All Posts By

Mauricio Peralta

Creating Stakeholder Dialogue Around Drug Pricing

By | Drug Costs, Healthcare Costs, Healthcare Value, Informed Patient, Rising Cost, Uncategorized | No Comments

The increase in prescription drug pricing and spending has been one of main factors contributing to the high costs of healthcare in the United States. In fact, according to a 2015 report by the National Center for Health Statistics, the national health expenditure for prescription drugs made up 10.1% of the total national health expenditure that reached $3.2 trillion that year [1]. Certain measurements of drug pricing villanize manufacturers an industry with outrageous cost and spending of prescription drugs. For example, patent exclusivity, research and development efforts, and competition in the market are generally blamed for the initial price increases. However, these measurements also cause skepticism and inaccuracies, thus shining a negative light on pharmaceutical companies. Therefore, the outliers misrepresenting pharmaceutical companies and the number of failed drugs need to be addressed in order for patients to have a better understanding on drug pricing.

Two outliers that don’t represent the overwhelming amount of biopharmaceutical companies are Mylan and Turing Pharmaceuticals. In 2007, Mylan Pharmaceutical acquired EpiPen, a handheld device that injects epinephrine to an individual with life-threatening allergic reactions, and increased the price of the drug by 500% [2]. The price rose from $100 to $600 in 2008 without any justification [3]. To no surprise, the company came under fire by the media for its unethical approach. The price increase can be attributed to Mylan’s patent use which allowed them to profit off of the drug without facing competition from a generic drug for a period of time [4]. In a similar situation, Martin Shkreli, founder and CEO of Turing Pharmaceuticals, raised the price of the drug Daraprim from $13.50 to $750 a tablet overnight [5]. What were once ‘affordable’ drugs became unaffordable for the vast majority of users causing outrage and shaming for pharmaceutical companies. Again, there are outliers that don’t represent the overwhelming majority of pharmaceutical companies that are developing new and novel drugs.

According to the 2017 Edelman Trust Barometer, the trust in the healthcare industry is slowly increasing compared to last year [6]. The trust in pharma in the U.S. seems to be “neutral.” With pharmaceutical companies like Mylan and Turing, it’s understandable why Americans might not be fully invested in pharma. When pharmaceutical companies make the headline in the news, it usually is unfavorable.

Furthermore, research and development is key when it comes to developing new drugs and used as justification for drug pricing. As we know, the process of creating a drug involves a lot of trials and errors where high costs are incurred in order to satisfy regulations imposed by the Food and Drug Administration (FDA); thus, it can create opportunities to price the drug even higher than it actually cost to get it out to the market. According to the 2017 Edelman Trust Barometer, 8 out of 10 people believe the pharmaceutical industry puts profit over people [7]. In reality, pharmaceutical companies only realize 39% of initial gross drug expenditures [8]. In addition, companies like Gilead are helping subsidize the cost of its drug, Epclusa, in Australia, which will help approximately 200,000 Australians that face the challenges of hepatitis C [9]. For example, Merck created an HPV vaccination program for cervical cancer in Rwanda [10]. Despite the media’s negative coverage, several other pharma companies have partnered with organizations like the Gates Foundation and UNICEF to provide medications for the developing world [11].

Lastly, it’s critical to address the failed formularies that ultimately lead to higher pricing as these costs must be recouped. The price to develop a drug is over $500 million [12]. According to the Tufts Center for the Study of Drug Development, the cost to develop and win marketing approval for a new drug is $2.6 billion [13]. The variance in the two aforementioned distinguish by fourfold, but it’s really expensive. Aside from this statistic, during clinical research phase studies, only 25-30% of initial drugs move to phase 4 where the drug is trialed by volunteers with the disease of interest [14]. The development of a drug can take a long time, especially when it comes to illnesses like cancer or HIV. During this time, the initial fund to conduct these studies starts to deplete. As patients, we need to understand that these are factors that even pharmaceutical companies have no control over.

