US drug pricing is on the verge of change

MoneyPills

Drug pricing is always a topic for discussion regardless of the country where you live.

The USA have long been considered as the most expensive country when it comes to drugs. Today, several initiatives are trying to contain their price and limit the explosion of healthcare expenditures. It is not easy and several political leaders failed in front of the powerful lobby supporting the pharmaceutical industry.

Maybe, instead of price cuts, we should think of more nuanced version of price control like value-based pricing or risk-sharing agreements.

An extremely interesting article explore the future opportunity of risk-sharing agreements in the USA. It is widely used in Europe as well as in other countries but shows a slow uptake in the USA. The conclusion of the article is positive as there is room for improvement. “Most manufacturers and payers expressed interest in RSAs and see potential value in their use. Due to numerous barriers associated with outcomes-based agreements, stakeholders were more optimistic about financial-based RSAs. In the US private sector, however, there remains considerable interest—improved data systems and shifting incentives (via health reform and accountable care organizations) may generate more action.”

However, despite hot debate launched by Hillary Clinton recently about drug pricing, the US Congress is still dominated by Republicans, who is completely supporting the pharmaceutical industry. Drug pricing and healthcare coverage will be one of the hottest debate question of the US Presidential Elections this fall.

Some articles are much less optimistic as they show that the bargaining power of private payers is far from sufficient to be able to negotiate discounts.

Drug pricing has to change in the USA because affordability and healthcare coverage will define the sales potential of the product. If the drug is so expensive that no one can afford it and no insurance will pay for it, it has no future sales opportunity. It is key to find a good balance between rewarding innovation and R&D efforts AND allowing patients to access the medicine and care they need.

 

Additional resources:

Private Sector Risk-Sharing Agreements in the United States: Trends, Barriers, and Prospects – American Journal of Managed Care – September 2015

It’s Time to Rein in Exorbitant Pharmaceutical Prices – HBR – September 2015

Why we can’t stop US drug companies from charging astronomical prices – Quartz – September 2015

Drug prices: Which companies may be the next targets? – CNBC – September 2015

Rational Drug Pricing – Huffpost Business – September 2015

Why Are Drug Costs So High in the United States? – Medscape – November 2014

High Cancer Drug Prices in the United States: Reasons and Proposed Solutions – ASCO – July 2014

Higher US Branded Drug Prices And Spending Compared To Other Countries May Stem Partly From Quick Uptake Of New Drugs – Health Affairs – April 2013

Pricing and Reimbursement in U.S. Pharmaceutical Markets – NBER – August 2010

 

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Alphabet (ex-Google) is the next big thing in Life sciences

A lot is currently written about the initiatives launched by Alphabet (Google) in the life sciences field.

I had the wonderful opportunity to have a look at the report written by the internet analyst, John Blackledge, from Cowen and I must say that he’s very smart at showing the huge potential of the life sciences at the core of Alphabet (Google).

This report is amazing as it allows you to have a better understanding of what’s happening now inside Alphabet (Google). I summarized the key points/quotes from the report below and I added other articles at the end of this blog post. Moreover, I will update it frequently as the news come in. This is a fascinating topic, I really hope Alphabet (Google) would be able to replicate the same success it has built with its search engine.

Key quotes & comments from the report:

  • Expansion into health care and related segments allows Google to leverage its core competencies in Internet communications technology, data structuring and analysis, and fundamental process reinvention.

 

  • Specific areas of focus in healthcare include:
    (1) the sequencing the human genome and the rise of precision medicine: despite the monumental significance of mapping the human genome and the implications for drug discovery, this was but one step in a long journey that continues to this day. Moreover, genes are but one factor in disease, and little is known about what role environment and lifestyle play.
    (2) the digitization of health data is exploding, with a virtually endless list of sources that can offer insight into clinical data, drug studies and more. As more data is digitized, there will be a profound impact on how patient care is administered, how therapies are researched, and how drugs are tested. EHRs (Electronic Health Records) are crucial but implementation is very challenging. Harmonization and data aggregation need to find their way. Wearables are another interesting topic in the digitization of health data. Social media and discussion boards as well as patients website are essential parts of the system that must be closely monitored as more and more patients use those communication channels in order to provide feedback and comments on treatments and daily struggles with healthcare providers.
    (3) the shift to value-based care, where payments are based on the value of care, is driving a change in how services are delivered and how much consumers engage in the process. From a provider perspective, doctors are incentivized to manage patients to the best possible health outcome at the lowest cost. From a patient perspective,
    consumers are being empowered to take a more active role in their own health care.
    These health care trends are being accommodated by technology advances in areas such as social, mobile, analytics and cloud computing, all areas of Google expertise.

