Linking Health Economics and Policy Part 2

Results

The biggest challenge perceived by stakeholders is demonstrating the ‘right’ evidence. Specifically, evidence generation, demonstrating value and insufficient internal experience are the biggest factors playing into this.

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This mainly stems from demonstrating value in a way that is meaningful to
payers. This is best summed up by a Brand Director that participated in the
survey: “Showing value (is the biggest challenge). Is value based pricing a
reality? I’m not convinced yet myself.”

Add to that a lack of experience and expertise internally, which was the
largest output from the people category, and the headache turns into a
migraine. These two factors play into each other, as in order to generate the
right evidence, you need the right resources to plan and execute.

Results – Part 1

Nearly half of the KSFs from the survey respondents relate to the process
and people category. More specifically external and internal communication
and alignment are considered most important. This implies that having a
truly innovative offering/product is not enough on its own to optimize
access.

Surprisingly, having an innovative product does not even score high on the
KSF list, only 11%. Does this mean that pharma accepts that revolutionary
product changes are truly rare, and it’s the expertise of their resources that
truly make the difference?

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Having evidence to justify the value of the drug in a format that
stakeholders want is what is important, and this requires the internal
expertise to demonstrate that value. Once again, this is best summed up by
a respondent from the survey. The Head of Global HEOR from one of the
companies said, “Clinical data that truly differentiates your drug from its
competition (is the most important KSF). That is still #1”.

What makes a successful launch is a robust understanding of your internal
and external stakeholders. Connecting directly with your customer is
considered essential. Having the experience to efficiently ‘sift through the
weeds’ and find what is truly meaningful to stakeholders’ matters, and
communication internally is as important as externally.

Learnings

Based on the results we tabulated the top 3 learnings that enable
transformational market access:

  1. Know your customer: You must identify and prioritize your
    customers. You must understand their values and beliefs.
    Understand their constraints and limitations. Understand what
    motivates them to take action.
  2. Develop your evidence: What truly makes an impact on their
    values and beliefs? What trial design and endpoints will help them
    move into action? What data design and evaluations best support
    the evidence? What format should the data be in to be most
    relevant to them?
  3. Be crystal clear internally on strategy and execution: What is
    your plan? Who has the experience to execute them? When will they do it? How will they do it? What’s the contingency plan when something goes wrong?

Looking back at the Sovaldi case, how do those success factors apply to Gilead? The company confirmed sales for the first half of the year have exceeded expectations at $5.75bn, which now accounts for nearly 50% of the company’s turnover. These sales suggest the company clearly understood the market environment, and indeed the differential pricing in emerging markets, such as India. Furthermore, the evidence generation was certainly strong enough to warrant access without excessive restrictions. Perhaps a clear internal process and experienced staff also helped drive the process. So despite the continuing political debate over pharmaceutical manufacturers’ profitability, Sovaldi is a clear example of how Gilead has transformed market access.

In summary, market access is a complicated process with many moving parts and many obstacles to consider along the way. Understanding the strengths and shortcomings in your people, processes and evidence are going to be the keys to your success. Planning around these key factors will enable increased market share and ultimately enhanced revenue for your organization.

 

Linking Health Economics and Policy Part 1

Transforming Market Access

In the face of rising healthcare costs and the rapid development of more innovative and expensive medical technologies, there is a growing recognition of the bearing cost-effectiveness has on the decision-making process of healthcare payers.
To gain further insight into the specific issues and key success factors which impact market access, Alliance conducted a global survey with key global and local stakeholders in the pharmaceutical industry.
The clear standout results from the survey highlighted 1) the importance of identifying and prioritizing the most appropriate stakeholder. Getting this first step right is critical to the success of pharmaceutical product. 2) Equally as important is ensuring sufficient evidence generation to provide support for products. And finally, 3) a clear strategic pathway for access to a product must be established by a manufacturer.

Stretching government boundaries or seeking true value?

As the US and EU economies struggle to bounce back after exiting the financial recession, healthcare budgets face constant restrictions and containment measures. Increased scrutiny is placed on pharmaceutical manufacturers regarding the manner in which they price their products. The trend for cost containment is very much alive today, with certain classes such as antibiotics, being publicly undervalued and under-priced.

Cheaper prices have led to global over-prescription by GPs and other healthcare professionals. This heavy overuse of antibiotics has gradually contributed to the prevalence of antimicrobial resistance. The number of antibiotics coming to market has dropped consistently since the 1980s, and with no clear market leaders forthcoming, the public may now realize we have hit a ceiling in our development of this class of drugs.

