Health Care, Life Sciences


Health Care Current: December 15, 2015

From microscope to pill bottle: The journey to patient centricity

This weekly series explores breaking news and developments in the US health care industry, examines key issues facing life sciences and health care companies and provides updates and insights on policy, regulatory and legislative changes.

From microscope to pill bottle: The journey to patient centricity

In Deloitte’s 2016 Life Sciences Industry Outlook, we wrote that despite the current climate in which many businesses find themselves, life sciences companies worldwide should see enough long-term growth opportunities to feel cautiously optimistic about 2016. I believe much of this near-term optimism is being driven by a number of factors around innovation, including the combination of novel business models and scientific and technological advancements that benefit the patient and the patient journey.

The trend toward patient-centric care models will affect the entire value chain, shaking up the ways life sciences companies have traditionally approached key functions of research and development (R&D), manufacturing, and commercialization.

Many life sciences companies are already taking advantage of the new role they will play in a patient-centered ecosystem. Leading companies are breaking away from traditional business models, no longer relying exclusively on the old ways of doing things, like communicating with patients through traditional indirect, mass media campaigns. These companies see that the balance of power is tilting toward patients, as more consumers today are involved in their own health care, using technology to measure fitness and health improvement goals and monitoring chronic conditions with tech-based tools, especially those with chronic conditions.1

As a result, the conversations are changing. More frequently, life sciences companies are recognizing the need to develop and focus on channels that allow them to have patient-centered discussions. For example, through advocacy and other consumer-oriented groups, many companies are developing strategies to involve patients to better understand their needs, identify unmet needs, and align those needs to priorities across the product lifecycle.

The personalized medicine movement has launched the industry into a new way of thinking, especially within R&D. Companion diagnostics – medical devices that provide information that is essential to the safe and effective use of a corresponding drug or biologic process – are helping companies create more targeted therapies for individuals. These tests can help identify patients that may benefit from specific therapies and can also identify patients that may be more likely to experience adverse reactions or serious side effects from particular therapies. Importantly, advancements like this are helping companies identify potential economic benefits early in drug development. For example, if a companion diagnostic is used to select patients for clinical trials, drug developers can reduce the costs and shorten the time to approval. While I anticipate the companion diagnostics field to continue moving forward, as highlighted in Deloitte’s 2016 Global life sciences outlook, one of the greatest challenges to its future growth is aligning stakeholder incentives. Pharmaceutical companies and health plans may need to agree on how to best take advantage of these technologies for their potential to be fulfilled.

Deloitte’s recent report, “The next frontier of drug development and approval,” outlined another significant trend helping to integrate patients into the R&D process. Patient-reported outcomes (PRO) – status reports on a patient’s health condition that come directly from the patient, without a clinician or other individual interpreting the patient’s response – are changing the way life sciences companies collect and integrate patient feedback into the clinical trial process. Stakeholders are using PRO data, which typically includes information about health-related quality of life, symptoms, function, satisfaction with care, adherence to prescribed medications or other therapy, and perceived value of treatment, to inform and guide patient-centered care and clinical and health policy decision-making. The US Food and Drug Administration (FDA) has also recognized the value of patient-centered measures in health outcome assessments and has expanded methodological aspects such as study design, statistical analysis, hypothesis testing, reliability, and validity of patient-centered measures.

Patient-centric models are also moving beyond the R&D stage, now extending into the manufacturing stage. For example, early this fall, the FDA approved the first ever 3D-printed drug for patients with epilepsy. The new 3D printed drug may improve patient adherence, as many patients identified size of the pills and frequency of the doses as major barriers to adhering to treatments.2 Others are trying new methods like personalized packaging, which has required new partners and collaborators to ensure the approaches are appropriate and meeting patients’ needs. In some cases, manufacturers are even using a direct supply approach for patients that have rare diseases. These and other approaches will likely continue to develop as patient purchasing and decision-making power grows.

Finally, the reach of patients does not stop after products are developed and approved. Many manufacturers continue to emphasize the patient through to the commercialization phase. For example, recognizing that patient engagement was core to compliance with treatment, Biogen created the Above MS™ program. The program allows patients to connect to one another, get support from coordinators and nurse educators, and access additional financial and insurance support.3 Many other life sciences companies have similar initiatives in play.

As part of the evolution toward new business models, life sciences companies have an opportunity to seize patient engagement. Whether the goal is to aid with compliance to certain therapies or just to support initiatives already in place, leading companies recognize that patient-centricity throughout the product lifecycle – from the microscope to the pill bottle – may be required to capitalize on growth opportunities long term.

