Payer-manufacturer collaboration – a sequel

by Torsten Bernewitz

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Yesterday we saw another example of payers and pharmaceutical manufacturers collaborating in new ways. The bug of creating new partnerships seems to be catching on as the different healthcare stakeholders realize that each of them are holding different pieces of the healthcare puzzle, and that they can really solve it only by putting them together in joint efforts.

Now it’s Pfizer partnering with prescription benefits manager Medco (http://www.thestreet.com/story/11289938/1/pfizer-establishes-precision-medicine-research-collaboration-with-medco.html).

Sanofi entered a similar collaboration with Medco in the summer, and of course a few days ago we had Pfizer-Humana and earlier in the year AstraZeneca-WellPoint. I shared more details about these examples in an earlier post (http://payer-strategies.blogspot.com/2011/10/adversaries-becoming-friends-payers-and.html).


And on the provider-payer side there is also a lot more love (http://payer-strategies.blogspot.com/2011/10/love-is-in-air-take-aways-from-ahip.html).

Interesting times!

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Torsten Bernewitz is a healthcare industry analyst and management consultant.
He is Managing Principal, Healthcare Insurers and Payers at ZS Associates.

This post is the author’s own and does not necessarily represent ZS Associates’ positions, strategies or opinions.

Contact: torsten.bernewitz@zsassociates.com

Adversaries becoming friends – payers and big pharma are pooling capabilities to tackle healthcare inefficiencies

by Torsten Bernewitz

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The relationships between pharmaceutical companies and health plans are usually not easy. They are parties sitting on opposite sides of the negotiating table, and frequently regard each other with suspicion.

But some change may be coming our way. If we want to stem the tide of ever rising healthcare costs, we need to get better at leveraging clinical evidence and comparative effectiveness data to steer the appropriate care, medications and services to the right patients, at the right time.

The different stakeholders in healthcare each hold different pieces of this puzzle. Payers have extensive data about healthcare utilization, outcomes and costs. Providers have the expertise in diagnosis and treatment protocols that determine the patient’s journey and experience along the way. Medical manufacturers have strong market research capabilities to understand provider and patient needs, attitudes and behaviors, the marketing skills to influence change, and the research and development capabilities to create new pharmaceuticals and devices to provide new solutions. Bringing all of this to the same table can be a win-win for everyone involved, including the patient.

This year we have already seen two prominent examples of different stakeholders working together in new ways.

Yesterday, Humana and Pfizer announced that they join forces in a five-year research partnership. The goal is to explore new ideas and ways to improve the quality, outcomes and costs of the healthcare delivery system, in particular for senior citizens.

Both organizations will bring together researchers and healthcare experts to study key issues and deliver interventions to reduce inefficiencies in the management of chronic conditions such as pain, cardiovascular disease and Alzheimer’s.

Humana expects to get from this collaboration a deeper understanding of their members’ needs, their behaviors, and the underlying drivers for health and well-being. The results could shape how Humana designs benefit and coverage plans, and what programs will be developed to influence how patients take their medications.

For Pfizer, the research will provide important pointers to influence pipeline strategy decisions. And of course they will get a better appreciation of how payers think and make decisions.

Earlier this year, AstraZeneca and WellPoint entered into as similar partnership to determine the most effective and economical treatments for chronic illnesses and other diseases.

In this collaboration, which is expected to run over the next four years, WellPoint and AstraZeneca will share and analyze electronic medical records, claims information and patient surveys from people insured by WellPoint and several regional Blue Cross Blue Shield plans.

The research will include prospective and retrospective observational studies on disease states as well as comparative effectiveness research of multiple treatment options. It will also highlight new therapies most needed for treating and preventing disease.

The companies plan to make their findings publicly available and to expand their partnership to include hospitals and other organizations.

These partnerships bear all the hallmarks of value-based relationships. They are significantly different from the key account management (KAM) and contracting strategies that usually characterize the approach of pharma companies when they interact with payer organizations.

This is not about selling products and/or services. It is not about pricing and rebating for access. Instead, it means bringing capabilities from both partners to the table to solve a problem or develop solutions together.

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Torsten Bernewitz is a healthcare industry analyst and management consultant.
He is Managing Principal, Healthcare Insurers and Payers at ZS Associates.

This post is the author’s own and does not necessarily represent ZS Associates’ positions, strategies or opinions.

Contact: torsten.bernewitz@zsassociates.com

Coming through – facing the new market access hurdle in Germany, AZ receives encouraging news for Brilique

by Torsten Bernewitz

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A few weeks ago, I mentioned that the U.S. are not the only country working on healthcare reforms. I was referring to a new law in Germany that appears to have an effect on curtailing healthcare costs, in particular regarding pharmaceuticals (http://payer-strategies.blogspot.com/2011/09/reversing-rising-costs-for.html).

This new Germany healthcare law mandates early evaluation of the additional benefit of the drug in comparison to a corresponding established therapy, creating an additional hurdle pharmaceutical manufacturers have to take when they bring new products to the market. Savings are expected to reach the healthcare system 2 billion euros (~$2.7 billion) annually.

Shortly after regulatory approval of a new drug, a Joint Federal Committee (Gemeinsamer Bundesausschuss G-BA; self-governing body of physicians, dentists, hospitals and health insurance companies) rates new drugs on a range from 1 (“major additional benefit”) to 6 (“less benefit than comparator”).

While the new law has already created some casualties - the withdrawal in Germany of Novartis’ Rasilamlo and the decision by Boehringer Ingelheim and Eli Lilly not to launch Trajenta in Germany - a preliminary assessment report regarding the medical benefit of AstraZeneca’s clot buster Brilique/Brilinta (ticagrelor) for acute coronary syndromes (ACS), seems to be reasonably positive, at least for the more significant part of the market(http://www.worldpharmanews.com/astrazeneca/1815-brilique-receives-a-positive-preliminary-medical-benefit-assessment).

