|Welcome to Hallo-week! As the Reputation and Risk Management Practice coordinates our costumes, we’re also keeping our third eye on the news – scanning for the spookiest updates in healthcare. Just kidding, no haunted headlines here, just grab your bowl of candy corn and witch’s broom as we fly into The Week That Was… |
►IS CLOROX TARGETING A THERMOMETER NEAR YOU?
Is Clorox reading your mind? No. It’s reading your Kinsa. Tech start-up Kinsa is selling internet-connected thermometers, which sync up with a smartphone app to tracks fevers. Heavily used by parents to track the symptoms of young children, the app promotes the benefits of “illness data” being captured in real time, thus avoiding unnecessary WebMD hypochondria or doctor’s visits. While patient personal data is not shared, illness data is being captured and sold to companies. For example, Clorox used the data to show which zip codes around the country had fever increases – and used the intel to coordinate ads for products such as disinfecting wipes to those regions. According to a report by CNET, Amazon was also recently granted a patent which allows the company to recommend chicken soup or cough drops to Echo users who cough or sniffle when communicating with the device. Christine Bannan from the Electronic Privacy Information Center stated that Kinsa’s data sharing was “less of a privacy question and more of an ethical question on what we think is acceptable for targeting people who are ill and what safeguards we want to have around that.”
So, we’re always a little leery of new applications that claim to share health data, even as the wave of the Internet of Things becomes real. While much hay has been made about protecting individuals’ health data, how do we handle bundled trend data that enables geo-targeting by companies like Clorox? Perversely, the very data that enables marketers to target us, can also be an incredible advantage to rapid and effective public health interventions. We don’t have time solve this one, as we’re too busy working on our app for drones that air drop chicken soup.
►READYING FOR A WORLD WITHOUT REBATES?
Pharmacy Benefit Manager (PBM) Express Scripts revealed a new model initiative that it’s launching with members of the National Drug Purchasing Coalition (NDPC), a major employer coalition. Under the plan, Express Scripts will not take a margin on drugs it purchases for NDPC members such as Pepsi, YUM! and Solvay. Instead, it will be compensated based upon shared goals that track the employers’ pharmacy spend and outcomes demonstrated by patients and their dependents. The model aims to improve the effectiveness of employer pharmacy spends, provide transparency surrounding the cost of drugs, and improve patient health. The “pay for performance” program will begin with five chronic diseases including diabetes, cardiovascular disease, autoimmune disease, pain and pulmonary conditions.
As the Administration flirts with the idea of eliminating protections for PBM rebates, the longevity of this business model that has fueled Express Scripts, OPTUM and others, is coming into question. With the potential of rebates being taken off of the table, PBMs must show they have a viable business model. Our forecast: expect to see more price transparency pledges and schemes that hand rebate savings directly to consumers.
Pharmaceutical companies whose gross-to-net margins are impacted by PBM rebates may be gleeful about the removal of rebates. But beware! Should the rebate go away, the pendulum may swing back to a focus on manufacturer list prices and what’s being done to bring them down.
►POTUS: GLOBAL FREE-LOADING NO MORE
Since the 2016 campaign trail, President Trump has raised concerns about the prices Americans pay for prescription drugs as compared those paid by other countries. Last week, he took action on that rhetoric. The Administration announced it will end “global freeloading” by creating an “International Pricing Index,” to benchmark and gradually lower the price that the government pays for drugs under the Medicare Part B program relative to drug prices paid outside the U.S. The plan calls for:
The government is accepting public comments and will initially hold the demonstration program through the Centers for Medicare and Medicaid Innovation. But don’t let the word “demonstration” fool you, it will impact half the nation. For the plan to roll out nationwide, federal legislation would be needed. So far, few Democrats have rallied behind the President’s approach, but drug pricing is a populist issue with support among many voters.
If your therapy or candidate will be reimbursed through Medicare Part B, we hope you’re paying attention! And, if your drug is one of the 27 highlighted by Sec. Azar, we recommend scenario planning now for greater scrutiny. Biologics and oncologics are likely to be the area of near-term scrutiny.
Regardless of whether your drug is reimbursed through Medicare Part B, all companies whose therapies have a significant U.S. and ex-U.S. cost difference should be preparing reactive responses to explain the delta. And finally, if you haven’t done it, it’s time to refresh your product value narratives. Many high list price therapies under Part B have life-extending benefits or may deliver other cost offsets. Communicating these in a resonant way may help to better contextualize list prices.
►SPENDIN', SPENDIN', SPENDIN'
A new study found that Medicaid member enrollment rates were lower this year -- but Medicaid spending remained steady and is expected to grow. Low unemployment and job verification requirements were cited as reasons for lower rosters; however, specialty drug costs, long-term care and behavioral health challenges are expected to propel spending forward. With the elections days away, how states will handle ballooning Medicaid costs is a hot topic. The Medicaid program accounts for a hefty 1 in every 6 dollars spent by the US healthcare system. Several states have ballot initiatives to determine how they will handle spiraling costs – with interventions ranging from Medicaid expansion to closing formularies.
According to The Economist, several states that voted heavily pro-Trump are reconsidering Medicaid expansion (a tenet of the Affordable Care Act). So, why is it that voters who seemingly reviled Obamacare would want to see an ACA mainstay continue? Since the rollout of the ACA, states that turned down the Medicaid expansion have nearly double the rates of uninsured non-elderly adults relative to those who accepted the expansion. This means more Americans are going without care. So, don’t be surprised to see rural districts with high unemployment rates advocate for the expansion come November 6th.
That’s all for this edition of The Week That Was!