The Pharma & ACO Relationship

A white paper on the relationship between the global

biopharmaceutical industry and Accountable Care

Organizations (ACOs)

THE PHARMA & ACO

RELATIONSHIP

http://www.chisite.org/

Table of Contents

Introduction …………………………………………………...…

Pharma Landscape ……………………………….…………..…

ACO Results ……...…...…………………………………………

ACO & Pharma Landscape …….....………………..…..…..…

The Pharma/ACO Interface ………………………………..…

Solutions ……………………………………..……...………..…

Telemedicine ………………………………...……………….…

Conclusions ……………………………………...……………..

References ………………………………………………………

Key Contacts ………………………………………...………....

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The Pharma & ACO Relationship

Introduction

Executive Summary:

The United States spends more on healthcare than many other industrialized nations while unable to compete with average measures of quality. Thus, American citizens often spend more for lower quality of care than other citizens around the world. There are several issues that factor into these deficiencies such as demographics, cultural differences, and notably population size that are beyond the scope of this paper. Our focus is the Accountable Care Organizations (ACOs) that were created out of the Patient Protection and Affordable Care Act (ACA) and introduced to improve access to quality care while simultaneously reducing costs. The Center for Medicare and Medicaid Services (CMS) defines ACOs as “groups of doctors, hospitals, and other healthcare providers, who come together voluntarily to give coordinated high-quality care to their Medicare patients.” [1] To be successful, ACOs are employing several initiatives that implement strategies to reduce the number of patients that return to the hospital after being discharged. Studies have shown that hospital readmissions are extremely costly and often avoidable, suggesting that the way we treat patients initially, track them once they leave the hospital, and treat them upon readmission remains one of the most powerful points for innovation in the ACO and healthcare landscape today. Here, we discuss triumphs and transgressions of the pilot initiatives, identify potential innovations to the system, and evaluate the evolving and ever-important relationship with the biopharma sphere.

Where are we today?

The Affordable Care Act (ACA) was passed in 2010 to transform the United States healthcare system through coverage expansion, access, quality, and cost improvements, and thus ensure healthcare providers maintain accountability. The implementation of the ACA provided all with access to health benefits with emphasis on preventative care. Measures designed to increase participation included subsidies for low-income families, a mandate for individuals to obtain insurance or face a tax, and guarantees that pre-existing conditions would not prevent insurance access. Further, Medicare and Medicaid were expanded to cover more low-income families and those with disabilities.

These goals, together, framed a bigger picture. The ACA was broadly designed to encourage access to quality care while simultaneously reducing associated costs. ACOs were developed as a vehicle to meet these goals, in part to more effectively network providers to more efficiently organize care. Initially interfacing solely with Medicare and Medicaid patients, ACOs are tasked with meeting 33 quality measures ranging from mammography screening to risk-standardized hospital readmission rates. ACOs are financially rewarded by meeting these quality standards and are included in a Shared Savings Plan that further rewards hospital systems based on their ability to reduce the number of tests and treatments compared to a CMS benchmark. The innovative ACO system is distinct in its model of risk assumption that holds physicians more financially and clinically accountable for the expenditures and outcomes of their patients. Further, transitioning healthcare from a volume-based reimbursement system to one that emphasizes value forces the foundation of that system to be built on quality care and affordable costs. Thus, care is better coordinated and duplicate or unnecessary treatments are reduced. The purpose of this is to advance the quality of healthcare across all disciplines and to enhance patient-physician interaction.

Beginning in 2012, the Center for Medicare and Medicaid Services helped establish 32 Pioneer ACOs to validate the feasibility and cost-effectiveness of the ACO system. Since then, the number of ACOs across the country has continued to climb with providers within almost every state. The results have thus far been positive, however, establishing these systems has been met with challenges. A major factor is the initial costs associated with the ACO framework, which have not been insignificant, forcing hospitals to spend heavily on administrative and logistical start-up costs. While these costs are unavoidable, it is difficult to get a complete picture of the functionality and efficiency of newer participants in the ACO system.

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ACA initiatives and the ACO framework broadly affect the pharmaceutical and biotechnology industries. While still too early to define long-term effects, the ACA increased the number of insured patients that can access and afford prescriptions, which portends to be a boon for drug manufacturers. Further, the interaction between pharma and ACOs tends to be even more complex with ACOs that demand lower costs while biopharma companies look to increase profits to bring drugs to market. We see a potential partnership with pharma as an avenue to reduce overall costs, drive innovation, and increase the quality of care within the healthcare realm. Here, we identify many of the successes and obstacles that infantile ACOs have met head on. We aim to survey the current pharma landscape, pointing out areas of potential synergy between the ACO system and the biopharma industry, specifically focusing on ways to increase adherence and compliance through technological advancements and education initiatives for patients, as well as providers.

