Transcript Biologic Therapy Management

Population Health, Value
Based Benefits and Biologic
Technologies
F. Randy Vogenberg, RPh, PhD
Executive Director, BFAC
Setting the Stage—from the
Employer View
The Market View
Manufacturer
Who
Controls the
Product?
Distributor
McKesson
Dispenser
Cardinal
PBM w/Specialty Pharm (SPC):
APCS(Fed)/Caremark,
Express Scripts/Curascript
Medco/Accredo
“Independent” SPC: Accredo,
Chronimed, etc.
MCO with internal PBM/SPC
Retail w/SPC &
PBM (Walgreens, CVS)
Administered by
Bergen
MD Office / Infusion Center
HHC
Patient
Patient
Payer
Medicaid
Medicare
Third Part Admin
MCO
3
Sample Snapshot from “BY 2004”
U.S. Pharmaceutical Market
Total Market = $215 B
($ in Billions)
Traditional
Specialty
Specialty Pharmaceutical Market
Multiple Sclerosis
2.5
Hemophilia 1.6
Hepatitis C 1.6
Rheumatoid Arthritis 1.5
Pulmonary
Hypertension
1.2
RSV prophylaxis
0.8
Growth Hormone
0.4
Infertility 0.7
Oncology 12.6
HIV/AIDS 3.4
Renal
3.2
Transplant 1.5
Other
1.3
Total
32.3
Sources: Extrapolated from IMS Health, JP Morgan Industry Update, “Specialty Pharmacy: Conduit of Growth for Biotechnology,” March 14, 2003,
Bear Stearns Health Care Distribution, “Specialty Pharmacy Services: Among the Fastest-Growing Areas of Health Care,” November 2003, Caremark Estimates.
Copyright 2007, F R Vogenberg.
A Sample Snapshot from 2006
U.S. Pharmaceutical Market
Total Market = $275 B
($ in Billions; +8%)
Traditional
Specialty (+20%)
Specialty Pharmaceutical Market
Multiple Sclerosis
Hemophilia
Hepatitis C
Rheumatoid Arthritis
Pulmonary
Hypertension
RSV prophylaxis
Growth Hormone
Infertility
Oncology
HIV/AIDS
Renal
Transplant
Other
Total
40.0
Sources: Extrapolated from IMS Health, JP Morgan Industry Update, “Specialty Pharmacy: Conduit of Growth for Biotechnology,” March 14, 2003,
Bear Stearns Health Care Distribution, “Specialty Pharmacy Services: Pharma Voice, 2007.
Copyright 2007, F R Vogenberg.
Trend Impacts in 2006


Acute or Life Saving
 0.6 %
Life Style or Cosmetic
 0.1%


Chronic preventative,
maintenance or
symptomatic
 3.4 %
“Over Utilization”
 1.1 %
Generics: Top 5 = 0.8% savings of gross
Generics: Top 14 overall = ~4 % savings of gross
Top Brands spend result in ~even cost overall.
Source: adapted from Caremark 2006, 2-07 Industry Analytics.
Copyright 2007, F R Vogenberg.
Generics

+13 % in prescription volume

+22 % in pharmacy sales
Copyright 2007, F R Vogenberg.
Health Care Hyper Disruption—
Just Like “IT”




Information explosion
 100 fold increase in bytes of data by 2010
 Consumerism and genome project applications
Device explosion
 Mobile devices double by 2010
 Biotechnology utilization grows 4 fold
Transaction explosion
 Platform stability for connection to interaction
 Claims adjudication to value based behavioral
management
Mayhem explosion
 Security breaches
 HIPAA compliance
Copyright 2007, F R Vogenberg.
New “Specialty” Drugs Are Escalating
Rapidly & Impacting Medication Spend
Specialty Drug Industry Growth, 1990-2005E
$50
Source: Banc of America Securities LLC
600
$46B
600
Product Revenues ($ Billions)
Number of Specialty Drugs
700
$40
500
400
$30
369
300
$20
240
197
200
100
$17B
100
$10
92
29
10
0
$0
1990
1995
Drugs in Development
2000
Drugs on Market
2005E
Product Revenue ($Billions)
• U.S. biotech companies had sales of $32.3 billion in 2003.
• U.S. biotech companies are predicted to have sales of $91 billion in 2008.
Sources: Ernst & Young LLC, Resurgence: The Americas Perspective Global Biotechnology Report 2004, cited in T. Agres, "US Biotech May Leap
into the Black," Drug Discovery and Development, July 1, 2004, p. 16.
Copyright 2007, F R Vogenberg.
Follow the Dollar: Cross Impacts of
Rising Cost Share on the Severely Ill
Total Health Care: $1
Total Rx : $.12-.15
Total Spc Rx: $.02
Hospital, Diagnosis
Medical Laboratory, Out
Patient
Typical Rx
Injectables ($.01)
Prescriptions
Injectables & Biotech
($.02)
Biotech ($.01)
Co-pay: $.002 or 2/10 of $.01
Example: Minimal impact of a
20% Co-pay on the total health care premium
Source: Aon project data on file, 2004
Copyright 2007, F R Vogenberg.
80% Covered
20% Out-of-Pocket
Tidal Wave Effect—Use & Cost
55%
5%
60%
Population %
4%
Spc Drug Spend %
4%
45%
3%
30%
2%
15%
15%
1%
1%
0%
0%
2004
Copyright 2007, F R Vogenberg.
Sources: Managed Care Magazine, August 2004; Specialty Pharmacy News, 2006.
2010
Benefits: Trends are about market
challenges and change

