Transcript Slide 1

Pressure from Increases in Cost, Pricing
Implications, and Launch Considerations
Craig Kephart, President & CEO
Centric Health Resources, Inc.
May 6, 2009
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Patient Centered Health Management®
News
 “…the PwC report recommends collaboration with nondrugmakers, particularly on disease management
programs. Partnering with other companies on "holistic
solutions" rather than "narrow treatments" is a more
flexible and "value-enhancing" strategy than, say, megamerging.”
 “Drugmakers are going to have to think of themselves
more broadly: They can't be makers of drugs. They have
to be health gurus, project managers, hospital partners ...
and so on.”
 “Outsource R&D…Outsource manufacturing. Outsource
sales and marketing, even. Then forge some links with
tech companies…and insurers, healthcare providers and
benefits managers. Reinvent yourselves, pharma! Don't
you know that's the latest trend?”
Source: Fierce Pharma, “Pharma: In 2020, it's not just drugs anymore,” April 30, 2009.
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Patient Centered Health Management®
More News
 “We’re going to see a growth in outcomes guarantees for
pharmaceuticals, and it’s very healthy.”
- Robert Seidman, formerly Chief Pharmacy Officer for WellPoint.
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Patient Centered Health Management®
Agenda
 Profile of a typical orphan drug
 Key Differences
 What Defines Success?
4
Patient Centered Health Management®
Profile of an Orphan Drug
DRUG A
DRUG B
DRUG C
100,000
10,000
1
5,000
1,000
1
No
Yes
Yes
Storage Requirements
2°C-25C°
None
Possibly
Route of Administration
IV Infusion
Oral
Any
$100,000/year
$70,000/year
?
60% home/40% Facility
Home
Anywhere
Ongoing
Ongoing
Ongoing
Yes
Side effect mgmt, lab draws
Possibly
Few or None
None at this time
Unlikely
Value of Reimbursement
Expertise
High
High
High
Priority to Managed Care
Low
Low
Low(?)
Advocacy Influence
High
Some
Some
Financial Support Needs
High
High
High
Potential Market
Number of Identified Patients
REMS
Cost
Site of Administration
Frequency of Administration
Nursing Required
Competitors
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Patient Centered Health Management®
Key Differences vs. Larger Drugs
 Have to spread cost of service model and monitoring over
fewer patients
 Focused sales force, specialists, CSLs, etc. need to ensure
physician that patient has access to drug and that ongoing
care is consistent
 Fewer patients means every patient is critical for sales –
need to build high-touch compliance and loyalty program
in order to keep patients on drug
 Greater demand for outcomes – P4P, value based benefit
design. Health management is most effective when fully
integrated with distribution
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Patient Centered Health Management®
What Defines Success
GET APPROVAL
LAUNCH DRUG
Plan Ahead
High-Touch Patient Services
Build Contingency Plan
Exclusive Distribution
Integrate with Distribution
REMS/Data
MAXIMIZE SALES
Access
Compliance
Find New Patients
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Patient Centered Health Management®
Get Approval
 Companies that are willing to put the right structure in
place to monitor patients, collect data, and measure
outcomes should find that the new regulatory model can
work to their advantage.
 The fewer questions left open, the more thorough the
planning and preparation, and the more narrowly defined
the REMS plan, the simpler the FDA application process.
 Execution of this planning process can provide your
organization with a competitive advantage over
manufacturers who fail to build REMS requirements into
their distribution.
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Patient Centered Health Management®
Typical Specialty Model
Intake Hub
Manufacturer
Wholesaler
Payers
SP 1
SP 2
Patient
Assistance
SP 3
Typical Specialty
Model
MD/Hospital
Buy / Sell
Patient
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Patient
Payers
Patient Centered Health Management®
Exclusive,
Mfr. Direct
Buy Sell
Intake Hub
Manufacturer
Wholesaler
MFR.