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1 Deloitte Center for Health Solutions, 2015 Survey of US Health Care Consumers,
2 Medical Daily, “FDA Approves First Ever 3D-Printed Epilepsy Drug From Aprecia; Set To Create More Central Nervous System Pills,” August 4, 2015,
3 Above MS,

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My Take

By Greg Reh, Principal, US and Global Life Sciences Leader, Deloitte Consulting LLP


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New HHS guidance on 1332 State Innovation Waivers provides more specifics on meeting coverage and budgetary requirements

Last week, the US Department of Health and Human Services (HHS) released guidance on Section 1332 of the Affordable Care Act (ACA). The guidance provides the Secretary of HHS and the Secretary of the Treasury Department with the discretion to approve a state’s proposal to waive certain ACA provisions if the proposal meets certain requirements.

The new guidance provides additional information on the requirements states must meet, the application review process, the amount of pass-through funding, certain analytical requirements, and operational considerations. HHS clarified that states must consider and report the impact on coverage on all state residents, regardless of the type of coverage they would have without the waiver. In particular, the guidance emphasized states should take into account how the waiver may impact coverage for vulnerable residents, such as low-income individuals, the elderly, and individuals with serious health conditions.

Under the deficit neutrality requirement, states must estimate how the waiver will impact federal revenue, including all changes in income, payroll, or excise tax revenue, as well as any other forms of revenue (including user fees). The Secretaries’ assessment of a state’s proposal will not consider the impact of state legislation that is proposed but not yet enacted or the impact of changes contingent on other federal determinations, including approval of federal waivers such as Medicaid or Children’s Health Insurance Program (CHIP) demonstration waivers.

State Innovation Waivers allow states to pursue alternative and innovative strategies for ensuring their residents have access to high quality, affordable health insurance. The guidance stipulates:

  • Health care coverage must be at least as comprehensive and affordable as would be provided without the waiver
  • The waiver cannot reduce the number of residents that would have coverage
  • It must implement affordability standards that are greater than or equal to the ACA
  • The provisions cannot increase the federal deficit over a 10-year-budget period

Analysis: This guidance comes out the same week that Massachusetts announced initial plans to apply for a Section 1332 waiver (see story in Around the Country below). Section 1332 waivers are intended to allow states to experiment with alternative coverage and regulatory approaches that might suit their residents and health care markets. During the congressional negotiations on the ACA, lawmakers envisioned the waivers as a way for a state to achieve the same goals of the ACA, but with a different approach. The statute allows the waivers, which are required to go through an extensive approval process, to go into effect beginning on January 1, 2017, if approved. States can apply in 2016 as long as they allow sufficient time for review and implementation. HHS issued a final rule outlining the new review process and timeline in 2012, though some states and other stakeholders have asked for additional clarity since that time.

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Implementation & Adoption

Survey: PCPs in many countries feel unprepared to treat patients with complicated conditions

The Commonwealth Fund interviewed primary care physicians (PCPs) in 10 countries and found that there are global challenges with care coordination and communication. Notably, fewer than half of the respondents said that their practice is well prepared to treat patients with severe mental health or substance abuse issues (with the exception of Norway). Moreover, in many countries, little more than half of PCPs regularly communicate patients’ needs and services with home care providers. In Germany, the US, UK, and Sweden, PCPs are dissatisfied with their country’s health care system more than the other surveyed countries. PCPs in these countries are more likely to find their job “very” or “extremely” stressful.

The findings suggest that US PCPs differ from their counterparts in other countries in several ways:

Related: Deloitte’s 2014 Survey of US Physicians found that many are concerned about the future of the US health care system, especially as it moves from one based on volume to one based on value. Physicians are aware that the shift to value-based care (VBC) is happening and inevitable, anticipating that approximately 50 percent of their total compensation will be paid through value-based payment models in the next 10 years. However, many desire stronger skills to participate in VBC, including business knowledge and experience with health information technology. Many stakeholders recognize that this shift to VBC cannot occur without the participation of physicians, especially those who work in primary care. The survey data from The Commonwealth Fund suggest that better ability to manage the care of chronic conditions also may be an issue.

