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A Thoughtful Discussion on Drug Pricing and Innovation

October 05, 2015
11:53 am

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.

The “Talk to Each Other” Challenge for Healthcare

June 30, 2015
10:36 am

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.

A Wise Withdrawal on Altering Medicare Part D

May 21, 2015
11:50 am

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.

The Exciting Movement Toward “Person-Centered Care”

May 20, 2015
11:46 am

American healthcare is evolving in ways that are both beneficial and necessary.  With an imperative to move toward a healthcare system that offers both high quality and cost-efficiency, the answer lies in finding better ways to keep people healthy.

In an interview with Hospital and Health Networks magazine, Ascension CEO Tony Tersigni (Ascension is the nation’s largest nonprofit healthcare system and a member of the Healthcare Leadership Council) explains how his organization is transitioning from “patient-centered care” to “person-centered care.”

This is one of the most enlightening quotes from the interview – “And so we see ourselves moving from physician-centered to person-centered, from transactional and episodic care to managed care by a team over time, from the idea of sick care to well-being.  We’re moving from care that’s inaccessible and tied to bricks and mortar to care that’s going to be convenient and available 24/7/365.”

Here is the full text of the Tersigni interview.

What is this idea of person-centered care at Ascension?

TERSIGNI: We view person-centered care as our sacred promise to support individuals’ lifelong health and well-being through holistic care. It’s something that goes back to our roots. We have a 200-year legacy of caring for the whole person — body, mind and spirit. We recognize that each person represents a unique individual biologically, psychologically and sociologically. We believe, as care develops in the future, it’s going to become much more personalized than it has been in the past. Bottom line, the emphasis on person-centered care is our way of demonstrating the commitment that our founders have had for the last 200 years.

Why is this driving the conversation at your organization?

TERSIGNI: It is our strategic direction. I might say we’ve been on this path since 2002. At that time, we created our “call to action.” It is pretty basic and simple: We are going to promise the communities that we serve health care that works, health care that’s safe and health care that leaves no one behind. Then we figured that, in order for us to do it, we needed to have four different foundational blocks. One is hired people — the people who serve those we’re privileged to serve. The second is developing trusted partnerships along the continuum. Empower knowledge, which is much more relevant today than it was in 2002. And then having this vital presence everywhere around the community.

That’s basically been the foundation of what Ascension has been. As we look at other industries, individuals have choices and options in every aspect of their daily lives, and we know that access to more and timely information really increases their options. That’s really what we’re trying to bring to Ascension and health care, and that’s how we’ve refined that focus over time.

Is “patient” not encompassing enough?

TERSIGNI: Actually, you hit the nail right on the head. We chose person-centered care because, again, it’s really focused on the person and, in many cases, they’re not patients, especially if we speak about health education and wellness. We typically don’t think of them as patients, but really as consumers. While other systems are caring for patients, we make a conscious effort to talk about providing person-centered care that’s focused on persons not on patients.

Is that difficult in such a provider-centered industry?

TERSIGNI: We’re challenging ourselves to move into health care transformation, and we believe that the first phase is seeing person-centered care. What I mean by that is we’re seeing health services being redesigned around the person, helping individuals to become participants in managing their own lives. We’re seeing care teams becoming more multidisplinary and we envision they’ll ultimately include professionals like nutritionists, social workers, coaches and partners for health. We also see that the economic model will become population based and will reward value. We’re seeing that now. And so we see ourselves moving from physician-centered to person-centered, from transactional and episodic care to managed care by a team over time, from the idea of sick care to well-being. We’re moving from care that’s inaccessible and tied to bricks and mortar to care that’s going to be convenient and available 24/7/365. There’s a lot of transformation that we believe has come and is coming to our health care industry. We want to be on that bandwagon as we move forward, because we need to move toward evidence-based standards and away from what we’ve seen in our industry is a lot of unwarranted variation. It’s a monumental transformation.

How will being person-centered help in the shift to value?

