Health Business Blog

Health care business consultant and policy expert David E. Williams share his views

Abarca, Amgen push the envelope with outcomes-based plan for Enbrel

Javier
Abarca COO, Javier Gonazlez

Health plans should be more willing to pay for high-cost drugs if they actually produce the results patients expect: cures, symptom relief, etc. But pay-for-outcome deals are few and far between.

Abarca Health –a small pharmacy benefit manager (PBM)– recently announced an outcomes-based deal with Amgen for Enbrel. I interviewed Abarca’s chief operating officer, Javier Gonalzez about the announcement.

This is your second deal with Amgen. How did the first one go? What did you learn from it and how did that impact the Enbrel contract?

Abarca is in the process of implementing the outcomes-based agreement with Amgen for Repatha. Because of the innovative and complex nature of these agreements, implementation takes time both with the drug maker and the health plans.

All parties have learned a lot throughout this process, and we expect implementation to get faster with new agreements. We also know that each outcomes-based contract is different. What looks like success for a patient with high cholesterol–like those who take Repatha–might not be the same for someone who is taking Enbrel for rheumatoid arthritis.

The key to a successful outcomes-based contract is collaboration–so this process has allowed Abarca to build a solid working relationship with Amgen. Our organizations are very much aligned in our belief that these agreements have the potential to disrupt the entire healthcare reimbursement system.

The Enbrel arrangement is positioned as an outcomes based contract, but the outcome is just whether the patient stops using the drug. Why not something more advanced, like a clinical measure?

Although our agreement for Enbrel will initially measure discontinuation, we will also be collecting data that drills down further into why the patient stopped treatment–which could be related to side effects, adverse events, or failure to meet therapeutic outcomes.

Though we would like to see additional clinical measures become the determining factors for outcomes-based contracts, it’s important to remember that these agreements are still very much in their infancy. Manufacturers are proceeding very slowly and picking some basic pharmacy therapy outcome endpoints that are reliable and readily accessible—medication adherence and discontinuation, for example—as they build experience.

But, as payers and PBMs build frameworks that can connect disparate patient health data points, and report outcomes through robust analytical platforms, we believe that they will be in a better position to take these agreements to the next level. To help move the industry to this point, Abarca is developing a specialty quality pay-for-performance program to establish clinical, operational, and compliance efficiencies for health plans that will create a game changing experience for patients, pharmacies, and physicians while delivering competitive pricing. We plan to announce this initiative early next year.

What interventions, if any, are utilized to encourage patients to stay on Enbrel? Do you work with any vendors to help?

Our clinical teams work closely with our clients to track adherence across all therapy classes on an ongoing basis. We also have our award-winning Medication Therapy Management (MTM) initiative and programs in place, which look at adherence for high risk patients.

Additionally, we are in the process of ramping up our offerings around the management of specialty patients. Our multi-pronged approach will feature advanced technology, and the eventual development of a quality pay-for-performance program that relies heavily on adherence as a factor to determine success. 

I’ve never heard of Abarca. How big are you? Who are your customers?

Abarca was built on the belief that with a smarter technology and a straightforward approach to business, it can provide a better experience and greater value for payers and consumers–and we’ve been delivering on that mission for more than a decade.

As a full-service PBM, Abarca’s clients include self-insured employers, Medicare and commercial plans, and large insurers across the US. We manage more than $2 billion in drug costs for 2.8 million members in commercial, self-insured, Medicare, and Medicaid plans. We also provide Darwin, our advanced technology platform that our team built in-house, to health plans and PBMs.

There have been a lot of companies claiming that they were going to disrupt or revolutionize the PBM industry. Often they use terms like “transparency” to try to differentiate themselves. But they haven’t been very successful. Why would Abarca succeed where others haven’t?

The largest players in the PBM space have found–and maintained–success by adhering to the status quo. Unfortunately, too often those practices favor the company, and not the clients and members they serve. And while some organizations may use the word transparency, we are building relationships with our clients to deliver transparency starting from day one.

For Abarca, transparency means is holding ourselves to a higher standard. It means to be able to look our clients in the eye and tell them “this is exactly what each of your drugs costs and why.” We don’t believe that transparency should be touted as a differentiator, it should be the industry standard.

Our company was founded to throw out the PBM playbook and find a better way in healthcare–and we have structured every aspect of our business in pursuit of that mission.

We have built industry-leading technology from scratch that makes PBM processes integrated, user-friendly, and modern–and has attracted the attention of some of the nation’s leading PBMs. Within a two year period, we will have doubled the size of our team to accommodate our ongoing growth. And, while many PBMs are in the process of debating outcomes based contracts, we’re executing them with some of the nation’s leading pharmaceutical manufacturers.

What other kinds of outcomes based contracts do you have in the pipeline? What kinds of drugs are good candidates?

Abarca will be focusing on high-cost, high-risk specialty medications for our future outcomes-based contracts. Specifically, we’re looking at treatments for multiple sclerosis, rheumatoid arthritis, hypercholesteremia, and breast cancer, among other disease states.

