patient centered health management® 1 pressure from increases in cost, pricing implications, and...

1Patient Centered Health Management®

Pressure from Increases in Cost, Pricing Implications, and Launch

Considerations

Craig Kephart, President & CEOCentric Health Resources, Inc.

May 6, 2009


“…the PwC report recommends collaboration with non-drugmakers, particularly on disease management programs. Partnering with other companies on "holistic solutions" rather than "narrow treatments" is a more flexible and "value-enhancing" strategy than, say, mega-merging.”

“Drugmakers are going to have to think of themselves more broadly: They can't be makers of drugs. They have to be health gurus, project managers, hospital partners ... and so on.”

“Outsource R&D…Outsource manufacturing. Outsource sales and marketing, even. Then forge some links with tech companies…and insurers, healthcare providers and benefits managers. Reinvent yourselves, pharma! Don't you know that's the latest trend?”

News

Source: Fierce Pharma, “Pharma: In 2020, it's not just drugs anymore,” April 30, 2009.


“We’re going to see a growth in outcomes guarantees for pharmaceuticals, and it’s very healthy.”

- Robert Seidman, formerly Chief Pharmacy Officer for WellPoint.

More News


Profile of a typical orphan drug

Key Differences

What Defines Success?

Agenda


DRUG A

Potential Market 100,000

Number of Identified Patients

5,000

REMS No

Storage Requirements 2°C-25C°

Route of Administration IV Infusion

Cost $100,000/year

Site of Administration 60% home/40% Facility

Frequency of Administration

Ongoing

Nursing Required Yes

Competitors Few or None

Value of Reimbursement Expertise

High

Priority to Managed Care Low

Advocacy Influence High

Financial Support Needs High

Profile of an Orphan Drug

DRUG B

10,000

1,000

Yes

None

Oral

$70,000/year

Home

Ongoing

Side effect mgmt, lab draws

None at this time

High

Low

Some

High

DRUG C

1

1

Yes

Possibly

Any

?

Anywhere

Ongoing

Possibly

Unlikely

High

Low(?)

Some

High


Have to spread cost of service model and monitoring over fewer patients

Focused sales force, specialists, CSLs, etc. need to ensure physician that patient has access to drug and that ongoing care is consistent

Fewer patients means every patient is critical for sales – need to build high-touch compliance and loyalty program in order to keep patients on drug

Greater demand for outcomes – P4P, value based benefit design. Health management is most effective when fully integrated with distribution

Key Differences vs. Larger Drugs


Access

Compliance

Find New Patients

MAXIMIZE SALES

High-Touch Patient Services

Exclusive Distribution

REMS/Data

LAUNCH DRUGPlan Ahead

Build Contingency Plan

Integrate with Distribution

GET APPROVAL

What Defines Success


Companies that are willing to put the right structure in place to monitor patients, collect data, and measure outcomes should find that the new regulatory model can work to their advantage.

The fewer questions left open, the more thorough the planning and preparation, and the more narrowly defined the REMS plan, the simpler the FDA application process.

Execution of this planning process can provide your organization with a competitive advantage over manufacturers who fail to build REMS requirements into their distribution.

Get Approval


ManufacturerIntake Hub

Typical Specialty Model

MD/Hospital

Patient

Payers

Payers

Wholesaler

SP 2

SP 3

Patient Assistan

ce

SP 1

Patient

Typical Specialty

ModelBuy / Sell


Wholesaler

Intake Hub

Exclusive, Buy Sell

MD/Hospital

Patient

Payers

Payers

Manufacturer

SP 2

SP 3

Patient Assistan

ce

SP 1

Patient

Exclusive

Buy / Sell

CENTRIC

Mfr. Direct

Direct

MFR. Direct


3PL

Manufacturer

Specialty Pharmacy

Hub Services /

Reimbursement

Nursing

Disease / HealthManagement/REMS

Comprehensive Model

Centric simplifies distribution

Ideal for small patient populations

Fewer transactions, lower costs, higher

level of service

CHR


REMS Elements

Safe Acces

sAssure Safe

UseMandatory registry

Documentation of patient monitoring Nurse training Technology to collect data lab

results, patient health measures

Assessments and Monitoring

Health management Voluntary patient registry Assessments Therapy compliance and adherence

Integrated systems with pharmacy dispensing data

Enhance Communications

Pharmacist education/counseling 24/7 Clinical support Training Nurse training, education, and clinical services


Access Compliance Finding New Patients

Maximize Sales


Health Mgt & PHC

(residing at CHR or Pt. Adv)

Integrated Health Management &

Distribution

ManufacturerPayer

Physician Patient

Coordination, claims and reimbursement

Rx

Pharmacy and clinical

services

Consented Patient data

Fee for service

Sell drug, service fees if req’d

Aggregated Data & Reporting

Data


Buyer (Payer) Bargaining Power

Characteristic

Bargaining Power

Strong Weak

Product Demand High Low

Switching Costs LowHigh (not many alternatives)

Patient Buyer DemandLow High

Brand Importance to Patient Buyer

Low High

Products for ultra orphan therapies tend to cause weaker buyer (payer) bargaining power,

thereby eliminating barriers to access.

