Marc O'Connor

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	Payers are focusing on unregulated growth opportunities and everyone is wondering if, how and when Amazon can make it work in the pharmacy space, according to insights from the 2017 UBS Global Healthcare Conference, May 22 to 24, in New York, New York.

	As U.S. healthcare spending races toward 20% of GDP (over $3.2 trillion in 2015), everyone in the business is chasing a bigger piece of the pie. While we put the patient at the center of every conversation we have, events such as JPMorgan and UBS are necessary when public companies need to brief analysts en masse, raise equity and the banks seek to court their next opportunities to ink lucrative financing deals.

Regulations limit the available profit insurers can glean from policies themselves

. This is one of the top reasons so many are leaving the exchanges. Where’s the growth opportunity? It’s all on the unregulated side of the business. What growth opportunities can payers offer their plan sponsors that’s not subject to profit limitation? The top options include provider connectivity, pharmacy programs, population health programs, adjudication of medical spending and wellness programs. On the pharmacy program side, one recent, high-profile example is UnitedHealthcare’s acquisition of Optum including its PBM platform.

	In an era where consolidation in the industry shows no signs of slowing down, executives should anticipate the interest in, and competition for, private companies that excel in those unregulated areas to increase. This is precisely why private companies invited to present themselves treasure the opportunity, be it at the annual UBS, JPMorgan or Goldman Sachs healthcare events where it’s all about pipelines, earnings, competition, growth opportunities and the dollars.

Healthcare consumerism: Can Amazon actually capitalize?

As was widely reported last month, Amazon looks like it’s getting serious about entering the pharmacy business. With consumers necessarily getting more educated about their healthcare due to the proliferation of high-deductible plans and the associated out-of-pocket costs, it makes sense (on the surface) that pharmacy needs to adapt to consumerism and consumers’ associated shifts in buying habits away from brick-and-mortar retail locations and into the online space. This was front and center throughout the 2017 UBS Global Healthcare Conference.

, “While 94% of all retail sales still take place in stores, e-Commerce sales are expected to increase annually by 17%, reaching $414 billion by 2018.”

	With a stock price currently exceeding $1,000 per share, it’s hard to bet against Amazon’s visionary CEO Jeff Bezos. And though many believe the pharmacy space is ripe for disruption, the entrenched powers that be, along with a federal regulatory body or two, will fight to maintain as much of the status quo as they can while they deal with their own businesses’ needs amidst the shift from fee for service to value-based care. Walgreens and CVS are already losing their share of toothpaste, detergent and other sundries to Amazon. They will not cede market share of their pharmacy business to Amazon without a fight, though they will have to acknowledge a nascent retail level threat.

Can Amazon change the pharmacy landscape?

	In the short term, retail pharmacies are more concerned with their next deal with Target, directing more prescriptions to their own PBMs and adding more in store care clinics within 10 feet of the pharmacy counter.

	In the long term, Amazon will have to address the same complexities of the pharmacy business existing players have been dealing with for eons: Low margins on pharmacy fulfillment, acquiring talent and clinical pharmacy expertise, endless regulatory hurdles, navigating a complex path between providers and consumers, building their own provider network and sizing up the very long putt that involves distribution networks and branded medications.

	Can Amazon really pull this off? Bloomberg healthcare columnist Max Nisen recently 

, “Amazon has many advantages when it comes to selling just about anything. Hundreds of millions of people buy something from Amazon every year, something no other company, let alone another pharmacy, can really match. It's arguably better at managing speedy delivery and consumer experience than its potential competitors. That gives it a real chance to increase the market penetration of online and mail-order drug options.

	“And because of the way they report revenue, PBMs may actually be far more profitable than they look at first glance. That might change if Amazon comes after them.”

	The rigors of specialty pharmacy will likely keep Amazon at arm’s length from pharmacies currently operating in the space. Accreditation processes and requirements alone would be enough of a deterrent. Add on the systems, talent and patient care coordination needed to improve patient adherence and outcomes for the most difficult to treat, chronically ill Americans and Amazon’s impact on the specialty pharmacy industry will likely be negligible.

Marc O’Connor is chief operating office for 

, a provider of enhanced medication therapy management and specialty pharmacy services.

