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Video Transcript: Top Five Health Reform Issues that Pharma Needs to Monitor

Webisode transcriptions completed by third-party vendor. AmerisourceBergen Specialty Group assumes no liability for the accuracy of the content.

Gina: Reimbursement changes. Comparative effectiveness. Physician response. How do all these elements influence the discussion around health reform, and how do they impact your product’s success. Join us to find out. “In the Know” starts now.

Hello and welcome to “In the Know,” your source for insight and analysis on the issues that matter to specialty pharma. I’m your host, Gina Clark.

Today we turn our attention to Washington DC and the looming changes in health policy. We’ll explore how manufacturers, physicians, payers and patients might be influenced by what promises to be a dynamic issue. 

Joining us today is Peyton Howell, President of consulting services and health policy for AmerisourceBergen Specialty Group. Peyton, welcome to the program.

Peyton: Thank you, Gina.

There continues to be a tremendous amount of dialogue about the impact that healthcare reform is having today. What is the impact you’re seeing on our pharmaceutical partners?

Peyton: Well it’s significant, and you’re right, the dialogue is amazing. I would probably summarize it into five big areas that pharmaceutical manufacturers are looking out for in terms of healthcare reform. The first is comparative effectiveness, so a lot of discussion related to that because that affects, potentially in the long term, what types of products and indications will be covered and kind of the rules of the road may change. So currently, when you’re FDA approved, you can consider yourself eligible to be reimbursed. A simple way to think of comparative effectiveness is that there might be another bar or another hurdle that manufacturers need to face in terms of the efficacy or health outcome bar that a product might have to be able to qualify for reimbursement. The next areas are related so number two, I would say, is Medicare Part D. We’ve gotten a lot of discussion and debate about Medicare Part D, in part, because everyone would like us to fill that donut hole everyone’s heard about, but at the same time there’s a big cost to that. So that’s a big controversial area that pharmaceutical manufacturers are following very closely, and as you can imagine it impacts patients directly. Medicare Part B is a little different. It’s not as focused into the debate, but it’s an important one to watch, because a lot of the ways that healthcare reform will eventually be paid for will relate to cuts in Medicare and that will affect Medicare Part B as well as hospital reimbursement on the Part A side. Four and five are related in the same way that four’s biggest issue right now would be Medicaid. Medicaid rebates for manufacturers are going to be increasing and so manufacturers have to have a close eye on that that will directly impact their profitability starting as early as July 2010. That’s not far away when we look out into the horizon, with some significant increases in rebates, but the good news there is it’s predictable, we have some advance warning and so it’s something manufacturers can calculate the impact of in advance. Of course there are some other things being thrown around right now, and those include some additional fees on the industry as a whole, so because of that, there’s going to be a lot of things to be watching in the fall as we get to the final stretch related to health care reform.

What impact could some of the proposed changes have on the way manufacturers do business, and what are manufacturers doing to prepare?

Peyton: You know the biggest one in terms of the way they do business to me when you think about comparative effectiveness, is the fact that we might really have a second hurdle beyond FDA approval that manufacturers need to consider in terms of having access to their product. So if health outcomes and some type of bar in terms of value messaging exists for products, that’s a very different environment than exists today in the United States, and it’s much more like the global environment. Most manufacturers are not prepared for that, and it’s kind of like taking all the work you do for managed care in terms of your managed markets efforts, and now willing to deploy that at a much higher and broader level that does play to the sweet spot of the work that we do at AmerisourceBergen. Specifically Xcenda, our consulting group, does that type of work and manufacturers are seizing that opportunity now and beginning to look at what they have in terms of resources, what kind of value messaging they have for their products, and it’s a wise step to take today. 

Much has been said about the possible implementation of comparative effectiveness, and it’s an issue that manufacturers are obviously following closely. Are there elements of this issue that aren’t being widely addressed? What do you see in the near-term future for comparative effectiveness in our country?

Peyton: Right, well one thing that helps ground me on comparative effectiveness is the fact that as we talk to private payer medical directors and pharmacy directors, they’re really predicting the impact of comparative effectiveness to be much a higher range than what you would believe from reading a lot of the current debate. So they’re predicting five years out, post-five years, many of them are predicting in terms of an impact for comparative effectiveness day in and day out. And I think that’s an important grounding piece, because it kind of takes the urgency away, it means that there is time for manufacturers to invest now in their value messaging statements, develop the data, even have time to capture that real world data that you’ll often need in terms of comparative effectiveness. So, you know, that piece I hope will really motivate manufacturers to look at that now. There’s certainly no reason to wait, but certainly there is time and a window to do that and have an impact for your product.      

At this time last year, REMS was quite a popular topic. Much of that discussion seems to have quieted down. What do you make of that? Is REMS not yet the force we thought it might be? Or have manufacturers just begun to address it more effectively?