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The pharma industry represents a major player in the healthcare industry in the United States as well as the American economy as a whole. The pharma and biotech industries together represent the major drivers for new drug and medical device development, as well as economic engines for innovation, job growth, and scientific advances. However, these industries face multiple headwinds that include rising costs of drug development, an oft-unpopular public opinion, patent expiration, and a drying research pipeline that has forced many biotech and pharma companies to shift their business model to an acquisition-first strategy. Despite these challenges, we predict the pharma and biotech industries will continue to thrive, and we envision them to build on their major roles in the healthcare space.

Revenue of the top fifteen pharma and biotech companies in the United States totaled just under $527 billion in sales in 2014. Sales for the same companies totaled $514.5 billion in 2013 resulting in just a 2.4% increase in sales year over year. [2] The top-selling drug in the U.S., AbbVie’s Humira, sold over $2.6 billion in 2014 alone, exemplifying the continued success of “blockbuster drugs,” despite several aforementioned headwinds. One challenge, for example, is the issue of patent and intellectual property expiration. Pfizer’s patent on the blockbuster drug, Lipitor, expired in October of 2011. Lipitor had previously been the number one selling drug in the U.S., but sales quickly plummeted from over $3B in Q3 2011 down to just over $500M in Q2 2012, [3] representing an approximate 80% drop in sales. Mitigating the inevitability of patent expiration is a common problem across the pharma industry.

Another, albeit less empirical, headwind is the matter of public perception of the pharma and biotech industries. Often, public mistrust based on allegations of profiteering and price fixing for pharmaceuticals that are necessary to fight lethal and chronic diseases plague the industry. While headlines have focused on rising prices of therapies, the top fifteen pharma companies saw an increase in profit of only 2.4% from 2013 to 2014. Further, drug pricing is a complicated issue with influences from the manufacturer, the healthcare provider, the patient, the payer/insurance provider, and finally government regulations. Thus, market prices for drugs need to be evaluated from all perspectives to determine how to make drugs more affordable for patients while still stimulating growth, discovery, and innovation within the pharmaceutical industry.

Another headwind that contributes more directly to rising drug costs is the rising cost of drug development and clinical trials. With opportunity cost of time included, a recent estimate of the cost of development of a single successful drug now sits at $2.6 billion, with roughly half being out-of-pocket expenses. [4] This estimate takes into consideration several factors including the amount invested into research and development for failed drug candidates, increasingly large and complex clinical trials, and a greater focus on targeting chronic and degenerative diseases, amongst other factors. Pharma has met this challenge in several ways, including a reliance on big data and improved patient tracking systems throughout clinical trials, as well as testing an outsourcing model for clinical trials [5].

Pharma Landscape

“The cost of development of a single

successful drug now sits at $2.6 billion with

roughly half being out-of-pocket expenses.”

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In an effort to mitigate many of these challenges, larger firms have experimented with an acquisition approach: absorbing smaller pharma companies with an established pipeline or promising therapeutics, thereby reducing costs associated with their own R&D. The trade-off is to invest more short-term capital into a technology, which may equate to a greater chance of success because it is at a later stage in development. As previously noted, time is evaluated as an opportunity cost and developing a therapy from an exploratory phase consumes more valuable time.

In this paper, we seek to identify areas of potential collaboration between the pharmaceutical industry and the Accountable Care Organization infrastructure. With new innovation and policy in place within the ACO framework, we believe there is room to make treatments more effective while raising accessibility to quality care within the healthcare landscape. To this extent, reducing rehospitalizations after discharge is a primary goal for ACOs and can be accomplished through mitigation of adverse reactions to drugs, focusing on patient adherence, and supporting an educational foundation for both patient and family. These goals, in some capacity, should be shared by the pharmaceutical industry to deliver more effective drugs and to encourage cost savings for the entire healthcare system. Further, we will discuss possible actions that can be taken by pharma companies to increase the utility of and accessibility to technological innovations.

