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1Patient Centered Health Management®
Pressure from Increases in Cost, Pricing Implications, and Launch
Considerations
Craig Kephart, President & CEOCentric Health Resources, Inc.
May 6, 2009
2Patient Centered Health Management®
“…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.
3Patient Centered Health Management®
“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
4Patient Centered Health Management®
Profile of a typical orphan drug
Key Differences
What Defines Success?
Agenda
5Patient Centered Health Management®
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
6Patient Centered Health Management®
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
7Patient Centered Health Management®
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
8Patient Centered Health Management®
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
9Patient Centered Health Management®
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
10Patient Centered Health Management®
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
11Patient Centered Health Management®
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
12Patient Centered Health Management®
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
14Patient Centered Health Management®
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
15Patient Centered Health Management®
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
16Patient Centered Health Management®
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
17Patient Centered Health Management®
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…
18Patient Centered Health Management®
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
20Patient Centered Health Management®
Distribution
PHARMACIST
NURSE
REIMBURSEMENT
PHC
OPPORTUNITY FOR PATIENT INTERVENTIONS ON MANY LEVELS
21Patient Centered Health Management®
Peer Health Coach
$
GoalsIndividual Health
PlanQuality of Life
Compliance
GoalsEducate
Capture Data
Impact Outcomes
22Patient Centered Health Management®
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.
23Patient Centered Health Management®
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.
24Patient Centered Health Management®
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.
25Patient Centered Health Management®
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
26Patient Centered Health Management®
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
27Patient Centered Health Management®
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
28Patient Centered Health Management®
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
29Patient Centered Health Management®
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…
30Patient Centered Health Management®
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
31Patient Centered Health Management®
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
32Patient Centered Health Management®
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.
33Patient Centered Health Management®
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
34Patient Centered Health Management®
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