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Business Roundtable: The Reimbursement Landscape under ACA

February 17, 2014
As the Affordable Care Act is implemented, reimbursement for life-saving and life-enhancing drugs is one of the most pressing issues facing healthcare stakeholders and decision makers, including patients, payers, providers, and innovative drug developers. BIO hosted a business roundtable discussion on this timely topic yesterday at our 16th Annual BIO CEO & Investor Conference.

Moderated by Real Endpoint’s Roger Longman, panelists represented a variety of perspectives:

  • Peter Bach, MD, MAPP, Attending Physician, Memorial Sloan-Kettering Cancer Center

  • Rachel K. King, CEO, GlycoMimetics

  • J.D. Kleinke, Healthcare Business Strategist

  • Melinda Thiel, Vice President, Pharmacy, HealthFirst

  • Laurel Todd, Managing Director, Reimbursement & Health Policy, BIO

J.D. Kleinke argued that the ACA – a “radical endorsement of the status quo” (a fee for service, primarily employer based system) – presents opportunities for the drug industry, drawing parallels to the adoption of the managed care system in the 1990’s:

“A lot of people said about managed care in the 90’s that it was the end of the drug business, that finally certain people are going to manage costs for drugs and the drug industry is going to lose all of its leverage. Well, that’s exactly not what happened. People got more access to a benefit in the 1990’s under managed care – it was more tightly managed – there were new access to benefits put in place, the PBM’s came up out of that, but at the end of the day the drug industry did better and had more people with more coverage. At the end of the day under the ACA… we are going to have more people with more coverage.”

BIO’s Laurel Todd argued that the ACA presents opportunities for the industry to better demonstrate the value of treatments:

“What the ACA does is it creates an opportunity for innovators to demonstrate the value of their treatments... We believe in the industry that our therapies offset costs elsewhere in the system, but because of the way it’s been silo’d – as [HealthFirst’s Melinda Thiel] told us, she’s focused on just spend, and so you get focused on price and that’s all that matters, whereas the clinical side is looking at the outcomes. As we move away from the fee-for-service model into a more integrated model like with ACOs – which are essentially HMOs like in the ‘90’s but with quality measures – now you have the opportunity to actually tell that value story, where there are offsets [such as reduced hospital stays].”

GlycoMimetics CEO and BIO Chair Rachel King argued that cost can only be one factor in the value equation:

“We’ve never defined value in healthcare as only about cost. That’s simply not what we do – because we improve quality of life also, and that’s a critical aspect of what you do with drugs and what doctors do with medical care. But the value is not the same as cost. Cost is a component of value , but value is not limited to a focus on cost.”

One point on which everyone seemed to agree is that the industry is going to have to get better at demonstrating and arguing for the value that medicines bring to the healthcare system and to patients. Safety, efficacy, toxicity, cost offsets, and improved quality of life for patients will all need to be taken into account as drug developers make their case to payers.

Watch Rachel King, CEO of Rachel King, CEO of GlycoMimetics, discuss partnering and public policy.