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The primary goal of the Accountable Care Organization (ACO) systems is to better coordinate and organize care for Medicare patients to cut down unnecessary treatments in an effort to improve quality and reduce costs. [1] Since their inception in 2012, results of their effectiveness have been mixed. Reports from CMS and the Government Accountability Office (GAO) report overall cost savings within the system despite only 49 participating ACOs being eligible for shared savings payments by reducing total costs. [6,7,8] In contrast, Health Affairs found that focusing on meeting quality standards failed to meaningfully reduce costs. [9] With the program in its infancy, however, it is reasonable to expect mixed results and the continuation of data review is necessary.

While there are 33 quality measures that serve as benchmarks for providing and coordinating care, the ACA neglected enrollment or cost-savings targets for the ACOs [11]. There are many possible explanations for a lack of enrollment targets within the ACO framework, including the potential for setting unrealistic goals and suffering an ensuing PR backlash. Moreover, the Pioneer ACO phase focused on testing the feasibility of an idea and served as a pilot phase, thus, setting enrollment targets would have been burdensome and counter-productive. Without cost-saving or patient enrollment targets, it is impossible to compare the development and expansion of ACOs to any predicted level to ascertain comparative quantitative or qualitative feedback.

Nevertheless, since 2011, the total number of ACOs has steadily risen. By the 1st Quarter of 2015, 744 public and private ACOs had been established; a substantial growth from the 32 Pioneer ACOs that were established in 2010. Total patient enrollment in these ACOs during the same time frame was estimated at over 23 million patients, suggesting successful enrollment and coverage strategies. [10] This figure, 23 million, represents roughly one-tenth of all those insured in the United States, but closer to 45% of citizens enrolled in Medicare. In both instances, this data suggests considerable room for enrollment improvement. Some sources have noticed a discriminate lack of ACO enrollment in rural areas. Correspondingly, several cities, such as Los Angeles and Orlando, have a much higher proportion of access to ACOs than other areas.

ACO Results

10% Of All Insured

Persons

Of Medicare

Enrollment

45% 23.5 MILLION

= =

Number of ACO Covered Lives until the 1st Quarter of 2015

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Regarding meeting the overall savings objectives, several outlets have documented contrasting pictures of financial success. This fact can be attributed to flexibility in analysis and reporting of the ACO data. CMS and the GAO reports focus on “shared savings” - a measure of an ACO’s ability to reduce costs associated with procedures. In turn, they receive a percentage of the savings, and, if their quality benchmarks are met, they receive additional bonus payments. Other sources, such as Kaiser Health News, focused more broadly and reported the bottom line outcome on how much the ACO system cost Medicare. Through 2014, Medicare has yet to save money on the ACO framework. [12] In fact, Medicare took a net loss of $3M in 2014 due to a miscalculation of patient costs on the ACO system, as well as paying out $422M to hospitals as savings bonuses. It must be pointed out that Medicare paid out $60B for patient treatment, so $3M over budget translates to 0.005% of the total financial cost of the ACO system. To put this in perspective, for a household budget of $10,000, 0.005% would translate to spending an extra 50 cents.

CMS and other sources tout successes achieved by the ACO system, including a continual increase in patient enrollment, continual increase in ACO numbers and size, and generation of over $400M in shared savings in 2014. Interestingly, Pioneer ACOs showed dramatic improvement, increasing shared savings from $2.7M to $6.0M per ACO in just two years. Pioneer ACOs invested heavily in infrastructure early, and the costs to build or improve the networks were lower by 2014, suggesting infrastructure startup costs dramatically affect future savings figures. In general, determining the financial success of the ACO system is complex, and gauging the financial success of the entire system will take more time and necessitate the analysis of more data.

Of the 353 participating ACOs, 206 reported quality scores as new ACOs were not required to report. The average quality score for all reporting ACOs was 0.866 (from 0.0 to 1.0) with a range from .641 to .954 suggesting a high rate of adherence to quality measures. As a benchmark, Pioneer ACOs improved each of their three years from .718 to .852 and finally finished at a higher rate than the average ACO at .872. Further, amongst those ACOs that reported in 2013 and 2014, they were able to improve in 27 of 33 quality measures. [12] Despite this success, when combined with shared savings, only 97 ACOs (27%) qualified for shared savings bonus payments.

