Posts Tagged insurance
Posted by Darshana V. Nadkarni, Ph.D. in Biotech - Medical Device - Life Science - Healthcare on May 24, 2012
Ellen Licking, writer and analyst for Real Endpoints, a start-up focused on providing objective information about product reimbursement, discussed “what cancer pathways mean for biopharma industry at http://www.bio2devicegroup.org.
Cost containment in healthcare has emerged as a significant issue and the payers are looking at big cost diseases like oncology to find more effective care options. The use of cancer care pathways is emerging as a strategy to focus on providing efficient care, while also containing costs. Results from existing “cancer pathway” pilots underway at national and regional insurers are becoming available in 2012 and are shedding light on the use of evidence-based medicine to improve outcomes and lower costs. In Europe, they discuss rationing of care. But in the US, it is a more complex issue, given the diversity of stake holders and the necessity for implementing politically appropriate language and behaviors.
Cancer pathways provide an evidence based-approach to care that is based on efficacy (how well the treatment works), toxicity (how toxic is the treatment), and cost. In the event that two drugs provide similar efficacy and toxicity, then the choice comes down to cost. Clear winners for reimbursement, in this approach, are efficacious drugs; for products that are as good, the choice is made based on price. First and foremost, this approach is designed to reduce the existing wide variation in care. Second, it aims to improve outcomes with focus on treatments that provide the greatest survival benefit and the lowest toxicity. Third, these care pathways would contain cost, based on scientific evidence of best care.
These pathways are not commandments in that payers are not mandating providers adopt a certain pathway. To get buy in from physicians, payers are considering waiving the right to prior authorization and programs that allow doctors to share in any financial savings. In one study, the data indicated 35% cost savings for on-pathways patients compared to those not on pathways, while showing no difference in survival outcomes. Real world cost savings, at least initially, are expected to be more modest in the 10-15% range. However, even these savings would greatly contain costs. Cancer pathways are small but growing quickly. Currently, there are an estimated 29 programs in place from a variety of payers. One concern has been that the pathway approach may change how oncologists are paid. Most oncologists are paid in relation to the amount and cost of drugs they prescribe. If payer savings translate into dramatic pay cut for oncologists then it would become challenging to get their buy in. Besides pathways, a few payers are experimenting with episode-of-care, which pays oncologists a single payment for treating patients during a specified treatment period.
What ARE the implications of these changes for THE biopharma industry? Given the dreaded oncology diseases, the treatment programs have traditionally been treated with kid gloves. But under this strategy, there will be clear winners and losers and treatments that are not efficacious will be dropped to make room for possible newer treatment options. While finding winning oncology drugs have always been challenging and will continue to be challenging, in the pathway driven world, it will also be more difficult to establish best in class drugs. Licking offered the recommended options for biopharma industry that include, maintaining focus on first in class drugs given the advantage to first to market, redefine meaning of best in class based on not just clinical efficiency but based on endpoints important to payers, in consideration of efficacy, to focus on price in addition to quality of life issues, and consider risk-sharing schemes that are tied to adherence medtrics or provide clear cost information such as Astrzeneca’s single payment scheme for Iressa. The talk generated a great deal of interest and discussion and was followed by Q&A. Ellen Licking can be contacted at email@example.com; You can learn more about Real Endpoints at http://www.valueandinnovation.com .