Can data, technology, and interoperability help life sciences companies reach beyond their own walls and transform?

My Take

Can data, technology, and interoperability help life sciences companies reach beyond their own walls and transform?

Seven questions for Mike DeLone, Deloitte’s new US life sciences leader, Deloitte LLP

Early last month, Mike DeLone was named national sector leader for Deloitte’s US life sciences practice. He will lead the overall strategic direction of the life sciences practice as well as its go-to-market strategies and resources. Mike—a 22-year veteran of Deloitte—succeeds Greg Reh, who will continue to serve as the global life sciences sector leader and global life sciences and health care industry leader. The Health Care Current spoke with Mike about his new role and what he sees as some of the biggest challenges—and most significant opportunities—for the industry.

HCC: You were recently named national sector leader for life sciences. How are you approaching this new role and what sort of legacy do you want to leave?

Mike: First and foremost, we will be bringing our overall capabilities to bear—across audit, consulting, risk and financial, and tax services—to our clients across the sector. We are truly differentiated in nearly all regards when we bring our best thinking across our businesses. On a more specific area, we are working to orchestrate the exchange of information better than any organization in the world. I believe we have a real opportunity to be at the center of that ecosystem. I’m seeing a level of sophistication and readiness around information, evidence, and analytics. There is an acknowledgment in the industry that the ability to responsibly and securely manage and use the vast amounts of information being generated will lead to success [across all internal and external processes] in the future. The ability for life sciences companies to exchange information with patients and with other organizations within the health ecosystem will truly be the differentiator. I want to help make that happen. I want my legacy to be largely defined by how well we support this opportunity.

HCC: How should company leaders approach the future of health strategically?

Mike: Growth and margins based on volume-based products are declining in favor of more precise therapies and a payment system based on value. As more precise medicines are developed, biopharmaceutical and medical technology companies should form closer connections with patients, and they should demonstrate and commit to the value of these new therapies and products. This is no small task given the complexity—and in many aspects the inconsistency—of the information needed to demonstrate value. Where does it come from and who owns it? Is it interoperable? Is it trustworthy and secure? Do all stakeholders agree?

HCC: What role are life sciences companies likely to play in the future of health?

Mike: Some of the greatest science in the world continues to take place in the life sciences sector—in companies large and small. I believe these organizations will continue to lead the way [aided by] significant improvements and efficiencies from automation, digital, and artificial intelligence/cognitive platforms. We have said that in the future of health, there will be a greater focus on all areas of wellness/prevention and early detection. I believe the ability to diagnose and treat a disease will remain important, but it will no longer carry the day. Some biopharmaceutical companies are already beginning to partner with medtech and other technology organizations around early screening. Rather than looking at an illness alone, life sciences companies will need to consider an entire disease state. They will need to identify potential partners who will help them improve prevention, early detection, precision diagnoses, and treatment. These companies should also determine how to monitor a patient 10 or 20 years after a disease has been eliminated. From prevention to long-term health monitoring, there should be a commitment to looking at the entire lifecycle of a disease and health. Biopharma companies will likely need to partner with multiple players in this ecosystem to demonstrate, and commit to, value. This is what patients have already started to demand. It is what I hope for my family’s wellness/health, and we expect it will drive the future of health.

HCC: What hurdles do life sciences organizations face when it comes to transforming their business models?

Mike: The most successful organizations will likely be those that are willing to reach outside of their own walls to transform. But transformation won’t be easy. Some incumbent medtech and biopharmaceutical companies have millions, if not billions, of dollars invested in legacy infrastructure, outdated processes and organizational models, and often legacy skills. Many of these companies have been doing things the same way for so long, with success, that it’s extraordinarily difficult to change. But as more efficient automated digital solutions and processes mature, companies might need to break away from their past before real change can begin. Life sciences companies should embrace an emerging ecosystem where patient advocacy groups, payers, providers, regulators, and competitors—perhaps even financial services and technology companies—are all connected. Companies that are unable or unwilling to move and participate could find it difficult if not impossible to transform.

HCC: The biopharmaceutical sector is moving toward expensive but highly personalized and effective curative cell and gene therapies. How might this trend impact the sector?

Mike: Everything about curative therapies is different compared to more traditional pharmaceuticals. The sourcing, operations, and manufacturing process is different. Clinical trials are different. Pricing, reimbursement, and contracting are different. The landscape is changing quickly. While some pharmaceutical companies will likely continue to invest in existing high-volume products, they will also likely continue to pursue and invest in—organically or inorganically—the riskier curative therapies. The future of these medicines is incredibly exciting. Many clinical trials are taking place right now, and while some of them will be successful, some will inevitably fail. But the science and the movement are happening, and I do not see it slowing down.

HCC: Do you expect companies will continue to invest in curative therapies even if they might be financially risky?

