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Biopharmaceuticals and Accountable Care Organizations: Balancing Cost and Quality

April 29, 2013
As biopharmaceutical manufacturers consider the new reality of accountable care organizations (ACOs) and the impact on their businesses, they must be ready to demonstrate the value of their products in ways that recognize the fine balance of cost and quality that ACO and ACO-like models seek to achieve. According to panelists speaking at the 2013 BIO International Convention session entitled, "Accountable Care Organization (ACO) Framework for Biopharmaceuticals," there are three primary considerations when it comes to the role of biopharmaceuticals in an ACO model. The first is the type of episode - is the therapeutic treating an acute or a chronic condition? The type of episode is important because it will determine the financing of that care - for example, through a fixed or bundled payment mechanism.

The second consideration is the availability of quality measures related to the condition and whether the use of biopharmaceuticals can play a role in achieving these measures. If there are no existing measures, manufacturers should actively engage in the creation of such measures, suggest the panelists. For example, panelist Dr. Jerry Penso, Chief Medical and Quality Officer of the Medical Group Management Association recommends working with specialty societies, many of which are on the forefront of quality measurement and have experience working with different quality organizations. As a note of caution, however, Dr. Penso points out, "whenever you are going to pay on that measure, it better be a reliable measure," emphasizing his point that quality measurement is a largely scientific exercise.

Finally, the third consideration is the role biopharmaceuticals currently play in treating the condition - more specifically, how common is it to use pharmacologic therapy to treat the condition as opposed to other types of treatment; what portion of the overall disease cost does pharmacologic therapy represent; and are there opportunities to offset other medical costs through the use of pharmacologic therapy? While there are some conditions, such as heart failure, where the evidence clearly shows that pharmacologic therapy produces cost offsets, there are many conditions where this link may not be as clear. Manufacturers must be equipped with this data, according to panelists.

Overall, as ACOs work to achieve the cost-quality equilibrium, biopharmaceutical manufacturers should consider building both elements into their clinical development programs, especially as ACOs and ACO-like models come to represent a larger portion of the market.