Pharma Reform

There is still considerable debate and experimentation as to how the proposed Accountable Care Organizations will be structured and function.   It is also hard to understand how widespread it will be once implemented. What is known is that as healthcare reform begins to take shape, the push (with financial incentives) for accountability in delivering higher quality care at lower cost will drive a more coordinated approach to comprehensive healthcare for patients.  As a result, hospitals and physicians are beginning to explore the best ways to work together to ensure that the quality of care they deliver will be accurately reflected in whatever measurements the government (CMS) decides to use for evaluation.  ACOs will in theory be rewarded by sharing the cost savings resulting from keeping their enrolled populations healthy and treating their patients efficiently and effectively.

The comprehensive care expectations for Accountable Care Organizations are beyond the capabilities of most solo physician practices or even small groups.  Also, hospitals will need to expand their roles to include better coordinated post hospitalization care to ensure patients continue their recovery without relapse and re-hospitalization.   This integration of care approach is causing some private practice physicians to consider joining larger group practices and encouraging hospitals to reach out to employ and align with the best physicians in their geographic coverage areas.

So how will this affect pharmaceutical sales?

The first implication of Accountable Care Organizations is most likely going to be a further reduction in sales representative access to primary care physicians as they join larger, busier group practices or hospitals.  Representative access to these physicians is  likely to be governed by even more selective product recommendations and administrative policies developed by the Accountable Care Organization.  The impact on physician time with patients and the potential for sales reps to influence expensive branded product use will also affect access decisions.  If representatives can demonstrate value by favorably impacting quality of care or cost reductions, they will find physician access less challenging.

Adoption of best practices and formalizing treatment guidelines will mean physicians will  be less autonomous in their prescribing practices. They will also have a financial vested interest in prescribing cost effective treatments, complying with formularies, and following recommended treatment guidelines established by the Accountable Care Organization. This will make it more difficult for pharmaceutical representatives to directly influence prescribing of products not supported by ACOs.

Electronic health records (a prerequisite for Accountable Care Organizations) will make the real world impact of drugs on provider quality of care and costs more readily available for evaluation.  Electronic medical records and e-prescribing will also allow for managing and monitoring compliance with treatment guidelines. These assessments and compliance monitoring will leave less opportunity for random use of expensive branded products with marginal clinical benefit.  Deviations from treatment guidelines will require justification and could result in reprimand or potentially expose physicians to financial penalties if repeated non-compliance results in increased costs without clinical benefit.

Companies with products that can demonstrate improvements in clinical outcomes (better than alternative treatment options) or reductions in overall healthcare costs will find a much more receptive institutional audience than they might have in the past.  Companies armed with compelling data will be able to influence the inclusion of their products on formularies and in treatment guidelines.  This is especially true for value-priced preventive medicines, vaccines, and companion diagnostics.

Sales representatives with new products or products that are not favorably received by the ACOs in their territories will be faced with the challenge of gaining acceptance.  Unlike having to convince (selling) individual physicians to prescribe your product, formulary and treatment guideline recommendations will be determined by healthcare provider teams with therapeutic and cost benefit expertise.  More importantly, electronic health records will provide these teams with easy to analyze comparative clinical outcomes and cost data from their own organizations, making it even more difficult for companies (and representatives) without comparable data to make their case.  Collective expertise, real world data, and financial incentives for delivering good clinical outcomes at low cost will make for a hostile environment for companies and representatives who are not equally armed with expertise and real world therapeutic and cost benefit data.

On the other hand, if the Accountable Care Organizations feel a product can help them achieve their quality of care and cost savings goals, representatives may be enlisted to assist the ACO achieve its goals.  Representatives could be encouraged to help educate physicians and other healthcare providers about the appropriate use of their product (within treatment guidelines).  They might even be called on to assist with implementing adherence and compliance programs to make sure patients take their medications as directed.  It might even get to a point where products are placed in treatment guidelines contingent on delivering the expected clinical outcomes and cost benefits.  This would require representatives to understand the metrics for assessing their product performance and staying current with how their products are performing (clinical outcomes and cost savings) within that ACO.

Regardless of how the ACOs are structured or how they decide to operate, it will mean a completely different work environment for pharmaceutical sales representatives.

mike@pharmareform.com

While there are legitimate cases of last resort off-label prescribing (especially in oncology), many examples that have been brought to the attention of the courts that are not desperate attempts to find a viable treatment where nothing else has worked. To the contrary, the commercial success of off-label prescribing that has led to billions of dollars of incremental revenue for pharmaceutical companies should be an embarrassment for academics, healthcare providers, professional medical societies, and medical education providers.  Why should they be embarrassed?