Do pharma companies want to do more of these deals? Why?

The adoption of innovative drug contracts has been slow and steady over the last few years. In fact, a recent report by PhRMA found that the list of publicly announced value-based contracts grew from 39% to 43% during 2018. But, there are several important trends that are emerging that could change healthcare significantly, including pay-for-performance, calls for transparency, and, potentially, moves away from existing rebate models.

Based on these factors, I believe that pharmaceutical companies are increasingly warming to these types of agreements. There is also the added bonus that outcomes-based agreements give drug makers critical, real-world insight into the performance of their products.

In general, pharmacy can be a very slow moving industry. But, those who are willing to innovate on their own accord–rather than industry mandate–will be in a better position for long-term success.

How about payers? What is their motivation?

Payers are really looking forward to the widespread adoption of these agreements, for a few reasons. First, it puts more accountability on manufacturers for the performance of their products. Additionally, it will help to facilitate better fact-based formulary decisions.

Today, there are a number of factors that contribute to whether or not a drug appears on a formulary but, in many cases, the process can be quite opaque. That’s not how important decisions that impact member health should be made. As outcomes-based agreements become commonplace, we will have the data necessary to manage formularies with more transparency, and objectivity. Specifically, the total impact of cost will be easier to manage and decisions can be made based on clinical outcomes, rather than pharmacy-based data points. 

Do you expect these outcomes based plans to be emulated by other PBMs? Does Abarca provide technology to other PBMs that will help?

We would hope that these types of agreements become the standard in our market. However, we recognize that not every PBM has the technology necessary to support them.

Along with being a full-service PBM, Abarca provides the technology, analytics, and reporting capabilities for health plans and PBMs to support innovative drug contracting–and other clinical initiatives. It may seem a little counterintuitive to provide what some see as our “secret sauce” to the competition, but we believe that health plans, pharmacists, physicians, and, most importantly, patients deserve a better experience–no matter who their PBM is.

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By healthcare business consultant David E. Williams, president of Health Business Group.

 

 

Orion Health CMO Dr. Chris Hobson discusses HIE’s past, present, future

Dr. Chris Hobson
Dr. Chris Hobson

Orion Health has been the Health Information Exchange (HIE) business around the world for more than 15 years. In this podcast, Chief Medical Officer Chris Hobson and I discuss the past, present and future of health IT.

Topics include:

  • (0:12) There are a lot of buzzwords in health IT: interoperability, population health, precision medicine. What is their relevance?
  • (3:07) What new buzzwords will we encounter as we head into the new decade?
  • (8:07) Health Information Exchanges have been around for 15 years. Have they succeeded? How will they evolve?
  • (12:05) You operate around the world. What are some differences and similarities you see with the US system? What can we learn from abroad?
  • (17:00) How do the priorities of payers and providers differ?
  • (20:16) What are the implications of new legislation focusing on interoperability? TEFCA? 21st Century Cures?

 

 

Partners dissolves into Mass General Brigham. I’m quoted in the Boston Globe

Massachusetts General Hospital and the Brigham and Women’s Hospital joined together as Partners HealthCare 25 years ago. Now they’re changing the name to Mass General Brigham, spending up to $100 million in the process. I’m quoted on the subject in a recent front page Boston Globe article (In major rebranding, Partners HealthCare to change name to Mass General Brigham).

What’s in a name, you may ask? In this case it’s worth parsing the change and exploring the history.

What does Partners mean anyway?

Partners HealthCare never had much brand equity. The word “partners” really described the decision of the two hospitals to partner with one another to offset the power of managed care organizations to play them off against one another. All HMOs needed one of those hospitals in their network, but not both. With Partners it was all or nothing. Partners had no problem playing “take it or leave it” right from the get go, nearly bringing Tufts Health Plan to its knees in the late 90s.

So unlike your typical business combination, which relies on elimination of duplication and other efficiencies to be successful, Partners succeeded right away by virtue of its enhanced market power and high pricing. Duplication remained –and remains to this day. MGH and the Brigham continued to move forward on their own while a new Partners overhead was introduced. No one –not patients, not doctors, not nurses– developed any attachment to Partners as an entity.

Why keep General?

Massachusetts General Hospital has kept the same name since its charter was granted by the Commonwealth of Massachusetts in 1811. It’s a proud name, and maybe sometimes a little too proud. (Some say MGH stands for Man’s Greatest Hospital.)

“Massachusetts” is shortened and “Hospital” is omitted from the new name. Of all the words to keep, why was “General” left intact? It seems so… generic. But it also reminds us of the grand era of American industry. General Motors. General Electric. General Atomics. (Remember that one.) The idea was that the one General company could dominate the industry and we’d all be the better for it.

Outside of this state, errr… Commonwealth, “Mass” doesn’t necessarily mean Massachusetts. It could mean a Catholic Mass or a big pile of something. But MGH is so often referred to here and abroad as Mass General that it must have seemed safe to trim it down officially, since the whole name is long anyway.