For patients with NSTEMI/UA (Non ST-Elevation Myocardial Infarction/Unstable Angina), which represents over 70% of the ACS patient population in Germany, a rating of 2 - “important additional benefit” - was assigned versus comparator Clopidogrel + aspirin.

For the smaller patient sub-populations with STEMI/PCS (ST-Elevation Myocardial Infarction/Percutaneous Coronary Intervention), however, the rating was 5 - “no additional benefit proven” versus comparators Prasugrel +aspirin and aspirin in monotherapy.

AstraZeneca will now respond to the G-BA regarding the initial assessment, after which the final benefit assessment will be performed by the GKV-SV (Federal Association of Statutory Health Insurance Funds). The decision is expected in 2012 (in the meantime, the product s already available in Germany).

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Torsten Bernewitz is a healthcare industry analyst and management consultant.
He is Managing Principal, Healthcare Insurers and Payers at ZS Associates.

This post is the author’s own and does not necessarily represent ZS Associates’ positions, strategies or opinions.

Contact: torsten.bernewitz@zsassociates.com

Accountable Care Organizations: Houston (or rather Washington), we have a problem!

by Torsten Bernewitz

During the debate about healthcare reform, institutions like the Mayo Clinic, the Cleveland Clinic, Geisinger Health System and Intermountain Healthcare were repeatedly showcased as models for a new health care delivery system dubbed “accountable care organizations” (ACO).

This new approach to delivering health care services rewards doctors and hospitals for providing high-quality care to Medicare beneficiaries while keeping costs down. In March CMS announced that it will allow up to 30 provider organizations to apply for "pioneer ACO" status and join the Shared Savings or Pioneer program this fall.

As it turns out, Mayo, Cleveland, Geisinger and Intermountain - considered the most likely candidates - have declined to apply for the “Pioneer” program. They complained that the draft CMS rules were too burdensome and didn't offer enough incentives.

Other stakeholders, such as the American College of Physicians, the American Academy of Family Physicians, the Medical Group Management Association, the American Medical Group Association, and the American Medical Association, voiced similar concerns.

CMS has not yet published how many health systems applied for the program (the deadline to apply was Aug. 19), but The Advisory Board Company, a hospital consulting firm, estimates based on surveys that between 30 and 50 organizations have applied for the Pioneer program. CMS goal was 30, so in terms of numbers they may be fine, however the composition of the group may be disappointing.
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Torsten Bernewitz is a healthcare industry analyst and management consultant.
He is Managing Principal, Healthcare Insurers and Payers at ZS Associates.

This post is the author’s own and does not necessarily represent ZS Associates’ positions, strategies or opinions.

Contact: torsten.bernewitz@zsassociates.com

Reversing rising costs for pharmaceuticals – the German experience

by Torsten Bernewitz

The U.S. are not the only country working on healthcare reforms. In Germany, a new law governing pharmaceuticals (Arzneimittelmarkt-Neuordnungsgesetz - AMNOG) is in place since the beginning of the year, and recent data seems to indicate that it is working. Expenditures for pharmaceuticals shrunk(!) 6.3% in the first half of 2011, leaving the Germany sick funds with a surplus in spite of rising costs in other healthcare sectors. The sick funds had ended 2010 still with a deficit.

The new Germany law allows for early assessment of the benefit of a medicinal product. Shortly after regulatory approval of a new drug, a Joint Federal Committee (Gemeinsamer Bundesausschuss G-BA; self-governing body of physicians, dentists, hospitals and health insurance companies) will evaluate the additional benefit of the drug in comparison to a corresponding established therapy. The law thus establishes a "fourth hurdle" pharmaceutical manufacturers have to take when they bring new products to the market, in addition to having to demonstrate efficacy, safety and quality.

If an additional benefit is determined, the price of the new medicine will be negotiated between the Federal Association of the health insurance funds and the manufacturer. If no additional benefit is determined, the new medicine will be part of the fixed price system (“Festbetragsystem”) in accordance with their pharmacological profile.

Similar procedures have already been introduced in many other European countries.

The G-BA has in fact taken its first decision following the introduction of early benefit assessments for new innovative drugs. The G-BA decided to include Livalo (pitavastatin) - which was launched in Germany in June 2011 - in the existing level 2 reference price group for statins, because a therapeutic improvement was deemed not proven.

The new law has also created some “casualties”:  Thus Novartis has discontinued the marketing of Rasilamlo (aliskiren + amlodipine) in Germany, which was approved by the European Commission in April 2011 and launched in Germany in May. Novartis was unable to provide data requested as part of the early benefit assessment.

In another recent case, Boehringer Ingelheim and their partner Eli Lilly decided not to launch their new type 2 diabetes treatment, Trajenta (linagliptin) in Germany due to the negative pricing prospect for their drug. The drug manufacturers feared that the comparator (which remains unnamed) might well be a generic diabetes drug, and would in that case put the drug at risk of obtaining a generic price.

However, while these changes should have a cost containing effect in the longer-term, the current reduction of pharmaceutical budgets in Germany is most likely caused by the 16 percent mandatory rebate introduced a year ago.
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Torsten Bernewitz is a healthcare industry analyst and management consultant.
He is Managing Principal, Healthcare Insurers and Payers at ZS Associates.

This post is the author’s own and does not necessarily represent ZS Associates’ positions, strategies or opinions.

Contact: torsten.bernewitz@zsassociates.com