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Copyright © 2007 Windhover. All rights reserved.
Health Care ReformAnd The Biopharma Sector
Michael McCaughan
Editor, The RPM Report
Founding Member, Prevision Policy
April 7, 2010
Copyright © 2007 Windhover. All rights reserved.
Or…
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How I Learned to Stop Worrying….
…And Love Health Care Reform
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Key Topics
Health Care Reform and Pharma: A Brief
History
Building on Medicare Part D
The PhRMA Deal Pays Off
Best Possible Bill
Implications for Industry…And Advertising
Thinking Big…and Thinking Small
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Health Care and PhRMA: 1993-94
PhRMA
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Health Care and Pharma: 2009
PhRMA
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For Pharma, Health Care Reform
Already Happened….
Dec. 8, 2003
The Medicare Modernization Act
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…And It Paid Off
US Rx Market, 2005 ($ bil.)
55.1,
28%
48.8
95.8,
Private Insurance
Cash
Public Insurance
US Rx Market, 2008($ bil.)
87,
37%98.5
48.5
Private Insurance
Cash
Public Insurance
Source: CMS
All Growth is Public Market!
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Key Trends From MMA
Federal Government Becomes Largest Payor
Market Remains Fragmented, Heavy Private Sector Influence
Nothing Is “Replaced” (Still Part A and B)
Self-Consciously a Model for Health Care Reform
The Health Insurance Exchange
Expanded Coverage Equals Expanded Volume…And Greater
Generic Penetration
Donut Hole Pinches
Leaves High Priced “Biotech” Products Untouched
Catastrophic Coverage Generous
Part B Payment Still Incents Use
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Adding Canada to US
2010 2013 2016 2019
Medicaid & CHIP (watch MCO plans)
40 46 49 50
Employer 150 170 169 159
Nongroup 27 23 23 24
Exchanges -- 9 20 30a
Uninsured 50 26 18 18b
CBO estimates of where the non-elderly will get insurance under House Affordable Health Care Bill
a: Six million in public plan; b: Six million of uninsured are
unauthorized immigrants
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Health Care Reform Impact:Quantitative, Not Qualitative
Expand Medicaid Coverage
Create New (Subsidized) Health Insurance Exchange
Fill In The “Donut Hole”
Improve Private Insurance
And Pharma Would Help Pay For It
Higher Medicaid Rebates
50% Discount in Donut Hole
Market Share Fee
“Scoreable Savings” of $80 Billion (Ends Up at $85 Billion)
What’s NOT In The Bill
Dual Eligible Rebates in Part D
A Policy “No Brainer”
Inpatient 340B Rebates
Reimportation
Medicare Price Negotiation
Foreign Income Tax
What Brought PhRMA to the Table
DTC/Marketing Tax
Probably a Bigger Deal To This Audience Than to PhRMA
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Obama Campaign Promises
Launch Prices Still in Pharma’s Control
…And One More Thing
Follow-On Biologics:
The IP Law For The 21st Century
12+ Years of Data Exclusivity for FOBs
Innovator-Friendly Process
FOBs Pathway is
New Business Opportunity
Across the Board
Innovator Friendly Deal Impossible Except
In Context of Reform…
…AND Savings Count Toward
PhRMA Deal
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A Free Ride on the Back of Reform
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The Legislative Pathway
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Tom Toles, The Washington Post
For PhRMA,
A Complete Tactical Victory
Final Bill is BETTER Than January 15
Version
“Reconciliation” is $5 Billion Less in
Fees Than Expected
Last Second Changes Improve Part D
Coverage, Reduce Market Share Tax
How Complete?
PhRMA Press Release Highlights Concerns
With IPAB New, 15 Member Panel
Significant Power to RECOMMEND Changes to Medicare
Spending…
…The COULD Take Effect Without Congressional Action…
…Starting in 2015
In Other Words, Not Much To Complain
About…
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Less Satisfied Stakeholders
Safety Net Hospitals
“SNHPA is extremely disappointed that this common sense provision [to expand Rx
rebates] was removed at the last minute from the health care reform legislation
despite being included in the bill that passed the U.S. Senate in December. There
simply is no sound policy rationale for allowing hospitals access to 340B discounted
drugs in the outpatient setting and not the inpatient setting. 340B hospitals are forced
to pay significantly more for a drug administered to a patient admitted to the hospital
than they do for the same drug prescribed on an outpatient basis.”
