Industry and Health-System Pharmacy: Bringing Solutions to

Healthcare

Presented by:Fred J. Pane R.Ph., BS, FASHP, FABC

Sr. Director, National Accounts and Healthcare Systems EngagementApril 9, 2014

Compliance

• The presentation and comments made today “Do not reflect the mission, feelings, or business model of The Medicines Company”.

3

Today’s Presentation

• As healthcare is evolving to consider “value” along with better patient outcomes, the pharmaceutical industry is considering how to better serve health-systems and deliver solutions. This session will showcase how health-systems can leverage industry partners to meet their individual system needs.

Some initial thoughts

• Everyone in Pharma, Device, IS, etc. is trying to figure out how to work with you and your health system.

• No one entity in health care can fix/address all the problems and issues that have been identified for improvement.

• We aren’t aligned with common goals and there aren’t discussions with everyone at the table.

• We don’t speak the same language

Some initial thoughts

• How do you want people to do business with you?– Distribution– Contracting (portfolio, value/disease based, drug line

item, acute/non-acute/retail/SP, etc.)– Value: what is it (clinical, financial, patient satisfaction,

etc.)– Leadership/Sales/Clinical Team– Technology– Consulting?

• Can trust be built?

Contracting: Acute/intensive medicines portfolio

Acute Cardiovascular Care

Surgery & Perioperative Care

Infectious DiseaseCare

Market Angiomax/Angiox Recothrom Cleviprex surgery Argatroban RTU

Minocin IVClindamycin IVAzithromycin IV

NDA Cangrelor Cleviprex AHF

IonsysFibrocaps

Oritavancin ABSSSIRPX602

R&DApoA-I Milano ALN-PCSK9sc

ABP-700 Carbavance MDR G–Oritavancin new indicnsOral/IV MDR G –Profile 3 MDR G–Ophthalmic

Another thought and confusion

• We need one Universal HEOR Model, that is accepted by Pharma, Bio, Device, Hospitals and Health-systems, health plans, CMS, FDA, AHRQ, VA, etc. Is it CER?

• Do not assume that hospitals, health systems, ACOs are using the same core measure/VBP/disease models with all payers!

• Payers are doing their own CER!• Go to payers and hospitals/health systems!• Can CER address customers Value Models?

And……is Industry willing to change and recognize the Health System Model….we are all discussing it!

• “Pharmaceutical companies will need to reconsider their customers going forward, as healthcare delivery models change to IDNs and ACOs”.

• “Pharmaceutical companies are still working on a share of voice model, where the physician is the only customer. No matter what, the potential of the physician is not always going to make a difference with regard to a sale”.

• “Pharma needs to move out of the comfort zone and to think and behave differently then they do today and move from a transactional model to a partnership model”.

Reference: PharmaVoice, January 2013, pages 16-20.

Fred J. Pane 7/13 Presentation

How does industry change and bring Value/Partner?

•Seeing the world through your CUSTOMERS and Competitors eyes is the best way to understand what sets you apart!

Harvard Business School, January 23, 2013

Fred J. Pane

My Poster Children!

•“I am tired of every drug company and device company coming into our hospital and telling us how they are going to lower our cost and decrease length of stay (LOS) and I can’t measure it in my hospital operating report!”

Quote from CFO at NJ University Medical Center

•“We sell care by the Package, not by the piece”.

George Halvorson, Kaiser Permanente CEO, USA Today, 10/24/12

Accountable Care Organizations (ACOs) Core Measures

Hospital Acquired Conditions (HACs)

Hospital Acquired Infections (HAIs)

Never Events

Pay for Performance (P4P)

Value Based Purchasing

Comparative Effectiveness (CE/CER)

Average Sale Price (ASP)Revenue Audit Contractors (RACs)

OIG AuditsHIT/EHRs

Value Based Insurance

Brown/White Bagging

Agency for Healthcare Research and Quality (AHRQ)

Risk Contracts/Value Based/Outcomes driven

Meaningful Use

Healthcare is Complex, with it’s own langauge

Bundled Payments

Balanced Scorecard

HCAHPS (Hospital Consumer Assessment of Healthcare Providers and Systems)

Medical Home Model

Private Payers vs. CMS

Patient Protection and Affordable Care Act

Gain Sharing

Benchmarking Patient Satisfaction

Fred J. Pane 1/11, revised 7/13

CMS Demonstration Projects

Antimicrobial Stewardship

Patient Centered Care

Gate Keeper Model

Consultants

Population Health Management

Hospital Engagement Networks

Hospital at Home Clinical Integrated Organization (CIO)

Clinically Integrated Network (CIN) MTMTriple AIM

Industry, like Health Systems, is focused on the common issues!