Articles

The conference raised important points about unregulated growth opportunities and new pharmacy arena players. 

Opinion: Top 2 takeaways from UBS Global Healthcare Conference

The 2017 Asembia Specialty Pharmacy Summit, held April 30 to May 3 in Las Vegas, delivered the goods in two of the hottest topics: value-based contracts and the race for health systems to enter the specialty pharmacy space.

1. Integrated health system and specialty pharmacy integration

O'ConnorIntegrated health systems and large hospitals are racing to enter what they perceive to be a highly lucrative proposition: the specialty pharmacy space. The top question that they must address is will they build or partner to do so. This explains at least in part why we saw far more health systems represented at Asembia 2017 than in any other year in memory.

The interest is driven by an interest in moving towards an HMO (Kaiser) model and perceived profit generation. Health systems, however, should use extreme caution when considering their next steps in specialty pharmacy.

The resources required and mandatory risks associated with entering the specialty pharmacy space are high. As Adam Fein, president of Pembroke Consulting, Inc., discussed during his presentation, “Specialty Pharmaceuticals and Pharmacy: Today, Tomorrow and Beyond,” there is a battle being waged over the patient journey, especially as it relates to data access, which may be driving systems to enter the specialty pharmacy space as well. But distribution network issues, DIR fees, and loss of focus from the core business for a poorly compensated piece of the puzzle are the top reasons health systems should proceed in their specialty pharmacy integration plans with extreme caution.

Partnering with a stable specialty pharmacy committed to improving patient outcomes through programs proven to improve adherence and reduce the overall healthcare might be the most prudent path forward.

2. To make the most of value-based contracting, keep it simple 

To date, value-based contracts among pharmaceutical manufacturers and payers have not achieved the adoption and success levels necessary to drive significant systemic change. This is because many of these agreements cover only one drug, and/or rely on volumetric math as the arbiter of contractual conditions and payment. That appears to be changing.

Contracts that base reimbursement on the broader notion of improved patient outcomes, in addition to drug efficacy, are compelling and gaining traction. Manufacturers stand to benefit from pharmacy and MTM partners with proven capabilities in improving adherence and patient engagement. These programs can result in positive health outcomes, such as sustained virologic response, thereby realizing the full financial potential of their specialty therapies.

Some manufacturers have indicated willingness to advance and improve value-based contracts. In a November 2016 column for Forbes, 

, “We believe in the efficacy of our products, and by collaborating with payers on solutions for reimbursement, we hope to help start a shift toward value pricing in the healthcare system.”

According to Deloitte in a value-based contracts presentation at Asembia 2017, the key pressures driving the transition from volume to value include reimbursement shifting to outcomes, the consolidation of buyers, increased competition thanks in part to generics and biosimilars, and more highly engaged patients due to increasing out-of-pocket costs and access to information.

According to the presentation, “patient adherence to therapy” is an “uncontrollable factor” among the challenges in executing new value-based agreements. We disagree. We have found that medication management and patient support programs like ours are proven to improve adherence among chronically ill patients.

Related: Ten ways to boost medication adherence

Value-based contracts are relatively young tools and will undergo continuous change for the foreseeable future. Start simple and select your outcomes measurement data carefully. For example, A1c count may only be measured in 30% of the diabetic population.

The value-based contract gold standard will likely be significantly different from the clinical gold standard due to data limitations. In the end, value-based contracting is about data and using it to generate better clinical outcomes. Organizations that effectively ameliorate the shared pain points between manufacturers and payers will be winners.

The conference raised important points about value-based contracts and the specialty pharmacy space.

Opinion: Top 2 takeaways from Asembia Specialty Pharmacy Summit

	Despite news breaking on the first steps toward the repeal of the Affordable Care Act (ACA) and President-elect Trump’s comments on pharmaceutical manufacturers and pricing, not all was doom and gloom at the 

J.P. Morgan 35th Annual Healthcare Conference 2017

, January 9-12, in San Francisco. Here are a few to-dos and reasons for optimism for managed care executives that we learned during our time at one of the most significant healthcare business event of the year.