TERSIGNI: We believe we need to bring health care and health services closer to the home. We need to bring information to the persons we serve on mobile devices they use in their daily lives. Last year, if you look at [Ascension’s] total $21 billion in revenue, 51 percent of that came from non-acute care services. While people see us as a large hospital system, which we are, we’re a lot more than that. We’ve recognized that the health care landscape is changing and there are opportunities for us. So what we’ve been doing along the way is really identifying the continuum of care, the partners that we need across the continuum, and looking at the longitudinal care that we’re going to provide under population health management.

Why is clinical integration key to person-centered care?

TERSIGNI: We believe that, through clinically integrated systems of care, we can enable quality improvements and increase cost-effectiveness. That’s basically what clinically integrated systems of care are. It says that we are going to use the resources within the community to raise the quality of care of the community, and, in many cases, it’s going to be partnering with others. That’s why, when I first stated our call to action, one of the foundational components is trusted partners. We know we can’t do it alone and so we’re going to need partners along that full continuum.

What do people want from person-centered care?

Tersigni: We’ve done a lot of focus groups over the last few years as we’ve refined our strategic direction, and they revealed four different areas. They want us to respect them, they want us to include them, they want us to connect them, and they want us to engage them. They say: Respect me. Those who care for me know me, understand what’s important to me and treat me with respect and communicate in a way that I can understand. They say: Include me. Those who care for me actually are listening to me, include my family and others I trust in my care, and work as a team in providing care that’s holistic — body, mind and spirit. I want to be connected to reliable health information that’s relevant to me and networks of people like me. People with chronic diseases want to be socially connected with other people who have those same chronic diseases so they can have a social dialogue in terms of what’s happening in their lives. The last piece is: Engage me. I engage in the decision-making with my trusted partners. Those are the four goals that we’ve been trying to achieve in the voice of the customer. It’s really all about creating a healthier community.

What is Ascension’s eventual destination point?

Tersigni: Our destination point is to develop the capabilities to take care of millions of lives from birth to death. That’s what person-centered care is all about; that’s what our call to action was when we created it; and that’s where our growth is focused. The bottom line for me is, while we’ve made great strides in accomplishing our call to action, our job is not done. We still have more to do in promising the communities we serve health care that works, health care that’s safe and health care that leaves no one behind.

Dr. Murthy’s Mission

May 01, 2015
2:25 pm

Last week, Dr. Vivek Murthy, the new U.S. Surgeon General was officially sworn into office.  In his speech to the ceremony attendees, Dr. Murthy described his mission for a stronger and healthier America.  He discussed roadblocks to better population health such as a culture focused on treatment rather than prevention, the spread of incorrect health information and unhealthy behaviors that are entrenched in society and difficult to change.  Addressing these issues, he said, is a shared responsibility requiring partnerships involving diverse interests and perspectives.

The Healthcare Leadership Council is proud to be a part of that partnership.  In fact, one of the Surgeon General’s first public appearances in Washington, DC was at a forum HLC hosted on anti-obesity initiatives.  At that forum, he joined with HLC member companies – Weight Watchers, Takeda Pharmaceuticals, Health Care Service Corporation and the Cleveland Clinic – to discuss the steps that are being taken to help more Americans understand the importance of and how to achieve healthy body weight.   Dr. Murthy spoke compellingly about the need to create a culture that encourages healthier lifestyles.

The good news is that important strides are being made in developing that culture.  In communities throughout the country (note Oklahoma City’s collective million-pound loss spotlighted at the HLC anti-obesity event), we’re seeing successes in establishing improved health and well-being.   Healthcare companies, including many of our HLC members, are taking innovative steps to incentivize better nutrition and exercise habits.  Many of these success stories are detailed in our publication, The Future is Here: Transforming American Healthcare Through Private Sector Innovation.

The need for progress is great.  As was mentioned several times at our recent event, the percentage of Americans classified as obese has nearly tripled since the 1960s.  This is taking an enormous toll not only on our well-being as a society, but also on the economic sustainability of our healthcare systems.   We need to learn from the successes that have been established, and then build on them.   On that note, we’re certainly aligned with our new Surgeon General.