One key measure of performance is readmission rates. CMS defines a readmission as a patient seeking acute care within thirty (30) days of a previous hospitalization. [13] In 2011, 3.3M adult patients sought acute care after discharge costing hospitals an astounding $41.3B. [14] For Medicare patients, the three major causes of readmission were congestive heart failure (134,500 readmissions), septicemia (92,900 readmissions), and pneumonia (88,800 readmissions), costing the Medicare system $4.3B. [14] Reducing hospital readmissions portends to be an intriguing possibility to reduce financial burdens on the healthcare system. In fact, reducing hospital readmission rates is an essential goal of the ACO framework and one of the important end goals of the quality metrics introduced above. In reference to the ACO framework, the preferred way to reduce readmission rates is to encourage preventative care and focus on overall health that would reduce complications after surgery, reduce adverse drug reactions, or lessen the impact of chronic diseases. These steps can take multiple forms and can be implemented by physicians, caretakers, and biopharma companies.

The Robert Wood Johnson Foundation created a map that highlights readmission rates by region across the United

“Medicare took a net loss of $3M in 2014 due

to a miscalculation of patient cost on the

ACO system as well as paying out $422M to

hospitals as savings bonuses.”

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States in 2010. [15] Readmission rates by region range from 11-18%. 2014 CMS data indicates the ACO readmission rate averaged around 17.2%, meaning ACOs, on average, were in the highest tier from the 2010 Robert Wood Johnson Foundation readmission rates map. ACO performance ranged significantly with many ACOs reporting readmission rates over 20%. It is surprising to see the average readmission rate, which is a critical goal of the ACO apparatus, leaning towards the higher end along with some staggeringly high outliers. Despite this trend, there have been major successes as some hospitals have been able to slash their readmission rate significantly, with Dorland Health reducing their readmissions by an impressive 26%. [16] As with financial data, it is difficult to make definitive conclusions on this data or the effectiveness of quality measure implementation on reducing hospital readmissions.

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When the Affordable Care Act passed, the ramifications for the biopharma industry were both potentially favorable and unfavorable. With a mandate for health coverage and a focus on preventative care, pharma companies have generally benefitted by doling out more prescriptions to serve a greater number of insured Americans. However, this boost was partially offset by increased taxes on biopharma companies as well as a preference for reimbursing generic medications. More directly, the biopharma industry, up until now, has played a passive role in the Accountable Care Organization framework. Despite no clearly defined role, biopharma companies play a pivotal role in reducing ACO costs via their ability to supply the market with medications, medical devices, and innovative medical products. The biopharma industry plays a crucial role in meeting quality standards by providing better, safer medications and increasing the focus on education to help save lives and encourage the transition to value-based medicine. The National Pharmaceutical Council has highlighted the importance of helping to meet quality standards and reiterated the focus on reducing hospital readmissions: “pharmaceuticals have demonstrated a potential to significantly reduce costs through their role in preventing hospitalizations. Efforts to focus on outpatient medical management and the prevention of hospitalizations through medication could lead to lower costs and higher quality for ACOs.” [17]

The ACO framework has largely been met with conflicting reports of success or failures. To this end, we believe that the biopharma industry could be a powerful engine of innovation and deploy novel infrastructure to help meet the challenges that face the ACO framework. The major goal of this venture should focus on improving quality and access to care in the ACOs through education and drug adherence initiatives. We believe that by taking a larger role, the rate of hospital readmissions can be dramatically reduced, which, as stated before, can drastically reduce the amount of money spent on care and procedures in the ACO framework.

ACO & Pharma Landscape

“Biopharma companies have pivotal

importance in reducing ACO costs via their

ability to supply the market with medications,

medical devices, and innovative medical

products.”

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The most important mechanism for reducing costs, while increasing access and quality, is reducing admissions and especially readmissions. One study showed that a follow-up visit in congestive heart failure (CHF) patients within 7-10 days post-discharge could reduce readmission rates and help hospitals achieve readmission reduction incentives. [18] Though specified for CHF, this recommendation can be further extrapolated to other emergent diseases. Follow-up visits are exemplary of a healthcare system in which providers, patients, and all players collaborate more efficiently and are better aligned to provide better quality treatments. This is the realization of a healthcare system built on preventative care and focused on individual health, rather than one that only treats symptoms instead of aiming to prevent them. In effect, better patient monitoring and more efficient patient education can be introduced to reduce noncompliance and reduce adverse drug reactions that plague the healthcare system and increase the costs of care. We believe that the biopharma industry can more effectively collaborate with healthcare providers, especially pharmacists, and can better connect and educate patients and provide necessary tools to reduce adverse drug reactions and hospital readmissions.