CENTRIC
Direct
SP 1
SP 2
Patient
Assistance
SP 3
Exclusive
Payers
MD/Hospital
Buy
Direct
/ Sell
Patient
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Patient
Payers
Patient Centered Health Management®
Comprehensive Model
3PL
Specialty
Pharmacy
Manufacturer
CHR
Hub
Services /
Reimbursement
Nursing
Disease / Health
Management/REMS
Centric simplifies
distribution
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Ideal for small patient
populations
Fewer transactions,
lower costs, higher
level of service
Patient Centered Health Management®
REMS Elements
Safe
Access
Assure Safe Use
Mandatory registry  Documentation
of patient monitoring  Nurse
training  Technology to collect data
lab results, patient health measures
Assessments and Monitoring
Health management  Voluntary patient registry  Assessments
 Therapy compliance and adherence  Integrated systems with
pharmacy dispensing data
Enhance Communications
Pharmacist education/counseling  24/7 Clinical support  Training  Nurse training,
education, and clinical services
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Patient Centered Health Management®
Maximize Sales
 Access
 Compliance
 Finding New Patients
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Patient Centered Health Management®
Integrated Health
Management & Distribution
Sell drug, service
fees if req’d
Payer
Coordination, claims
and reimbursement
Health Mgt
& PHC
Data
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Fee for
service
Aggregated Data
& Reporting
Rx
Physician
Manufacturer
Pharmacy and
clinical services
Consented Patient
data
(residing at CHR or
Pt. Adv)
Patient
Patient Centered Health Management®
Buyer (Payer) Bargaining Power
Bargaining Power
Strong
Weak
Product Demand
High
Low
Switching Costs
Low
High (not many
alternatives)
Patient Buyer Demand
Low
High
Brand Importance to
Patient Buyer
Low
High
Characteristic
Products for ultra orphan therapies tend to cause
weaker buyer (payer) bargaining power, thereby
eliminating barriers to access.
Source: Fadia T. Shaya, PhD, MPH, Associate Professor and Director, Center on Drugs and Policy, University of Maryland
School of Pharmacy, CBI Strategic Pricing and Modeling Techniques to Demonstrate Product Value, April 6, 2009
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Patient Centered Health Management®
Distribution and Patient
Outcomes Continuum
No Program
LOW
Multiple
Programs,
Multiple
Providers
Multiple SP
providers with
Integrate Hub
Patient Registry,
and Health
Management
Integrated
Distribution &
Health
Management
HIGH
• Compliance
• Adherence
• Persistency
• Patient retention
• Patient satisfaction
• Self empowerment
• Clinical outcomes
• Maximum benefit
of therapy
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Patient Centered Health Management®
Why the Integrated Plan Works
EDUCATION IS NOT THE SAME AS A WELL-INTEGRATED PLAN…
PROGRAM DESIGN
EDUCATION
Significant effort is placed
into the design of the
program prior to launch
To maximize effectiveness,
education must be the right
information at the right time
and delivered in a customized,
personalized way
DISTRIBUTION
Health management tied to
distribution allows for
interventions at many levels
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Patient Centered Health Management®
Design Process
1
Comprehensive
Disease Profile
2
Develop
Intervention
Goals
6
3
Develop
Assessment
Dialogue
4
Systems
Configuration
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Outcomes
PHC Deliver
Interventions
Intervention Goals (Examples)
1. Achieve remission, manage
relapses
2. Reduce risk from steroids
3. Decrease ADEs
4. Improve knowledge
5. Reduce relapses
6. Manage stress, depression
7. Improve QOL
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Patient Centered Health Management®
Education
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Patient Centered Health Management®
Distribution
OPPORTUNITY FOR PATIENT INTERVENTIONS ON MANY LEVELS
PHARMACIST
NURSE
REIMBURSEMENT
PHC
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Patient Centered Health Management®
Peer Health Coach
$
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Goals
Goals
Individual Health Plan
Educate
Quality of Life
Capture Data
Compliance
Impact Outcomes
Patient Centered Health Management®
Why the Peer Health Coach
Model Works
Patients
They are
want
Thus
driven
support,
the development
to interact
information,
with
of PAGs…
other
education.
patients.
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Patient Centered Health Management®
Service Intensity Bonus
Service Intensity and Loyal Customers
 Service intensity is about cost-effectively building relationships with
customers.
 A company can’t offer more service than can be covered by the
value of a customer's repeat business.
 The right level of service intensity is therefore a function of
long-term product revenue and cost.