 

  • Alphabet invests in health in five different ways:
    (1) Google Life Sciences originated in Google[x], a research lab within Google that was funded by the company’s board of directors in January 2010 to pursue “moonshots”—audacious new projects that have a low probability of succeeding, but could be truly revolutionary if they do. The company views moonshots as critical in driving the true innovation required to affect revolutionary change and avoid the “incrementalism” or evolutionary change that tends to lead to corporate irrelevance over time. The Life Sciences team is responsible for such innovations as glucose monitoring smart contact lenses. With an expanding list of intellectual property, Life Sciences has begun to accelerate its collaborative efforts with third parties. The company is aggressively partnering with leading players in the health care space on a growing number of programs.
    (2) Calico’s mission is to harness advanced technologies to increase understanding of the biology that controls lifespan. Calico was originally conceived by Google Ventures President and General Partner, Bill Maris, who observed that most companies seek to find treatments for disease and associated symptoms, but that none address the root cause of disease and death. He wondered if studying the impact of aging on genetic material could lead to the discovery of drugs that could address many age-related diseases and significantly extend the human life span.
    (3) Google Ventures has provided seed, venture and growth stage funding to a host of companies in diverse fields, but its stated focus is machine learning and life science investing.
    (4) Google Capital was formed to invest in later-stage technology companies with a focus on emerging technology leaders and potential disruptors. Unlike the earlier stage companies in Google’s other investment vehicles, the later stage companies in Google Capital tend to be fairly common household names. Although the stated focus of Google Capital is on technology companies, the collision of technology and health care is blurring the lines of what a traditional “technology” company looks like.
    (5) Google Core: Over time, Google has invested in numerous health-related initiatives within its main corporate division. These have tended to be very closely linked to the company’s core businesses, such as Search. Earlier this year, the company announced that it will add health information that has been fact-checked by physicians directly to search results. The company is also talking to the FDA about using search query data to identify adverse drug reactions.

 

  • Google’s Health-Related Focus Areas: regardless of where they are housed within Google’s corporate structure, most of Google’s health-related endeavors share common characteristics.
    (1) Longevity
    (2) Genetics and Chronic Care
    (3) Diagnostics
    (4) Diabetes/Digital Health
    (5) Medical Devices
    (6) Telehealth/Digital Health
    (7) Wearables/Fitness

 

  • Google’s health endeavors fit with the company’s goals of “making the world’s information useful” and helping millions of people. Indeed, Google believes that many of the same principles, techniques and problem solving capabilities employed by its software developers can be applied to the massive inefficiencies that exist in health care to create transformational solutions and medical breakthroughs that help people live longer, healthier lives. Health care ambitions can be summarized as:
    (1) Analyze: Analytics to inform decision-making and provide business insight
    (2) Attract: Attract health care constituents to platforms and solutions that drive engagement
    (3) Aggregate: Aggregate data from disparate sources onto the Internet or GCP

 

Additional resources:

Alphabet to help researchers predict disease – Financial Times – April 2017

Google Life Sciences Exodus – STAT – March 2016

Verily, Google’s Health Gambit, Is Stacked With Scientists. Now It Needs to Build a Business – ReCode – December 2015

Google hires mental health expert to lead new life sciences unit – Financial Times – September 2015 (Subscription required)

Head of Mental Health Institute Leaving for Google Life Sciences – The New York Times – September 2015

Google Bets on Insurance Startup Oscar Health – WSJ – September 2015

Is Health Care Google’s Next Big Business After Search? This Investment Bank Thinks So – Re/Code – September 2015

Why Google Is Going All In On Diabetes – NPR – September 2015

Google’s health startup, AbbVie team up on drug research – Chicago-Sun Times – September 2015

Google Life Sciences Company Has New Deal, Official Nemesis in Diabetes – Re/Code – August 2015

Alphabet Breathes New Life, Resources Into Google’s Health Care Projects – iHealthBeat – August 2015

Google Health – Easy as ABC. Alphabet, Calico and the Aging of Humanity – What on Earth are they doing? – Digital Intervention – August 2015

 

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Using “Tumour-Traps” to Monitor The Spread of Breast Cancer

Excellent & insightful article on how it is now possible to track cancer progression.

Snackable Science

Breast cancer is the most common form of cancer in the UK, with approximately 50,000 British women diagnosed with the disease every year. Despite this high occurrence, breast cancer patients have relatively good prospects and almost 80% of sufferers are still alive 10 years after their initial diagnosis. One factor that influences a patient’s chances of survival is the presence or absence of secondary tumours, which occur when cancer cells spread from the breast and establish themselves in other parts of the body.

In research published this month in the journal Nature Communications, a team of scientists led by the University of Michigan’s Dr Lonnie Shea describe an exciting new material, which can be implanted under the skin to capture invasive cancer cells as they move throughout the body. “Tumour traps” like this could be used in the future as part of an early warning system to alert doctors to the…

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Health illiteracy – A major concern in today’s medicine

Health literacy – the ability to obtain, understand and use health information

Making sure that patients understand the information provided to them is critical for health outcomes but also to avoid side effects and disease complications.

The lack of understanding leads to several issues, not only medical like drugs confusion, over- or under-dosage, mismanagement and worsening of treatable conditions, but also financial (it is estimated, for the USA, that health illiteracy costs between USD 100 and 250 billion each year).