As we wait for a viable healthcare reform under the current administration, it’s important to push for one that restores the well-being and decreases the burden of millions of Americans. During the process, there needs to be increased dialogue between patients and providers, such as pharmaceutical companies. All to avoid situations like that of Mylan and Turing. If drug pricing continues to increase, the biopharmaceutical industry will face more scrutiny. There will be increasing tension between patients, pharmaceutical companies, and pharmacy benefit managers (PBM). It’s important for all stake holders to be open and transparent in order to resolve these issues successfully. In an ever changing environment, we must learn to understand the process in order to appropriately resolve issues plaguing our society. We are ever changing.

To further explore the drug pricing trends, CHI is organizing the 5th Annual Healthcare Executive Roundtable on October 12, 2017, in Manhattan, New York. The Center for Healthcare Innovation’s “Understanding Value in Consumer-Orientated, Patient-Centric Era” Roundtable is an intimate, invitation-only, expert roundtable discussion for healthcare executives, key opinion leaders, and patient groups to discuss how stakeholders throughout the healthcare ecosystem can address critical issues related to healthcare value, quality, and cost. This year’s Roundtable will focus on several key market forces that affect the current state of healthcare in the U.S. Please visit http://chisite.org/roundtable/ for more information.

Work Cited

[1] Health Expenditures. Centers for Disease Control and Prevention. https://www.cdc.gov/nchs/fastats/health-expenditures.htm. Accessed September 14, 2017.

 

[2] Mylan Raised EpiPen’s Price Before the Expected Arrival of a Generic. The New York Times. https://www.nytimes.com/2016/08/25/business/mylan-raised-epipens-price-before-the-expected-arrival-of-a-generic.html?mcubz=3. Accessed September 14, 2017.

 

[3] Mylan finalizes $465 million EpiPen settlement with Justice Department. CNBChttps://www.cnbc.com/2017/08/17/mylan-finalizes-465-million-epipen-settlement-with-justice-department.html. Accessed September 14, 2017.

 

[4] Mylan Raised EpiPen’s Price Before the Expected Arrival of a Generic. The New York Times. https://www.nytimes.com/2016/08/25/business/mylan-raised-epipens-price-before-the-expected-arrival-of-a-generic.html?mcubz=3. Accessed September 14, 2017.

 

[5] Drug Goes From $13.50 a Tablet to $750 Overnight. The New York Times. https://www.nytimes.com/2015/09/21/business/a-huge-overnight-increase-in-a-drugs-price-raises-protests.html. Accessed September 20, 2017.

 

[6] Trust in Healthcare: Making Progress. Edelman. https://www.edelman.com/post/trust-healthcare-making-progress/. Accessed September 20, 2017.

 

[7] Trust in Healthcare: Making Progress. Edelman. https://www.edelman.com/post/trust-healthcare-making-progress/. Accessed September 20, 2017.

 

[8] Majority of Drug Revenue Not Going to Pharmaceutical Companies. The American Journal of Pharmacy Benefits. http://www.ajpb.com/news/majority-of-drug-revenue-not-going-to-pharmaceutical-companies. Accessed September 20, 2017.

 

[9] New Hepatitis C Drug to be subsidized in Australia. The Pharma Letter. https://www.thepharmaletter.com/article/new-hepatitis-c-drug-to-be-subsidized-in-australia. Accessed September 25, 2017.

 

[10] Even Pharma’s Good Deeds Are Criticized. Forbes. https://www.forbes.com/sites/johnlamattina/2013/05/06/even-pharmas-good-deeds-are-criticized/#612c29ec4cd3. Accessed September 20, 2017.

 

[11] Even Pharma’s Good Deeds Are Criticized. Forbes. https://www.forbes.com/sites/johnlamattina/2013/05/06/even-pharmas-good-deeds-are-criticized/#612c29ec4cd3. Accessed September 20, 2017.

 

[12] R&D Costs For Cancer Drugs Are Likely Much Less Than Industry Claims, Study Finds. NPR. http://www.npr.org/sections/health-shots/2017/09/11/550135932/r-d-costs-for-cancer-drugs-are-likely-much-less-than-industry-claims-study-finds. Accessed September 20, 2017.

