Bracket Buster: Part 2

In this post, we continue our analysis, and achieve better success after some adjustments to the methodology.

Our best indicator was tuition (in-state) which had 66% correct which beat out the analysts who performed the worst by 3% (1 Pick) and tied the analyst who picked second from last.

Our indicators didn’t stack up very well to the “experts” or national average at all. However, we noticed that our indicators were picking the wrong schools in completely obvious scenarios such as 1 vs. 16 matchups and other very high vs. very low seeded teams. These are generally the easy picks and not the ones we need help with. To counteract this we picked the top seeded team to automatically win in the following games: 1 vs. 16, 2 vs. 15, 3 vs. 14, 4 vs. 13, and 5 vs. 1. The top-seeded team was picked even if we know the higher seeded team won the game. Of these games there were four wrong picks out of 20 games.

We left 12 games to be decided by our indicators. These twelve games include the tough 8 vs. 9 matchup through the 6 vs. 11.

Figure 1 shows how these modified scenarios against the same unmodified scenarios.

Figure 1

As shown in the graph, the modified strategy beat the original strategy for every indicator. Every indicator went to 69% or greater and three strategies (Tuition (In-state), Admission Rate and 2012 endowment) either tied or beat the national average picks. Admission rates gave the best results at 78%.

Table 2 shows the performance with the comparators.

Table 2

The three top analysts and President Obama remained at the top, all picked over 80%. However, admission rate and 2012 endowment joined the upper ranks predicting better than the average pundits, the national average bracket and the “chalk” bracket.

By selecting the top ranked teams in the easy games and one of these indicators to predict the closer games our bracket beat the national average and the average analyst prediction.

Bracket Buster: Part 1

Round of 64: who predicts winners better?

Warren Buffett’s challenge of filling out a perfect bracket captivated America, but why? Who wouldn’t take a shot at winning $1 billion even if the odds are beyond farfetched? Historically, the highest payout for the lottery in the United States was $656 million in 2012 by the mega millions. Buffett’s prize is significantly higher and $1 billion certainly carries some shock factor. However, Buffets’ bracket challenge only lasted into the 25th game before the entire field of brackets were eliminated. After Memphis’s win over George Washington, all of the brackets were officially “busted”.

Did anyone really have a chance at winning the $1 billion bracket? There is a perception that choosing a bracket is less random than the lottery in most people’s eyes, but is it? Let’s put this is in perspective. The odds of winning the mega millions are 1 in 258,890,850 or roughly 1 in 258 million. The odds of picking a perfect bracket, assuming each team has an equal shot to win each game is 1 in 9,223,372,036,854,775,808. That’s 1 in 9 quintillion. The chances of winning the lottery are about 35.6 billion times greater. The lottery however has no skill or smarts involved.

If choosing the perfect bracket is not random, what criteria are used to predict winning teams? Some people choose based off of gut feelings, others are based on head to head matchups, some teams are chosen out of school loyalty, or teams that have been strong historically. But what if we looked at statistics having to do with the schools as predictors?

We looked at six different indicators relating to the colleges and universities participating in the tournament. These indicators include: admission rate, 2012 endowment, tuition (both in and out of state), and graduation rate (at both 4 and 6 years).

The indicators were chosen for various reasons. Endowment and tuition reflect the amount of money received by the school which helps fund sports programs and draw in potential players. Admission and graduation rates are also important factors in deciding on a school for student athletes. Very few college basketball players make it into the NBA and prospective players want to have their degrees mean something after basketball ends. We believe that better schools often draw in better quality players.

We used the same first round matchups as the original bracket and compared the real results to using one of the indicators as picking the winner. We only looked at the first round of the tournament.

Table 1 compares each of our indicators with the national average bracket, the top and bottom three performing analysts in the country, the president and the “chalk” bracket which always picks the higher seed.

Table 1

As seen in the table, our indicators didn’t fare all that well. The top three analysts and President Obama scored over 80% while our best indicator only scored 66%. The national bracket, or the most popular picks of each bracket in America (via ESPN) had 75% correct as did the “chalk” bracket which simply takes the highest seed.

In our next post, we’ll continue our analysis, and achieve better success after some adjustments to the methodology.

