DTC National Conference APRIL 2, 2013 ACA is here to stay - - PowerPoint PPT Presentation

DTC National Conference

APRIL 2, 2013

ACA is here to stay

 President Obama’s re-election assures solid

Administration support for ACA for another 4 years

 Supreme Court ruling validated the individual

mandate – albeit through taxing power

 Key steps to implementation occur during this

presidential term – so HHS will strongly support

 2014 launch of state-based exchanges  Improbable that law will be dismantled in future

 Majority of U.S. supports ACA – January CNN/ORC

poll found 51% favor all or most of the law – only 45% two years ago

ACA basics

 Goals of reform – expand coverage and access to

healthcare for all Americans

 Shifts federal healthcare focus to prevention and cost-

effective medical services

 CBO/JCT estimate more than 30 million new

Americans will get coverage by 2022

 12 million through Medicaid and the State Children’s

Health Insurance Program (SCHIP)

 26 new million enrollees will obtain health insurance

through exchanges (some overlap)

 Only 29 million non-elderly individuals left uninsured

New market opportunities to new customers

 ACA offers number of opportunities for health service

providers, including marketers of drugs and services

 Expanding coverage creates new markets with

expanded customer populations

 Supreme Court recognition of right of states to refuse

Medicaid expansion likely will not erode expected addition of 30 million new customers to marketplace

 And . . . more red states are signing up

Medical loss ratio shifts payer allocations to procedures and drugs

 The focus on preventive care presents even greater

• pportunities for marketers

 Insurers must devote 80% - 85% of premiums to

payment for medical procedures (and drugs) rather than administration and profits

 As coverage expands to include broader range of

medical services, drug manufacturers and marketers can promote new medications and vaccines, and new applications for products

ACA promotes shared decision making – expands market audience

 ACA mandates pilot projects dedicated to “shared

decision making” (SDM)

 Pilots are to emphasize dialogue between patients and

providers about elective procedures

 SDM to promote prevention, disease and treatment

awareness, and management of chronic disease

 SDM could pave way toward more outpatient (drug)

therapies

 Marketers should increase emphasis on growth areas for

disease management and outpatient services

ACA – Fundamental shift in payment for healthcare

 ACA moves healthcare away from – the more you do the

more you get paid

 Emphasis on evidence-based medicine – rewards for

positive outcomes – including drug therapies

 Hospitals must create benchmarks for Medicare spending  Hospitals then must create incentives to bring Medicare

spending below benchmarks

 Hospitals will share in savings if meet quality standards

and spend below their benchmarks

ACOs and value-based systems may challenge marketing of drugs

 Act provides potential new areas for marketing drugs  Be aware of trade-offs and potential disincentives in the

law

 Value-based payment for performance systems and

Accountable Care Organizations (ACO) are examples where marketers may see uneven effects (quality versus quantity)

 ‘Cost-effectiveness’ and ‘outcome-based results’ are the

new metrics behind healthcare success

 ‘Old’ protocols of multiple procedures to demonstrate

quantity of effort must yield to more effective qualitative methods

ACOs focus on reducing procedures

 Impact on marketers will depend on drugs that

contribute most to manufacturer’s bottom line

 More emphasis on preventive, daily use drugs to

manage chronic disease

 Less emphasis on sophisticated drugs that are part

• f complex inpatient therapies

 ACO emphasis on shared decision making may

steer patients towards treatments that do not necessitate as many procedures – or the drugs that often accompany them

ACA directs government comparison of drug effectiveness

 Title VI of ACA mandates government

investigation comparative effectiveness of drugs in effort to further cut costs

 This will involve studies on the efficacy of brand

• vs. brand drugs, as well as brand vs. generic

drugs, with the potential of diminishing revenues for under-performing medicines

Closing the donut hole

 A well-advertised feature of ACA – it closes the

so-called donut hole

 PhRMA offered as concession during ACA

debate

 Reducing Medicare Part D beneficiary payment

is estimated to cost drug makers more than $80 billion over 10 years

 Debate continues whether a net increase of

customers will enter the system to expand drug manufacturers’ consumer base and offset ‘contribution’

Does drug industry face more cuts?

 Drug industry marketers – watch for post-ACA

‘refinement’ of Medicare Part D

 State of the Union address – ‘ . . . reforms I’m

proposing go even further. We’ll reduce taxpayer subsidies to prescription drug companies’

 Negotiations for lower prices for higher volume

sales?

 Deny deduction for prescription drug advertising?  This effort to cut healthcare and drug costs could

reappear in sequestration, the next debt ceiling fight, and efforts to reform Tax Code in 113th Congress

Yet another health cost cutter . . .

 Finally, marketers should closely monitor Independent

Payment Advisory Board (IPAB). IPAB charged with setting cap on Medicare spending by cutting payment rates for service providers

 Panel has authority to recommend limits on cost of drugs

and to reduce subsidy payments under Medicare Part D towards administrative costs and Medicare Advantage bonuses

 Negotiated Part D prices could mean lower profits for

pharma and correspondingly lower marketing budgets

Summary of challenge to pharmaceutical marketing

 ACA is here to stay  Majority of U.S. citizens support  Expanding coverage creates new markets – more than 30 million

Americans will get coverage

 Insurers must devote 80% - 85% of premiums to payment for medical

procedures (and drugs)

 ACA mandates studies of the efficacy of brand vs. brand drugs, as

well as brand vs. generic drugs

 State of the Union address: We’ll reduce taxpayer subsidies to

prescription drug companies

Summary of challenge to pharmaceutical marketing

 ACA mandates studies of the efficacy of brand vs. brand drugs, as

well as brand vs. generic drugs

 State of the Union address: We’ll reduce taxpayer subsidies to

prescription drug companies