Do n Huffo rd, MD CMO We ste rn He a lth Adva nta g e T he Big g - PowerPoint PPT Presentation

Pha rma c e utic a l Costs Industr y Dr ive r s and Manage me nt T e c hnique s Do n Huffo rd, MD CMO We ste rn He a lth Adva nta g e

T he Big g e r Pic ture – I HI ’ s “T he T riple Aim” • I mpro ving the He a lth o f Po pula tio ns • I mpro ving the Pa tie nt E xpe rie nc e • Re duc ing pe r Ca pita Co st T he T riple Aim is a ‘ thre e le g g e d sto o l’ tha t ne e ds a ll thre e to sta nd. T he fe de ra l g o ve rnme nt a nd CMS fully suppo rt this c o nc e pt He a lthc a re is >17% o f the na tio ns GDP a nd g ro wing Da te 2 Pre se nta tio n T itle

Pha rma c e utic a ls T he Good, T he Ba d a nd T he Ug ly • T he Go o d! – T he Pha rma I ndustry ha s c re a te d so me g re a t ne w me dic a tio ns to tre a t dise a se s tha t pre vio usly we re ha rd to tre a t. • T he Ba d! – Muc h re se a rc h ha s simply g o ne into re dunda nt drug s o r drug s with minima l b e ne fit. • T he Ug ly! – T he Pric ing o f Pha rma c e utic a ls is o utra g e o us with no e nd in sig ht. Da te 3 Pre se nta tio n T itle

Pha rma c e utic a l Costs Re la te d to Me dic a l Spe nd • Out-Pa tie nt Rx Co sts (tra ditio na l a nd spe c ia lty) – 12% o f me dic a l spe nd. • I n-pa tie nt a nd o ut pa tie nt infusio n Rx is imb e dde d in me dic a l c o sts (a ppro x. 11% o f me dic a l spe nd). • Ove ra ll Pha rma c e utic a ls a dd up to a b o ut 23% o f me dic a l spe nd (a nd g ro wing ). Da te 4 Pre se nta tio n T itle

Industry Se g me nts Ne t Profit Source – Sood et al USC/ Schaeffer Center for Public Policy Research Da te 5 Pre se nta tio n T itle

F ortune 500 Ma nufa c ture rs Da te 6 Pre se nta tio n T itle

R&D vs. Ma rke ting Da te 7 Pre se nta tio n T itle

Dire c t to Consume r Adve rtising and Pharmac e utic al Re ps to Physic ians’ Offic e s Da te 8 Pre se nta tio n T itle

Re se a rc h a nd De ve lopme nt is E xpe nsive • Did you know? Ab o ut 50% o f R&D is funde d b y F e de ra l • Gra nts. (NI H, Sta te a nd L o c a l Go ve rnme nts, Cha rita b le Org s. E tc .) So va ldi wa s de ve lo pe d b y Pha rma sse t • who pla nne d o n ma rke ting fo r $30,000 fo r a 3 mo nth c o urse o f tre a tme nt. Gile a d purc ha se d Pha rma sse t fo r $11 • b illio n a nd ra ise d the pric e to $86,000 fo r a thre e mo nth c o urse o f tre a tme nt Da te 9 Pre se nta tio n T itle

Pric ing Ba se d on Corne ring the Ma rke t Da te 10 Pre se nta tio n T itle

Onc olog y Pric ing Da te 11 Pre se nta tio n T itle

F DA F a st T ra c k for Onc olog y Me dic a tions • JAMA I nte rna l Me dic ine – No v. 2016 – Of 31 Me dic a tio ns re c e iving e a rly a ppro va l fo r surro g a te ma rke rs, 18 ha ve no t sho w impro ve me nt in surviva l o r q ua lity o f life in po st ma rke ting studie s. – T he F DA ha s no t g o ne b a c k a nd re vie we d tho se indic a tio ns. – Ave ra g e a nnua l c o sts fo r the se drug s ra ng e fro m $80K to $160K Da te 12 Pre se nta tio n T itle