 

[13] Cost to Develop and Win Marketing Approval for a New Drug Is $2.6 Billion. Tufts Center for the Study of Drug Development. http://csdd.tufts.edu/news/complete_story/pr_tufts_csdd_2014_cost_study. Accessed September 28, 2017.

 

[14] Step 3: Clinical Research. U.S. Food & Drug Administration. https://www.fda.gov/forpatients/approvals/drugs/ucm405622.htm. Accessed September 20, 2017.

 

The Shift from Volume-to-Value: Innovating Payment Systems

By | Healthcare Costs, Patient Engagement, Volume-to-Value | No Comments

The U.S. healthcare system has been facing serious issues when it comes to the quality and cost of healthcare today. These issues have called for a shift from the traditional volume-based care to value-based care. One key factor driving this change is the need for patient-centered care for our current growing elderly population and those with chronic disease [1]. In addition, there is a need for a different type of payment system that won’t punish providers for focusing on keeping people healthy and avoiding unnecessary care [2]. The last factor is the current payment system contributes nothing to improving health [3].

According to a report by the Centers for Medicare & Medicaid Services, the total health spending in the U.S. in 2016 reached nearly 3.4 trillion dollars [4]. In addition, 45% of all Americans suffer from at least one chronic disease, which in financial terms turns out to be an average costs of $6,032 annually [5]. The high cost of care can be attributed to the traditional volume-based care (fee-for-service) that promotes profit over quality of care [6]. This means physicians must focus on volume of patients and getting rewarded for it. As previously mentioned, there are individuals that suffer from serious illnesses that calls for better care on behalf of the providers.

Furthermore, in order to successfully shift to value-based care, the current payment model must be changed to one that incentivizes physicians to promote better care. Physicians aren’t paid for time spent on educating their patients. However, they are paid for coordinating tests [6]. This ends up hurting patients because physicians aren’t focused on improving patient outcomes but rather making sure that they follow procedures that don’t add much value to patient engagement. The numerous tests and medicine prescriptions are illusions of high quality care. In reality, even though our health care spending is astronomical, millions of Americans are uninsured or receive care that is inadequate.

To further elaborate on the issues with the current payment system, according to a survey conducted by PwC’s Health Research Institute (HRI), fee-for-service payments make up 53% of a physician’s revenue [7]. Therefore, in the initial stages of the shift to value-based, physicians must accept a temporary loss of revenue [8]. Sure, it’s a hard pill to swallow. However, in order to see change, financial losses at the beginning stages is a reality that must be accepted. It seems that in order to create a balanced system that works for providers and patients, more financial risks have to be incurred by organizations.

In 2017, the topic of healthcare coverage has taken the spotlight under the current administration that aimed to replace the Affordable Care Act (ACA). If there ever were a better time to leverage the use of technology to help reduce certain costs, it would be a great time to do it now. As we know, the healthcare industry is a complex ecosystem where traditional thinking is favorable compared to innovative ideas. Value-based care is innovative to a certain extent and seems promising. In the end, as the health care landscape changes once again, implementing a payment model that aligns with the objectives of high quality and better care is needed.

To further explore these value-based trends, CHI is organizing the 5th Annual Healthcare Executive Roundtable on October 12, 2017, in Manhattan, New York. The Center for Healthcare Innovation’s “Understanding Value in Consumer-Orientated, Patient-Centric Era” Roundtable is an intimate, invitation-only, expert roundtable discussion for healthcare executives, key opinion leaders, and patient groups to discuss how stakeholders throughout the healthcare ecosystem can address critical issues related to healthcare value, quality, and cost. This year’s Roundtable will focus on several key market forces that affect the current state of healthcare in the U.S. Please visit http://chisite.org/roundtable/ for more information.

References:

[1] From Volume To Value: Achieving Bold Change In Our Healthcare Payment Systems. Forbes. https://www.forbes.com/sites/billfrist/2016/06/30/from-volume-to-value-achieving-bold-change-in-our-healthcare-payment-systems/#65afc8f09c82. Accessed September 7, 2017.