Generic Pharmaceutical Association
“The bill provides a biogeneric pathway in name only, giving false hope to patients
who desperately need access to life-saving biogeneric medicines. Simply put, the bill
fails to infuse competition and choice into the health-care system due to the excessive
and unprecedented market exclusivity protections for the brand industry. Until the
brand evergreen loophole is closed and the indefinite brand biologic monopolies are
addressed, our health-care system will not see true savings from biogenerics for
decades. This is a very unfortunate missed opportunity that poses significant
exposure to the sustainability of private and public pharmaceutical coverage
programs.”
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But PhRMA ≠ Pharma
Pain Is Front-Loaded, Easy To Quantify Medicaid Rebate Increase Effective Immediately
Market Share Tax Starts in 2011
Payoff Feels Less Certain Hard to Quantify Donut-Hole Relief, Improved Insurance Quality
Insurance Expansion Starts in 2014
Biologics IP Is Intangible (Priceless?) Asset
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Chantix Gains Coverage
Ambien CR Rebate Increase
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That Timing Makes Sense
Patent Cliff Looming: The Issue
for Big Pharma Today
A New World In 2014 Part D “Filled In”
Regulatory Model Clearer
FOB Implementation Clearer
New Insurance Market/Regs Kick In
The US Becomes The World’s Largest
Emerging Market For Pharmaceuticals
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Market Share Logic
More to Come?
Market Share Fee Suggests Market Share Approach
Broader Product Lines Encouraged
Diversity Within Rx Helps
Tax Threat Remains…
…As Does Hope of Repatriation
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Pick Your Payor—
Or Pick Them All
Primary Care Oral Products
Mature Brands, Generics
Part D
Injectable Therapies/Chemo
High Priced Specialty, FOBs
Part B
Hospital Products
Capitated Payment Model
“Part A”
Contraceptives/Smoking Cessation
Cash to Coverage
OTCs
Cash Markets Are
Shrinking—
So Cash Businesses
May Command a
Premium
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“Biotech” Is Preferred
Copay Reforms Address Key
Issue
FOBS Eliminates IP
Uncertainty
Competitive Dynamics Less
Firm on Pricing
Medicaid Rebate Pinches More
Up Front
Pharma Already
Going There
“Specialty” Drugs
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Orphans Are Even Better
Regulatory Advantages
Advocacy Within FDA
Reimbursement Advantages
Even In UK and Canada
IP Advantages
Especially Without FOBs
Protected Status in Changing Climate
Exempt From Excise Tax
Exempt From “Line-Extension” Rebate
Special Consideration in CER
Where Does DTC Fit In?
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Public Health Awareness
Public Health Education
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A Better Political Climate
“Advertising certainly can be a very effective tool. I’d
like to see advertisements contain more fundamental
public health information, even if they’re advertising a
product. It is an opportunity to potentially provide
some basic information about the underlying medical
conditions to help consumers know more and make
better decisions.”
--Margaret Hamburg
Appropriations Subcommittee Hearing
2008
“The purpose of this hearing is to examine
the potentially misleading and deceptive
tactics used in DTC ads for prescription
pharmaceutical products.”
--Bart Stupak
Oversight Subcommittee Hearing
2010
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Prevention Encouraged
Basic Insurance
Encourages Preventative
Care Significant Screening for BP,
Cholesterol, Etc.
Vaccines “Free” (No Copay)
Longer Term Key To
“Bending the Curve” Who Will Educate Consumers to
Live Healthy, and How?
The McDonalds Of Health Care
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Big Mac Brand Lipitor
Cheeseburger Generic Atorvastatin
Coca Cola Licensee Crestor?
Generic Plavix?
Easy,
Inexpensive,
Fun Place to EatHappier,
Healthier,
Longer Life
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The Personal Trainer Model
The Patient Needs More Than a Safe and
Effective Molecule
Access to Prescriber
Proper Diagnosis
Appropriate Dosing
Access to Pharmacy
Resources to Pay
Information About Risks and Benefits
Instructions on Appropriate Use
Coordination with Other Therapies
Protection from Errors/Mix-Ups
Etc. Etc. Etc.
Is the Value of Medicine in the Molecule?
Or in the Patient Support?
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Questions?
202-747-9477