Put a spring in your step and read Real Endpoints’s weekly round-up of reimbursement related news.
Overseeing Cancer Drug Regimens: Here’s a scary find. On March 16 researchers from Medco Research Institute reported new data at the American Society for Clinical Pharmacology and Therapeutics annual meeting showing that a high percentage of patients on oral kinase inhibitors like Gleevec or Tarceva are also taking medicines that reduce the effectiveness of the cancer treatment. In total, the Medco researchers looked at the pharmacy claims of 11,600 cancer patients taking one of nine oral kinase inhibitors during a 29-month period that ended mid-2010. The researchers specifically looked at the secondary drugs prescribed these patients, with an eye for those known to spark potential drug-drug interactions, for instance proton pump inhibitors (PPIs), steroids, calcium channel blockers, and some antibiotics and antifungal treatments. Based on their analysis, 23-57% of the patients were simultaneously taking a drug that had the potential to reduce the effectiveness of the cancer treatment; even more unnerving, 23-74% of patients received secondary drugs that could have increased the toxic side-effects associated with the cancer medicine. How could this happen? While oncologists prescribed the vast majority of cancer drugs, other therapies were the purview of primary care physicians; because of the current difficulty sharing information between provider groups, it’s fair to say the lapse came because treating physicians are only aware of what they are responsible for (whether its treating the tumor or the anxiety that could result from a cancer diagnosis). It’s another reminder of the need to treat cancer patients holistically. That Medco funded this kind of trial is hardly surprising; the PBM has access to all the scripts (not just oncologics) filled for its patient members and is therefore in a prime position to flag up adverse side-effects that could result in worse outcomes. Indeed, that’s a big part of the pitch Medco makes to payers and employers who might be interested in having the PBM help manage complicated oncology patients.
Merck heads back to school: Spoiler alert. This next item isn’t really reimbursement related. But one of the challenges for industry is to maintain pharmacologic innovation and device development in an increasingly competitive market.. Increasingly, turning to academia has become the preferred method to check the “R” box without adding too much red ink to the budget line. On March 16th, Merck, one of the big pharmas that has largely stayed on the sidelines when it comes to academic-centered dealmaking, entered the game with a $90 million bet. The biopharma announced a commitment of up to $90 million to fund the development of a non-profit research center, the California Institute for Biomedical Research (Calibr), which will invest in basic translational biomedical research. Through Merck’s funding, Calibr will be able to provide researchers with full access to scientific resources and equipment without the red-tape that’s the norm in the cutthroat and budget-pinched university environment. The quid? Merck has the option to exclusively license any protein or small-molecule therapeutics that result from the basic research. Meantime, Calibr scientists will be free to seek outside funding on any work that Merck decides not to license. Overseeing Calibr is Peter Schultz, a chemist and biotech entrepreneur well versed in taking ideas birthed in academia into the private sector. Interestingly Calibr won’t be affiliated with a specific institution (Schulz, in the meantime retains his long time affiliation with Scripps.) That makes Merck’s strategy slightly different than competitors like Pfizer, Sanofi, and AstraZeneca. All three have largely crafted deals that are institution specific, with Pfizer beginning multi-university alliances to create innovation hubs via its Centers of Therapeutic Innovation. The money Merck is putting down is small compared to Pfizer’s spend; still, whether Merck can make its $90 million bet pay off remains to be seen. For that price tag, the pharma could have attempted to set up multiple early stage research bets with early stage biotechs.
The Making of a Market: Partnering with over 50 hospitals and over 16,000 doctors across Massachusetts, Harvard Pilgrim announced it will offer companies and employees a new “focused network” model that lowers employer’s premiums by up to 10 percent. Harvard Pilgrim aims to do so mainly by excluding the region’s higher-cost health care providers, especially Partners HealthCare System, which is the state’s largest hospital and physician group and has pricier fees than some of the area’s other teaching hospitals. To join the new plan, Focus Network MA, Harvard Pilgrim requires providers in the network keep the costs of their services below predetermined levels. Outside of Partners, other provider groups excluded from Focus Network include hospitals with a geographic monopoly (e.g. Cape Cod Hospital in Hyannis). By offering this new network, Harvard Pilgrim is looking for two major outcomes: first, the insurer hopes that the competitive cost-of-service requirements will pressure pricey hospitals to lower their own rates; second, by appealing to employers who feel the pinch of rising premiums, Harvard Pilgrim foresees strong sales of Focus Network MA. Given the breadth of in-network providers, subscriber worries of limited coverage seem fairly unlikely. The new network is awaiting state Division of Insurance approval, but assuming all goes as planned, Focus Network MA would be available across Massachusetts beginning April 1st.
- For more on Focus Network MA see Harvard Pilgrim’s website.
- Stories from the Boston Globe and the Washington Post can be found here and here.
Anti-Trust and Healthcare: The Federal Trade Commission (FTC) has been busy this week: first, the FTC is calling out over 50 hospital mergers with antitrust regulations; second, dozens of states are watching for the FTC’s decision on possible anti-trust violations in the proposed merger of Express Scripts and Medco Health Solutions, a tie-up that would create the largest U.S. pharmacy-benefits manager (PBM). Where does antitrust regulation fit within the health care system? As we saw in the piece on Harvard Pilgrim Healthcare’s Focus Network above, the ability to create new benefit products depends on competition. One reason Harvard Pilgrim could create its new plan: there are a number of high quality provider groups jockeying for patients in the Massachusetts area. But with hospitals busy merging with each other – last year alone more than 86 deals valued at $7.9 billion took place—there’s concern that such deals lock up markets and lead to higher prices for patients and insurance companies. Recent data supports this claim. A report published in the American Journal of Managed Care presents a study of major cardiac and orthopedic surgery procedures in hospitals in eight states; numbers show that private insurers paid 29%-56% more for procedures in hospitals with less market competition. On the other hand, a study commissioned by the American Hospital Association reports that pricier hospitals tend to care for sicker patients, have higher technological capabilities and have more teaching programs. As many hospitals argue, the heath-care overhaul calls for coordinated patient care and electronic records that are certainly more feasible for large organizations. Interestingly, it’s not always the case that less competition means higher prices. At least that’s the argument execs at Medco and Express Scripts have been making as they try and convince regulators that the proposed alliance should go through. As the giant in pharmacy benefts, a combined Express/Medco would be in a position to pressure both drugmakers and distributors to agree to lower costs on products. (Think of what ExpressScripts has been doing to Walgreens writ larger.)
- A story from the WSJ on hospital consolidation and the FTC is here.
- To read the AJMC report in detail, click here.
- For more on the ongoing Express Scripts/Medco saga see Bloomberg’s take.