October 05, 2015
There has been a lot of talk of late about the price of prescription drugs. Most of it, unfortunately, has come in the form of 30-second sound bites, largely driven by one hedge fund investor’s decision to significantly raise the price of a single product.
Determining the correct price for an innovative, life-changing product to achieve both consumer accessibility as well as a return on investment, which is vital to fund future research and development, is a complex topic that warrants a thoughtful discussion, not glib attack lines.
Credit, then, goes to the Washington Post for its lengthy question-and-answer article with Joseph Jimenez, the CEO of Novartis, one of the world’s leading pharmaceutical companies. In the interview, Jimenez made, I believe, several striking and instructive points. Among them:
On price versus value:
“When you look at the cost of development, it continues to go up and up and up. So when we price a drug, we price it based on the value it will bring into that marketplace, and also how its price compares to the other therapies currently on the market. There’s been a lot of discussion about drug pricing. What we have to do is we have to shift that conversation away from the price toward the value. Like, what exactly is the value of this drug that is going to result in a positive outcome? And is society willing to pay for that drug?”
On the ability to use genomics to reduce the overall cost of drugs to society:
“Technology has improved so much in drug development that we now can find genetic markers on patients to ensure that they will benefit from our drug, and we’ll know those patients who won’t benefit from the drug. For example, we just launched a new lung cancer drug that only works in about 3 percent of patients with lung cancer, because only 3 percent have this particular genetic mutation. So we’re able to go to the payers and say, “Yes, this is an expensive drug in absolute, when you think about one patient taking this drug, but you’re not going to waste one dollar on this drug, because we’re only giving it to 3 percent of this population and the impact on the budget is quite small.”
On the value of pharmaceutical collaboration with academia:
“Academic collaborations are very important for the pharmaceutical industry because we do not spend money on basic research, we spend money on applied research. When there’s basic biology that has to be understood, an academic institution is going to be much better at doing that than Novartis. If we partner with them, we can take that learning and we can turn it into a drug.”
I recommend you read the full interview, which can be found here. Mr. Jimenez’s thoughts provide a foundation for a reasonable discussion regarding medical innovation and patient access, the kind of conversation our society needs to have.
September 03, 2015
A study published in this month’s edition of the American Journal of Managed Care brings hard data to an argument many of us have been making for some time, that private Medicare Advantage plans are doing a superior job of delivering high-quality care at less cost than traditional Medicare.
The study, led by Dr. Bruce E. Landon of the Harvard Medical School and funded by a grant from the National Institute on Aging, examined price-standardized resource usage and care delivery for patients with diabetes or cardiovascular disease in both Medicare Advantage plans and traditional fee-for-service Medicare. The takeaways from the study included:
• For both health conditions examined, relative resource use was lower in Medicare Advantage plans than it was in traditional Medicare
• Although there was variation among individual plans, quality of care for diabetes and cardiovascular disease was higher in Medicare Advantage plans.
The study concludes, “Proponents of managed care have long argued that integrated health plans can deliver care more efficiently than traditional fee-for-service care by using their ability to tailor their provider networks to the needs of their population and to implement disease and case management programs to improve chronic disease management. In this large national study of enrollees with diabetes or cardiovascular disease, our findings suggest that many Medicare HMO health plans are able to deliver care of equal or better quality with lower (resource usage) than traditional Medicare.”
These findings, I would add, echo what we hear at the Healthcare Leadership Council on a regular basis from not only our health plan members, but also from hospital leaders – that, in terms of attacking chronic disease in a cost-efficient way, Medicare Advantage has a strong upper hand over conventional Medicare.
August 06, 2015
This summer, the nation has observed the 50-year anniversary of the Medicare program. As we focus on Medicare’s next half-century and how we can ensure high-quality, accessible and affordable healthcare for tens of millions of current and future beneficiaries, it’s important that we have a clear understanding of what aspects of Medicare are working well in terms of elevating value.
The Medicare Today alliance recently released its annual survey, this one conducted by Morning Consult, of senior citizens throughout the country regarding their thoughts on Medicare Part D prescription drug coverage. In existence now for just over a decade, Part D was one of the most important improvements to Medicare in the program’s history. With a majority of older Americans coping with multiple chronic illnesses, it is impossible to overestimate the significance of this population having affordable access to prescription medications.
The survey of over 2,000 Americans over the age of 65 confirmed once again that Part D is fulfilling its mission. Almost nine of every 10 seniors said they are satisfied with their Medicare drug coverage and 85 percent said the plan they selected delivers good value. Eighty percent said their total out-of-pocket costs for their medications are reasonable.