Mike: As I mentioned earlier, I don’t think there is any turning back. Organizations small and large should continue to invest in curative therapies. But they could face some significant challenges in getting them to market, in demonstrating value, and in getting paid. Determining how to price these new therapies is a significant challenge, and it is front-and-center of the public/government debate and focus [on drug pricing]. While I expect value-based contracting will continue to accelerate, there are challenges in ensuring that it works as intended. As more personalized therapies become viable and available, there will likely be increased pressure to figure out how to pay for them. That might require more trust in the system which, to date, has been elusive. Biopharma companies, payers, patients, and clinicians all have to agree on, and trust, the complex methods used to demonstrate value. Not only do companies and other stakeholders need to agree on the most appropriate data, they also should agree on a definition of value. Until we reach that level of maturity, a level of distrust among stakeholders could continue. We are well positioned to help drive the industry in this direction.

HCC: What sorts of technologies are you most excited about?

Mike: I have been in life sciences for 22 years, but my background is in data and analytics. As a technologist, I’m seeing enormous potential in emerging technologies, but we are only in the infancy stage. Along with analytics and AI, I am also excited about the cloud, which changes the game entirely by expanding computing power, eliminating internal bottlenecks, and also by creating entirely new capabilities that organizations can, and are, harnessing. The cloud could open the door to radically interoperable data—a cornerstone for the future of health as we see it. I am also bullish on the use of blockchain to improve transparency, which has been a significant impediment to sharing data across an ecosystem. Technology could help us finally achieve many of the things we’ve been talking about for years. Technology has already advanced beyond our ability to harness it entirely…we now need to spend equal time, energy, and commitment to radical integration, standards, and interoperability. This is what the patient should and will demand.

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In the News

Uninsured rate increases for the first time since 2014

The number of people who lack health coverage increased in 2018—the first observed increase since 2014 when major provisions of the Affordable Care Act (ACA) were implemented, according to a recent report from the US Census Bureau. The percentage of Americans who were not enrolled in a health insurance plan for the entirety of 2018 was 8.5 percent, up from 7.9 percent in 2017. This trend occurred despite a national increase in workers’ earnings and a decrease in the federal poverty level. The report notes that the higher uninsured rate was likely due to a decline in Medicaid coverage. In 2018, 2 million fewer individuals were enrolled in the program compared to the prior year. While enrollment in private insurance plans also declined during the same period, the number of people enrolled in Medicare increased by 1.6 million largely due to individuals over age 65 entering the system.

(Source: Modern Healthcare, Fewer People had health insurance in 2018, September 10, 2019)

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MedPAC proposes new value-based payment structure for post-acute care settings

The Medicare Payment Advisory Commission (MedPAC) released a draft recommendation calling for a uniform value-based payment system across post-acute care settings. This prospective payment structure would include services provided to Medicare beneficiaries within skilled-nursing facilities (SNFs), home-health services, inpatient-rehabilitation facilities, and long-term care hospitals.

The program would establish a value-based incentive program to evaluate providers across a standardized set of measures, including:

• Risk-adjusted, claims-based measures such as Medicare spending per beneficiary 
• Uniform performance targets that account for social-risk factors

This new approach aims to ensure that payments for post-acute care settings meet MedPAC’s principles. It also would encourage increased focus on quality measures, the patient experience, and social-risk factors that might impact performance payments. Recommendations are expected to be finalized next year.

(Source: Modern Healthcare, Value-based payments are coming to post-acute care, says MedPAC, September 6, 2019)

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States pass record number of laws addressing drug prices

So far in 2019, 33 states have enacted a record 51 laws addressing drug pricing and access, according to the National Academy for State Health Policy (NASHP), a nonprofit organization that develops model legislation. The number of new laws this year surpasses last year’s record of 28 states and 45 laws. Several of the new laws focus on topics such as:

• Limiting so-called “gag” rules for pharmacists: As of last month, 16 states enacted 20 laws governing pharmacy benefit manager (PBM) behavior. Most of the new legislation prevents PBMs from imposing “gag” clauses on pharmacists. These clauses—which are written into contracts between PBMs and pharmacists—prevent pharmacists from telling customers if a drug is cheaper to the patient if paid out-of-pocket instead of through insurance. Last October, Congress passed—and the president signed—two bills banning gag clauses for both private health plans and Medicare Advantage (MA) and Part D plans (see the October 16, 2018 Health Care Current). Many of the 20 state laws passed this year contain additional gag-rule limitations.
• Allowing reimportation of prescription drugs from Canada: Four states have enacted measures to create programs to import cheaper prescription drugs from Canada—and six others are considering similar legislation (see the July 23, 2019 My Take). Medicines in Canada and other countries can be less expensive than those in the US. In July, the US Department of Health and Human Services (HHS) and the US Food and Drug Administration (FDA) announced the Safe Importation Action Plan, which outlines two potential pathways for importing certain prescription drugs originally intended for foreign markets (see the August 6, 2019 Health Care Current). Obstacles remain, including opposition from the pharmaceutical industry and the Canadian government and questions about developing a proposal that would meet the requirements of the pathway.
  