Va lue Ba se d Pric ing ? Da te 13 Pre se nta tio n T itle

Wha t is Va lue ? • Va lue ha s se ve ra l de finitio ns b ut it is a n e q ua tio n whe n c o mpa ring the ra pie s. • Va lue = b e ne fit-a dve rse e ffe c ts/ pric e • Ho w Do We Pric e F ixing Ro ads? – Do We Add the Co st o f Auto Re pairs fro m Po t Ho le s? Da te 14 Pre se nta tio n T itle

IT IT’S T TIM IME T E TO PLA O PLAY “T “THE PR E PRIC ICE IS IS NOT OT R RIG IGHT” • Anuso l Plus a dde d to 2.5% Hydro c o rtiso ne = Wha t Pre sc riptio n Pric e ? • Ne xium a dde d to Na pro syn = Wha t Pre sc riptio n Pric e ? Da te 15 Pre se nta tio n T itle

Wha t If You Combine T he se T wo Me dic a tions + $6 $12 Da te 16 Pre se nta tio n T itle

Anusol HC $1,763.00 Da te 17 Pre se nta tio n T itle

Wha t If You Combine T he se T wo Me dic a tions? + $10 $18 Da te 18 Pre se nta tio n T itle

Vimovo $3,564.00 Da te 19 Pre se nta tio n T itle

E ffe c t of Couponing • Why a re Pha rma c e utic a l Ma nufa c ture rs Giving Co -Pa y Assista nc e (Co upo ns)? – Re duc e s Co st to the Pa tie nt – Ye s – Ma ke s the Pa tie nt’ s Co st le ss fo r a mo re e xpe nsive drug . – Ma nufa c ture rs a dd c o st o f c o upo n into pric ing . • 98.3% o f Rx c o st is c o ve re d b y He a lth Pla ns a nd 1.7% b y the Pa tie nt • E limina te s ‘ tie ring ’ a s a me tho d to dire c t c o nsume rs to mo st c o st e ffe c tive me dic a tio ns. Da te 20 Pre se nta tio n T itle

E xa mple s of Coupons Medication Ingredients Patient Cost 30 Day supply OTC separate with cost cost Coupon Vimovo Nexium/Naprosyn $0 $3,564 $17.10 Alcortin A Hydrocortisone $0 $7,968 OTC anti- Aloe Vera fungal or Iodoquinol Neosporin LA Times – Dec. 2016 Da te 21 Pre se nta tio n T itle

So Wha t is WHA T rying to Do? • He a lth Pla ns a re Cha rg e d with Pro viding Va lue fo r the Pre mium Do lla rs a nd I mpro ving Qua lity o f Ca re – I mpro ve d Qua lity (T he rig ht c a re a t the rig ht time the first time if po ssib le ) – Re duc e Wa ste (E limina te Ca re tha t do e s no t a dd va lue o r c ha ng e o utc o me ) – F ind Mo st Co st E ffe c tive Ca re . • We K no w Ca re is E xpe nsive Da te 22 Pre se nta tio n T itle

T e c hnique s to ma na g e c ost while providing qua lity c a re T ie re d fo rmula ry • – Co upo ning ha s a ne g a tive e ffe c t o n this te c hniq ue Ste p T he ra py • – Mo st c o st e ffe c tive me dic a tio ns trie d first Pro vide r E duc a tio n • – WHA wo rks with me dic a l g ro up pha rma c ists a nd me dic a l dire c to rs Prio r Autho riza tio n • – Re vie w to c rite ria to e nsure me dic a l ne c e ssity – Dire c t to mo st c o st e ffe c tive a lte rna tive Co ntra c ting – PBM’ s o b ta in disc o unts • Co mplia nc e Pro g ra ms – to impro ve pa tie nt c o mplia nc e • Da te 23 Pre se nta tio n T itle

Summa ry • T he Pha rma c e utic a l I ndustry ha s do ne So me Ama zing T hing s. • But……. – T he “o ve r the to p” pro fit a nd the re dunda nc ie s a re a sto unding in the Rx ma nufa c turing industry. – T he ma in o b je c tive fo r us is re duc ing wa ste thro ug h c o st e ffe c tive se le c tio ns, re duc ing o ve r pre sc rib ing a nd impro ving pa tie nt c o mplia nc e . Da te 24 Pre se nta tio n T itle