Where did the Women go?

How did Brigham and Women’s Hospital (BWH) get its name? Unlike MGH, BWH went through some name changes, although none recently. The Boston Lying in Hospital was founded in 1832 and the Free Hospital for Women came about in 1875. They merged in 1966 to become the Boston Hospital for Women. (Apparently that name didn’t stick right away, since I was always told I was born in the Lying in Hospital –even though I was born after the merger.)

In 1980, the Peter Bent Brigham Hospital, Robert Breck Brigham Hospital and Boston Hospital for Women merged (not partnered) to become BWH.

If they had called it the Women’s and Brigham the Women’s name might have survived the latest consolidation rather than being unceremoniously lopped off.

GSK not G SK

Back in the 1980s and 1990s a lot of big pharmaceutical companies merged. It was typical for them to drop the last name of their multiword names when they did. For example, SmithKline & French became SmithKline Beckman after merging with Beckman and then SmithKline Beecham after merging with Beecham.

When Glaxo Wellcome and SmithKline Beecham came together they followed a similar path. But you may notice they went with GlaxoSmithKline rather than Glaxo SmithKline, because the SmithKline people thought that would make it harder to get rid of their name later on. That’s a true story. I was there.

The stratagem has worked so far.

I wonder whether the BWH folks lobbied for MassGeneralBrigham to avoid a similar fate down the road.

When did Hospital become a bad word?

Remember when there were doctors and hospitals? Now it’s providers, medical centers and health systems. Hospitals still dominate economically and politically, but there is a general (and welcome) shift to lower acuity settings of care. Meanwhile Partners has vacuumed up so many other hospitals, physicians and other players that “hospital” no longer belongs in the name.

An interesting marker of the new company’s brand equity and name recognition is that unlike virtually every other new healthcare organization or company, it omits the word “health” from its name. People already understand it’s a healthcare organization.

What about Harvard?

MGH and BWH are both Harvard hospitals. So why not just call it the Harvard Hospital System or Harvard Health System? The use of the Harvard name could be a topic for its own post (Harvard Pilgrim –originally Harvard Community Health Plan and soon to merge with Tufts but with no name announced yet– is a great example) but the simple answer is that while MGH and BWH are Harvard hospitals, there are others like Beth Israel Deaconess and Boston Children’s that are also affiliated with the University.

——

By healthcare business consultant David E. Williams, president of Health Business Group.

Don’t worry, be happy with your health plan!

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The Likes have it

Joe Biden said in a recent debate, “one hundred sixty million people like their private insurance.” I agree with Biden’s assessment that it’s foolish to advocate scrapping insurance companies as his rivals Elizabeth Warren and Bernie Sanders want. It’s stupid politically to take such an extreme view and it’s also worth noting that other countries with nationalized health insurance (like the UK and Germany) have private insurers, too.

Still, what does it mean to say people like their private health insurance? I suppose I would be counted in that number. And, by and large I would say I do “like” my insurance, which is with Blue Cross Blue Shield of Massachusetts. They cover the doctors and hospitals I want to use and the drugs my family takes. Their customer service is good. Their website is ok. They’re flexible in their approach to enforcing policies.

The problem is the cost, which soared to about $2800 per month for family coverage, even for a high-deductible plan. At a colleague’s suggestion, I switched to an even higher deductible plan –which is also one where you have to pay for your own prescription drugs within that deductible instead of the first-dollar coverage I had previously. So while the premium dropped by several hundred dollars a month, I ended up with a co-pay on a generic drug of over $1000 –which would have been $100 before.

And did I mention that since it’s an HMO I needed to buy separate insurance for a dependent who’s at school out of state? And that the out-of-state insurance doesn’t cover expenses arising from participation in college sports? So I had to buy a third policy.

I don’t really blame my health insurer for the high and rising premiums. The main driver is the price of healthcare procedures, which continue to go up. I’ve been healthy, but still routinely see bills for my care in the thousands of dollars that would cost hundreds at most in other places. Some of that cost is attributable to the paperwork burdens imposed by the plans.

Warren and Sanders have a point about problems with health insurers and the lack of universal coverage. But in my view, the real way to address problems in the US healthcare system is to build on Obamacare, focusing not just on coverage (which Obamacare provides, especially if Medicaid expansion is fully implemented), but also on the cost, efficiency, and appropriateness of the care provided.

By healthcare business consultant David E. Williams, president of Health Business Group.

 

 

Check out #CareTalk @HLTH2019

CareCentrix CEO, John Driscoll and I talk #CareTalk on the road to the HLTH conference in Las Vegas, where we interviewed some big names include Obamacare architect Zeke Emmanuel, Former CMS Administrator Andy Slavitt, Former Congressman Patrick Kennedy, Walmart Health exec Marcus Osborne, and Boston Children’s Chief Innovation Officer John Brownstein.

You can check out the whole series on the YouTube playlist.