	However slowly in some spaces, nearly every session I attended featured a focus on value-based care. No longer a dull hum in the background, I sensed a vibrancy in discussions and initiatives designed to accelerate the drive to value-based care at J.P. Morgan 2017 that had not existing in previous years.

	In its simplest terms, we define value as outcomes divided by cost. Winning organizations improve outcomes while reducing costs at the same time. And they should be prepared to prove it.

	Express Scripts launched its Diabetes Care Value Program last year, the fifth in a series including hepatitis, inflammatory conditions, cholesterol and oncology care. According the PBM, “The Diabetes Care Value Program is projected to boost the average medication adherence rate for enrolled patients by 5%, reducing downstream health complications and healthcare costs. Currently, $4,690 per diabetes patient is spent each year on medical expenses that could have been avoided if patients had taken their diabetes medications as prescribed.”

	The efficacy of the program in real-world conditions will take time to measure, but it is a step in the right direction. We know well the importance of medication adherence to the value equation. In October, preliminary results of a Curant Health 

 with Johns Hopkins indicated enhanced medication therapy management improves adherence by 30% over the standard of care for patients with inflammatory bowel disease (IBD). Multiple colleagues with whom we met reacted with near amazement when we shared this data with them.

	We heard many more questions than answers within the healthcare industry at J.P. Morgan 2017. There were fewer big announcements at the show compared to any year in recent memory. The M&A guys were on the hunt for deals and not finding many at J.P. Morgan 2017. One notable exception was WellCare’s acquisition of Universal American. That aside, an uncertain tack on legislation and the pending status of the Aetna-Humana and Anthem-Cigna deals has most healthcare executives playing the wait and see game. This might be prudent with respect to big moves, but executives should not be lulled into complacence when there are immediately actionable, value-based to-dos.

. If you can find partners that improve value, your cost profile, HEDIS responsiveness, reduces readmission rates or improve adherence especially to specialty medications, wait and see does not apply. Find them. Engage them. Insist on value-based success in real-world situations, not just clinical trials. Real-world efficacy is going to become the gold standard in care, especially for pharmaceutical manufacturers.

Start with the patient when aligning incentives

. In likely the most entertaining session at J.P. Morgan 2017, James Carville and Karl Rove generally agreed that whatever becomes of the ACA, whatever is next needs to start with the patient when aligning incentives. PBMs, pharma manufacturers and service providers sure do like to talk about patient centricity and we heard plenty of that kind of talk last week. I would encourage you to ask anyone that mentions it about what exactly it means to them. How do they define patient centricity? How long have they been “committed” to it? What metrics do they use to support their claims? Exactly how do they put the patient first in order to align the balance of the ecosystem including and especially prescribers, payers and pharma manufacturers?

	The elephant in the room-the looming battle over DIR fees

	The pharmacy community is grappling with the impact direct and indirect remuneration (DIR) fees are having on their businesses. Originally designed by CMS as a way to track manufacturer rebates applied to Part D medications and the overall impact on the Part D program, DIR fees have the potential to put some a large number of pharmacies out of business, even though the measurement metrics might be beyond their control. Too many pharmacies are currently being “graded” on things they simply cannot control, like disease state measurements on drugs they aren’t providing to the patient. 

	Diplomat CEO Phil Hagerman said, “Diplomat and the entire specialty pharmacy industry do not agree with how the practice has evolved and the broad expansion that has taken place in 2016. We don't feel that the way some of the PBMs are calculating these fees meet the goals, outcomes or spirit of CMS’ intentions.”

	There are those who said at JP Morgan that DIR fees could be the demise of the independent specialty pharmacy moving toward health plans and /or PBM-owned specialty pharmacies. There is sure to be a great deal of discussion between PBMs, specialty pharmacy organizations and policy makers regarding DIR fees for the foreseeable future.

Marc O’Connor is chief operating officer for 

. Curant Health provides medication management, patient support and pharmacy fulfillment services for patients nationwide. 

Is the drive to value-based care really accelerating? What can be done amidst all of the uncertainty? Expert shares insights from the J.P. Morgan 35th Annual Healthcare Conference.

