DTC National Conference APRIL 2, 2013
ACA is here to stay President Obama’s re -election assures solid Administration support for ACA for another 4 years Supreme Court ruling validated the individual mandate – albeit through taxing power Key steps to implementation occur during this presidential term – so HHS will strongly support 2014 launch of state-based exchanges Improbable that law will be dismantled in future Majority of U.S. supports ACA – January CNN/ORC poll found 51% favor all or most of the law – only 45% two years ago
ACA basics Goals of reform – expand coverage and access to healthcare for all Americans Shifts federal healthcare focus to prevention and cost- effective medical services CBO/JCT estimate more than 30 million new Americans will get coverage by 2022 12 million through Medicaid and the State Children’s Health Insurance Program (SCHIP) 26 new million enrollees will obtain health insurance through exchanges (some overlap) Only 29 million non-elderly individuals left uninsured
New market opportunities to new customers ACA offers number of opportunities for health service providers, including marketers of drugs and services Expanding coverage creates new markets with expanded customer populations Supreme Court recognition of right of states to refuse Medicaid expansion likely will not erode expected addition of 30 million new customers to marketplace And . . . more red states are signing up
Medical loss ratio shifts payer allocations to procedures and drugs The focus on preventive care presents even greater opportunities for marketers Insurers must devote 80% - 85% of premiums to payment for medical procedures (and drugs) rather than administration and profits As coverage expands to include broader range of medical services, drug manufacturers and marketers can promote new medications and vaccines, and new applications for products
ACA promotes shared decision making – expands market audience ACA mandates pilot projects dedicated to “shared decision making” (SDM) Pilots are to emphasize dialogue between patients and providers about elective procedures SDM to promote prevention, disease and treatment awareness, and management of chronic disease SDM could pave way toward more outpatient (drug) therapies Marketers should increase emphasis on growth areas for disease management and outpatient services
ACA – Fundamental shift in payment for healthcare ACA moves healthcare away from – the more you do the more you get paid Emphasis on evidence-based medicine – rewards for positive outcomes – including drug therapies Hospitals must create benchmarks for Medicare spending Hospitals then must create incentives to bring Medicare spending below benchmarks Hospitals will share in savings if meet quality standards and spend below their benchmarks
ACOs and value-based systems may challenge marketing of drugs Act provides potential new areas for marketing drugs Be aware of trade-offs and potential disincentives in the law Value-based payment for performance systems and Accountable Care Organizations (ACO) are examples where marketers may see uneven effects (quality versus quantity) ‘Cost - effectiveness’ and ‘outcome -based results’ are the new metrics behind healthcare success ‘Old’ protocols of multiple procedures to demonstrate quantity of effort must yield to more effective qualitative methods
ACOs focus on reducing procedures Impact on marketers will depend on drugs that contribute most to manufacturer’s bottom line More emphasis on preventive, daily use drugs to manage chronic disease Less emphasis on sophisticated drugs that are part of complex inpatient therapies ACO emphasis on shared decision making may steer patients towards treatments that do not necessitate as many procedures – or the drugs that often accompany them
ACA directs government comparison of drug effectiveness Title VI of ACA mandates government investigation comparative effectiveness of drugs in effort to further cut costs This will involve studies on the efficacy of brand vs. brand drugs, as well as brand vs. generic drugs, with the potential of diminishing revenues for under-performing medicines
Closing the donut hole A well-advertised feature of ACA – it closes the so-called donut hole PhRMA offered as concession during ACA debate Reducing Medicare Part D beneficiary payment is estimated to cost drug makers more than $80 billion over 10 years Debate continues whether a net increase of customers will enter the system to expand drug manufacturers’ consumer base and offset ‘contribution’
Does drug industry face more cuts? Drug industry marketers – watch for post-ACA ‘refinement’ of Medicare Part D State of the Union address – ‘ . . . reforms I’m proposing go even further. We’ll reduce taxpayer subsidies to prescription drug companies’ Negotiations for lower prices for higher volume sales? Deny deduction for prescription drug advertising? This effort to cut healthcare and drug costs could reappear in sequestration, the next debt ceiling fight, and efforts to reform Tax Code in 113 th Congress
Yet another health cost cutter . . . Finally, marketers should closely monitor Independent Payment Advisory Board (IPAB). IPAB charged with setting cap on Medicare spending by cutting payment rates for service providers Panel has authority to recommend limits on cost of drugs and to reduce subsidy payments under Medicare Part D towards administrative costs and Medicare Advantage bonuses Negotiated Part D prices could mean lower profits for pharma and correspondingly lower marketing budgets
Summary of challenge to pharmaceutical marketing ACA is here to stay Majority of U.S. citizens support Expanding coverage creates new markets – more than 30 million Americans will get coverage Insurers must devote 80% - 85% of premiums to payment for medical procedures (and drugs) ACA mandates studies of the efficacy of brand vs. brand drugs, as well as brand vs. generic drugs State of the Union address: We’ll reduce taxpayer subsidies to prescription drug companies
Summary of challenge to pharmaceutical marketing ACA mandates studies of the efficacy of brand vs. brand drugs, as well as brand vs. generic drugs State of the Union address: We’ll reduce taxpayer subsidies to prescription drug companies
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