 Effective service intensity creates loyal customers.
 You can measure service intensity.
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Patient Centered Health Management®
Service Intensity
Types of Health Care Data
 There are many different kinds of health care data:
 Prescription
 Contact management information
 Doctor and nurse notes
 Billing records
 Electronic medical records
 Lab data—orders and results
 Medical and pharmacy claims
 Survey data—customer satisfaction and assessment data.
 As long as it can be tied to a customer, it becomes a vehicle for
discovery—for learning and improving the customer experience.
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Patient Centered Health Management®
Service Intensity
Infusions from Facility to Home
 Patients that Centric assists in
setting up home infusion services
are 1/4 as likely to terminate as
all other patients.
 The process is labor intensive—
filled with paperwork and phone
calls, but the long-term payoff is
loyal customers.
16%
13.9%
12%
8%
4%
3.6%
0%
Facility to
Home
Infusions
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All Other
Patient Centered Health Management®
Service Intensity
Alternative Funding Sources
 Patients that Centric assists in
finding alternative funding sources
are also 1/4 as likely to terminate
as all other patients.
 Because almost 1/3 of Centric
patients have new or additional
payors year to year, inability to
pay in one year does not mean the
same for future years.
16%
13.9%
12%
8%
4%
3.5%
0%
Alternative
Funding
Source
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All Other
Patient Centered Health Management®
Service Intensity
Extra Attention to Patient Concerns
 Patients that Centric assists by
finding answers to complicated
questions are about 2/5 as likely
to terminate as all other patients.
 The process is labor intensive—but
customers appreciate and reward
the company’s propensity to give
them extra attention.
16%
13.9%
12%
8%
6.2%
4%
0%
Extra
Attention to
Questions
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All Other
Patient Centered Health Management®
Service Intensity
Infusions during Travel
 Patients that Centric assists in
setting up infusion services during
travel are 1/10 as likely to
terminate as all other patients.
 By enabling patients to be less
held back by their condition, the
company becomes an integral part
of their lives.
16%
13.9%
12%
8%
4%
1.3%
0%
Setting Up
Travel
Infusions
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All Other
Patient Centered Health Management®
Integrated Specialty Pharmacy
Results
Over 2,350 patients enrolled in program…
Compliance
92.8%
Patient Retention
95.8%
Patient Satisfaction
95%
Program opt-in rate
98%
Time period measured: 2005 – 2007
Source: specialty pharmacy data
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Patient Centered Health Management®
Cost Management
 What are the costs of Distribution?
 Managing multiple vendors
 Risk of service breakdowns
 Inconsistent Service
 Counterfeiting or diversion
 REMS requirements
 Redundancy in data collection efforts
 Compliance and health management
 How to mitigate
 Compress distribution channel
 Integrate service model with distribution
 Include distribution and patient services in pricing
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Patient Centered Health Management®
Pricing & Reimbursement
 Include Distribution and Patient Services in Pricing
 Include cost of distribution
 Include cost of REMS
 Factor in increased risk
 Consider impact of ASP
 Margin pressure from SPs will force more discounts
from the manufacturer
 Discounts drive down ASP
 Direct distribution can mitigate this impact
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Patient Centered Health Management®
ASP Adoption
Does your organization anticipate moving to ASPbased payments in the next 12-18 months?
33.3%
32.1%
34.6%
n = 81
Yes
No
My organization has already started to
move to ASP-based payments.
Source: payer survey, reported August, 2008.
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Patient Centered Health Management®
AWP vs. ASP Pricing
Margin
loss to
channel
Manufacturers
must change
how they look at
distribution
MFR
ASP
No
incentive
to SP
SP
ASP+6%
PAYER
Payers are
insourcing SP
SPs will look for margin on both fronts but will face challenges...
The direct model addresses this issue with a Fee-for-Service approach
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Patient Centered Health Management®
Summary
 Profile of a typical orphan drug


…is changing
includes oral medications, subsets of larger patient
populations, and personalized medicine
 Key Differences


Require high-touch patient services
Higher demand for outcomes data and monitoring
 What Defines Success?



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Get Approval
Launch Drug
Maximize Sales
Patient Centered Health Management®