Newer, more expensive antibiotics such as Durata’s Dalvance, will test the current price-conscious healthcare environment. Dalvance, indicated in patients with skin infections, has a better administration profile than generic vancomycin, and may also lead to reduced length of hospital stays. The value of Dalvance lies in the vastly improved patient quality of life and reduction in healthcare resource utilization, albeit at a higher unit cost per treatment than generic vancomycin.

The recent furor surrounding Gilead’s US launch of their Hepatitis C drug, Sovaldi, has shown how a seemingly high price can be politicized and criticized without a clear understanding of the lack of effective treatments within the Hepatitis C treatment landscape. Sovaldi has managed to show a 90% cure rate for patients in a therapeutic area where rates historically have been ~50%. Interferon is the primary alternative agent which is effective in these patients, but with high relapse rates and poor tolerability, the launch of Sovaldi was highly anticipated.

Gilead managed to secure a treatment course price of up to $84,000 in the US, as a result of their solid evidence generation and the clear unmet need for Hepatitis C patients. Sovaldi, however, became a target for politicians as well as insurance companies, with the advent of the Affordable Care Act also driving negative opinions. Add to this, Gilead offering Sovaldi at heavily discounted prices in markets such as India, has led to US stakeholders and key opinion leaders campaigning against the company and its perceived greed.

Historically, pharmaceutical companies have been dogged by severe criticism around ethical standard and an emphasis on business-driven goals as opposed to a patient-focused approach. Health is often seen as a right rather than privilege, and pharma’s close interaction with healthcare systems have often deflected away from inefficient governmental and poorly regulated private systems. Furthermore, a lack of clarity over the true cost of bringing a product to launch, with the manufacturer’s themselves often unable to confirm exact values, has contributed to a lack of understanding around prices which pharma wish to set for their products.

Companies such as AstraZeneca have reported an average spend of ~$12bn on research for each new drug. Healthcare will always remain a controversial discussion point, and the fact that financial gains or potential losses may shape a pharmaceutical company’s strategic directions will always ensure a somewhat negative perception. Avoiding sensationalist media campaigns and a greater clarity around the ultimate goals of pharma will allow for a closer relationship between the public and the pharmaceutical industry.

The Alliance Market Access Survey

As we have seen, market access is the ultimate goal for medical device and pharmaceutical companies, yet it remains one of the biggest current and future challenges for the industry. To uncover the specifics on the challenges and key success factors, we recently conducted a survey with global and local stakeholders to find out more.

We asked the stakeholders two main questions:

  1. What do you consider to be the top three challenges from a price, reimbursement or market access perspective of launching a new drug?
  2. From your experience, what have been the top three key success factors related to price, reimbursement or market access, of launching a new drug?

In our next post we will discuss the results and findings from the Market Access Survey.

Big Spenders Part 2

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Population is not the best variable to control for since Medicare covers the senior population mostly. If there is a state that has a large population of younger people, the per capita Medicare spending may be artificially deflated. Florida seems to present this case here; the per capita Medicare payouts are much higher than average, but Florida has the highest percentage of senior citizens at 17.3% compared with the national average of 13.29%.

To gauge the efficiency of the Medicare funds we plotted the per capita Medicare payout against the percentage of senior citizens (65+) for each state.

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While Florida spent only $10 less per capita than New Jersey, Florida was much more efficient as it had to care for more senior citizens. New Jersey had the worst efficiency as it spent the most per capita while having only .21% more senior citizens than the average state distribution.

Hawaii was a very efficient spender as it had a relatively high distribution of senior citizens compared with the national average (14.3% vs. 13.29%) while spending only $117 per capita, which was the third least amount of any state.

Continued releases of datasets such as this provide a great insight into the efficiency of the United States’ programs.

Big Spenders Part 1

With the Obama administration making more data available to the public, we analyzed the CMS dataset containing information on the services and charges performed by physicians and other suppliers to Medicare beneficiaries.

The top 5 states made up 39% of all Medicare charges while the combined 45 other states plus Washington D.C. made up the other 61%. New Jersey and Florida had the highest Medicare spending per capita at $398 and $388, respectively.

We also judged the efficiency of the spending by controlling for the population over 65. New Jersey had the worst efficiency as it spent the most per capita while having only .21% more senior citizens than the average state distribution. Hawaii was a very efficient spender, with a relatively high distribution of senior citizens and spending only $117 per capita.

Transparency

What does the state by state Medicare spending look like?