Adverse Drug Reactions (ADRs)

The FDA Adverse Events reporting system reported a consistently growing number of adverse drug reactions (ADRs) over the course of the last decade, with the highest instances occurring in 2014 (807K ADRs, 123K deaths). In the first quarter of 2015 alone, there were 44,693 deaths and 253,017 serious cases reported, putting 2015 on track for over 175K deaths and over 1M serious complications of drug administration, both record levels. [19] Over 1M serious adverse drug reactions reported in 2015 would represent an increase of around 25% over the previous year. Furthermore, the FDA noted that not all ADRs are reported, which suggests the actual number of ADRs in the U.S. may be as high as 2M per year. [20] These statistics highlight a growing problem within the healthcare system, and these figures are especially pertinent to the ACO’s goal of reducing costs associated with hospital readmissions.

In a UK study, roughly 40% of patients discharged from the hospital were readmitted within a year, with around 20% of

The Pharma/ACO Interface

FDA Adverse Events Reporting System Reporting by Patient Outcomes by Year

*Serious outcomes include death, hospitalization, life-threatening, disability, congenital anomaly and/or other serious outcome. *Source: FDA Adverse Events Reporting System (FAERS)

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those patients readmitted because of an adverse event. [21] In older patients age 65 or older, an estimate of almost 100K hospitalizations of patients each year are attributed to adverse drug reactions, with nearly half of those in patients 80 or older. Interestingly, only 1.2% of hospitalizations were attributable to high-risk medications, suggesting that most hospitalizations were due to problems with frequently used medications. [22] This suggests that, while adverse drug reactions are fairly frequent and can be costly, better management of commonly used drugs can make a large impact on hospital readmissions, particularly in elderly patients. This same conclusion was reached in a separate study highlighting the fact that adverse drug events occur frequently and could be mitigated with simple to introduce strategies. [23] While no data exist distinctly for hospital readmissions in the ACO framework due to adverse drug reactions, the important point presented by outside data suggests that hospital readmissions due to adverse drug reactions are ubiquitous in the healthcare system, and they are an important, addressable point in efforts to reduce costs and increase quality in the ACO framework.

Of highest concern to readmission frequency are the underlying causes of ADRs in home care and nursing care. One major issue tends to be patient education, which directly affects patient adherence and compliance. Adherence measures a patient’s ability to fill or refill a prescription on time. Compliance, while similar, is defined by the act of taking a medication on time, at the correct dosage, and for the entirety of the prescription. [24] A study from the Mayo Clinic suggested that perhaps 50% of patients fail to adequately adhere to their medication and reiterated the fact that “increasing the effectiveness of adherence interventions may have a far greater impact on the health of the population than any improvement in specific medical treatments.” [25] Further, poor adherence and noncompliance to medication are estimated to cost the healthcare system $100B per year, with some estimates up to $300B. [26,27] This is especially relevant in patients over 65 where noncompliance rates tend to be higher for a variety of reasons including polypharmacy, in which patients are treated with several medications at once. Since Medicare covers a great number of U.S. citizens over 65, noncompliance issues are directly relatable to Medicare and especially the ACO framework.

There are many potential strategies that have been formulated and employed in hospitals to combat the rise of ADRs. Many of these strategies focus on length of hospital stay. Several hospitals have deployed better patient surveillance

techniques that alert hospital staff of adverse reaction warning signs as well as infrastructure to better manage patient health records to reduce medication error rates. [28] Drug adherence reinforcement programs were also able to reduce costs in chronic vascular disease patients. [29]

These statistics speak directly to the biopharma industry. Biopharma companies submit to intensive regulatory procedures to get drugs to market and are strictly monitored by governing regulatory bodies including the FDA. Further, once treatments make it to the marketplace, biopharma companies have pharmacovigilance infrastructure to identify issues in how a drug is received or tolerated by patients, as well as extensive monitoring through Phase IV clinical trials. However, the industry must play a more proactive and extensive role in defining and enacting adherence and compliance solutions. Improvements such as patient education, innovative new technologies, and a defined presence in hospitals are important steps to reducing costs within the ACO framework, and they may help increase quality outcomes in patients.

“Poor adherence and noncompliance to

medication is estimated to cost the

healthcare system $100B per year, with some

estimates up to $300B.”

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The biopharma industry has a responsibility to ensure that patients are educated on how to properly take their medications and informed on the necessity of completing the course of a drug treatment. To reiterate, this directly relates to drug adherence and the idea that increasing adherence can ultimately reduce overall costs. The healthcare ecosystem is undoubtedly complex and includes the biopharmaceutical companies that manufacture products, physicians that write prescriptions, pharmacists to fill these prescriptions, and finally, patients to take (or not take) the medication. Often, the redundancy in the system is regarded as a bureaucratic obstacle, but we view it as an opportunity to reinforce in patients the importance of medication adherence. This is especially relevant to the ACO framework, as the purpose of the system is to better align providers to streamline infrastructure and to organize medical care more efficiently. However, the fact remains that an estimated 90M American adults are unable to make sound medical choices for themselves. [30] Thus, the importance of patient education can not be understated.

