2011 Alliance Of The Year Nominee: AZ/HealthCore

It's time for the IN VIVO Blog's Fourth Annual Deal of the Year! competition. This year we're once again presenting awards in three categories to highlight the most interesting and creative deal making solutions of the year. The categories are: M&A Deal of the Year, Alliance Deal of the Year, and Exit/Financing Deal of the Year. We'll supply the nominations (a half dozen in each category throughout December) and you, the voting public, will decide the winners (by voting early and often, commencing once we've announced all the nominees). Strap yourselves in, it's The Race for the Roger™.

Never mind scientific or regulatory challenges. Payers are arguably the single most important hurdle between pharma and future profits -- and a flurry of 2011 deals showed that drug firms know that. They also know that, where payers are concerned, it's time to move from the battlefield into bed.

AstraZeneca's February 2011 tie-up with HealthCore was the first and among the most ambitious of 2011's pharma-payer deals, so that's our nomination here, but votes count toward any/all of the copy-cat deals, too: Sanofi/Medco (June) and Pfizer/Humana (October). They are all aimed, ultimately, at measuring health outcomes and understanding how drugs contribute (or not) to those outcomes. They're looking at cost-effectiveness. They're seeking to identify the inefficiencies in the provision of health care, and, in theory, feeding that information back into pharma development plans and pipelines.

Hoorah! These alliances are the surest sign yet that industry realizes that the game isn't about getting novel chemicals (or biologicals) past FDA, fun as that might be. That the way to reap future financial rewards involves developing practical, value-for-money health care solutions to prop up a crucial service within modern society that's on its knees.

Now if that financial-crisis-defying, social-responsibility-ridden big picture doesn't draw your vote from you, let's dig down. AstraZeneca -- which hasn't shied away from declaring its ambition to be a leader when it comes to payer interactions -- has tied up for at least four years with HealthCore, which is the clinical outcomes research unit of WellPoint, the U.S.'s largest managed-care organization. The partners aim to generate real-world data on the most cost-effective ways to treat chronic diseases like diabetes, cardiovascular disease and dyslipidemia -- and to evaluate drugs' cost-, clinical- and comparative-effectiveness.

In sum, AZ hopes that, by drawing on HealthCore's database of pharmacy and medical claims from 36 million members of Blue Cross and Blue Shield insurance plans, it can get better at persuading payers to cover its drugs, not least by better anticipating the kinds of cost-effectiveness studies that payers will use to decide whether or not to reimburse. The deal may also help identify where AZ should invest its future R&D efforts.

So for now, it's mostly words. But they're the right words. AZ is working more closely with the groups that influence drug purchasing decisions, and that's sensible. It may be ambitious in its aim to expand the project into a public-private consortium, including other drug firms, payer organizations and governments, but working with real-world data on real-world problem-solving is big and requires multiple collaborators. That's in part why the U.K. government recently announced plans to make accessible unnamed patient records from the country's vast National Health Service.

Indeed, AZ's business development chief Shaun Grady has made it clear he wants to emulate the HealthCore deal in other geographies, likening these actual and future collaborations to "building up a toolbox of solutions and approaches" to addressing health care issues.

What about the potential conflict of interest (since WellPoint is a big customer)? Not an issue, said AZ's executive director, corporate business development Mahmood Ladha, speaking at Elsevier's Pharmaceutical Strategic Alliances conference in New York in September. "There's an extraordinarily solid firewall" between HealthCore and its parent. "This is not a vendor relationship. HealthCore is a true partner."

Sanofi no doubt would say the same of its global deal with Medco Health Solutions and its United BioSource health economics and outcomes research unit. This tie-up appears to be more directly focused on informing development strategy for drugs in Phase II and III of the French giant's pipeline. But the thrust is the same.

So is that of the five-year Pfizer-Humana deal. Speaking in October to "The Pink Sheet" DAILY, Jim Harnett, Pfizer's Senior Director of U.S. health economics and outcomes research, neatly summed up why this trio of deals deserves your vote: "Previously we had not [included] the decision-makers" in our work to identify and define a research agenda.

Seems silly, really, doesn't it?

Market Access: Pharma's Hot Potato?

Strangely enough, given that market access is nowadays probably the single most important determinant of near-term (and indeed any-term) commercial success for pharma, there weren't that many companies attending a recent event dedicated to this topic. Instead, it was mostly consultants -- gearing up one supposes to later suck hefty fees out of said absentee firms by relaying information on how to convince payers to reimburse their drugs. (Which is what market access is, in case you'd also missed it).

Then again, maybe it was understandable that many pharma stayed away: the messages aren't happy ones. The various overhauls of Europe's market access systems (that's to say, health technology assessment methods and processes) have already had "major consequences" on drug pricing, said Pierre-Phillippe Sagnier, VP Global Market Access at Bayer Schering Pharma.

Yet it remains unclear precisely what criterial those overhauling systems use to judge the value of new drugs. Thus, in Germany, Europe's largest and arguably most influential market, all new products are now subject to a compulsory cost-effectiveness exam after just six months on the market. Moreover, while this exam determines a drug's pricing fate, the marking system remains opaque.

That matters because many European countries look to Germany when making their own pricing decisions and drug-value judgments. Thus, a bad mark in Berlin could spell disaster for a product in Europe as a whole. (Tip: Germany's hot on relative cost-effectiveness, so you can mostly forget placebo-controlled trials.)

On the other hand, most European countries do nevertheless now have their own HTA systems, with their own particular methods and biases. That means each requires a bottom-up information feed from local execs and a degree of regional tailoring. Pharmas still aren't that comfy with the trend towards regional empowerment even at the marketing level; now it has to consider regional input during development to make sure it generates appropriate data.

Partly because of the complexities required to account for these regional difference and partly because big drug makers are resistant to change, pharma apparently have little idea how to fit the market access function into their traditional basket of activities. "Market access works across all functions; it's essentially an integrating function," commented Janice Haigh, Senior Director, Pricing & Market Access for Astellas Pharma Europe. She's trying to figure out market access for the Japanese firm, which has shifted from part of Operations to Marketing. She and other executives suggest that, at the moment, no-one's really managed to position market access right. Bayer has moved it about from development to commercial and is now trying to integrate the two. "It will take some time," says Sagnier.

There are some ideas trickling through, including better mechanisms to address the global vs. local disconnect that can arise in market access. Astellas, for instance, groups payers into five or six types, according to Haigh, which share similar priorities.

But there are also signs of a wait-and-see attitude that most pharma can ill afford. Regarding the the German system, for instance, where the first outcomes are expected in August 2011, "we're quite glad we are not launching anything in 2011/2012; we're happy to see how other drugs get on, " admitted Bayer's senior market access manager, Jens Lipinski.

Top management at several Big Pharma are talking big talk about market access. It's unclear, from this blogger's lunch chats during the above-mentioned meeting, that this world view has trickled down through the ranks.

In reality shifting the commercial mentality away from pushing drugs at doctors and towards building relationships with national and regional payers requires new skills. So too, does dreaming up risk-sharing deals and embracing integrated care contracts. It's tough stuff that will remain a hot potato no one department wants to own -- let alone a subject that can attract conference attendees.

image by flickrer Jess Gambacurta used under creative commons