2013 Alliance of the Year Nominee: GSK/ Community Care Of North Carolina

It's time for the IN VIVO Blog's Sixth 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 of the Year, Alliance of the Year, and Financing of the Year. We'll supply the nominations (about a half dozen in each category throughout over the next week or so) 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™.

GlaxoSmithKline PLC’s tie up with the non-profit Community Care of North Carolina calls for the drug company and the care network to develop health information technologies that help providers identify patients with medication management problems and determine how best to aid them.

Ostensibly the deal, announced Sept. 18, seems like a small marketing alliance between a big pharma company and a local provider of health care services in the medication adherence arena. But it is not that at all and, in reality, it is much, much more. And while no money is changing hands – definitely a deficit on the awards circuit – it tackles critical challenges that are clearly on top of executives’ minds, in pharma and elsewhere in the health care system.  Given the difficulties of closing deals between a pharma company and non-traditional commercial partners, notably like providers or payers, GSK certainly has pulled off a coup.

CCNC coordinates care across roughly 1,000 health care providers, including 110 hospitals and more than 1,700 primary care practices, serving 1.5 million people in North Carolina. The nonprofit has multi-year expertise in optimizing resources for medication management, a goal that is increasingly on the minds of everyone involved in health care, given growing systemic resource constraints and emphasis on pay for performance. GSK has data analytics, IT capabilities, and broad scientific expertise that could be of value in reaching CCNC’s network.

The partners are banking on internally developed predictive analytics and algorithms to create customized approaches that allow doctors or other caregivers to determine, sometimes in advance, what a patient’s specific barriers are to adherence, enabling them have meaningful conversations with patients on the spot.

Providers will have access to select information such as patient prescription fill history and hospital data. Importantly, the system also is designed to work in a range of different settings, across multiple IT systems, avoiding integration and interoperability issues that have been a drain on many big data approaches.  That said, the initiative, from GSK’s perspective, is strictly about learning – there’s no marketing component, it is not tied in any way to GSK’s portfolio, and any business opportunity will be a secondary benefit and entirely independent of GSK’s core drug business.

So, how does this deal fit into GSK’s big-picture agenda? It will enable compilation of information that health care system participants are keep to collect in the face of changing customer dynamics. As the system shifts its reimbursement emphasis from volume to paying for value, biopharm has been working hard to incorporate data on the cost effectiveness and systems-wide savings benefits of its drugs into its R&D and commercial portfolios.  But getting accurate data to support those efforts is a struggle, particularly post-approval. For a variety of reasons, ranging from business priorities to legal constraints, pharma has to date largely been edged out of risk-sharing arrangements now gaining traction among users and payers.

It will provide GSK with a ‘window’ to learn about medication adherence and population management – two interrelated trends that are shaping health care decision making down the road. To drive home the point, McKesson Corp.’s president of specialty health, Marc Owen, noted at an investor meeting in June that the size of the U.S. market for pharmaceuticals could double if medication adherence was 100% enforced, adding that “It costs a lot less to get a patient to take a medication than to treat him in the ER.” As he observed, within the health care world, “you either change the dialog to include value or you’ll end up in a discussion on pricing for service” – in other words, negotiating around discounts. While he was referring to his own neck of the woods, specialty pharma distribution, he could well be signaling a warning to pharma in some of its crowded categories.

This new initiative places GSK in a different role entirely. Although it is a small endeavor, it has the endorsement of senior management, and demonstrates GSK's interest in learning from new health care delivery systems and payment models. It is one pharma’s creative way of broaching the divide, without running into regulatory, legal or historical hurdles that all too often stump even the best-intentioned deal makers and strategists.

Velcro close-up from flickr user Marie Janice Yuvallos

"No!" says NICE, to Sprycel, Tasigna

The UK cost-effectiveness watchdog NICE today delivered a resounding "no" to the use on the National Health Service of Bristol's dasatinib (Sprycel) and Novartis' nilotinib (Tasigna) in chronic myeloid leukemia patients intolerant to imatinib (Glivec).

"The evidence available to support [the clinical effectiveness] of dasatinib and nilotinib was very poor," declared Professor Peter Littlejohns, clinical and public health director at NICE. "The drugs' cost is also very high," he added, in a press release announcing the latest draft guidance.

Sprycel costs about £30,477 per year, and nilotinib about £31,711, according to appraisal documents on NICE's website. And the drugs are taken for several years, with no evidence-based 'cut-off' point currently in use.

It doesn't even look as if the drugs came close, in other words. And Bristol and Novartis can't even consider one of the loopholes now available to companies, the end-of-life guidance issued in late-2008, which permits a somewhat higher cost-per-QALY (quality-adjusted life year) than usual for drugs that extend life in niche yet terminal diseases. (This, you will recall, is what allowed Celgene's multiple myeloma drug Revlimid to slip past the agency.)

The available evidence on the drugs' extension of life--typically required to be of at least three months--"is too weak", declares the NICE PR in yet another blow to the products' manufacturers. That the drugs, both second-generation tyrosine kinase inhibitors, offer such an extension, documents declare, "is plausible, but definitely not proven."

But at the end of this rather damning announcement came an olive branch. "It would be heartening to hear that pharmaceutical company manufacturers are prepared to share some of the very high cost of these drugs with the NHS," suggested Littlejohns.