Despite the ACO framework being in its infancy, the ACO system is already plagued by some of the same problems facing traditional healthcare systems. Patient leakage is defined as patients “leaking” from one hospital system to another, often during referrals to a specialty provider. A study from Becker’s Hospital Review cites patient and physician education as critical tenets of an efficient hospital system. [31] The critical message from this study is that educating patients on the benefits of a coordinated care system and acknowledging the effects of a patient-based system is effective in reducing patient leakage. The study also advocated educating physicians and encouraging them to identify other providers in the ACO system to stop patient leakage as another successful intervention.

More broadly, patient education initiatives are focused on the patient’s medical literacy or their understanding of the medication and treatment plan. Many suggested system improvements implement patient education initiatives, including a proposed “Health Literate Care Model.” [32] The purpose of this model is to improve health outcomes by relying on the patient’s ability to immerse themselves in their own health management, whether through prevention or decision-making. Two important assumptions to make are that the patient knows little about their health condition and that healthcare providers must consequently provide and ensure understanding of necessary information. The Journal of the American Medical Association identified several important factors for encouraging patient education and literacy. While they acknowledge that effective programs must be comprehensive and involve all parties, they focus on counseling, self-monitoring, and costs of treatment, among other areas. [33] The overall thesis, which is corroborated and proven successful elsewhere [34], is to establish a level of medical literacy in a patient for them to understand their condition and convince the patient of the importance of completing their treatment while ensuring access to necessary medication. Also, providers must be accessible to patients to answer questions and address concerns that may arise. An exhaustive review highlights many potential barriers to medication adherence and the clinical strategies that could be employed to address poor adherence. [35] These include barriers to the patient to properly “know what to do or why” with remedies that include providing simpler instructions and having patients watch short videos on their medication.

Solutions

“Estimated 90M American adults, more than

half adults, are unable to make sound

medical choices for themselves.”

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Other suggestions point to shifting patient education liability in part to pharmacists, or at the very least, a renewed focus on team-based care and prescription delivery systems. [36] In this role, pharmacists assume a larger role along the continuum of care from the hospital to the pharmacy to educate patients on risks and potential drug interactions as well as being available for consultations to their patients. Despite their expertise in medication management, encyclopedic knowledge of potential drug interactions, and ability to provide comprehensive drug counseling, the majority of existing ACOs have failed to meaningfully engage pharmacists to the potential detriment of patients and cost-savings initiatives of the framework. [36] There are several challenges to integrating pharmacists, such as a general lack of a reimbursement strategy for involved pharmacists, but undoubtedly, medication management and drug education need to become a priority to increase health literacy and better manage patients’ drug treatments.

While much of the discussion is currently on increasing the presence of pharmacists within teams in the ACO framework, we believe that biopharma drug manufacturers, those that have extensively researched, tested, and developed therapeutics, must be more involved in the prescription and adherence monitoring phases of drug administration. The major goal of a biopharma presence within the ACO framework would be an informational source for both patients and providers regarding therapeutics while striving to educate patients about their treatment and disease indications. Several pharma companies have already deployed a call center strategy to employ providers that are available over the phone to answer questions about certain drugs. However, this strategy is typically employed only for higher profile drugs, such as Humira, and only available during restrictive business hours. Additionally, some biopharma companies have begun to transition to a team-based presence in hospitals that incorporate pharma representatives, as well as Medical Science Liaisons that engage “key opinion leaders” (physicians/providers) to provide them with scientific consultation and ensure the drug is being utilized properly. Since 2005, according to the Medical Science Liaison Society (MSLS), the top 10 biopharma companies have increased the number of MSLs by over 76%. [37] While this is not necessarily a new idea, we believe that MSLs should play a larger role in the framework to offer more consultative services to providers and patients.