• The IHI Triple Aim is a framework developed by the Institute for Healthcare Improvement that describes an approach to optimizing health system performance. It is IHI’s belief that new designs must be developed to simultaneously pursue three dimensions, which we call the “Triple Aim”:– Improving the patient experience of care (including quality and satisfaction);– Improving the health of populations; and– Reducing the per capita cost of health care.

Top 5 CEO Issues

• Engaging physicians in cost and quality improvements

• Redesigning service portfolios for population health

• Establishing sustainable acute care cost structures

• Patient engagement strategies• Controlling avoidable utilization

Reference: The Advisory Board Company, March 2015; N=150 CEOs/Execs

What Industry Could Do to help our Health System

– Give us the benchmarks of the ‘best of breed’– Help us understand our process (process mapping)– Help us understand improve our process – “Consider different models / structures of partnering”

Jack Cox, MD MMM, Senior VP & Chief Quality OfficerHoag Memorial Hospital, 2010

Fred J. Pane

Examples of Industry Helping Health System Pharmacy

•Merck partnering with Geisinger Health System, an integrated delivery network headquartered in Danville, PA

•Indiana University Health-system established risk based contract with pharmaceutical supplier

•Fairview Health-system Pharmacy, “ Engaging Our Customers, Annual Pharma Symposium”; Discuss their ACO, Insurance, Risk Contracting, Disease States, etc.

Fred J. Pane 7/13 Presentations

Health System Pharmacy and Industry

• “I would like to see Disease State (Value Based) specific contracting for products/solutions, where clinical and financial metrics are established and measured.”– University Hospital Health System VP Pharmacy

• “We agree that we can’t fix every area of need with all the changes in Healthcare ourselves. We have two pharma companies where the local reps are paid in part, based on core/quality metrics we established with them.”– University Hospital Health System DOP

ACO Coordinated Care means Coordinated Review of a Drug’s Value: Comparative Effectiveness

•“To get to a products Clinical Value, the important thing is that all voices are heard and that the decision making rules are clear in advance and they’re based on sound principles”•Justine Carr, CMO, Steward Health Care System, The Pink Sheet Daily, December 10, 2012.

•“As Value Based Reimbursement and ACO models drive us into an era focused on cost-containment and care-management strategies, the P and T Committee must evolve-in fact, reinvent itself”•David Shulkin, MD, President, Morristown Medical Center, Professor of Medicine, Mount Sinai School of Medicines, NYC, P and T, December 4, 2012

A Health System and Complexity of National P&T and Formulary

Corporate

Centralized

Decision Making

P&T

REGION

HH

HH

P PP

IC

ASC

HHH

H H H

REGION

HH

HH

P PP

IC

ASC

HHH

H H H

REGION

HH

HH

P PP

IC

ASC

HHH

H H H

REGION

HH

HH

P PP

IC

ASC

HHH

H H H

REGION

HH

HH

P PP

IC

ASC

HHH

H H H

REGION

HH

HH

P PP

IC

ASC

HHH

H H H

REGION

HH

HH

P PP

IC

ASC

HHH

H H H

REGION

HH

HH

P PP

IC

ASC

HHH

H H H

REGION

HH

HH

P PP

IC

ASC

HHH

H H H

REGION

HH

HH

P PP

IC

ASC

HHH

H H H

86 Hospitals | Regions made of Multiple Hospitals, Physician Groups & Alternate Care Groups

Collaboration | Physicians & Alternate Sites deliver care and determine treatment

Centralized | Liaison from each region participates on Decision committees for voting related to P&T, Protocol, etc.

P&T Decisions | Nine (9) REGIONS covering 20 status plus one CORPORATE vote

P&T Decisions are centralized | 9 Regions & 1 Corporate Vote

20

New P and T and Formulary Review Process

• Christiana Care Health System: Value Institute– The Center for Clinical Outcomes Research– The Center for Quality and Safety– The Center for Health Care Delivery Science– The Center for Operational Excellence

• University of Pennsylvania– Coordinating Committee approval of unique

opportunities that bring Value to their Health System, improving Quality/Outcomes and Financial Performance, through the Wharton School of Business

The future of P and T/Value Analysis

• “Devices in Drug Land: Med-tech Firms Try to Break into Pharma Territory”– The Gray Sheet, April 2, 2007

• “What emerging drug therapies could replace our device business?”– (Book) Peripheral Vision: Detecting the Weak Signals that Make or

Break Your Company, 2006

• “Measuring Medication ROI: More than the cost of the drug”– HFMA, Managing the Margin, May 2008

• “Hospital tumor board”

22

Defining Value Patient Perspectives on Quality:(Are the Healthcare Reform Changes going to address Patient

Concerns?)