Due to a new policy put forth by the Obama administration, CMS (Centers for Medicare and Medicaid Services) has released a dataset, which contains Medicare payment information from 2012. The data contains information on the services and charges performed by physicians and other suppliers to Medicare beneficiaries.

We analyzed the dataset and looked at the aggregate Medicare payout for each state. The top 5 states made up 39% of all Medicare charges while the combined 45 other states plus Washington D.C. made up the other 61%.

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The top 5 states in addition to making up 39% of the total Medicare payouts also hold about 36% of the total population. When we adjust for the population in the dataset by calculating Medicare payouts per capita, we find which states are spending more or less than the average per capita. Texas and California spent less than the average of the other states, while New York, Florida and New Jersey spent quite a bit higher than the average, on a per capita basis.

In our next post, we will take a closer look at Per Capita Medicare Payouts by each state.

To the Cloud Part 2

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Cost studies once again topped the list making up 33.55% of all studies. There was less of an even distribution in the International meeting as the top four types of studies made up 83.42% of all studies as opposed to the European meeting were the top four studies made up 72.90% of all studies.

Regulation of healthcare studies saw a significant increase in the International meeting making up 1.60% of all studies while only making up 0.42% in the European meeting. Lastly, there were zero risk-sharing posters in the International meeting and five in the European meeting. This may be reflective of the lack of uptake in these types of contracts outside of Europe.

Workshops and Issue Panels

Another way to identify trends in the industry are through the issue panels and workshops. Since ISPOR members submit their own ideas for issues panels and workshops, it can provide a good beat of where things are heading. Unlike posters which often reflect completed studies, workshops and issues panels may provide better insight on the direction of the field.

We compiled a word cloud for both the panels and workshops. The issue panel’s cloud is found below.

Issue Panels

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For the most part, the most popular words contained in the titles are predictable as health care, new, technology and time. A few interesting trends emerged with real world, personalized data, personalizing, and risk-sharing.

There seems to be a good amount of focus being put around the new personalized medicines and available data along with risk-sharing and, of course, all of the new real world data becoming available.

Below we have done the same thing for the workshops.

Workshops

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The workshops seem to be a bit more directed as a “how to” instead of issue panels, which are directed more so at understand the issue and its implications. These “how to” workshops are mostly involved with outcomes, data, and research which are all fully expected and not out of the ordinary.

A couple of the more interesting words being used in the workshops was electronic and EMR. There were two workshops having electronic medical records as their focus:

  • A REALISTIC APPROACH TO WORKING WITH ONCOLOGY ELECTRONIC MEDICAL RECORD (EMR) DATA IN OUTCOMES RESEARCH
  •  PATIENT-REPORTED OUTCOMES (PROs) – USE IN ELECTRONIC MEDICAL RECORDS (EMR) AND IMPLICATIONS FOR COMPARATIVE EFFECTIVENESS RESEARCH (CER)

We expect more of these types of workshops in the future as EMR data becomes more widespread. This data will eventually become another asset to health economists.

To the Cloud Part 1

After another successful ISPOR International meeting we look back at the trends associated with the European and International poster presentations. We also explore the trends in workshops and issue panels.

Comparing the poster presentation word clouds of the European and International meetings, there seemed to be more posters in Montreal centered on diabetes, risk, cancer, and patterns. There was also a significant increase in diabetes studies for the International meeting (9.48%) in comparison with the European meeting (7.33%).

Regulation of healthcare studies saw a significant increase in the International meeting and accounted for 1.60% of all studies compared with only 0.42% in the European meeting.

The workshops and issue panels saw trends around the key words of personalized medicine, risk-sharing and electronic medical records.

Assessing the trends in ISPOR Europe and ISPOR International

Every ISPOR event has a different theme. The 2013 European meeting’s theme was “The Patients and Health Technology Assessment,” and the 2014 International meeting’s was “Big Data.” The real themes of the events, however, were determined by the poster presentations, issue panels and workshops. These items were submitted by people working in the field and showed the actual trends within pharmacoeconomics and outcomes research.

We dissected the titles of all the posters, issue panels and workshops at the 2014 ISPOR International Meeting in Montreal. The image below is a word cloud comprised of all 1,562 poster titles.

All Posters

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Compared with the word cloud of poster titles from the European meeting in Dublin, there were a lot of the same words such as patients, cost-effectiveness, treatment, analysis, and health. The words that seem to stand out more from the International meeting are diabetes, risk, cancer, and patterns.

In addition to the type of study, we also tracked the disease areas covered by the posters. The sectors and types of study distributions were compared with the European meeting. The sector of the study refers to the disease area or if there is no specific disease area it refers to the focus of the study (research on methods or health care use and policy studies).

