health care reform and the biopharma sector · and unprecedented market exclusivity protections for...

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Health Care ReformAnd The Biopharma Sector

Michael McCaughan

Editor, The RPM Report

Founding Member, Prevision Policy

April 7, 2010


Or…


How I Learned to Stop Worrying….

…And Love Health Care Reform


Key Topics

Health Care Reform and Pharma: A Brief

History

Building on Medicare Part D

The PhRMA Deal Pays Off

Best Possible Bill

Implications for Industry…And Advertising

Thinking Big…and Thinking Small


Health Care and PhRMA: 1993-94

PhRMA


Health Care and Pharma: 2009

PhRMA


For Pharma, Health Care Reform

Already Happened….

Dec. 8, 2003

The Medicare Modernization Act


…And It Paid Off

US Rx Market, 2005 ($ bil.)

55.1,

28%

48.8

95.8,

Private Insurance

Cash

Public Insurance

US Rx Market, 2008($ bil.)

87,

37%98.5

48.5

Private Insurance

Cash

Public Insurance

Source: CMS

All Growth is Public Market!


Key Trends From MMA

Federal Government Becomes Largest Payor

Market Remains Fragmented, Heavy Private Sector Influence

Nothing Is “Replaced” (Still Part A and B)

Self-Consciously a Model for Health Care Reform

The Health Insurance Exchange

Expanded Coverage Equals Expanded Volume…And Greater

Generic Penetration

Donut Hole Pinches

Leaves High Priced “Biotech” Products Untouched

Catastrophic Coverage Generous

Part B Payment Still Incents Use


Adding Canada to US

2010 2013 2016 2019

Medicaid & CHIP (watch MCO plans)

40 46 49 50

Employer 150 170 169 159

Nongroup 27 23 23 24

Exchanges -- 9 20 30a

Uninsured 50 26 18 18b

CBO estimates of where the non-elderly will get insurance under House Affordable Health Care Bill

a: Six million in public plan; b: Six million of uninsured are

unauthorized immigrants


Health Care Reform Impact:Quantitative, Not Qualitative

Expand Medicaid Coverage

Create New (Subsidized) Health Insurance Exchange

Fill In The “Donut Hole”

Improve Private Insurance

And Pharma Would Help Pay For It

Higher Medicaid Rebates

50% Discount in Donut Hole

Market Share Fee

“Scoreable Savings” of $80 Billion (Ends Up at $85 Billion)

What’s NOT In The Bill

Dual Eligible Rebates in Part D

A Policy “No Brainer”

Inpatient 340B Rebates

Reimportation

Medicare Price Negotiation

Foreign Income Tax

What Brought PhRMA to the Table

DTC/Marketing Tax

Probably a Bigger Deal To This Audience Than to PhRMA


Obama Campaign Promises

Launch Prices Still in Pharma’s Control

…And One More Thing

Follow-On Biologics:

The IP Law For The 21st Century

12+ Years of Data Exclusivity for FOBs

Innovator-Friendly Process

FOBs Pathway is

New Business Opportunity

Across the Board

Innovator Friendly Deal Impossible Except

In Context of Reform…

…AND Savings Count Toward

PhRMA Deal


A Free Ride on the Back of Reform


The Legislative Pathway


Tom Toles, The Washington Post

For PhRMA,

A Complete Tactical Victory

Final Bill is BETTER Than January 15

Version

“Reconciliation” is $5 Billion Less in

Fees Than Expected

Last Second Changes Improve Part D

Coverage, Reduce Market Share Tax

How Complete?

PhRMA Press Release Highlights Concerns

With IPAB New, 15 Member Panel

Significant Power to RECOMMEND Changes to Medicare

Spending…

…The COULD Take Effect Without Congressional Action…

…Starting in 2015

In Other Words, Not Much To Complain

About…


Less Satisfied Stakeholders

Safety Net Hospitals

“SNHPA is extremely disappointed that this common sense provision [to expand Rx

rebates] was removed at the last minute from the health care reform legislation

despite being included in the bill that passed the U.S. Senate in December. There

simply is no sound policy rationale for allowing hospitals access to 340B discounted

drugs in the outpatient setting and not the inpatient setting. 340B hospitals are forced

to pay significantly more for a drug administered to a patient admitted to the hospital

than they do for the same drug prescribed on an outpatient basis.”