They should be embarrassed because many of these cases demonstrate that the medical profession has no effective way to educate physicians about prescription drugs.  More importantly, it demonstrates that the evaluation process used by physicians to select treatments for their patients is less than rigorous and not necessarily based on package insert information, a critical evaluation of clinical data, or the literature.  Simple “show me the data” requests with a diligent comparative evaluation should have revealed the data gaps and more importantly, exposed the marketing hype and sales slight of hand for many of these campaigns.  How embarrassing for the medical establishment to have to face suggestions from litigation that pharmaceutical sale representatives and paid physician advocates have the skill and ability to influence prescribing practice without even having legitimate clinical proof of efficacy.

Rather than reveling in the success of winning billions of dollars in fines and settlements levied against the pharmaceutical industry, the plaintiffs and the medical profession should see this as a disturbing scorecard of medical education ineffectiveness and the inability of practicing physicians to critically evaluate prescription drugs for use in their practice.

It is also ironic and very disconcerting that states, private insurance companies, and even the federal government (CMS), all of whom espouse rigorous expert formulary evaluation processes, willingly encourage this prescribing by paying for these off-label uses without approved label claims or even supportive clinical data.  These very same organizations however, find it lucrative to sue pharmaceutical companies for what is actually their own lack of due diligence (no clinical proof of efficacy or safety required), ineffective medical education processes, and lax prescribing oversight (more than just a few cases needing this product off-label might have raise concerns).

There are five simple solutions for preventing pharmaceutical companies from enhancing their sales from off-label promotion. These five actions would make it less attractive, less tempting, and less profitable for pharmaceutical companies to even consider off-label promotion.

• If the government, insurers, or plan mangers don’t approve of off-label prescribing, they shouldn’t pay for off-label uses.  If they decide to pay, they should not be allowed to sue the pharmaceutical companies for their own negligence in product assessments, inability to control prescribing, or ineffectiveness of their medical education processes.
• Physicians should be required by law to inform patients that they are being prescribed a product off-label for their condition.  If the patient agrees to the treatment, they should not be allowed to sue the pharmaceutical company for any reason related to the use of that product.
• Physicians merely have to be more demanding for data and rigorous in their evaluation of off-label claims made by sales people and paid physician advocates.  If they agree to use the product off-label, they should assume all liabilities related to its use.
• Academia and medical education providers should be doing a much better job of teaching physicians about treatment options and challenging, even debunking off-label claims being made by pharmaceutical companies.
• Academics and practicing physicians should be writing articles in medical journals that challenge the off-label claims being promoted by pharmaceutical companies.

If the market feels it is inappropriate to use prescription drugs off-label, that it results in the inappropriate overuse of higher priced prescription products, and therefore contributes to inflated healthcare costs, then the market should do its part and take responsibility for better educating the physician population and better manage the off-label use of prescription drugs.

mike@pharmareform.com

Pharmaceutical and biotech company marketers have always appreciated the impact they could have with pharmacoeconomic data to support the advertising and promotion of their products.  Unfortunately, it was rarely a prerequisite for commercial success and more often than not, done after product launch using retrospective database analysis and speculative modeling.  In the evolving new healthcare market that will change.  In an increasingly managed and cost conscious market, even innovative products with meaningful clinical differentiations from other therapeutic alternatives will be expected to substantiate the value of that differentiation.  So how do you deliver on those expectations?  You start early in development.

Pipeline project evaluation:

• What are the target product profile value drivers? Specifically, what are the points of differentiation;  the reasons why this product will be better than what is currently available or that might be available at the time of product launch?
• What are the plans for proving that these points of differentiation are clinically real and meaningful?
• Will it be possible to include these points of differentiation in regulatory labeling (package insert) so they can be used in marketing programs?
• Can marketing ascribe a quantitative value (cost benefit) to these points of differentiation?  What are they worth to the patient, to healthcare providers, and to the payer?
• Have you modeled the potential value of the differentiation and the minimum comparative value that is going to be meaningful to payers?  At what point, does the differentiation no longer have meaningful value?