HFMA Study

Solutions: What We Can Do Together

• Assure quality healthcare for the patients we have in common

• Assure care across transitions and accept our roles for being accountable

• Help our team make better decisions• Know our teammates and their roles• Work together on acceptable risk/cost strategies• Embrace technology for care delivery

Reference: Anthony Slonim, MD, EVP and CMO St. Barnabas Health System President and CEO, Renown Health (current)

Solutions

• Interventions that reduce low-profit medical inpatient admissions can be economically rewarding.

• Medicare’s value-based purchasing programs also offer incentives for reducing preventable admissions.

Primer on Avoidable Costs: The Advisory Board Company 2015

Solutions: Industry Develops Drugs

CDC has designated “urgent & serious” threats

IDN Sales Representative of the Future• Role #1: The Relationship Builder

– Build Trust – Package Solutions for the IDNs Top Challenges – Suppliers face a tall trust barrier at many hospitals and IDNs, where the actions

of a few reps have soured executives on closer supplier relations. Well-versed in the challenges health care executives face, the “Relationship Builder” ERM establishes lasting personal relationships with key leaders across the provider enterprise

• Role #2: The Strategy Consultant– Package Solutions for the IDNs Top Challenges– Align and Market Solutions to Multi-Stakeholder Interests – Armed with a good understanding of their IDN customers’ key challenges, ERM

“Strategy Consultants” work with multidisciplinary teams to help address these challenges—broadening their reach across IDN stakeholders, demonstrating real impact, and paving the way for even more strategic conversations going forward.

©2013 The Advisory Board Company : Clinical Innovators Council

IDN Sales Representative of the Future

• Role #3: The Value Engineer– Conduct Proactive Value Analysis– Generate IDN Savings with Portfolio Size– Develop Risk Sharing Arrangements– Inform R and D Initiatives – As “Value Engineer,” the ERM helps to demonstrate ROI of the company’s

product portfolio from a variety of viewpoints. With thorough and transparent analysis, the ERM can help the IDN customer maximize financial gains of using specific products or services, demonstrate long-term cost/quality impact for appropriately-used premium products, and identify new opportunities for the supplier to improve performance on emerging IDN quality and financial indicators

©2013 The Advisory Board Company : Clinical Innovators Council

IDN Sales Representative of the Future

• Role #4: The Alignment Architect– Minimize Shared Waste within Service Relationships– Align Sales Team Incentives with Provider Goals – For the IDNs capable of driving compliance with supplier contracts, the ERM

realigns or eliminates inefficient and counterproductive elements of the sales relationship to achieve shared gains. Such a strategy ultimately positions the supplier as a valued and integrated partner, with the benefit of controlling unnecessary costs for both parties.

©2013 The Advisory Board Company : Clinical Innovators Council

Fred J. Pane

What do we know today? • Changing Patient Care delivery models • Each customer is Unique, changing, and evolving• Partnership or what is correct term• Need for Value/what is Value• Need help meeting clinical and financial goals• Will have financial and clinical outcomes data for all

payers • Want Comparative Effectiveness Studies/CER• May not want industry help: Trust and respect!• WILL NOT WAIT FOR US to Change!7/21/2014

Thank You

• Fred.pane@themedco.com• Cell: 704-564-1409

Risk Sharing/CER Experience

• U.S. RSA experience – 17 arrangements in the U.S. between the years 1997

and 2012. – 10 had coverage with evidence development

component, – 6 had a performance-linked reimbursement component – 1 had a conditional treatment continuation component. – 12 with public payers – 5 with private payers

Reference: ISPOR Issues Panel June 3, 2014 Montreal, Quebec Canada

Risk Sharing and CER

• Risk Sharing For Medical Devices: Has The Time Come? – The hospital landscape in the United States is

undergoing a period of great change brought about by market conditions, the Affordable Care Act, and advances in information technology. Given these changes, is it really so surprising that pilot risk-sharing arrangements are making their way to hospitals?

– (Source: ISPOR Connections, May/June 2014).