The survey also found that seven of every 10 individuals receiving Medicare drug coverage said it is important for Part D to provide a selection of different coverage plans.
That last finding is significant. There is an ongoing discussion in political circles regarding the private sector orientation of the Part D program. Consumers have multiple plans from which to choose and drug prices are determined in private sector negotiations involving manufacturers, health plans and pharmacy benefit management firms. This approach is clearly working well, exemplified not only by Part D’s popularity among seniors but also by the recent announcement by the Center for Medicare and Medicaid Services that average Part D monthly premiums would stay flat in 2016 at $32.50.
As we consider Medicare’s future, there are lessons to be learned here about the ability of consumer choice to drive quality, affordability and value.
June 30, 2015
There is an excellent read in the Wall Street Journal today from Susan DeVore, the President and CEO of the Premier, Inc. alliance of 3,000 community hospitals throughout the country. (Ms. DeVore is also chairman of the Healthcare Leadership Council.)
In her WSJ piece, Ms. DeVore notes that, while other industries have made excellent use of evolving information technologies to improve customer service and strengthen cost-efficiency, healthcare has lagged behind. Improved data sharing is essential, she writes, “to ensure the right information about the right patient is available at the right time.” She is absolutely correct in her assertion that making this happen is a responsibility shared by the private sector and public officials.
The DeVore column is below:
SUSAN DEVORE: Imagine what Twitter would be like if you were only able to have and Tweet to one follower? Or if email only worked within the four walls of your organization? Technology has made information sharing seamless and almost limitless for most people and industries. But it hasn’t reached its full potential in health care.
In health care, technology is foundational to drive change and improve the quality and value of patient care. The problem is that important health-care data cannot flow freely among the various health-information-technology systems that hospitals and health systems use. This hinders the ability for providers to connect and easily exchange information across their organizations and with other health systems.
As health systems focus on accountable care and increasingly move toward alternative payment models, the need for interoperable data across all health-information technology systems becomes critical. The ability to seamlessly pull discrete data anytime, anywhere helps to ensure the right information about the right patient is available at the right time. But today, providers are challenged with having to double check data pulled from disparate devices to make sure the information matches, such as dosing and blood sugar levels. Not only is this a step back for efficiency, but it is another manual process that has the potential to create errors and patient-safety issues.
To truly leverage health-information technology’s full potential, diverse networks and systems in health care must be able to talk to each other. To do so, we should require the use of innovative technology solutions such as open application programming interfaces (APIs) and secure third-party applications that connect the data to enable the real-time exchange of information.
Designing and implementing health-information technology that promotes collaboration among all stakeholders would create a learning health system that focuses on improving health-care quality, efficiency, safety, affordability and access. Private-public partnerships on interoperability governance, standards, measures and system transparency are essential to make this work.
A few weeks ago I was watching as my grandchildren were playing with their parents’ smartphones. At their ages, they are only interested in the bells and whistles, but in their little hands were devices probably considered impossible 10 or 15 years ago. Through innovation, ingenuity and necessity, my hope is that the challenge of interoperability becomes an obsolete concern.
May 21, 2015
This morning, the House Energy and Commerce Committee voted unanimously – a rare event in these fractious political times – to send its 21st Century Cures legislation to the full House. Progress for this measure, which will accelerate the development and delivery of new treatments and therapies while also making advances in healthcare data access and interoperability, is good news for patients and the healthcare system.
An interesting and positive development in the Energy and Commerce markup actually concerns something that didn’t happen.
One of the amendments scheduled for consideration this morning would have fundamentally changed the Medicare Part D prescription drug program by empowering the Secretary of Health and Human Services to negotiate drug prices, a responsibility now being handled by private sector health plans and pharmacy benefit management firms.
This is a status quo that isn’t begging to be repaired. Just the opposite, in fact. These private sector pricing negotiations have yielded a Part D program that has maintained beneficiary monthly premiums at a stable, affordable level for the past five years. All the rhetoric in the world doesn’t change the fundamental truth that millions of seniors and beneficiaries with disabilities have affordable access to medication because of the way the Part D program is structured.
The drug pricing amendment was withdrawn before coming to a vote. Medicare Part D stays on a path that has consistently won approval ratings of greater than 80 percent among Americans 65 and older.
Some efforts withdraw, as the saying goes, so they can live to fight another day.
Ill-conceived ideas like this one, though, should just call it a day and stay permanently out of the way of Medicare beneficiaries and the medicines they need.