Pharmaceutical Commerce - May/June 2013 - (Page 1)

MAY/JUNE 2013 Brand Marketing & Communications Legal & Regulatory Industry confronts healthcare’s changing oncology practices Health systems and community oncologists are fighting over a preferred position as care providers, while payers tighten purse strings By Suzanne Shelley, Contributing Editor Given the high cost of cancer care— where individual drug therapies can cost tens of thousands of dollars per month, and many treatment plans call for combinations of agents, radiation therapy and other treatment modalities—payers, physicians, pharma manufacturers and patients have a vested interest in exploring creative ways to improve health outcomes and survival rates while reducing costs. Today, these ambitious objectives are being sought through a variety of mechanisms including: Lessons learned on bona fide service fees and fair market value—is there a “right answer”? Recent regulatory actions and court cases highlight the importance of due diligence in reporting the value of service fees when federal reimbursements are concerned. The financial consequences can be substantial By Chris Cobourn and Rick Moore, Compliance Implementation Services; and Larri Short, Arent Fox credit: Walgreens • Increased use of clinical pathways, which rely on evidence-based algorithms to guide and standardize cancer care to the greatest extent possible, focusing attention on those therapeutic options that have the most compelling evidence related to efficacy, safety profile and cost • Increased use of oral oncology agents over traditional infusion-based therapies • Alternative business models for oncology practices, with a decline in the prevalence of independent, community-based practices in favor of larger, hospital-owned practices • Increased use of biomarkers and companion diagnostic tests, to better target which subpopulations of patients are most likely to derive benefit from costly and often narrowly effective therapies. While each of these market trends offers the potential for promising clinical and financial advantages for some stakeholders, each also presents a host of interesting challenges. Oncology—A unique sales channel Unlike most other disease states or drug classes, the practice of oncology relies on the so-called buy-and-bill model. Rather than having the medications they prescribe flow through retail or specialty pharmacies, oncology practices typically purchase (out-of-pocket) the vast majority of the infusion-based or injectable therapies they will administer directly from drug wholesalers or group purchasing organizations (GPOs). They store the prepurchased drug inventory onsite, dispensing directly to patients as needed, and seek reimbursement from private and government payers and from patient copays or co-insurance. While this model has advantages in terms of operational flexibility for practitioners, it also exposes them to considerable financial risk. For Medicare patients, IV or injectable oncology drugs are typically reimbursed at Average Sales Price (ASP) +6% (with the margin designed to cover overhead costs in the prescriber’s practice and provide some profit margin). However, Medicare may soon reduce this reimbursement rate to ASP +4%. According to one study, nearly 80% of oncology practice revenue comes from the buying and billing of drugs continued on page 14 “Bona Fide Service Fee (BFSF),” and “Fair Market Value (FMV),” are two of the most important and visible terms today for pharmaceutical manufacturers participating in federal healthcare programs, such as Medicaid, Medicare, Public Health Service (PHS) and the Federal Supply Schedule (FSS). For many manufacturers, up to half of their US customers receive some benefit through one of these publicly funded programs, with the government purchasing or reimbursing for drugs at significant discounts. The price the government pays is based upon data provided to government agencies by the manufacturer. As government programs grow and the government spends more on pharmaceutical products, enforcement authorities have increased their scrutiny of the accuracy of reported pricing to ensure against overpayment. The “statutory pricing” that determines the prices paid by the government is performed by manufacturers who collect, aggregate and filter thousands or millions of lines of commercial data, including direct sales, indirect continued on page 28 Manufacturing & Packaging Compliance prompting packaging: ‘The light bulbs are coming on’ As improved medication adherence gains more focus in healthcare, the advantages of compliance packaging are becoming clearer By F.J. Quinn, Contributing Editor It’s been said that seeing is believing. Such is the case with pharmaceutical companies, who for many years held the belief, but lacked the scientific evidence, concerning the impact of using compliance prompting packaging. Now following the release of two significant studies coupled with patient-cliff and healthcare-reform initiatives, demand for compliance prompting formats in both starterpack style physician samples and commercial packaging are gaining wider acceptance as a means for generating better health outcomes, experts say. “There have been studies in the news in the last year that have shown unit dose packaging (UDP) does contribute to increased patient compliance,” says Frederick Lutz, a regional sales manager at Constantia Flexibles (Vienna; US HQ in Blythewood, SC), a flexible packaging supplier. “Additional studies are ongoing and promising.” Last year, Walmart (Bentonville, AR) adopted two types of calendarized blister packs for its pharma products as part of its commitment to help customers “live better,” according to published reports. This included continued on page 26 May | June 2013 Visit our website at 1 PONTIAC, IL PERMIT 268 PAID PRSRT STD US POSTAGE

Table of Contents for the Digital Edition of Pharmaceutical Commerce - May/June 2013

Pharmaceutical Commerce - May/June 2013
Table of Contents
Top News
Brand Marketing & Communications
Supply Chain/ Logistics
Information Technology
Manufacturing & Packaging
Legal & Regulatory
Meetings and Editorial Index

Pharmaceutical Commerce - May/June 2013