: the pharmacy and therapeutics committees that both the public and private sectors rely on in choosing drugs for reimbursement. As a member of the committee at Jefferson Hospital, I know that our members will not consider recommending a formulary listing until they see an economic dossier of the medicine's potential impact on costs.

This is not the same as saying "hand us your proprietary clinical trial information." Instead, our goal is to condition pharma companies to supplement clinical information with a broader economic perspective. Understanding the payer perspective begins with the simple recognition that the payer is bearing all the economic risk. To the payer, "value" means finding drugs that are efficacious, safe and advance the standard of treatment, at a price that also allows for a margin from the sale. Drug companies that understand this basic fact of life for payers will succeed, with the added social benefit of preserving the decades-long hegemony that the US innovative drug industry has enjoyed worldwide.

PE: There is much emphasis on the obligation of big Pharma to understand the payer perspective. Might it not be better to see this relationship as a two-way street? Do PBMs and insurers – the major payers for medicines in the private sector – bear any responsibility for advancing the dialogue?

Nash: Yes. I am a member of the Board of Directors of Humana. Despite the connection, I don't think insurers do a good job in articulating what they provide to the health care system. For example, it's a misnomer that the big insurers tell physicians how to practice medicine. It is also misleading to state that insurers won't pay for drugs, if they don't like the evidence. Humana is a facilitator, not an arbiter, of care. This is the proposition: insurers, Humana among them, say to their providers: "here is your money upfront. Use it to decide what you think is the best way to treat your patients. But because there is a limit to this money, you would do well to practice based on the best available evidence of value for that money. And if you perform that task well, we will add a bonus – if you create more value for money, we will give part of that value back to you."

PE: As a population health advocate, what is your view on implementation of the 2010 Affordable Care Act [ACA]? Are you a proponent – or an opponent – of what the Obama Administration is doing?

Nash: The law is a step in the right direction. The US is the only industrialized nation where upwards of 15 per cent of the population has no health insurance. If nothing more ends up being done than covering these uninsured, then President Obama deserves recognition for a great act of social justice. The problem I have is the way the legislation was enacted, in a series of fudges and compromises required to obtain the bare majority of votes, all from one party in Congress. As a result, few of the cost fundamentals that drive our system – such as rewarding providers for a service, rather than an outcome – will be resolved anytime soon.

Nevertheless, there are promising experiments under way; many are financed through the law. "No outcome, no income" is the operative concept. The ACA introduces a new model, the Accountable Care Organization [ACO] that promises to attract millions of enrollees, particularly those eligible for Medicare. There is also provision for patient-centered medical homes, a care delivery model centered on transparency, accountability, and evidence-based practice. You can also point to the widespread adoption of electronic medical records, a transition facilitated by the law.

One downside is the negative media coverage of enrollment in the new insurance exchanges. That too has to be put in perspective. Looking back, no major legislation involving health has been implemented without controversy. The American Medical Association [AMA] fought Medicare and opposed prospective payment reform in the 1980s. Patient power led to repeal of catastrophic care coverage in the 1980s and a backlash against HMO managed care in the 1990s. Liberal Democrats almost torpedoed the Medicare Part D benefit in a fit of partisan pique against a Republican president. So the histrionics over "Obamacare" have to be placed in context. How could anyone believe that confrontation would not occur in a sector that accounts for a sixth of US economic output?

In a larger sense, the dysfunction on reform underscores how little is known about insurance as a social and economic instrument. Most Americans still have trouble understanding the basic principle behind insurance: diverse pools of people contract to spread the risk of illness equally, among the sick and healthy, thus mitigating the disproportionate financial consequences of illness for the individual. Health insurance is seen as an assault on personal freedom, even though living in an interdependent world should carry some obligations to the collective.

A significant omission in the ACA is in preparing the health care workforce for the expansion in coverage. We do not have enough primary care physicians to enable full implementation of the law. At present, there are three specialists for every one primary care physician in practice. This distortion in the labor supply is entirely due to economic factors. Medical school students now graduate with an average tuition debt of $190,000 – the equivalent of a new mortgage here in the northeast. As the ACA is phased in, changes are needed to increase training slots for primary care physicians and to raise their reimbursement rates. Incomes for the sub-specialties have to go lower, across the board. And opportunities have to increase for crucial care team members, including nurses, physician assistants and community health workers. One of the priorities of our population health strategy is to insist that all these practitioners work closely together, at the top of their game, and for the purpose for which they were trained: to get people well, and as quickly as possible. That is another challenge in itself.

But the biggest flaw in the law is the cost. I believe it will drive up spending much faster than anyone has imagined. The precedent is the 1965 Medicare Act, where Congress was off target by a factor of 400 in what it estimated health coverage for the elderly would cost the government then, and what it costs today. Although expansion of insurance cover is a major advance in social policy, it must be weighed against the capacity of society to pay for it. To me, this dilemma is a stimulus to action because promoting a cost control and quality agenda centered on population health is more vital than ever.


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