Generic Pharmaceutical Association

“The bill provides a biogeneric pathway in name only, giving false hope to patients

who desperately need access to life-saving biogeneric medicines. Simply put, the bill

fails to infuse competition and choice into the health-care system due to the excessive

and unprecedented market exclusivity protections for the brand industry. Until the

brand evergreen loophole is closed and the indefinite brand biologic monopolies are

addressed, our health-care system will not see true savings from biogenerics for

decades. This is a very unfortunate missed opportunity that poses significant

exposure to the sustainability of private and public pharmaceutical coverage

programs.”


But PhRMA ≠ Pharma

Pain Is Front-Loaded, Easy To Quantify Medicaid Rebate Increase Effective Immediately

Market Share Tax Starts in 2011

Payoff Feels Less Certain Hard to Quantify Donut-Hole Relief, Improved Insurance Quality

Insurance Expansion Starts in 2014

Biologics IP Is Intangible (Priceless?) Asset


Chantix Gains Coverage

Ambien CR Rebate Increase


That Timing Makes Sense

Patent Cliff Looming: The Issue

for Big Pharma Today

A New World In 2014 Part D “Filled In”

Regulatory Model Clearer

FOB Implementation Clearer

New Insurance Market/Regs Kick In

The US Becomes The World’s Largest

Emerging Market For Pharmaceuticals


Market Share Logic

More to Come?

Market Share Fee Suggests Market Share Approach

Broader Product Lines Encouraged

Diversity Within Rx Helps

Tax Threat Remains…

…As Does Hope of Repatriation


Pick Your Payor—

Or Pick Them All

Primary Care Oral Products

Mature Brands, Generics

Part D

Injectable Therapies/Chemo

High Priced Specialty, FOBs

Part B

Hospital Products

Capitated Payment Model

“Part A”

Contraceptives/Smoking Cessation

Cash to Coverage

OTCs

Cash Markets Are

Shrinking—

So Cash Businesses

May Command a

Premium


“Biotech” Is Preferred

Copay Reforms Address Key

Issue

FOBS Eliminates IP

Uncertainty

Competitive Dynamics Less

Firm on Pricing

Medicaid Rebate Pinches More

Up Front

Pharma Already

Going There

“Specialty” Drugs


Orphans Are Even Better

Regulatory Advantages

Advocacy Within FDA

Reimbursement Advantages

Even In UK and Canada

IP Advantages

Especially Without FOBs

Protected Status in Changing Climate

Exempt From Excise Tax

Exempt From “Line-Extension” Rebate

Special Consideration in CER

Where Does DTC Fit In?


Public Health Awareness

Public Health Education


A Better Political Climate

“Advertising certainly can be a very effective tool. I’d

like to see advertisements contain more fundamental

public health information, even if they’re advertising a

product. It is an opportunity to potentially provide

some basic information about the underlying medical

conditions to help consumers know more and make

better decisions.”

--Margaret Hamburg

Appropriations Subcommittee Hearing

2008

“The purpose of this hearing is to examine

the potentially misleading and deceptive

tactics used in DTC ads for prescription

pharmaceutical products.”

--Bart Stupak

Oversight Subcommittee Hearing

2010


Prevention Encouraged

Basic Insurance

Encourages Preventative

Care Significant Screening for BP,

Cholesterol, Etc.

Vaccines “Free” (No Copay)

Longer Term Key To

“Bending the Curve” Who Will Educate Consumers to

Live Healthy, and How?

The McDonalds Of Health Care


Big Mac Brand Lipitor

Cheeseburger Generic Atorvastatin

Coca Cola Licensee Crestor?

Generic Plavix?

Easy,

Inexpensive,

Fun Place to EatHappier,

Healthier,

Longer Life

http://images.google.com/imgres?imgurl=http://cdn.erictric.com/wp-content/uploads/2009/12/mcdonalds-logo.jpg&imgrefurl=http://erictric.com/tag/charge/&usg=__iaSNkCPonWoRoln3rXfW6tt4x5A=&h=352&w=460&sz=12&hl=en&start=8&um=1&itbs=1&tbnid=D--miOr5mUDb3M:&tbnh=98&tbnw=128&prev=/images%3Fq%3Dmcdonalds%26um%3D1%26hl%3Den%26sa%3DN%26rlz%3D1T4GGLL_enUS361US362%26tbs%3Disch:1


The Personal Trainer Model

The Patient Needs More Than a Safe and

Effective Molecule

Access to Prescriber

Proper Diagnosis

Appropriate Dosing

Access to Pharmacy

Resources to Pay

Information About Risks and Benefits

Instructions on Appropriate Use

Coordination with Other Therapies

Protection from Errors/Mix-Ups

Etc. Etc. Etc.

Is the Value of Medicine in the Molecule?

Or in the Patient Support?


Questions?

[email protected]

202-747-9477

mailto:[email protected]

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