Value-based care takes over J.P. Morgan Healthcare Conference 2017

O'ConnorEvery year, the business of healthcare gathers en masse at the annual J.P. Morgan Healthcare Conference. This year’s conference will be held January 9 to January 12 in San Francisco. What will we learn? What will we hear? What will be missing?

	Because of the nature of the forum, companies are a bit light in presenting substance when it comes to patient care. This conference is about the healthcare business, not necessarily the patient care business. The conference is an opportunity to highlight value to the entire continuum by putting the focus on the patient from which positive outcomes in personal health, population health and economic health emanate.

Here are three things to watch at this year’s conference: 

 At-risk contracts 2.0: Will real value make an appearance?

	Every year we hear about new therapies that have completed phase three trials and are about to be commercially launched, along with the manufacturers speaking to their drugs’ pricing. The CEOs of pharma manufacturers will, of course, be messaging directly to analysts.

	From the payers and PBMs, we will hear pushback on the cost of specialty medications and that manufacturers may be cut out of payers’ formularies if pricing, value and efficacy are not proven for new specialty therapies.

	The movement toward value-based pharma arrived in late 2015 with Amgen’s pay for performance agreement with Harvard Pilgrim for the PCSK9 inhibitor Repatha. Yet the first generation of at-risk contracts between manufacturers and payers appeared to be little more than value-based window dressing.

, “As the only drug on formulary within these agreements, manufacturers are still banking on a simple volumetric percentage of efficacy to meet payment and profit goals. Real improvements in outcomes and value-based contracts require more lifestyle factor measurement and corresponding agreement on their evaluation.”

	Curant Health President and CEO, Patrick Dunham, along with Javier Mendez, VP Pharmacy Operations for Virginia Premier Health Plan, discussed four key components for successful outcomes-based contracts at the Asembia 2016 conference. They include engagement of pharmacy partners with medication management protocols shown to improve adherence and outcomes, agreed upon up-front data sharing and outcomes measurement, and neutral arbiters of that data in order to achieve their value-based potential.

	What can we learn about the latest at-risk contracts between manufacturers and payers at J.P. Morgan 2017? Is either party improving value, where value is defined as outcomes divided by cost? We are eager to find out.

2. Cancer’s trend to a chronic condition

	Increasing survival rates among cancer patients are a leading indication that the future of cancer treatment may start to mirror the treatment of chronic conditions. Such a shift will have massive effects on payers and will accelerate difficult conversations and decisions about the value of extending life. Oncology patients on new immunotherapies are demonstrating three to five-year survival rates and 30% remissions.

	There exists a massive difference for the continuum between paying $120,000 or more for one year of therapy with six- to 12-month survival rates for cancer patients compared with the same $120,000 per year for an indefinite number of years as treatment efficacy grows.

	What’s needed to prepare for cancer’s trend to a chronic condition? Managed care executives would be wise to start with development of a chronic care management team (inclusive of clinical pharmacists) responsible for providing patient support and assistance, patient education and counseling and improved sharing of information to improve adherence to medication protocols.

	Who will have access to which therapies and who is going to pay for it? We will be listening closely for any insights payers share on the topic.

	What the future holds for the Affordable Care Act is anyone’s guess. While there have been both positive outcomes and continuing opportunities for improvement, we can be certain that whatever national healthcare policy changes percolate out of Washington, the shift from fee-for-service to value-based care will continue and is likely accelerate.

	What should patients, payers, manufacturers and prescribers be prepared to demonstrate as proof of their contribution to value-based care? Is the day coming when manufacturers only get paid for manufacturing costs of breakthrough therapies until their real world efficacy is proven?

	When more than $300 billion in U.S. healthcare spending is wasted due to medication non-adherence, something’s got to give. We are eager to hear what healthcare leaders have to say about their value-proposition to the continuum of healthcare stakeholders.

Marc O’Connor is chief operating officer for

. Curant Health treats patients nationwide through its medication management protocols.

This year’s J.P. Morgan Healthcare Conference will address some of the biggest managed care trends, including next-gen at-risk contracts and access to therapy as cancer trends towards a chronic condition.