Alliance Life Sciences Launches New Pricentric™ Portal: Robust Data Services Application Synthesizes Competitive Global Pharmaceutical Pricing and Reimbursement Data

Alliance Life Sciences is pleased to announce the launch of a new portal for Pricentric™, a comprehensive data services product that integrates competitive pharmaceutical pricing and reimbursement data from multiple global markets. We are offering a free trial of the new portal at: pricentric.alscg.com/demo

“Pricentric™ enables our customers to stay ahead of austerity measures across key markets by tracking changes, such as price cuts, margin changes and more,” says Preeti Patel, Vice President, Consulting Services, ALSCG. “This reliable, fully customizable offering – the first of its size and scope — is designed to meet customer needs, providing data coverage spanning over 80 countries, and enabling easy treatment cost comparisons and reimbursement levels for key products by indication or country.”

Pricentric™ provides a robust data source with standardized naming conventions that enable users to easily compare product prices.  Data is standardized using Alliance’s proprietary product classification system to enable easy cross-country comparison at the product and pack level.

Pricentric™ features include:

  • Full range of reimbursement information, including status, prescribing      restrictions, rates and co-payment prices
  • The most current, and historical, exchange rates to facilitate conversions to      standard currencies
  • Flexible data delivery options enable access via PRICENTRIC™ portal, Microsoft or Excel

“Pricentric™ helps users to define an optimal global pricing strategy through the identification of pricing trends in key markets, and monitor responses by competitors to price actions taken for the company’s own products,” adds Patel.  “A team of dedicated experts is available to help with interpreting data, and users can access analysis and modeling exercises, such as pharmaco-economical modeling, analysis, and hospital pay or budget impact, to assist decision-making processes.”

Going the Way of Blockbuster: Part 2

In the second part to our examination into what kind of impacts blockbuster drugs have on large pharmaceutical and biotechnology companies, more support comes in figure 3 which shows the index of total revenue and stock price for the period.

Figure 3

Revenue for these companies continues to remain steady despite large drop offs in revenue from Lipitor, Plavix, Seroquel and Singulair. While revenues remained steady, stock prices soared. The patent cliff was and still is a major concern for these large companies, perhaps revenues remaining steady and not dropping contributed to more investor confidence and the built in cushion for the stock price was initially a bit of an overestimation and prices corrected up.

To assess the loss of patent on a company level we took a look at Pfizer and one of the best selling drugs of all time, Lipitor, we see a major decline in sales but an increase in stock price.

Figure 31

It seems that these drugs aren’t as big a part of the total portfolio as originally thought since they don’t seem to influence stock price on their descent as much as they drove the price higher in their ascent.

Table 2 shows what percentage of total revenue these drugs had of their respective companies during Q1 2011.

Table 2

With the exception of Bristol-Myers Squibb and Amgen where Plavix and Enbrel made up 33% and 22% of their revenue, respectively, most drugs only made up less than 20% of total revenue. Singulair only accounted for 9% of Merck’s total revenues and Remicade was a drop in the bucket at 5%.

Our main conclusion from the research seems to be that if a company has a solid pipeline they should not be too worried about a blockbuster losing market share to a generic as the market seems to have priced this in. Companies need to be reinvesting their profits when they have a block buster in order to prepare for the future.

Data Sources

Sales data was provided by IMS Health via Drugs.com. Company fundamental data was provided by Charles Schwab & Co. Historical stock prices are adjusted closing prices provided by Yahoo! Finance.

Highlights from the 2014 Pharma Pricing & Market Access Outlook Conference in London

by Patricia Ladrón de Guevara

UK – Update on VBP

Paul Catchpole announced that the Value Base Pricing implementation has been delayed until late 2014.

It was announced that the VBP scheme is going to include an annual cap on economic growth of each medicine. If the pharmaceutical company exceeds the growth agreed, a rebate of the amount exceed will have to be paid back – this amount will be visible to the public!

Referring to NICE, it was said that NICE will be a body to evaluate reimbursement not pricing. It was explained that NICE will not negotiate, publicly set or indicate prices.  The threshold will remain at the same level. NICE will evaluate Value Based Assessments from autumn 2014.