 

[2] From Volume To Value: Better Ways To Pay For Health Care. Health Affairs. http://content.healthaffairs.org/content/28/5/1418.full#ref-1. Accessed September 7, 2017.

 

[3] Patient-Centered Care: What It Means And How To Get There. Health Affairs. http://healthaffairs.org/blog/2012/01/24/patient-centered-care-what-it-means-and-how-to-get-there/. Accessed September 7, 2017.

 

[4] 2016-2025 Projections of National Health Expenditures Data Released. Center for Medicare & Medicaid Services. https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2017-Press-releases-items/2017-02-15-2.html. Accessed September 7, 2017.

 

[5] Why Public Health Is Necessary to Improve Healthcare. National Association of Chronic Disease Directors. http://c.ymcdn.com/sites/www.chronicdisease.org/resource/resmgr/white_papers/cd_white_paper_hoffman.pdf. Accessed September 7, 2017.

 

[6] From Volume To Value: Better Ways To Pay For Health Care. Health Affairs. http://content.healthaffairs.org/content/28/5/1418.full#ref-1. Accessed September 7, 2017.

 

[7] Healthcare’s Alternative Payment Landscape. PricewaterhouseCoopers. https://www.pwc.com/us/en/health-industries/health-services/assets/pwc-hri-alternative-payments-2015.pdf. Accessed September 7, 2017.

 

[8] Patient-Centered Care: What It Means And How To Get There. Health Affairs. http://healthaffairs.org/blog/2012/01/24/patient-centered-care-what-it-means-and-how-to-get-there/. Accessed September 7, 2017.

 

Healthcare Value and Patient Engagement

By | Patient Engagement, Patient-Driven Healthcare, Uncategorized | No Comments

As of 2015, healthcare spending in the U.S. reached approximately $3.2 trillion dollars, or $10,000 dollars per person. (1.) Despite high amounts of spending, Americans have seen a decline in life expectancy by one-tenth of a year.  (2.) According to a publication in 2013 by The Common Wealth Fund, Americans had fewer physician visits with 4 per year compared to 6.5 visits for other countries in The Organization for Economic Cooperation and Development. (3.) With the rising cost and poor quality of healthcare, it is critical to analyze the intersection between healthcare value and patient engagement. (4.)

How do we define “value” in health care? The definition for this term can range from improved patient outcomes to coordination of care to patient-centeredness. (5.) However, value-based care is generally defined as safe, appropriate, and effective care at a reasonable cost. It is very important to carefully define value as we move towards value-based care. This allows customers to fully understand the type of care they are receiving. Furthermore, value-based care has emerged as a solution to address rising health care costs. This is a change from the traditional fee-for-service approach where doctors and hospitals are paid for based on the number of health care services they deliver. (6.)

What this entails for hospitals and physicians is more accountability on their part for the well-being of their patients. For example, according to the Harvard Business Review, value-based care will be about costs and patient outcomes like quicker recoveries, fewer readmissions, lower infection rates, and fewer medical errors. (7.) In addition, as we move towards this newer model, we also see an abundance of data that can be tabulated and analyzed to ensure better health outcomes for patients. (8.) If value-based care is to succeed, the need for better patient engagement becomes a key component to that success.

Patient engagement is a set of strategies that are created to keep patients connected and engaged in their own care. Today, this is facilitated through the use of healthcare technology. For example, patients can use patient portals to directly message their provider regarding any questions they have regarding their health. (9.) In addition, people have been using mobile applications on their smartphones to keep track of their health. Ultimately, they can decide whether it is appropriate to visit a doctor based on the information they have in their pocket. (10.) This trend also focuses on preventive measures since this allows patients and providers to be in direct contact.

