Biotechnology Healthcare - November/December 2008 - (Page 35) — no more promoting to one health plan at a time and fighting for market share at the provider level • Lowers barriers to entry for new products • Minimizes risk for investors by stabilizing the market BALANCING PROGRESS AND RESISTANCE Any business innovation will generate threats and opportunities — sometimes both to the same company. Bio-re, however, would probably be a welcome concept to most manufacturers. As a whole, the biotechnology industry has not yet realized a profit. Hastening decisions regarding market acceptance could be good news to venture capitalists in this area. Some established innovator companies, especially those that have best figured out how to market to physicians and payers, might see this approach as a threat. On the other hand, most businesses prefer private-sector solutions, which can be highly effective at driving down costs. Likewise, many physicians and patients will welcome clearer guidelines, reduced costs, solid clinical expertise, and evidence-based quality control. Others might fear cost rationing and an expansion of bureaucracy. With the trend by large insurers to bring SP in-house, some physicians might prefer working with an independent carve-out company rather than an insurer. Reinsurers have historically focused on financial management and underwriting, with little expertise or interest in managing patient care. For this reason, I expect that bio-re will likely find interest in other segments of the healthcare industry. A lot of pieces need to come together for bio-re to work Bio-re: a new kind of health insurance business The biotechnology reinsurance (bio-re) concept would be a combination of: • A carve-out that assumes the financial risk for providing expensive biotechnology devices and new innovative drug therapies • Clinical, evidence-based expertise that provides medical management, precertification, and quality control for the entire spectrum of related care delivery, not just the drug • Collective purchasing of products, including capitated purchasing from manufacturers • Network management with centers of excellence for associated conditions • Patient health promotion/disease management for selected patients — sufficient volume of members (probably in the tens of millions), willing providers, and a proven ability to remove waste from the system, to name a few. I recognize this is unlikely to happen in a grand way. However, some of these elements could come together among very large insurers through a consortium of Medicaid programs or in other ways. New biologic-based technologies promise an array of exciting potential in delivering and managing patient care for optimal outcomes. Bio-re could provide incentives for the use of these state-of-the-art advances by promoting market stability and by offering innovative biotechnology companies improved market access. As a result, perhaps the discussion would move away from “How can we possibly afford this?” and closer to “How can we translate these significant new scientific discoveries into medicine and treatments that save people’s lives?” REFERENCES Blumenthal D, Buntin MB. Carve outs: definition, experience, and choice among candidate conditions. Am J Manag Care. 1998;4 suppl:SP45–57. Frank RG, Garfield RL. Managed behavioral health care carve-outs: past performance and future prospects. Annu Rev Public Health. 2007; 28:303–320. KFF (Kaiser Family Foundation). Follow the pill: understanding the U.S. commercial pharmaceutical supply chain. March 2005. «http://www.kff.org/ rxdrugs/upload/Follow-The-PillUnderstanding-the-U-S-CommercialPharmaceutical-Supply-ChainReport.pdf». Accessed Oct. 16, 2008. Medco Health Solutions. Drug Trend Report. Franklin Lakes, N.J. 2008. Stern D. Benefit design innovations to manage specialty pharmaceuticals. J Manag Care Pharm. 2008;14 (suppl S):S12–S16. Disclosure Bruce Pyenson reports speaker’s bureau affiliations with, and the receipt of consulting fees from, the biopharmaceutical industry. NOVEMBER/DECEMBER 2008 · BIOTECHNOLOGY HEALTHCARE 35 http://www.kff.org/rxdrugs/upload/Follow-The-Pill-Understanding-the-U-S-Commercial-Pharmaceutical-Supply-Chain-Report.pdf http://www.kff.org/rxdrugs/upload/Follow-The-Pill-Understanding-the-U-S-Commercial-Pharmaceutical-Supply-Chain-Report.pdf http://www.kff.org/rxdrugs/upload/Follow-The-Pill-Understanding-the-U-S-Commercial-Pharmaceutical-Supply-Chain-Report.pdf http://www.kff.org/rxdrugs/upload/Follow-The-Pill-Understanding-the-U-S-Commercial-Pharmaceutical-Supply-Chain-Report.pdf http://www.kff.org/rxdrugs/upload/Follow-The-Pill-Understanding-the-U-S-Commercial-Pharmaceutical-Supply-Chain-Report.pdf
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