Moreover, it is alarming to see that, in a developed country like the USA, only 12% of the population has “proficient health literacy”.

Beyond the communication, language and cultural barriers could be very difficult to get over.

How to empower patients?

Several tools are available today to empower the patients: simplified literature & visual guides to attract attention, patient group meetings led by nurses or dedicated healthcare providers, patient associations, health-related websites, websites for patients… Apart from those interactions, mobile health together with specific apps can provide access to resources regarding one’s health.

Open communication (in both ways), patience as well as avoiding the stigmatization of weak people can really help improve health literacy and simply serve as a form of emotional support during challenging times.

It is fundamental to teach not only young doctors but also senior staff in the healthcare industry in order to tackle that issue. Without proper education and information, even the best medicine is useless.

 

Additional Resources:

Health Literacy Definition – National Network of Libraries of Medicine

Health Literacy Training and Activities – Centers for Disease Control and Prevention

Health illiteracy could be the death of us – The Guardian – 2015

Understanding the true impact of health illiteracy – ArtcraftHealth – 2015

Want to Fix Healthcare? Fix Health Literacy First – Citylimits – 2015

Racial/ethnic disparities in knowledge about one’s breast cancer characteristics – Cancer – 2015

Making health literacy a priority in EU policy – EU – 2013

Consequences of Health Illiteracy – University of Texas – 2012

Many Americans have poor health literacy – The Washington Post – 2011

The Silent Epidemic — The Health Effects of Illiteracy – NEJM – 2006 – Not only health illiteracy but illiteracy stricto sensu (unability to read)

Visual Learning Tools Overcome Health Illiteracy – Patient Safety & Quality Healthcare – 2006

Health Literacy – A prescription to end confusion – NAP – 2004 (free, just register)

Health literacy as a public health goal: a challenge for contemporary health education and communication strategies into the 21st century – Health Promotion International – 2000

 

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Open innovation – Is the pharmaceutical industry ready?

Open innovation is a fascinating topic. According to Dr. Henry Chesbrough, who is the co-founder of the Open Innovation Community, “Informally, open innovation is the idea that companies should make greater use of external ideas and technologies in their own business, and allow unused internal ideas to flow out to others for use in their business. It is the antithesis of a closed innovation process which relies on internal R&D and deep vertical integration.”

The traditional business model of pharma (based on blockbuster multi-billion sales generating products) has shown its weaknesses and is today doomed to fail. The industry must reinvent itself and open innovation is thought as one tool among others to help reconnect with R&D productivity and profitability.

What could be the advantages of open innovation for pharma?

  • go beyond the closed model of innovation. Collaborate and try to find the best companies for each project instead of the companies focusing on the same targets with differentiated successes…
  • focus on what you do best. The cost of R&D will thus not be duplicated and will be dramatically lower. It will benefit the industry as a whole.
  • concentrate on specific markets and sell the IP for the other ones.
  • open your R&D to other industries and take a look at them too as cross-fertilization could lead to fantastic and awesome ideas.
  • expand your network to exchange ideas and challenge your own ones.
  • use crowdsourcing when you are stuck. Somebody in the world has maybe already encountered such an issue or the wisedom from the crowds could help you.

Companies like AstraZeneca and Eli Lilly have already started their own transformation by opening up to the external world. They are not alone and the transformation is on track…

As a conclusion, I propose you to watch an pretty old but excellent TED Talk on the subject, not dedicated to the pharmaceutical industry. He talks about the role of consumers and end users but also about the fact that creativity is both collaborative and interactive. The pharma industry absolutely needs (an it has already started to do it!) to think out of the box. It has definitely to look toward other industries to learn from them. Another point highlighted by the speaker is the fatal error of looking for incremental innovation instead of striking/disruptive innovation because of the perceived risk. We know that big companies are far more risk averse that smaller ones. Attitude has to change.

Additional resources:

Measuring Open Innovation_Creativity_Innovation_Management_2015 – A brilliant article on how to measure open innovation

Open Innovation in Pharmaceutical Industry: A case study of Eli Lilly – Master of Sciences Thesis by Borja Hernandez Raja & Priyadarsini Sambandan – 2015

Managing innovation in Pharma – PriceWaterhouseCoopers – 2014

Restructuring The Pharma Industry Mizuho 2014 – On page 30, the open innovation model is compared to the traditional model. This report brings to light which company leads the way when it comes to open innovation.

Connecting Knowledge: How big pharmaceutical companies invest in Open Innovation? – Futuribles – 2014

Models for open innovation in the pharmaceutical industry – Drug Discovery Today – 2013

Pharmaceutical Innovation Hits the Wall: How Open Innovation Can Help – Forbes – 2011

JNJ_Open Innovation An Imperative for the Pharma Industry_BIF_Spring_2010 – An excellent presentation by the head of external research at JNJ

Is open innovation the way forward for big pharma? – Nature Reviews Drug Discovery – 2010 (subscription required)

Future of OI – R&D Management – 2010

Pharma 2020: Challenging business models – PriceWaterhouseCoopers – 2009

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