Germany – AMNOG Analysis

Dr. Meriem Bouslouk gave a rundown of recent news on the AMNOG situation expressing that the market launch and early benefit assessment run in parallel with AMNOG. The mandatory rebate of 16% was reduced to 6% the 1st of January of 2014 and will be increased to 7% the 1st of April pf 2014.

France – Medico-Economic Assessment

Professor Jean–Luc Harousseau talked about the pricing process in France.

It was explained that the drugs in France are priced in accordance to the ASMR classification. If the drug is classified in class ASMR I and II: the price will be based on IPR If the drug is classified in class ASMR III and IV: the price approved will be similar to the comparator. If the drug is classified in class ASMR V: the price approved will be cheaper than the comparator and the product will not be reimbursed.

Netherlands – Temporary Reimbursement

Martin van der Graff introduced a very important concept to bear in mind in Netherlands when launching a product in Netherlands, Temporary Reimbursement. It was explained that if you achieve all the criteria for temporary reimbursement in Netherlands, you can launch the product and negotiate the price afterwards.

Italy – Algorithm to Define Innovation

Dr Giovanni Tafuri explained the changes introduced in the evaluation system in Italy.

It was announced that currently in Italy, there is a possibility of quick access ie launch the product before starting the reimbursement process with free pricing.

There are 3 groups of medicines with a faster negotiation process: orphan drugs, hospital only use medicines and medicines of great therapeutic and social relevance.

One very important feature to highlight about the Italian System is that Dr Giovanni talked about the development of an algorithm to define innovation which is due to be completed in 2015.

Canada – Attractive Pharmaceutical Market

Neil Palmer showed the market figures for the healthcare system in Canada.

It was explained the Patented Medicine Prices Review Board (PMPRB) role: the primarily role of this board is price fixing but is not involved in reimbursement decisions. The classification system is similar to the ASMR rating in France. Also, although price setting is a central decision, reimbursement is solely decided at provincial level.

An IMPORTANT NOTE about the future – Canada is considering extending the basket of reference countries (consult Pricentric for more information)

Greece – Reactivated the Approval of New Drugs

Penny Retsa recalled to the audience that Greece has not approved new drugs in the last 2 years. However, she announced that the Ministry of Health in Greece has reactivated the approval of new drugs from the beginning of 2014.

She highlighted that in the price bulletin that has just been published there are new drug approvals for the first time in 2 years.

The Conclusions of the Conference were:

Due to the limited healthcare resources across the countries, Governments are trying to establish new legislations and rules to ensure that the resources are allocated to the most cost-effective treatment. This is resulting in ever-changing price and reimbursement legislation. For further information contact Patricia at: pricentric@alscg.com

One Week In

Welcome to our ALSCG Blog!

I am very excited to take the helm of Alliance Life Sciences and bring it together with the Adjility Health organization. It’s a privilege to serve both groups of employees, and all our customers.

Collectively, we have a lot to offer. We are solving complex problems across a lot of functions. We are doing great work in pricing, HEOR, contract management, clinical operations, and sales operations. We are introducing new algorithms to help our customers compete on analytics, we are creating some great technology and technology capabilities, and so on.

But what is most important in all of this is that we help our customers innovate in their work, and that we innovate in our own work. And by innovate, I mean real productivity gains and real shifts in ways of doing business. This is the source of real gain, this is how cash flow is freed up for the innovation that really matters: the research that brings new health therapies to market.

How do we show decision makers that a global trial can be executed for 3% – 5% less by optimizing site usage globally? How can a mobile app extend a pharmaceutical product into a service that has greater impact on patient outcomes?

We will spend time talking about how we are driving down the cost of our business and our customer’s business, helping manufacturers service patients and physicians better. Its not just solving a skill shortage or helping our clients with areas that are not core skills for them. Those things are nice – but we have to aim much higher, because the pressure to deliver on the industry has never been greater.

There are a lot of “first things” to get done, but one of the very first things we are doing is to get our leadership team up and active on all forms of social media, including our company blog. We have a very talented group with a lot of things to share.

Sharing these ideas with all of you, engaging in a dialogue with everyone more efficiently, is the first step in this process.

I look forward to what comes next!