What patient engagement ultimately allows is for patients to take charge of their health through the use of innovative methods that have become available through technology. It allows patients to avoid spending a lot of money on doctor visits that only require simple checkups. It plays a critical role in lowering the cost of healthcare for patients and ensures better quality of care. (11.) Healthcare value and patient engagement now go hand in hand because both are innovative ideas that are meant to disrupt an industry where traditional thinking triumphs. In today’s society, the need for change is only becoming inevitable.

As a new administration takes charge, the future of our healthcare system has never been so unclear. It will be interesting to see if this value-based approach can reach new heights under the new administration. As leaders in this sector await change, one can only hope that it is the change that we have long desired. It is important for healthcare leaders to advocate for an inclusive and efficient healthcare system. In the end, if we are to succeed, collaboration on both ends of the spectrum is required.  

 

Works Cited

1.) National Health Expenditures 2015 Highlights. Centers for Medicare and Medicaid Services. https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/nationalhealthexpenddata/downloads/highlights.pdf. Accessed January 25, 2017.

2.) Bernstein L. U.S. Life expectancy declines for the first time since 1993. Washington Post. December 8, 2016. https://www.washingtonpost.com/national/health-science/us-life-expectancy-declines-for-the-first-time-since-1993/2016/12/07/7dcdc7b4-bc93-11e6-91ee-1adddfe36cbe_story.html. Accessed January 25, 2017.

3.) Squires D. U.S. Health care from a global perspective. The Common Wealth Fund. http://www.commonwealthfund.org/publications/issue-briefs/2015/oct/us-health-care-from-a-global-perspective. Accessed January 25, 2017.

4.) Claxton G. Measuring the quality of healthcare in the U.S. Peterson-Kaiser Health System Tracker. http://www.healthsystemtracker.org/insight/measuring-the-quality-of-healthcare-in-the-u-s/. Accessed January 25, 2017.

5.) Blumenthal D. Getting real about health care value. Harvard Business Review. https://hbr.org/2013/09/getting-real-about-health-care-value. Accessed January 25, 2017.

6.) Belliveau J. What is value-based care, what it means for providers? Rev Cycle Intelligince. http://revcycleintelligence.com/features/what-is-value-based-care-what-it-means-for-providers. Accessed January 25, 2017.

7.) Cosgrove T. Value-based health care is inevitable and that’s good. Harvard Business Review. https://hbr.org/2013/09/value-based-health-care-is-inevitable-and-thats-good. Accessed January 25, 2017.

8.) Porter M. The strategy that will fix health care. Harvard Business Review. https://hbr.org/2013/10/the-strategy-that-will-fix-health-care. Accessed January 25, 2017.

9.) Heath S. How do patient engagement strategies cut healthcare costs? Patient EngagementHIT. http://patientengagementhit.com/news/how-do-patient-engagement-strategies-cut-healthcare-costs. Accessed January 25, 2017.

10.) Key facts about the uninsured population. http://kff.org/uninsured/fact-sheet/key-facts-about-the-uninsured-population/. Accessed January 25, 2017.

11.) Barnett J. United States Census Bureau. http://www.census.gov/library/publications/2016/demo/p60-257.html. Accessed January 25, 2017.

 

What Healthcare Diversity Looks Like in The 21st century

By | Clinical Trials, Diversity & Inclusion, Global Healthcare Trends, Patients | No Comments

Diversity is a key word in the healthcare system. It can be defined as the blending of different backgrounds, with representation across gender, race/ethnicity, generation, and sexual orientation. Diversity is undeniably one of the most important topics in today’s society. In fact, according to an article published in Becker’s Hospital Review, millennials are the most diverse generation in the U.S. Population [1]. This change has brought the demand for a better quality of life across every social aspect, such as healthcare[2].

Despite the focus on relatively high economic factors in our healthcare system, many issues on the social spectrum remain unaddressed. One of the issues that our healthcare system faces today is the lack of representation for our ever-growing, diverse, population. As stated in an article published in Modern Healthcare, the lack of true diversity among leaders in this industry has stayed consistent[3]. How consistent? Well, according to Kevin E. Lofton, CEO of Englewood, Colorado-based Catholic Health Initiatives, this has been an issue since he started his career back in 1978. The healthcare industry has done a poor job of adjusting to the rapid demographic changes in recent years.