This model would also modify the current framework where biopharma representatives, or ‘drug reps’, only interface with physicians or other professional healthcare providers. Clinical-based pharmaceutical representatives would transition to perform post-prescription consultations, limiting conflict of interest, and interface directly with patients. Also, the pharmaceutical representative would focus on educating providers on clinical trial data, potential adverse reactions, and possible drug interactions in a similar role to Medical Science Liaisons. We envision the creation of MSL/pharmaceutical representative teams that would aim to educate providers and patients. This role would be located primarily in hospitals and clinics where they could serve to counsel in- and out-patients. This model would be beneficial for all parties: drug adherence principles are reinforced by pharma companies ensuring safety and raising adherence levels, providers’ knowledge and expertise are reinforced, and pharma companies will benefit from patients that actually take their medication and refill their prescriptions. Hospitals also stand to benefit as in- and out-patients are encouraged to fill prescriptions in hospital pharmacies after obtaining counsel from an in-house representative/MSL team. Instead of pharmaceutical representatives functioning solely to sell or convince a provider to prescribe a medication, the role of the rep transforms to educate and encourage a patient to adhere to the medication schedule as prescribed by a provider.

“We envision the creation of MSL/

pharmaceutical representative teams that

would serve to educate providers and

patients with representatives focusing on

educating patients.”

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In a transformed model, biopharma companies would invest in infrastructure wherein professionals are available for extended hours to serve as a resource for both patients and medical providers. Extended hours are an important feature, as patients will often turn to online counseling where they get general, non-personalized information and are still required to make medical decisions for themselves. WebMD clears, on average, 4 billion page views per quarter, suggesting that patients are seeking medical advice and making medical decisions on their own far too often. [38] The biopharma industry could take on a larger role in this ecosystem to employ more providers that would give 24/7 consultative advice on how to properly take medications and warn patients about potential drug interactions. An oft-argued barrier to this system is costs associated with employing knowledgeable professionals to support these consultation initiatives. Recently, the American Medical Association has advocated that pharmaceutical companies end direct-to-consumer advertising on television and other media. By one estimation, $4.5B was spent on direct-to-consumer marketing. [39] By cutting back on marketing, this capital can be invested in post-clinical drug counseling both in person and over the phone or internet.

There are many other barriers to patient education such as customs, language barriers, distrust of the medical system, drug costs, payer issues, and so forth. While we expect that more intervention by the biopharma industry within the ACO framework would help increase patient education, there is likely much more that could be done separately. As such, we envision separate patient education initiatives that focus on groups of minority patients, patients with certain ailments, or other initiatives that reduce costs for necessary medicines. Interestingly, roughly 84.6% of ACO patients have been white, with African-American/black patients making up only 9.0% of patients. [ACO data] Further, many biopharma companies have deployed initiatives which provide access to costly prescriptions at little to no charge. The ACO system needs creative solutions, such as the suggested reformation of consulting services to patients that will increase medication adherence to lower costs and increase access and quality.

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Telemedicine can revolutionize the ACO framework and reduce the number of hospital readmissions by patient monitoring outside of the hospital environment. The idea is simple: medical staff monitors patients who traditionally would be unable to access care at home through wearable medical devices such as heart monitors, blood pressure monitors, and potentially other diagnostic equipment. The market for wearable medical devices ranges from brain scanning EEG headsets to heart rate and sweat-sensing wristbands, and everything in between. This new technology has demonstrated the power to track medical information in real-time and has already shown promise in the healthcare realm. Several reports have indicated successes, but also shortcomings, of developing and deploying new technologies, both at home and in a managed care setting. We believe that the biopharma industry has two responsibilities: to continue to innovate and develop novel, easy-to-use wearable medical devices and to ensure that these technologies are available and utilized within the ACO framework.

The general idea behind wearable technology is to give a patient a monitoring device relevant to their disease indication. This information can either be databased and saved for a future doctor visit or, if necessary, can be streamed in real-time to a remote medical center staffed by qualified healthcare providers. In addition to offering real-time health monitoring, trackers also monitor physical activity, provide reminders for medication adherence, and can offer immediate access to information regarding drug safety. Interestingly, scientists at the University of California-Berkeley have developed fitness-band based sweat sensors that monitor body chemistry that could be deployed to monitor for disease symptoms. [40] Simple fitness bands can also monitor heart rate or fitness activity and data can be applied to a clinical setting. For these reasons, and their ability to offer constant monitoring, we believe that wearables and telemedicine have the ability to fundamentally change the way that outpatients are treated. It is reasonable to assume that these changes will lead to reduced readmission rates, improving the ACO framework while also increasing the quality of care.

