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David Balekdjian is a partner at the Bruckner Group, (www.brucknergroup.com) a consulting firm assisting pharma and biotech companies with strategic, marketing, and development issues.
Robert Seidman, Former Chief Pharmacy Officer, Wellpoint
The US private payer landscape has been transformed over the last 10 years. With payers now making new drug access decisions not just on safety and efficacy, but on the drugs' value to healthcare overall, pharma companies have had to transform their business model. A key figure in this transformation was Robert Seidman, who leveraged his role as the insurer group WellPoint's first Chief Pharmacy Officer to drive many important changes in the institutional relationship between Big Pharma and its now equally big customers.
Robert Seidman Former Chief Pharmacy Officer, Wellpoint
Under Seidman, WellPoint became the first national health insurer to adopt and implement outcomes-based access in its new drug coverage and access policies. WellPoint required that in order for a new drug to obtain eligibility for reimbursement, manufacturers had to demonstrate not only that the drug is safe and effective, but also had a compelling and differentiating healthcare value proposition, along with the necessary evidence. The value proposition needed to show the pharmacoeconomic value of the incremental outcomes the new drug produced relative to its incremental cost. Insurers would then compare this value to existing therapies, and then make their coverage and access decisions accordingly. WellPoint also refused to consider any drug for approval for listing unless this information was included in the drug's formulary submission materials. All these moves are today virtual standard practice in the US industry.
"If health insurers are going to continue to provide long-term access to essential pharmaceuticals, it's necessary to remove inefficiencies from the drug delivery process," Seidman says. "And there are a number of ways that we sought to do this, including a focus on patient compliance with their therapeutic regimen. But certainly one of the ways we removed inefficiencies is by taking steps so that doctors and patients don't use inefficient therapies when more efficient ones are available."
"What differentiates me from others in my space is that I never hesitated to speak my mind and be honest about my concerns," Seidman said. "I put all my cards on the table as to what I thought was right or wrong, and I was always straightforward about it. My job was to manage the affordability of the prescription drug benefit, and when I saw developments that challenged that, I took action."
One of the precedent-setting actions that Seidman is best known for is WellPoint's petitioning the FDA to force a switch of Schering-Plough's Claritin allergy drug from prescription to OTC status. WellPoint ultimately prevailed, and as a result Claritin became an OTC therapy, leading to large cost savings for payers.
"When we saw that we had a 600 percent per member per month increase in spend on non-sedating antihistamines, we took a laser-like focus on the category. The side effects of these drugs were no different than a sugar pill, so the question arose: Why are these drugs even prescription drugs? There were no safety or side effect issues with these drugs, and in fact they were less dangerous than drugs being sold over the counter. So we sent a letter to the FDA asking why these drugs even qualified for prescription drug status given their profiles." On May 11, 2001, an FDA advisory committee voted overwhelmingly that the second-generation antihistamines did not warrant prescription drug status, and Claritin was soon afterwards switched to OTC.
Looking forward, Seidman feels that industry's great challenge is to move back to a science paradigm from a marketing paradigm. "I think a lot of companies have gotten in trouble by letting marketing take over. We need innovation and science to drive the industry. Innovation comes by trying to develop new major breakthroughs, not aiming for small, incremental improvements to what already exists." In coming years, insurers will be even more closely tying outcomes to reimbursement, so that the level of reimbursement provided will be directly linked to the type and value of outcomes provided, relative to existing alternatives.