• Creating state agencies to review drug costs: Maine and Maryland enacted drug-affordability boards this year, and two other states are discussing similar legislation. Beginning in 2021, Maine’s board will set annual spending targets for drugs purchased by the state or by local governments. Maryland’s board will examine drugs that have annual price increases of $5,000 or more and new medicines that cost $30,000 or more per year or during treatment. If approved by future laws, Maryland will also establish upper-payment limits for these drugs, beginning in January 2022.
  
• Increasing price transparency: In 2019, four more states passed laws requiring drug manufacturers to provide public information on drug list prices and planned increases. Although legislation varies, all states with such laws identify drugs with planned price increases of 10 percent or higher for brand-name drugs, and price increases of 25 percent or more for generics.
  

(Sources: NASHP, State Legislative Action to Lower Pharmaceutical Costs, August 27, 2019; KHN, States Pass Record Number of Laws to Reel in Drug Prices, September 9, 2019)

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Private insurers are expected to pay record $1.3B in MLR rebates this year

Private health insurance companies are expected to pay a record $1.3 billion in rebates to consumers this year, under requirements stemming from the ACA’s medical-loss ratio (MLR) formulas, according to an analysis from the Kaiser Family Foundation (KFF) published September 10. This amount surpasses the previous rebate record of $1.1 billion in 2012. The MLR law and regulations require insurers to spend at least 80 percent of premium revenues from individual health plans—and 85 percent from large-group plans—on health claims and quality improvement activities.

According to the analysis, which relied on data health plans reported to the US Centers for Medicare and Medicaid Services (CMS), most rebate dollars ($734.3 million) will come from health plans in the individual market. Rebate amounts from plans in the small and large-group markets are closer to previous years, reaching $250 million and $284 million, respectively. Health plans must pay the rebates to eligible consumers by September 30.

(Source: KFF, Private Insurers Are Expected to Pay a Record of At least $1.3 Billion in Rebates, September 10, 2019)

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Legislative health updates

• Proposed House legislation urges international drug-price limits, government negotiation
  A document outlining House Speaker Nancy Pelosi’s (D-Calif.) draft bill on drug pricing calls for Medicare to negotiate prices for 250 prescription drugs. These drugs would be selected based on cost and competition from biosimilars. The price of drugs sold overseas would be the upper limit for what Americans would pay for medications. Additionally, the bill would impose penalties to ensure drug manufacturers participate in price negotiations, rather than relying on third-party arbitration. These prices would also apply to private insurance. Drug manufacturers would not be allowed to raise the price of a negotiated drug above the rate of inflation until the drug has market competition, according to the bill. Speaker Pelosi’s office noted that the document is not yet final.
• Senate committee asks HHS, CMS to share point-of-sale pharmacy fees
  A bipartisan group of 23 Senate Finance Committee members is urging CMS and HHS to make health plans subtract the fees they charge to pharmacies from the price of drugs at the point-of-sale. In a September 11 letter, the senators said the move would reduce what consumers pay for the drugs. This regulatory action, called direct and indirect remuneration (DIR), would apply to pharmacies participating in the Medicare Part D program. According to CMS, DIR could lower costs at the pharmacy counter, but might also lead to higher premiums for beneficiaries. An analysis from a public policy think tank determined the policy would reduce beneficiary cost-sharing by $14.8 billion over a decade and increase premiums by $5.6 billion during the same period—resulting in net savings of $9.2 billion to beneficiaries. Eight organizations representing the pharmaceutical industry expressed support for the committee’s request.
  

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Breaking Boundaries

Digital solutions are breaking new ground for mental health

Digital solutions such as apps and telehealth are helping connect patients who are seeking mental-health care but wind up on waiting lists for face-to-face care or have other barriers to care such as time, transportation issues, or prefer a digital solution to an in-person visit. Digital services—including internet-facilitated therapy—can be an effective solution to bridge the access gaps in mental health.

Kooth, a digital mental well-being platform for young people, is available for free in parts of the United Kingdom. The British company has been around for over a decade and has 40 trained therapists who provide text-based counseling tailored to each patient. Last year, Kooth had 98,000 unique users, with roughly 2,200 logins each day. Many patients report being able to stay with the same counselor throughout their treatment.

Behavioral health startup Ginger (formerly Ginger.io) focuses on providing digital mental-health services—including behavior-health coaching, video therapy, tele-psychiatry visits, and other self-guided content—to patients who are dealing with anxiety and depression. The platform offers both human-to-human and digital support. Some employers have partnered with Ginger to make the services available to their employees.

Mental-health apps are also on the rise. A recent study determined there are more than 1,400 mental-health apps on the market. Some offer meditation and mindfulness exercises, while others serve as telehealth platforms with a clinician on the other end. While mental health apps are abundant, some stakeholders have noted that many apps lack validation and more evidence is needed before some clinicians will be comfortable recommending them. Some companies are adding to the evidence base through peer-reviewed studies, case studies, and consumer-survey results.

(Source: Madhumita Murgia, How digital services are transforming UK mental healthcare, Financial Times, August 19, 2019)

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