Three issues to watch at the J.P. Morgan Healthcare Conference 2017

	In November CapGemini and HealthPrize Technologies updated the forward to a reissued 2012 

 on pharmaceutical revenue loss due to medication nonadherence that states, “Globally, according to CMR International, pharma revenues hit $1.1 trillion in 2015, which is a 13% increase from the $956 billion figure used for our 2012 report. Accordingly, this means that estimated revenue losses globally due to non-adherence are now $637 billion, a steep increase in comparison to our previous figure of $564 billion.”

	Lead authors Katrina Firlik, MD, and Thomas Forissier go on to state, "Interventions to improve medication adherence should be top priority for the pharmaceutical industry and will prove beneficial to all stakeholders. Increasing adherence rates by only 10 percentage points would translate into a $41 billion pharmaceutical revenue opportunity in the U.S. ($124 billion globally), accompanied by improved health outcomes and decreased healthcare spending."

	Alignment among every member of the healthcare continuum is more important than ever in order to ensure better use of limited resources. The first generation of value-based pharmaceutical contracts between manufacturers and payers were meaningful intent but were not designed to produce real value-based change. As I 

 in June, “As the only drug on formulary within these agreements, manufacturers are still banking on a simple volumetric percentage of efficacy to meet payment and profit goals. Real improvements in outcomes and value-based contracts require more lifestyle factor measurement and corresponding agreement on their evaluation.”  

 “Although a number of pharmaceutical companies have established adherence teams, they are often underfunded, slow moving, and prone to recommending traditional tactics such as reminder programs, cost reductions and isolated educational campaigns, which are insufficient and often do not address the root of the problem.”

	Placing the patient at the center of every conversation and looking beyond the disease or the symptoms to uncover other barriers to medication adherence and improved health outcomes are the cornerstones on which we build programs that improve adherence, outcomes and lives. What other medications are involved? What are their side-effect implications and how can clinical pharmacists mitigate them? What elements of a patient’s lifestyle and level of education are likely to present impediments to adherence and how to we remove barriers like cost, access to care or need for further education? This is difficult and labor intensive, but we do so every day because we know it is an absolute requirement to improve outcomes, lives and reduce the overall healthcare spend for the most costly to treat, chronically ill patients.

	Demonstration of efficacy in real-world conditions, along with provision of supplemental patient support services will be high level priorities for manufacturers in the very near future. Considering aforementioned $41 billion revenue opportunity by increasing adherence rates by 10% and what we hear from payers, manufacturers and chronically ill patients every day, we know with great certainty that high levels of adherence are the demand for additional patient support services among manufacturers is high.

	This presents a golden opportunity for managed care executives to leverage the manufacturers’ needs into risk-based contracts that improve stakeholder alignment, patient adherence, acquisition of real-world data on efficacy, value-derivation and improved outcomes across the board.

		Include adherence measures in joint wellness programs. There is a massive opportunity to develop joint wellness programs between managed care organizations and pharmaceutical manufacturers with significant focus on medication adherence for patients with chronic conditions as a critical component. Reduction of the chronic condition medication nonadherence gap by one-tenth would lead to better clinical outcomes, a decline in healthcare spending and increased patient benefits while netting manufacturers billions in additional revenue.

		Ensure inclusion and engagement of resources, including clinical pharmacists and patient support services teams, proven to improve adherence and outcomes in at-risk contracts. These resources provide insights into the patient living room that are inaccessible to payers whose visibility ends at the payment of the prescription.

		Assign a neutral manager to oversee this process. There is too much at stake for both payers and manufacturers to fairly assign and measure outcomes metrics for value-based at-risk contracts, let alone adjudicate them amongst themselves. Clinical pharmacists are the nearest neutral party with the pharmacological expertise to evaluate clinical outcomes-assuming the drugs in question are not part of a limited or exclusive distribution agreement or are the only drug on formulary.

	We see no reason to believe the shift from fee-for-service to value-based care will slow down in the short to near term, and it will likely accelerate. Managed care executives have a phenomenal opportunity before them to turn a previously adversarial relationship into one of mutual benefit and smarter allocation of scarce resources by implementing at-risk contracts with pharmaceutical manufacturers that support and reward high levels of detailed, data-driven adherence, efficacy and outcomes improvement.

O’Connor is chief operating officer for

Pharmaceutical manufacturer relationships and next-gen value based contracts are primed to accelerate value-derivation from your drug spend.