Clinical development:

• Are trials designed to deliver data to prove the points of differentiation?
• Are the trials designed to capture the quantitative value of the differentiation?  Have credible, valid pharmacoeconomic metrics been used?
• Have you eliminated bias from the quantitative design elements?
• Have you built in conservative pricing assumptions and options?  Are they sufficient to allow for valid sensitivity analysis?
• Will the value assessment be reproducible in the real world?

This approach relies heavily on the marketing team understanding the value expectations of the market, the competitive value propositions, and the impact of pricing on the value proposition model.

The research teams must look at not only trial designs from a regulatory perspective but also must be accountable for delivering the definitive proof of differentiation and the data to support the quantitative comparative value (pharmacoeconomics).

Many pharmaceutical marketers do a series of market research studies and then typically set a price based on competition and “what the market will bear”. They then try to justify the value when they go to market.  Now, marketers will need to appreciate, very early on, the relationship between the price they set and the value they can prove based on that pricing and the available clinical and pharmacoeconomic data.   Comparative value assessments by payers will be data driven and will not be influenced by marketing hype.

I’m certain that some who have read this post will think that this process is idealistic, impractical, and some might even argue it is not necessary.  That is might be true until they realize their competitors who are developing comparative value data are creating a substantial competitive advantage and increasing the probability for more ready access to drug formularies at premium prices.

mike@pharmareform.com

Most Big Pharma development programs focus on regulatory requirements for FDA approval.  Makes sense.  There is no commercial value in a product that can’t get approved.  Healthcare reform and the evolving new market, however, are going to impose another level of expectations that go well beyond FDA product approval.

Big Pharma research teams often develop elaborate target product profiles that provide the reasons for developing drugs in the first place.  New mechanisms, less of this or more of that, better dosing schedule or something that makes the product worth developing.  These profiles often provide the theoretical rationale for why the product is better than what is out in the market.  These points are also highlighted every time a budget is reviewed to support continued investment in the product.  Unfortunately, few development plans reflect “proving” these points of differentiation.  Being able to demonstrate “better” for your product compared to other therapeutic options, including generic drug alternatives is rarely part of a regulatory path to approval.  In fact, being “as good as” or “not worse than” is the statistical goal of most programs.

So holding research teams accountable to deliver the “differentiation” proof and data would be one place to start, especially in the face of market expectations for “comparative effectiveness” studies.  But here is the real kicker.  Even if they can demonstrate some clinically meaningful superiority to an available alternative treatment that doesn’t ensure market acceptance with widespread adoption or that the product will become the “treatment of choice.”   I’m not talking about product launch failures or poor commercial execution issues here.

Once the company has demonstrated (solid clinical data) a clinically meaningful difference it will have to have data to show that the difference is worth paying for.  This will be especially challenging when the alternatives are less expensive generic drugs.  I can hear the formulary verdict already.  “We have determined that your product is clinically better than the treatment options available to us but the price difference doesn’t’ justify including your product on our formulary.”  What the market will really be asking for is “comparative value” data.

We’ll discuss what companies should be doing to deal with this in the next post.

mike@pharmareform.com

Once you have the attention of your customers (aware and interested in your product) they will usually evaluate your offering against other therapeutic options before they try or buy it.

In the past you may have been able to convince individual physicians that you had a better product for their patients by using any combination of sales presentations, marketing brochures, published clinical papers, or by having them attend company sponsored speaker programs.  Some physicians jumped right to using samples as their evaluation process. These were all effective tactics used to provide information for evaluation and biased or not, it was often the only information that physicians had convenient access to that helped them evaluate your product against other therapeutic alternatives.

In the evolving new healthcare market, even if you convince the physician you have a great product, what happens when they write the prescription but the patient’s drug plan does not have your product available on their formulary or it is available at a significantly higher, and perhaps an unaffordable, co-pay than other treatments?

Yes, this same situation can happen today but as the realities of healthcare reform take hold; cost management will intensify, including putting increased pressure on controlling the cost of prescription drug treatment. Managed plans will become more demanding for the information they require to substantiate your differentiating claims of better efficacy, improved safety, or cost benefit.  With the number of very effective mass market blockbuster products coming off patent over the next 5 years, prescription drug plans will have even more generic drug therapeutic alternatives to evaluate against your new product for many of the chronic diseases that drive revenues for the industry today.  Remember, you’ve been telling these same people how therapeutically wonderful these products are for years.  Now that they are available as generic drugs doesn’t make them any less therapeutically beneficial for their patients.