Peyton: You’re right, this time last year REMS was out of our mouth every other sentence, and I think that makes sense because this time last year a lot of existing products had their REMS strategies due back to the FDA. So we’ve kind of gotten through that big piece, now we really are in a much more manageable situation where new products, as they become FDA approved, have to prepare for REMS as appropriate to their product. So it feels much more manageable. We also had the FDA release some additional guidance just last week on REMS, so we see more clarity from the FDA in terms of what they want. But what’s kind of exciting now that we have more experience with REMS, and as you know Gina, we work on a wide range of REMS programs as simple as medication guides to really some of the most complex and controlled REMS programs within the Specialty Group. And what we see, is that even in those more controlled models, it actually can be an opportunity for your product, an opportunity to create a patient experience, a physician experience for your product to really be able to support patient compliance and adherence, to be able to support patients and hopefully prevent adverse events from happening and be able to track patients in a way that you can’t without a REMS requirement. So it’s, for me, not as scary as it used to be. In some way, it creates a market advantage for your product, which isn’t what we all thought a year ago.    

Excellent, you know you referenced the physicians just now, and obviously the manufacturers aren’t going to be the only ones affected by these proposed changes. What reaction have you seen among physicians in the specialty market—particularly among oncologists served by the Specialty Group? What questions or concerns do these physicians have, as a group?

Peyton: There are lots of questions from physicians, and I’m actually with that group quite a bit. They are concerned about, unrelated to Medicare reform, they’re concerned about Medicare Part B changes for January first. There’s a lot coming at physicians in addition to healthcare reform. So that’s an important kind of clarifier when you think about physicians dealing with that. And as part of healthcare reform, they are hoping to have some changes made so that they’re not always facing those looming cuts that we’ve seen every January first in terms of physician payment under Medicare. Physicians are very concerned about that public option that we mentioned previously, because they are acutely aware of how inadequate Medicare reimbursement can be specifically. But they also know that change needs to be made. So they know and see in their offices patients that are completely uninsured, patients that are underinsured and cannot meet their co-payment obligations. So in many ways physicians represent to me both the good and the bad of healthcare reform. Some challenges that we have in terms of inadequate reimbursement, but an acknowledgement that we certainly need patients in their offices to be able to have appropriate coverage.

What about for patients? In what way will this whole reform discussion truly impact those who are at the receiving end of the healthcare system?

Peyton: Right. Well of course the motivator behind health reform is to address the uninsured, so some 15% of Americans without coverage, and that’s going to be very important. So that’s the biggest body of patients we know that would directly benefit from health reform. But the next piece is the underinsured, as we like to label them. So folks that, for example, under Part D have a donut hole-type coverage. We hope to fill at least pieces of that through healthcare reform. And we may see health insurance market reforms, and that’s where there’s actually bipartisan support for those kinds of reforms, and those are exciting. Things like having pre-existing conditions eliminated. Potentially having caps on total out of pocket expenditures for any patient to make, regardless of your insurance. Those are really game changers for patients in terms of not sending you afoot to financial disaster because you have a disease such as cancer.   

Stepping outside health reform for our final question, what will recent changes at the FDA mean for new drug approvals and approvals for new indications? Can we be hopeful about the chances for new blockbusters coming to market soon?

Peyton:  I’m an eternal optimist, as are you, Gina. As you know, we do have new leadership at the FDA. It probably is too early to tell; she has not even been in her position six months, but I’m very optimistic that the whole environment seems to understand that the U.S. leads in medical innovation. And for us to have innovation, that means we do need therapies to be approved by the FDA. It’s closely related to your question about REMS as well. So the REMS strategies are really designed to allow the FDA to approve products that do have potential risk to patients and be able to manage those risks. So hopefully those two things coming together will lead us to some important new FDA approvals in the coming year. And I’m very hopeful. But it is too early to tell.

So let’s just, as we wrap up, kind of go a step up and be broad again. Assuming that many of these changes are enacted, in what way do you expect this reform to impact our still recovering U.S. economy?

Peyton: One reason I think health reform will pass in some form this fall, is that we do have a number of Americans that are unemployed that are at the tail end of the insurance benefits that they have access to following Cobra and some of the expanded things that are passed by the government as part of a stimulus. That means we have a looming percentage of the population in addition to the 15% that are uninsured, so another 10%, that are going to need access to insurance coverage. So I think when you step back, that to me is the urgency that ties back to our economy. We certainly wouldn’t want to do anything to prevent patients from having access to healthcare. It’s a huge sector of our economy in and of itself in addition to being the right thing to do. So I think that piece is critical. And I think for everyone, having some assurance that you know there is a safety net in place in the United States, you know, I think that gives you some confidence when you think about the economic factor. So changing the cost curve as it’s been called is part of health reform that is a big challenge. But one thing I’m at least relieved to see is that the government is talking about a ten-year window and beyond which means health reform is really just the beginning. It’s focused on really getting people access to care. And then slowly making the changes to our healthcare system, to hopefully have an affordable healthcare system that still balances innovation with it for the long term.

A lot of complexities, but then a lot of opportunities for us to have a positive impact.

Peyton: That’s right.

Peyton, I see we’re nearing the end of our time, but thank you so much for coming and sharing with us today.

Peyton: Thank you, Gina.

And thank you for joining us—we’ll be back soon with another, all-new webisode. Until then, if it’s on your mind, it’s In the Know.

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