According to a survey conducted in 2013 by the American Hospital Association’s Institute for Diversity, minority representation on healthcare boards across the nation stood at 14 percent [4]. Furthermore, the same survey reported that minorities represented 31 percent of patients nationally. This is an issue that needs to change in the next couple of years. In an article published by David Ferguson, he mentions that a lack of diverse leadership in the healthcare industry can present a cultural gulf that must be overcome if the industry plans on switching to patient-centered care[5]. Emphasizing the crucial importance of diversity is critical if we ever hope to have an adequate health care system that is inclusive and represents the diverse set of people living in this nation.

Change must start at the top of the executive pyramid. Why? Well, those at the top are the ones with the power to make decisions.  In addition, increasing the number of physicians of color can foster higher levels of patient satisfaction among underrepresented groups in the community[6]. Most importantly, it is key to let minority groups know that the resources are there for them to take initiative. This can only work if both healthcare providers and patients work together to bring much-needed change to a system as sophisticated as the healthcare industry.

We must look at different initiatives that in the long-term can foster a system where the gap between healthcare inequality is minimal or non-existent. These initiatives must produce a system that is not only inclusive but effective as well. Shedding light on this issue is a must among healthcare leaders since they become the voice of the underrepresented populations. In the end, it is important to push for change and create something meaningful in an industry where change is long overdue.

To further explore these diversity trends, CHI is organizing our 7th annual Diversity, Inclusion, & Life Sciences Symposium on 6/15/17 in Chicago. The Symposium is the leading annual, collaborative event for life sciences and healthcare executives, physicians, HR professionals, clinical trial professionals and patients, entrepreneurs, patient groups, researchers, academics, and diversity and inclusion advocates to discuss diversity and inclusion in healthcare. The symposium focuses on the latest trends, challenges, opportunities, and best practices for implementing strategies and tactics to make these industries more diverse and inclusive, as well as understand how to better serve diverse patient groups. Attendees will learn the newest insights and ideas, discuss practical solutions, and meet new industry and marketplace colleagues. See a video at http://www.snip.ly/fxln8. This year’s symposium will include topics such as the role of coaching and mentoring in executive success, diversity and inclusion in clinical trials and research, and expanding definitions of diversity. Please visit http://chisite.org/dilss/ for more info or to register. Register before 5/13 to receive early registration discount.

 

References

[1] Jayanthi A. The new look of diversity in healthcare: Where we are and where we’re headed. Becker’s Hospital Review. http://www.beckershospitalreview.com/hospital-management-administration/the-new-look-of-diversity-in-healthcare-where-we-are-and-where-we-re-headed.html. Accessed January 25, 2017.

 

[2] Dorning J. The U.S. Health Care System: An International Perspective. Department For Professional Employees. http://dpeaflcio.org/programs-publications/issue-fact-sheets/the-u-s-health-care-system-an-international-perspective/#_edn24. Accessed January 25, 2017.

 

[3] Lofton K. Need for more diversity in healthcare leadership represents a moral and business imperative. Modern Healthcare. http://www.modernhealthcare.com/article/20161119/MAGAZINE/311199945. Accessed January 25, 2017.

 

[4] Diversity and Disparities. Diversity Connection. http://www.diversityconnection.org/diversityconnection/leadership-conferences/diversity_disparities_Benchmark_study_hospitals_2013.pdf. Accessed January 25, 2017.

 

[5] Ferguson D. Diversity in healthcare leadership drives better patient outcomes and community connection. Fierce Healthcare. http://www.fiercehealthcare.com/healthcare/diversity-healthcare-leadership-drives-better-patient-outcomes-and-community-connection. Accessed January 25, 2017.

 

[6] King M. The importance of cultural diversity in healthcare | Brainwaves. The University of Vermont. https://learn.uvm.edu/blog-health/cultural-diversity-in-healthcare. Accessed January 25, 2017.