So what does this mean?  The evaluation step of the adoption sequence in the evolving new healthcare market will require marketers to answer two questions.  Marketers will also need to align every pieced of supportive data they have to prove the answers they are giving are based on credible, preferably published, scientific data (and not just implications and marketing hype).   This market will no longer buy into just because it is new, it is better message.  So, what are the two critical questions that must be answered?

“Why should we use your product rather than these other therapeutic options (including generic drug options) we have available?”

and

“Why should we pay more than we pay for these other therapeutic options that happen to be available as generic drugs?”

The difference between the past (or even the present) and the evolving healthcare reform- driven market is that prescription drug plans will be even more demanding and rigorous in their evaluation process. With so many good generic drug options available at lower cost they will need very good rationale and data to support their decisions and to justify the added costs associated with putting an expensive new branded products onto their formularies.  Patients may always have the option to pay for your product themselves but this is not where marketers are going to want to be, as you will not get the volume or revenues you need to make it worth marketing.

The good news is that if you have a truly innovative treatment that you can demonstrate has a clear clinically meaningful benefit at a reasonable price you will make the formulary decision easier and you may find the plan interested in working with you to increase the rate of adoption and encourage the use of your new product.  Again, all the marketing and sales hype you want to deploy for a “new” and “different” product without a meaningful clinical or cost benefit won’t get you there.  It will take solid credible clinical data to support the answer to the two questions.

It is this evaluation step that will make the evolving new healthcare market more challenging for pharmaceutical marketers going forward.  As physician prescribing practices are guided and constrained by prescription drug formularies and patient co-pay affordability, traditional marketing and sales tactics will have less of an impact on the evaluation step.  A good portfolio of effective treatments available as generic drugs makes this even more challenging.  Good science with strong data to support new product clinical benefits or overall healthcare cost savings will be more important than ever.

Guess marketing better start working even closer with and provide some meaningful input to  R & D.

mike@pharmareform.com

Most pharmaceutical companies are probably going through an endless series of meetings trying to figure out the potential impact of healthcare reform on their revenue forecasts.  Much of the public press has focused on the industry’s potential windfall and revenue upside from:

• Prescription drug coverage expanded to include an additional 45 million currently uninsured patients.
• Growing, aging population with the potential to treat more chronic diseases over a longer period of time
• Prescription drugs will be seen as cost saving alternatives with the potential to reduce the chances for more costly medical complications and avoid costly hospitalizations
• Cutting the $80 billion over 10 years deal to pay 50% of drug costs for seniors in the “doughnut hole” of Medicare coverage will make those drugs more affordable,  increasing the probability that patients will continue to take their branded medicines and reduce the chance that they might switch to cheaper generics during that time.
• Heightened prospects for establishing programs to enhance adherence and compliance (keep patients taking their medicines as prescribed)

These upsides, however, will come with new market expectations and realities that could have perhaps an even more dramatic downside impact on revenue forecasts.

• A strong preference for generic drugs supported by insurer driven prescribing influence (think compliance through e-prescribing technology) and an intense focus on controlling costs
• An expectation for proprietary brand products to meet “best practice treatment of choice” clinical proof before they are considered therapeutic options to generic drugs
• An expectation for treatment “guarantees”, cost sharing, risk sharing and other, yet to be created, tactics to offset the financial impact of high cost treatments
• Increased pricing transparency will increase market pressure to gravitate to the lowest negotiated price for a therapeutic class
• The potential for government price negotiations.  Private insurance plans will be challenged to do better than they are currently doing in price negotiations.  If they fail, prescription drug prices appear out of control, and  regardless of whether there was a deal struck between the industry and the Obama administration, the government will end up negotiating prices, at least for government sponsored coverage.
• Formularies will leverage their negotiating power and realize the financial feasibility of having no more than 2-3 therapeutic options (e.g., no need for 10 cholesterol lowering agents or anti-hypertensives) on their formulary.
• Formularies will collectively structure to the lowest cost options for drug treatment, reducing the market opportunity for more costly or less preferred branded products in a therapeutic class
• There will be less opportunity to directly influence physician prescribing or patient preference through traditional sales and marketing tactics

So how do your products fit this new world picture?   What do your forecasts look like? In the next post we’ll show you how to pressure test your product portfolio against the evolving new healthcare market.

mike@pharmareform.com