What billions in lost pharma revenue means for managed care

	Currently FDA provides an array of expedited programs and designations for drugs and biologics âintended to facilitate and expedite development and review of new drugs to address unmet medical need in the treatment of a serious or life threatening condition: fast-track designation, breakthrough therapy designation, accelerated approval, and priority review designation. While admirable in many regards, the program has generated a situation where exorbitant prices are being paid for therapies well in excess of $100,000 per year when definitive proof of their clinical effectiveness and associated value is questionable at best.           

	The Institute for Clinical and Economic Review (ICER) evaluates evidence on the value of medical tests, treatments and delivery system innovations. Most recently, ICER 

 its analysis of new drugs for multiple myeloma showed they were severely overpriced compared to their cost-effectiveness.

Three ways to maximize value in cancer treatment.

	While it is significantly more difficult to ensure adherence to oral therapies versus infused therapies, efficacy and value derivation to both are critical to ensuring the long term health of the entire continuum regardless of delivery method.

	For a small set of new cancer drugs, accelerated approval of breakthrough therapies could mean a $600 million bill for payers and patients for therapies that provide only hope, not an established expectation for extension of life, remission or cure. With access already highly limited to proven curative agents for hepatitis C, and a frightening dearth of new antibiotics in the pipeline, how will we pay for the next breakthrough cure when the healthcare system is already taxed with high-dollar therapies that are still in the process of proving their efficacy?

	Beyond the âsecond-levelâ clinical trials that follow the single-arm trials in an accelerated development process as required by FDA, the true value associated with specialty therapies only becomes apparent in real-world conditions. Improvements to nascent value-based or âat-riskâ contracts between payers and manufacturers can be more fairly developed from both sides of the table given early access to real-world results and medication management protocols that provide meaningful access and adherence support.

	One healthcare industry expert recently posited the idea that the 21st Century Cures Act should include a clause that limits the price of new drugs brought to market via FDA expedited path to production costs only until the companies offer definitive proof of efficacy. This is value-based sensibility that the continuum should embrace and Congress should include within the 21st Century Cures Act not only because of the lack of certainty around the economics and outcomes data involved, but more importantly because it aligns all parties.

	Patients and providers would benefit from improved access to novel therapies that could be their only hope for extending life.

	Payers would benefit from not solely bearing the risk of inefficacy.

	Manufacturers would benefit from efficacy measurements through real-world results, effective elimination of barriers to adherence and ways to improve the therapies. Oral oncology agents make up 50% of oncology drugs currently in use and about 25% of drugs in the pipeline. Additionally, there are 3,400 ongoing immunotherapy trials in the United States alone. The sooner manufacturers learn which drugs are most effective in real-world situations, the more they can concentrate on bringing effective therapies to market, recoup their investment and rightfully profit from them.

Four critical components for successful, value-based pharma contracts.

	The most common barrier to adherence (or compliance) to any high-cost oral therapy, including the oral oncolytics on the market and oral immunotherapeutics in the pipeline, is access. Enhanced medication therapy management should be mandatory for full-value derivation from many specialty therapies, especially for those with limited real-world outcomes data. For example, Curant Healthâs medication therapy management protocols, part of its C The Cure Program for hepatitis C, generated 

 for patients coinfected with hepatitis C and HIV. These are only the second real-world data set known for this patient profile and treatment regimens.

Five ways to improve medication adherence.

	In an era when adherence to specialty pharmaceuticals is disturbingly low, outcomes-based derivation of value from them in real-world conditions is exceedingly difficult. Multiple sources place the wasted healthcare expenditure due to medication nonadherence between $105 billion and $300 billion every year. As health insurers push to tie drug prices to outcomes through value-based or âat-riskâ contracts, paying full price for immensely expensive approved therapies that have withstood the relatively paltry rigors of a one-armed clinical trial should be avoided. Instead, manufacturers, payers, patients and clinical pharmacists should focus on substantiating that new therapies work in real world conditions.

Marc OâConnor is chief operating officer for

In an era when adherence to specialty pharmaceuticals is disturbingly low, value-based pricing needs real-world results, not single-arm accelerated trials.