Sector Distribution

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Compared with the European meeting, the International meeting had a more even distribution of sectors. In the European meeting the highest concentration of posters were research on methods posters (14.18%). For the International meeting the highest concentration of posters was in cancer (11.84%).

There was also a significant increase in diabetes studies for the International meeting (9.48%) in comparison with the European meeting (7.33%).

Check out our next blog post to see our look at the types of studies, which included cost studies, PRO studies, clinical outcomes studies, etc.

The Health Cup Part 2

Health Expenditures

While health expenditures do not always mean better outcomes, in theory the more a country spends on health the healthier its people should be and better athletes should be produced. We decided to see if higher health expenditures as a percentage of GDP are correlated with a better world ranking.

Health Expenditures

Health expenditures as a percentage of GDP show a slight correlation with overall FIFA world rank. An obvious outlier is the United States, which spent nearly 18% of its GDP on health in 2012 for only a 14 world ranking. Without the outlier, there is a noticeable positive correlation in world rankings and health expenditures as a percentage of GDP.

We also looked at health expenditure per capita versus world rankings in the following graph.

Health Expenditures 2

Health expenditures per capita show little correlation and a less pronounced relationship than health expenditures as a percentage of GDP. Again, the US is a noticeable outlier, and so is Switzerland. These two countries spend the most per capita on health and are rewarded with 14 and 8 rankings. On the other end of the spectrum, Australia spends the third most and is ranked a world cup worst 59th.

Overall we expect an exciting World Cup as usual. Below you’ll find some of the Alliance team’s predictions for the winner!

 

The Health Cup Part 1

We are finally within sight of one of the greatest sporting events in the world: The World Cup. The chatter has already started as the final squads are announced. How will the United States cope without the veteran leadership of Landon Donovan? Will Suarez be healthy in time to lead Uruguay out of a tough group?

In this issue, we took a look at the field of teams in the World Cup and also analyzed some health economic indicators to see if there were any correlations with FIFA world rankings.

We uncovered some correlations with life expectancy and health expenditures. Lastly, in an unscientific manner, we offer our picks as to who will win the World Cup.

Setting the Stage

One of humanity’s greatest sporting events will run from June 12th through July 13th as 32 nations will compete to win the World Cup in Brazil. It has been a long road of qualifying for many of the 32 teams. There have been some exciting matches such as the November “winner take all” qualifier between Sweden and Portugal where Portugal crushed the hopes of Ibrahimovic and his squad.

The United States, who ran the CONCACAF table, had a very exciting qualification stage as well. After a 2-1 loss in the first game, the US went on to win the group decisively with an impressive 0-0 draw against Mexico in Azteca in front of 85,000 fans. One of the most criticized games of the entire qualifying stage came from the United States’ 1-0 win against Costa Rica. The game saw several inches of snow, which completely covered the pitch. Crews had to shovel the lines for the penalty, sidelines and goal lines tirelessly throughout the game. The game was stopped in the 70th minute and the Costa Rica squad insisted it be continued, only to later protest the game after the final score was sent in.

The group of 32 teams that did qualify feature some incredible talents such as Messi (Argentina), Ronaldo (Portugal), Neymar (Brazil) and Suarez (Uraguay) to name a few. These players have the potential to go down as some of the best all time, so to have them all playing in the same World Cup is very special.The game was stopped in the 70 minute and the Costa Rica squad insisted it be continued, only to later protest the game after the final score was sent in.

Group play this year will prove to be especially interesting if one is a fan of the United States who drew into Group G, or what is being dubbed as this year’s “group of death”. The US will have to start against a tough Ghana team, which knocked them out of the 2010 World Cup in a heartbreaker. The schedule does not become any easier for the US squad who will have to play both Germany and Portugal, who rank numbers 2 and 3 in the world respectively.

Group D—with Uruguay, Costa Rica, Italy and England—will be another very tough group. One team out of Uruguay, Italy and England will not get out of group play, which will be unfortunate because they are all very good teams.

In Table 1, we give an overview of the eight groups and provide the team’s FIFA world rankings as of April 2014 and the number of top 4 finishes in previous World Cups.

table1

Group of Death

Every year there is a group that is drawn where all four of the teams could realistically make the knockout stage. Generally these teams all have high world rankings and are world powerhouses. This year’s group of death is said to be Group G with Group D not far behind. Group G has the number 2 and 3 teams in Germany and Portugal along with the US at 14 and Ghana at 38, though they play at a much higher level and can definitely play a spoiler role.