(Source: Robin Osborn, et al. Health Affairs, “Primary Care Physicians In Ten Countries Report Challenges Caring For Patients With Complex Health Needs,” December 2015)

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3.5 million uninsured may pay more for individual mandate penalty than coverage would cost

A recent Kaiser Family Foundation (KFF) analysis found that the average penalty that individuals will have to pay for going without insurance in 2016 will increase significantly. The individual mandate penalty is collected with income taxes and was created to encourage people not to wait until they get sick to buy health insurance. Individuals who fail to purchase coverage for more than three months will have to pay the penalty. Some individuals who go without insurance will get an exemption from the penalty (e.g., because of their low incomes), but most would be required to pay a penalty.

For 2016, the penalty is the greater of two amounts:

  • $695 plus $347.50 per child, up to a $2,085 max for a family or
  • 2.5 percent of family income in excess of 2015 income tax filing thresholds ($10,300 for an individual, $20,600 for a family)

Importantly, KFF estimates that approximately 3.5 million uninsured individuals are eligible for insurance subsidies to help pay for coverage, and purchasing a plan could be cheaper than going uninsured and paying the penalty. The average household penalty in 2016 is projected to be $969, which is a 47 percent increase from $661 in 2015. Individuals eligible for subsidies will owe an estimated average of $738 in 2016, while those who do not qualify for premium assistance will owe an estimated average of $1,450 in penalties.

Related: The US Centers for Medicare and Medicaid Services (CMS) announced last week that, unlike last year, it will not have a special enrollment period in 2016 to allow people who find out they must pay the penalty to buy coverage instead. Individuals who do not sign up for coverage by the end of open enrollment – January 31 – may have to wait a year before they can enroll. They may also be required to pay a penalty when they file their 2016 income taxes in 2017. In 2015, CMS had a six-week special open enrollment period that aligned with tax filings and ran from March 15 to April 30. It was intended to ease the burden for individuals who learned of the penalty for the first time when they filed tax returns for 2014.

(Source: Matthew Rae, Anthony Damico, Cynthia Cox, Gary Claxton, and Larry Levitt, Kaiser Family Foundation, “The Cost of the Individual Mandate Penalty for the Remaining Uninsured,” December 9, 2015; Kevin Counihan, “5 Facts for Consumers about the Fee for Not Having Health Coverage,” December 2015)

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Survey: Health care organizations unsure of ability to share data securely

More than two out of three health care organizations are not confident in their ability to share patient health data securely, according to a survey conducted by Privacy Analytics and the Electronic Health Information Laboratory. The survey found that organizations continue to expand their data sharing activities, but many are not following key protocols to de-identify patient data and protect sensitive information.

A majority of the survey respondents use protected health information (PHI) for data analysis, research, safety measurement, public health, payment, or provider certification. However, the PHI often cannot be use or is shared in a way that increases the likelihood of a data breach because organizations do not know advanced methods to de-identify data.

Many of the surveyed organizations employ data-sharing agreements, data masking, or Safe Harbor methodologies that do not meet globally accepted data sharing standards. As a result, the Health Information Trust Alliance (HITRUST) has released a de-identification framework for organizations to implement while creating, accessing, storing, or exchanging PHI.

Background: The group surveyed 271 professionals, including C-suite level executives, managers, and employees, for the State of Data Sharing for Healthcare Analytics 2015-2016. Researchers, clinicians, project managers, analysts, and consultants were also surveyed. One-third of the respondents are responsible for privacy and compliance in their healthcare organizations, and another 23 percent work in IT departments.

(Source: Privacy Analytics, "State of Data Sharing for Healthcare Analytics 2015-2016,” 2015)

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ONC announces goal to connect health information exchanges by 2016

Karen DeSalvo, the National Coordinator for Health IT, announced that in 2016 a major goal for the Office of the National Coordinator for Health IT (ONC) will be to connect all private and public health information exchanges throughout the country. She made the announcement at a Bipartisan Policy Center event convened last week to evaluate the current status of health IT in the US and discuss priorities for the coming year.

DeSalvo said the interoperability of health information exchanges will help achieve the objectives of the Interoperability Roadmap (see the October 13, 2015 Health Care Current). Interoperability will help make information more accessible and allow providers to address patients’ needs in real time, wherever they may be. The ONC has a goal for the majority of health providers and consumers to be able to send, receive, find, and use a common set of clinical information by the end of 2017.

As part of the initiative to improve interoperability across state lines, DeSalvo said that the ONC may hold a competition for developers to create apps to enhance patient access to information and improve user interface for providers. The agency will also work with developers to create an app store where providers can find a better user interface for their system.