Now if that isn't a call for a cost-share (or should we say 'patient-access') scheme, then I don't know what is. Recall that such schemes have allowed NICE to green-light a good handful of expensive drugs that likely would not have otherwise made the cut--including most recently UCB's RA drug certolizumab (Cimzia). (Interestingly, although Celgene also put forward such a plan for Revlimid, this wasn't what tipped the decision in its favor.)

So we understand NICE's call for companies to make an effort on the cost-share front--indeed, the agency's CEO Andrew Dillon has told us clearly that he'd prefer if manufacturers simply submitted such schemes up front rather than waiting for a rejection in order to fish one out.

But is Littlejohns implying that a cost-share proposal would simply eliminate all the problems that the appraisal committee identified in the submission, around trial data and design? These seemed considerable: no studies submitted assessed either drug against relevant comparator; trials were 'heterogenous in terms of design, population, implementation and analysis'.

We put this question to NICE. Their reply:

Although there is some evidence to suggest that dasatinib and nilotinib could be considered clinically effective in cases of chronic myeloid leukaemia (CML), the quality of that evidence was extremely poor. This, coupled with the very high cost of the drugs, meant that the independent appraisal committee could not recommend them as an appropriate use of NHS resources.

During the public consultation on the draft recommendations manufacturers will have the opportunity to propose a patient access scheme, to make it easier for the NHS to afford expensive new treatments. We would be happy to look at such a scheme.

The answer is still not entirely clear (to me anyway; and I'm pushing for further clarification). But it sure looks as if patient access schemes will trump poor data.

If that's true, we're not sure that will do anyone any good--the NHS (paying, if a reduced price, for drugs that aren't effective), companies (forced to submit access schemes above all else), or patients (potentially receiving an ineffective drug and, as a group, perhaps not getting something else as a result).

We hope, then, that we're wrong.

image by flikrer greenchartreuse used under a creative commons license

Germany Gets Creative with Pharmaco-Payer Contracts

Rebate contracts between German health insurance funds (sick funds) and generic firms have become widespread since such contracts were permitted in 2007. But sick funds may also negotiate deals directly on patented drugs, with innovative drug firms. And that, increasingly, is where the action is in Europe’s largest market.

In the case of generics, payers like AOK, Germany’s largest (covering 45% of the country’s insured) go out to tender and secure time-limited contracts based purely on price and supply capacity. The losers are effectively locked out of that segment of the market for the contract’s duration (two years, for AOK deals) since pharmacists must prescribe a rebated drug to any of that insurer’s customers (they’re penalized even if they prescribe a parallel import).

It’s slightly different for patented drugs: there’s no tender process, for one, since such products are theoretically unique. And even after a deal’s signed, sick funds can’t force doctors to prescribe that drug (and thus can’t control whether a pharmacist dispenses it).

But they can—and do—incent the docs to, with financial rewards and other support structures. Indeed, Germany’s sick funds are signing deals with doctors’ associations almost as fast as they are with pharmacos; examples include AOK’s July 2008 minimum five-year tie-up (read the German update here) with two independent doc groups. The result: stronger payer influence on prescribing decisions, and heftier payer clout in negotiations with pharmacos.

Most of those drug firms are dragging their feet when it comes to rebate deals around patented drugs, however—unsurprisingly, since Germany is a reference price market for many other European countries. (Thus even if they do sign discount deals, the details are, by necessity, opaque.) But in some circumstances, such as for mature drugs at the end of their patent life, products that are struggling to gain market share and/or are poorly differentiated, several companies, including Sanofi Aventis, Novartis, Merck & Co. and Novo Nordisk, have been willing to play ball, according to consulting firm Booz & Co.

These and others are also testing out more creative deal flavors, in their quest to avoid straight price cuts but ensure their drug is prescribed. Wyeth for example has a compliance support scheme around its pricey RA drug Enbrel with several sick funds, where it funds homecare visits to patients and a telephone support scheme. According to Booz, the drug’s showing a ‘generally positive’ sales trend within these sick funds as a result.

Meanwhile, Novartis has agreed with two payers to refund the costs of its osteoporosis drug Aclasta if it doesn’t work (if the patient gets a fracture within one year of infusion, for instance), as it seeks to claw market share off competitor Actonel.

For AMD drug Lucentis, beset by bad publicity over its high price and around illegal off-label usage of cancer product Avastin, which contains a similar active ingredient, the company set an overall cost-per-year cap for the treatment at €350 million. The gamble paid off: sales trebled from a low base of just €20 million or so, and most of the bad noise stopped, according to Booz.

You can read more about such deals, and their implications, in the July/August edition of IN VIVO. They’re not unique to Germany—similar examples are arising in the UK, in the Netherlands and Italy; Australia is at the forefront of financial risk-sharing schemes.

But Germany’s fragmented insurance market means there’s a wide variety of deals under trial, as both payers and pharmacos seek a competitive edge. As such, any winner or loser structures that emerge—it’s too early to tell which is which, for now—may well influence company strategies in other markets, not least the US.

Here, the equally fragmented nature of managed care organizations may limit their influence over prescribing for now, but experts such as ZS Associates expect this to change, and for payers like Medicare and Medicaid to increasingly influence prescription decisions.

Germany’s worth watching, in other words.

image by flickrer litandmore used under a creative commons license