Source: Fadia T. Shaya, PhD, MPH, Associate Professor and Director, Center on Drugs and Policy, University of Maryland School of Pharmacy, CBI Strategic Pricing and Modeling Techniques to Demonstrate Product

Value, April 6, 2009


LOW HIGH

Distribution and Patient Outcomes Continuum

No Program

Multiple Program

s, Multiple

Providers

Multiple SP providers with Integrate Hub

Patient Registry, and

Health Management

Integrated Distribution &

Health Management

• Compliance

• Adherence

• Persistency

• Patient retention

• Patient satisfaction

• Self empowerment

• Clinical outcomes

• Maximum benefit

of therapy


Health management tied to distribution allows for interventions at many

levels

DISTRIBUTION

To maximize effectiveness, education must be the right information at the right time and delivered in a customized, personalized way

EDUCATIONSignificant effort is

placed into the design of the program prior to

launch

PROGRAM DESIGN

Why the Integrated Plan Works

EDUCATION IS NOT THE SAME AS A WELL-INTEGRATED PLAN…


Comprehensive Disease Profile

1

Design Process

Develop Assessment Dialogue

3Systems Configuration

4

Outcomes6

Develop Intervention Goals

2PHC Deliver Interventions

5

Intervention Goals (Examples)

1. Achieve remission, manage relapses

2. Reduce risk from steroids

3. Decrease ADEs

4. Improve knowledge

5. Reduce relapses

6. Manage stress, depression

7. Improve QOL


Education


Distribution

PHARMACIST

NURSE

REIMBURSEMENT

PHC

OPPORTUNITY FOR PATIENT INTERVENTIONS ON MANY LEVELS


Peer Health Coach

$

GoalsIndividual Health

PlanQuality of Life

Compliance

GoalsEducate

Capture Data

Impact Outcomes


Why the Peer Health Coach Model Works

Thus the development of PAGs…They want support, information, education.Patients are driven to interact with other patients.


Service Intensity Bonus

Service Intensity and Loyal Customers Service intensity is about cost-effectively building

relationships with customers. A company can’t offer more service than can be covered

by the value of a customer's repeat business. The right level of service intensity is therefore a function

of long-term product revenue and cost. Effective service intensity creates loyal customers. You can measure service intensity.


Service Intensity

Types of Health Care Data There are many different kinds of health care data:

Prescription Contact management information Doctor and nurse notes Billing records Electronic medical records Lab data—orders and results Medical and pharmacy claims Survey data—customer satisfaction and assessment data.

As long as it can be tied to a customer, it becomes a vehicle for discovery—for learning and improving the customer experience.


Service Intensity

Infusions from Facility to Home

Patients that Centric assists in setting up home infusion services are 1/4 as likely to terminate as all other patients.

The process is labor intensive—filled with paperwork and phone calls, but the long-term payoff is loyal customers.

3.6%

13.9%

0%

4%

8%

12%

16%

Facility toHome

Infusions

All Other


Service Intensity

Alternative Funding Sources Patients that Centric assists in

finding alternative funding sources are also 1/4 as likely to terminate as all other patients.

Because almost 1/3 of Centric patients have new or additional payors year to year, inability to pay in one year does not mean the same for future years.

3.5%

13.9%

0%

4%

8%

12%

16%

AlternativeFundingSource

All Other


Service Intensity

Extra Attention to Patient Concerns

Patients that Centric assists by finding answers to complicated questions are about 2/5 as likely to terminate as all other patients.

The process is labor intensive—but customers appreciate and reward the company’s propensity to give them extra attention.

6.2%

13.9%

0%

4%

8%

12%

16%

ExtraAttention toQuestions

All Other


Service Intensity

Infusions during Travel Patients that Centric assists in

setting up infusion services during travel are 1/10 as likely to terminate as all other patients.

By enabling patients to be less held back by their condition, the company becomes an integral part of their lives. 1.3%

13.9%

0%

4%

8%

12%

16%

Setting UpTravel

Infusions

All Other


Compliance

Patient Retention

Patient Satisfaction

92.8%

95.8%

95%

Time period measured: 2005 – 2007 Source: specialty

pharmacy data

Integrated Specialty Pharmacy Results

Program opt-in rate 98%

Over 2,350 patients enrolled in program…


Cost Management

What are the costs of Distribution? Managing multiple vendors Risk of service breakdowns Inconsistent Service Counterfeiting or diversion REMS requirements Redundancy in data collection efforts Compliance and health management

How to mitigate Compress distribution channel Integrate service model with distribution Include distribution and patient services in

pricing


Pricing & Reimbursement

Include Distribution and Patient Services in Pricing Include cost of distribution Include cost of REMS Factor in increased risk

Consider impact of ASP Margin pressure from SPs will force more

discounts from the manufacturer Discounts drive down ASP Direct distribution can mitigate this impact


Does your organization anticipate moving to ASP-based payments in the next 12-18 months?

33.3%32.1%

34.6%

Yes

No

My organization has already started to move to ASP-based payments.

n = 81

ASP Adoption

Source: payer survey, reported August, 2008.


Payers are insourcing SP

Manufacturers must

change how they look at distribution

AWP vs. ASP Pricing

MFR SP PAYERASP ASP+6%

The direct model addresses this issue with a Fee-for-Service approach

SPs will look for margin on both fronts but will face challenges...

No incentive to SP

Margin loss to

channel


Profile of a typical orphan drug …is changing includes oral medications, subsets of larger

patient populations, and personalized medicine

Key Differences Require high-touch patient services Higher demand for outcomes data and

monitoring

What Defines Success? Get Approval Launch Drug Maximize Sales

Summary

patient centered health management® 1 pressure from increases in cost, pricing implications, and...

Documents

high slide

health gurus

high drug c

success slide

news slide

orphan drug drug b

agenda slide

disease management programs