Pressure on regulators to reduce healthcare costs could be a response to the estimated $1 trillion in US expenditures from poor care coordination, administrative burdens, and fraud, said Jeff Mortier, partner at Farragut Partners, during the Community Oncology Alliance Payer Exchange Summit.
Pressure on regulators to reduce healthcare costs could be a response to the estimated $1 trillion in US expenditures from poor care coordination, administrative burdens, and fraud, according to Jeff Mortier, partner at Farragut Partners, who spoke at the Community Oncology Alliance (COA) Payer Exchange Summit on October 29-30, 2018, in Tyson’s Corner, Virginia.
“Congress continues to ask us the same questions [about the cost of healthcare], and we continue looking for different answers. Value-based agreements [VBAs] are the current innovative solution” to improving quality and reducing healthcare costs, said Mortier. “Adequate treatment and adherence in chronic conditions can save $213 billion,” he explained.
But there are barriers to operationalizing VBAs, said Mortier, which echoed the thoughts of Bo Gamble, director of strategic practice initiatives at COA, who highlighted regulatory and cultural challenges as a hurdle to VBAs during a session on the first day of the meeting.
Operational challenges, which include anti-kickback laws, drug pricing proposals, administrative burdens, and government pricing “all add layers of complexity to existing structural impediments,” Mortier explained.
Mortier explained that HHS’ focus on lowering list prices and introducing competition within the Medicare Part B space via step therapy are just some of the operational challenges that manufacturers face. He highlighted the contradiction between the government wanting to lower drug list prices and introducing value-based contracts. UnitedHealthcare’s pilot study that was launched in 2009 reported substantial savings (34%) in can- cer costs over the 3-year period of the program, “but the drug cost went up 179%,” said Mortier. “So, we are a little bit at odds with this administra- tion that wants to adopt value-based models, but [also wants] to lower the list price [of drugs].”
There is a need, he said, to fill Congress’ knowledge gap in the space. “Additionally, data and reporting challenges continue to mar provider practices that do not necessarily have the time to dedicate a team for doing this,” Mortier said. “Interoperability and meaningful use, or ‘meaning- less use’ as some like to call it, continue to burden practice economics as they try to engage in VBAs.”
Big Pharma’s Input on VBAs
Following this policy update by Mortier was a surprise all-pharma panel that COA convened to discuss the progress and challenges with VBAs from the drug manufacturer’s outlook. Participants included Erin Darling, executive director of Merck; Prasun Subedi, MD, senior director of patient and health impact at the Center for Health Systems Innovation Leadership at Pfizer; Tamar Thompson, MHS, of government affairs, alliance development, and policy at Bristol-Myers Squibb; and Eric Turowski, director of oncology payer marketing, pricing, and market access at Eli Lilly and Company.
“The meetings helped us understand where there are alignments between us, COA [providers], payers, and employers as well,” said Turowski when asked to describe major learnings from the VBA meeting.
Thompson agreed, adding that the meetings drew attention to patient-centricity and quality measures in a meaningful way. “It was interesting to learn that providers want to be a significant part of this conversation,” said Darling, even though such arrangements have historically been between manufacturers and payers.
Subedi added that as VBAs stand today, stakeholders want specific questions about the value of a particular treatment answered. He believes that access to patients and the opportunity to create data are vital to the process. According to Subedi, the best VBAs are the ones that clearly articulate the relation between the product and its value. “Simplicity is key,” he said.
One learning for Turowski was that providers have interest in getting down to the individual patient-level performance, not just the aggregate comparisons that VBAs today are built to measure.
Although data are vital to this conversation, Subedi said that providers don’t need to have all the answers when they come to the table; rather, they should be patient and gain an understanding of the process, which may not be very fast paced.
Obstacles to the Process
Darling pointed out that current regulations, such as the federal antikickback statutes, are a major roadblock to innovation in the value-based care process, because of associated legal and business risks. “It prevents us from providing value to our stakeholders: patients, providers, and payers,” she said. “We need safe harbors in the space to help us pull through collaborations that will be good for patients, but we cannot [do so] within the current frameworks of the law.”
Thompson pointed to waivers that were introduced for payers and providers to allow accountable care organization (ACO) collaborations and the launch of the Oncology Care Model (OCM). She pointed out how important it is for manufacturers to understand the government’s position on what they can or cannot do, similar to changes that facilitated collaborations in the ACO and OCM environment.
Whereas manufacturers have figured out ways to work on agreements within the existing guidance, “These are very simple agreements, and so we cannot innovate,” Darling told the audience. She urged the providers and payers in the room for assistance to develop a more meaningful process.
Additionally, cultural barriers include that the manufacturerphysician relationship has always existed within the sales or marketing environment, Thompson said. Infusing policy conversations into the space would require a big cultural shift.
The panelists agreed that we have traveled only a short distance of this path and a lot lies ahead, primarily because of the lack of support from infrastructure, technology, and regulatory rules. Darling believes that we require shifts along those dimensions and that with growing capabilities, we will move quicker.
“We have different views of value, but we need to find the center of the Venn diagram, because that’s where the patient sits,” Darling said.
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