Related: Carequality, a public-private partnership with health care organizations working on improving the electronic transfer of patient information, launched the Carequality Interoperability Framework last week. The framework, focused on secure health information exchange, includes legal terms, policy requirements, technical specifications, and governance processes. It is available for health information exchange networks, vendors, and payers, among others. Organizations can use the framework to establish data sharing partnerships more quickly and uniformly than previously possible.

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On the Hill & In the Courts

DOJ collected $1.9 billion in health care fraud through False Claims Act

The US Department of Justice (DOJ) recovered $3.5 billion from settlements and judgements under the False Claims Act in fiscal year 2015. This is up from $2.3 billion in 2014. More than half ($1.9 billion) came from companies and individuals in the health care industry. This number only represents federal losses; the DOJ efforts also helped recover millions of dollars to consumers and state Medicaid programs. Additional findings:

  • Settlements and judgements with hospitals made up nearly $330 million of the $1.9 billion, the majority of which was from hospitals that violated Medicare billing rules for cardiac device implants.
  • Claims involving pharmaceutical companies accounted for approximately $96 million.

The Obama Administration prioritized fighting health care fraud when it created the Health Care Fraud Prevention and Enforcement Action Team (HEAT) in 2009. It created the interagency task force to increase coordination and improve enforcement. Since January 2009, the DOJ has recovered $16.5 billion in fraudulent health care payments. The recoveries send valuable assets back to Medicare, Medicaid, and TRICARE (the military health care program) and prevent millions more in losses by deterring others from engaging in fraudulent activities.

Background: The False Claims Act addresses double billing, charging for services not rendered, and more. Under the law, a whistleblower can notify the federal government of alleged false claims, and similar claims can be pooled into one action. If the government prevails in the action, the whistleblower can receive up to 30 percent of the amount that is recovered by the government.

(Source: DOJ, “Justice Department Recovers Over $3.5 Billion From False Claims Act Cases in Fiscal Year 2015,” December 2015)

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CBO: ACA provisions will reduce the labor force by 2 million full-time workers by 2025

The Congressional Budget Office (CBO) projected changes to the US labor market and found that the ACA will reduce total labor supply by 0.86 percent, or $120 billion, by 2025. That year, the labor force would have 2 million fewer full-time-equivalent (FTE) workers than it would have in the absence of the ACA. Much of the reduction is due to provisions of the law that expand health insurance coverage, increase taxes, and apply penalties to certain individuals.

CBO projects these policies will cause individuals to react in several ways, including allowing people to choose not to work because they can get insurance outside of work. Many may decide to work fewer hours, while others may leave the workforce entirely or stay unemployed longer than they may have originally. An estimated 25 million individuals will gain health insurance by 2025 as a result of the ACA. This will reduce labor supply an estimated 0.65 percent that year, mostly due to the insurance subsidies through the exchanges. The ACA also imposes taxes and penalties on individuals and businesses, and CBO expects the costs associated with those provisions will be passed on to workers and change their incentives to work. As a result, these provisions are projected to reduce labor supply by 0.21 percent in 2025.

Related: The Bureau of Labor Statistics’ (BLS) latest employment projections found that the health care industry is expected to employ the most individuals by a decade from now, increasing from 12 percent in 2014 to 13.6 percent in 2024. Employment by health care is projected to surpass that of state and local government (12.4 percent) and professional and business services (13.1 percent) industries by that year. By 2024, BLS projected that there will be 2.3 million new jobs in health care support occupations and health care practitioners and technical occupations, representing one out of four new jobs.

(Source: Edward Harris & Shannon Mok, CBO, “How CBO Estimates the Effects of the Affordable Care Act on the Labor Market,” December 2015; BLS, “Employment Projections: 2014-24 Summary,” December 2015)

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Massachusetts considers options for a 1332 waiver

Officials at the Massachusetts Health Connector, the state’s health insurance exchange recently provided an overview of its plan to apply for a Section 1332 State Innovation waiver through the ACA. The waiver offers states the opportunity to refine their approach to health reform and build on lessons learned to make high-quality coverage more available and affordable.

After working with industry stakeholders and other state agencies through a series of open policy forums in October and November, Massachusetts Health Connector policy advisors presented their findings to the board of directors. The presentation outlined policy areas the state will consider and how the policy proposals would be evaluated – both by the state and the federal government. The state is considering whether it should:

Massachusetts proposes to move forward with the first recommendation for a phase 1 waiver and continue to analyze the remaining recommendations for a phase 2 waiver. If the agency decides to pursue a waiver, the draft would need to be submitted to the General Court in February 2016 and HHS in March. If sufficient consensus among the board members is reached, the state may pursue a waiver. The agency anticipates releasing a draft for public comment in early 2016.