Group D is the second toughest group, and unlike Group G which has Germany and Portugal as two favorites to emerge from group play, Group D is wide open. This group is most likely going to be defined by one high impact player: Luis Suarez, an amazing talent for Uruguay. Suarez is currently recovering from knee surgery and is a may be to play in the World Cup. If he plays, the group could be a three horse race between Uruguay, England and Italy with Costa Rica playing the spoiler. If Suarez is absent, Italy and England will be the favorites to win the group.

We wanted to see if the label “Group of Death” is really appropriate for these tough groups. For the most part, the countries at the top of the rankings seem to be highly developed and modernized. We found the current life expectancy at birth for each of the teams and averaged it, along with FIFA world rank to find the average life expectancy and world rank for each group.

Group Rankings by Life Expectancy

The above graph suggests a correlation between the groups’ average FIFA world rankings and their average life expectancy at birth. Group G, which is being hailed as the Group of Death, is about middle of the pack for life expectancy (mostly due to Ghana). The real group of death seems to be group F which has the lowest life expectancy as well as the worst average FIFA world rankings. Group F’s low life expectancy is weighed down by Nigeria, which has the worst life expectancy in the tournament. Group B boasts the highest life expectancy and a middle of the road average ranking.

Since the last World Cup in 2010, many teams have jumped around in the world rankings. Keeping with the life expectancy theme, we examined how the average life expectancy changed from 2010 to 2012 compared with how teams’ rankings changed from 2010 to 2014.

Changes in Life Expectancy and World Rankings

We do not see any real trend in change in rank and change in life expectancy. An encouraging takeaway is that no country had life expectancy decrease over the period. Russia had the largest increase in life expectancy but also slightly fell in the world rankings. Belgium, which increased 50 spots in the rankings, had the smallest change in its already high life expectancy. Portugal which stayed at the three world ranking saw the second highest life expectancy increase which came in at 1.3 years.

In our next issue, we will look into  whether higher health expenditures as a percentage of GDP are correlated with a better world ranking.

The Uninsured: Part 1

A policy analysis of the Affordable Care Act

The Affordable Care Act (ACA) was passed in 2010 and aims to give more Americans access to affordable, quality health insurance, and to reduce the growth in health care spending in the U.S. To achieve this first goal, an individual mandate requires that most Americans get some kind of health insurance by 2014. March 31, 2014 marked the end of the open enrollment period if you want an insurance plan through the federal or state marketplaces. This was also the date to sign up by if you want to avoid the tax penalty if you do not have insurance or an exemption. The ACA estimated 32 million people would gain coverage, out of about 48 million who do not have insurance. Subsidies from the federal government will help pay for health insurance on state-based exchanges starting in 2014 and will allow many low- to moderate-income Americans to get a break on their premiums.

In the first part of our analysis we looked at who the uninsured are and what the demographics of these 48 million Americans look like. Then we explored how the ACA addresses the needs of these specific groups of uninsured people.

Table 1

Table 1 shows a breakdown of the population based on certain characteristics such as age, sex, race, and employment status and then gives the percent distribution based on insurance coverage. The age group that has the highest percent of uninsured are adults aged 18-65. Within this group there are 11 million young adults ages 18 to 29 that lack coverage.[1] More men are uninsured than women. The largest ethnic group that is uninsured are Hispanic and Latinos.

Within the adults that are uninsured, the group of young adults between 19-25 years of age have received the benefits of an additional benefit of the ACA. In one provision young adults can stay on their parent’s private health insurance coverage until the age of 26. This provision reduced the number of adults by an estimated 3 million people.[2]

Even though there is relatively high private coverage for employed individuals, the percent of uninsured employed people is only 0.2% less than the percent of unemployed and uninsured people. This could be due to employed individuals only working part time. Many companies do not offer health benefits to part-time employees. Under the ACA, large employers will have to offer benefits to full-time employees that work 30 or more hours a week. There are 7.6 million part time workers and 3.5 million self-employed workers that do not have health insurance. Depending on their income, Part-time workers and self-employed individuals can gain ACA coverage through Medicaid or Health Insurance Marketplaces.

In our next post, part 2 of The Uninsured, we will discuss a provision to the ACA that will increase the number of insured.

[1] Medical Expenditure Panel Survey: Health insurance coverage of the civilian noninstitutionalized population:Percent by type of coverage and selected population characteristics, United States, first half of 2012

[2] Kaiser Family Foundation. The Uninsured – Interactive Tool. Accessed April 2014: http://kff.org/interactive/the-uninsured-an-interactive-tool/