Many companies and hospitals have begun utilizing both at home and remote monitoring, including Philips, Stanford Medicine, and St. Jude Medical. [41,42,43] One study has shown that poor exercise adherence of heart failure patients increases susceptibility to hospital readmission while increasing the risk of poor outcomes. [44] As a possible remedy, HackensackAlliance ACO found that a tablet program for chronic diseases helped reduce readmission rates from 28% down to 8%. [45] The ACO provided tablets to patients returning home to plan meals, measure blood sugar, and track their weight. If the patients failed to update their schedule, they would receive a call or message from a caretaker in a remote monitoring center. Remote monitoring can serve as an excellent motivator and encourage patients to stay on track with their activity and nutritional goals. These plans encourage adherence and have foundations built to ensure that patients are responsible for their medication and health adherence. While this study and others have shown the success of wearables and remote monitoring, some studies have shown the apparent steep learning curve to incorporating tech into the healthcare system. One system in Ohio found that medical residents gave low marks to iPad incorporation in daily rounds, and a hospital system in California found that remote telemonitoring did not reduce readmission rates. [46,47]

Telemedicine

“Wearables and telemedicine has the ability

to fundamentally change the way that

outpatients are treated.”

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With some positives and negatives of the integration of wearable tech and telemedicine, improving this system should be a fundamental goal of the biopharma system. The biopharma industry can continue to innovate and develop novel technologies and collaborate with technology companies to develop efficient wearable technologies. Since telemonitoring is typically focused on health and drug adherence, biopharma companies have a responsibility to provide the best information to patients, which can take the form of web applications or software tailored to a particular medication. As such, biopharma companies stand to profit in this new, growing market for wearable technology. As we recommended with education, we believe that biopharma companies should place emphasis on developing new technologies and initiatives that will encourage widespread use of remote monitoring technologies and healthcare wearables. We believe that these principles have shown promise in reducing hospital readmissions that can raise the quality of care, reduce costs, and increase access in the ACO framework.

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Technology has become ubiquitous in American society, and it has proliferated in the healthcare ecosystem. Americans of all ages have unparalleled access to smartphones and tablets that offer computing power anywhere, wearable technology that can provide instant and constant health monitoring, and the ingenuity to solve problems such as healthcare costs and, in particular, high readmission rates that continue to burden the healthcare ecosystem. At the core, this requires solutions that focus on the patient and the desire to create better healthcare outcomes for all. With the introduction of the Patient Protection and Affordable Care Act, we have witnessed the beginning of this transition. Accountable Care Organizations have further aimed to solve this goal and others. Their formation represents a healthcare system that seeks to increase access and quality while simultaneously reducing costs. For ACOs to become successful, patients must take a larger role in their own healthcare, medication management, and monitoring. Here, we have discussed the role that the biopharma ecosystem plays and actions that companies may take to reduce patient burdens by offering consultation, increasing education, and innovating in the realm of healthcare telemonitoring technologies. Momentum to more efficiently and widely integrate telemonitoring technologies, wearables, and other technologies is building, as many ACOs have tested these types of technologies, and, more importantly, patients are beginning to incorporate these technologies on their own. By transitioning and building on their current roles, biopharma companies have the ability to affect real change in the healthcare system, especially in the ACO framework that aims to reduce costs while increasing access to quality care.

Conclusions

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Key Contacts

Mr. Joseph Gaspero Chief Executive Officer & Co-Founder Center for Healthcare Innovation

Dr. James Gillespie, PhD, JD, MPA President Center for Healthcare Innovation 222 S. Riverside Plaza (1900) Chicago, IL 60606 www.chisite.org [email protected]

Mr. Joseph Gaspero Chief Executive Officer & Co-Founder Center for Healthcare Innovation 222 S. Riverside Plaza (1900) Chicago, IL 60606 P: +1.312.906.6153 www.chisite.org [email protected]

About the Center for Healthcare Innovation: The Center for Healthcare Innovation is an independent, 501(c)(3) research and educational institute that helps patients and providers increase their knowledge and understanding of the opportunities and challenges of maximizing healthcare value to improve health and quality of life. We aim to make the world a healthier place. CHI encourages and enables meaningful and executable innovation that aims to address existing and ensuing healthcare dynamics through communication, education, training, symposia, reports, and research. By bringing the best and brightest healthcare leaders from all over the world together to share their ideas and expertise, CHI creates a unique opportunity to address and improve healthcare value, which we view as a function of quality, access, and cost. For more information, please visit www.chisite.org.

Mr. Ryan Haake, MS Research Associate Center for Healthcare Innovation

Authors:

Key Contacts:

Ms. Ivory Chang Senior Analyst Center for Healthcare Innovation

http://www.chisite.org/

The Pharma & ACO Relationship

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