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Around the Country

Nearly half of Meaningful Use incentive payments went to eight states

A recent analysis of CMS data found that of the roughly $31 billion Meaningful Use (MU) program incentive payments, 44 percent went to eligible physicians and hospitals in eight states. Providers in the two most populous states, California and Texas, received more than $2 billion each in MU payments. Providers can get payments through the Medicare EHR Incentive program and the Medicaid EHR Incentive program.

Additional findings of the analysis:

  • Washington and Massachusetts received large portions of the Medicaid funding, but received fewer contributions from Medicare, keeping their total payments out of the top 10
  • Pennsylvania and Michigan have the most office-based physicians demonstrating MU (52 percent) among the states that received the most MU payments
  • In Florida, 96 percent of Medicare-eligible hospitals have demonstrated MU, and rural, small rural, and critical access hospitals exceeded the national average for demonstrating MU

Background: More than 551,000 eligible professionals, hospitals, and critical access hospitals are actively registered in the Medicare and Medicaid EHR Incentive Programs as of October 2015. Of those, roughly 187,000 are registered for the Medicaid EHR Incentive Program and 358,000 for Medicare EHR Incentive Program. The program encourages physicians and hospitals to adopt and use electronic medical records.

(Source: Frank Irving, “The Billion-Dollar EHR Incentive States,” HealthIT Interoperability, December 2015; CMS Payment and Registration Summary Report, November 2015)

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Advancements lead to innovation in the fight against infectious disease

Although vaccines have been around for hundreds of years, stakeholders continue to find innovative strategies to eradicate infectious disease through advancements in immunization. The Cleveland Clinic even named recent and up-and-coming vaccines among the top 10 health care innovations for 2016.

One initiative that is accelerating new vaccines and decreasing development costs is the Global Health Vaccine Center of Innovation (GHVCI), a joint effort supported by the Infectious Disease Research Institute (IDRI), Sanofi Pasteur, and a grant from the Bill & Melinda Gates Foundation. The GHVCI aims to accelerate the development of vaccines and associated technologies to fight a wide range of infectious diseases around the world and make these vaccines globally accessible, especially in developing countries. IDRI's vaccine adjuvant technologies (adjuvants are substances added to vaccines that enhance the ability of antigens to stimulate the body's immune response) and formulation expertise are designed to improve immune response in vaccines and save substantial costs by reducing the amount of vaccine needed. Together with Sanofi's experience as a multi-national vaccine developer, manufacturer, and distributor and the Gates Foundation's experience with the discovery and development of global health interventions, this collaborative approach leverages the strengths of all three organizations.

A vaccine’s effectiveness relies in part on public health agencies’ ability to track and monitor the spread of disease; 2015 saw innovations in tracking from the global health community. UNICEF recently recognized ARM, developer of Khushi Baby, with its Wearables for Good competition award. Khushi Baby is a tiny digital health record that is worn like a necklace around a baby’s neck that tracks immunization where recorded medical histories are a challenge. ARM is testing the necklace with 300 children in villages in India. Visiting doctors scan the necklaces using a smartphone app and can see the history of the patient’s immunizations. Another scan can update the chip with recent immunizations. When doctors are near an internet connection again, the record uploads to the cloud. Mothers also get an automated phone call in their dialect to remind them of upcoming immunizations.

Analysis: 2015 started with the Ebola epidemic in Africa as a top-of-mind issue for health care stakeholders around the world. More than 10,000 people died in Sierra Leone, Guinea, and Liberia during the epidemic. The World Health Organization (WHO) declared Ebola a public health emergency of international concern. The most promising vaccine to target Ebola emerged in under a year, and may be available next year. The vaccine works by isolating a protein from the Ebola virus that is too small to trigger an infection and placing it inside a harmless cattle virus for delivery into the host. The protein fragment contains enough of the virus’s genetic identity to trigger an immune response. A Phase III trial of the vaccine involving 4,000 people who had direct exposure to the Ebola virus showed 100 percent protection after 10 days. The urgency created by these kinds of outbreaks shine a light on the improvements researchers have made in developing effective vaccines faster than ever to prevent epidemics.

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Breaking Boundaries

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