Short Term
 1-3 years
Benefit-Design Trends: Increased
Cost Sharing at Point of Service
Today we have Co-pay set on price,
not value

Generic drugs – lowest co-pay

Preferred brand – middle

Nonpreferred brand – highest
Value-based Health Benefit Plan

Why is it a good concept?
More appropriate strategy to engage “consumers”
in their own health management
Creates an alignment between quality improvement
initiatives and health plan designs
Misinterpretation of VbBD
Medical Home
Value Based
Pay For
Performance (P4P)
&
Formularies
HPN
Gatekeeper
Value Based
Insurance Design
&
Hybrids
Value-based
Benefit Design
&
Others
VbBD: A Corporate Strategy
ER Corporate Business Model
Business Goals and Objectives.
Goals, Objectives/Outcomes
Value-based
& Desired Behaviors resulting from
Health Plan
Health Care Plan(s).
Health Plan
Benefit Coverage
Implementation of Health Plan.
Following ERISA, HIPAA, etc.
VbBDs
Medical Home
Value Based
Pay For
Performance (P4P)
&
Formularies
HPN
Gatekeeper
Value Based
Insurance Design
&
Hybrids
&
Others
Employers Primary Focus of Health Care
Risk
Reduction
Prevent the Preventable
Change Incidence Rates
CONFIDENTIAL INFORMATION
© 2007 Copyright EPS LLC, All Rights Reserved
Employer’s Health Care Objective
Economic Benefit of Healthy Employees…
Find Patients @ Risk
Prevent the Preventable (Heart Attack)
Continuum of Service
Health
&
Wellness
(Prevention
curtails costs)
No Risk EEs
Risk
Reduction
Prevent the Preventable
Change Incidence Rates
CONFIDENTIAL INFORMATION
© 2007 Copyright EPS LLC, All Rights Reserved
Disease
Management
(After the fact
Management)
EEs suffered
CVD Event
VbBD
How can “Pharmacy” help enhance
each stakeholders own “Value Proposition”?
Physician:
Reputation
Office Efficiency
Improved Care
Employer:
Productivity
Employee Stability
Premium Rates
IMPROVED
OUTCOME
Payor:
Market Share
Member Turnover
Utilization & Costs
Patient:
QoL
Care Perception
Lower Co-pays
Biologic Finance and Access Council
(BFAC)
About the Program at Thomas Jefferson University
Background
Biologic Finance and Access Council
• A multi-disciplinary not-for-profit organization addressing:
–
–
–
–
–
Patient cost burden
Appropriate access and reimbursement
Role and value of biologics
Future means of financing and managing
Unmet educational and informational needs
of stakeholders
• Information analysis and idea exchange
• Need for innovative benefit designs and insurance
solutions
Membership: An Opportunity to “LEARN”
• Leadership
– Members steer the direction by identifying key issues, such as:
• Patient cost burden; role and value of biologics; access to,
reimbursement for, and ways to finance and manage biologic products
and technologies; and other relevant issues
• Education
– Provides, through existing or new collaborations:
• Courses, webinars, and conferences offering in-depth professional
development opportunities, designed by and for BFAC members and
related professionals
• CME opportunities for licensed professionals
• Action
– Develops and disseminates practical solutions:
• Collaborate with stakeholders on the creation of innovative benefit
designs
• Publish definitive viewpoints and interpretations of market trends,
addressing the unmet educational and informational needs of
stakeholders
Membership: An Opportunity to “LEARN”
• Research, Representation, and Resources
– Creates opportunities for:
•
•
•
•
Original or shared research on innovative benefit designs
Data and information analysis
Exchange of ideas on future financing of biologic technologies
Provision of member mailing lists, conferences, and educational courses
• Networking
– Offers a dynamic forum for the exchange of new ideas, bringing
together members to share their experiences, expertise, and
friendship
• Through BFAC, there are numerous opportunities for leadership,
education, discussion of national or local issues, personal and
professional networking, professional development, referrals, and
accredited education offerings
Foundation In Place for the Future
Biotechnology Healthcare - Official Journal
• Reports on:
– Management and use of biopharmaceuticals and molecular
diagnostics
– Value to third-party payers and employer purchasers
– Scientific advances affecting healthcare
– Financing, utilization, and public policy
• Bimonthly, peer-reviewed journal,
introduced 2004, link with BFAC 2006
• Reaches 35,000 healthcare
decision makers
• Website – www.biotechnologyhealthcare.com
– Weekly e-newsletter (13,000 requestors)
Foundational Initiatives by BFAC
The Need for Value-based Health Benefits
Distributed to 45,000 stakeholders
Aligning the Value Equation
Held on April 7, 2008 with
more than 100 attendees
Future Focus for BFAC
• Benefit design innovation
• Employer issue exchange on health care coverage
• Biologic technologies, biomarkers, and molecular
medicine
• Spotlight on disease states
• Health data analysis and research
• Multidisciplinary opportunities for collaboration
• Market focused and action oriented
Summary
• Unique biologic/new technology focus with emphasis on
member driven solutions led by an experienced
leadership team
• Action oriented around innovation in benefit design for
real world biotechnology access and finance solutions
• Established work product and direction, now with the
Jefferson School of Population Health and its resources
or affinity groups