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

NICE's Future is Assured, Says Departing Chairman Rawlins

"The future of the National Institute for Health and Clinical Excellence is assured," said its long-serving chairman, Professor Sir Michael Rawlins, speaking at the start of the institute's annual meeting on Tuesday 10 May in Birmingham, U.K.

Addressing a packed auditorium in the U.K.'s second-largest city, Rawlins pointed to the way the proposed Health and Social Care Bill will give NICE a new name – the National Institute for Health and Care Excellence – and will remove it from political interference by establishing it as a new non-departmental body.

The existing roles and responsibilities of NICE are however expected to remain unchanged, but the new NICE will take on additional responsibilities for generating advice about social care.

This year, NICE still expects to publish 39 technology appraisals (including drug appraisals), 21 clinical guidelines, 5 public health guidelines and 30 quality standards.

Rawlins accepted that treatment guidelines for specific disease conditions are now addressed by several appraisals, which is why the institute has just launched "NICE Pathways", its online resource that brings together all the relevant appraisals for each specific condition, producing a path of care.

Rawlins was not so forthcoming on one issue of particular interest to the pharmaceutical industry, however: value-based pricing. He claimed that NICE would play a critical role in developing such pricing for medicines in the U.K., but said the details of how this would work in practice have yet to be decided.

No surprise there, perhaps: after all, the British pharmaceutical industry appeared to be similarly in the dark about VBP at a March press conference. And although industry hasn't voiced strong opposition to VBP in principle (it would rather play a role in designing it), it does worry that VBP is incompatible with the wider set of proposed reforms in the U.K, which may lead to health care being commissioned by consortia of general practitioners. The worry: the likely volume of prescribing of a particular medicine, a vital component of deciding a price, cannot be estimated if each of the 400 or so consortia have different prescribing formularies.

But with the success of this wider set of health care reforms (known as the Health and Social Care Bill) looking increasingly uncertain, this particular worry may go away. The Bill's progress has been halted while politicians take stock of its implications, following concerns that it was being rushed into law without proper debate.

With the future shape of health care management in the U.K. in the balance, there's everything to play for for those (including NICE) involved in managing health care in the U.K. But Rawlins himself, while expressing his confidence in the agency's future role, is calling time: he will not put himself forward as a candidate for chairman of the new NICE next year, he told the audience in Birmingham. That makes this his last year, after leading the agency since its inception 12 years ago.

--by John Davis

Industry Still In The Dark About UK Value-Based Pricing

A few of the light bulbs in the room in which the Association of the British Pharmaceutical Industry (ABPI) held its March 14 press conference on value-based pricing (VBP) refused to shine. They were not alone in failing to shed any real light on even the broadest aspects of a new and wholly untested pricing system set to come into force in less than three years.

The idea is that VBP will take into account wider benefit measures than are currently used, including societal ones, in order to improve access to high quality medicines whilst ensuring that industry continues to enjoy healthy profits. But while interested parties seem to understand (and agree on) the aims of the UK government's VBP proposal - which is out to public consultation until March 17 - all sides, the government included, appear, at least as far as this blogger could tell from the aforementioned press conference, in the dark as to how it should function.

And somewhat disconcertingly for industry, ABPI Director General Richard Barker said that there is no guarantee as yet that the government won't impose random price cuts, of the variety seen in most other European countries during 2010, either before or after VBP arrives. He instead exclaimed how "striking" it was that "while other European countries have, as part of their cost controls, already introduced arbitrary price reductions for medicines, the U.K. hasn't."

We know already that the new pricing system will include a cost-effectiveness element, a disease burden element and an innovation element. But their relative weighting and relationship to one another is still unknown. And although the National Institute for health and Clinical Excellence will be an important agent in assessing cost-effectiveness, how and by whom the other two elements will be determined is as yet unclear. So, therefore, is what happens when the "value-based" price provided by the assessing authorities (whoever they may be) does not conform to the price proposed by the industry.

Light has also yet to be shone on the thorny question of precisely how the VBP scheme will fit in with another element of the government's health care overhaul: the granting of commissioning powers, budgetary responsibility and hence huge prescribing influence to a series of GP consortia across the country. On paper this risks leading to an even worse case of "postcode lottery", the term used to refer to variations in treatment access across the country, than is currently the case. Instead of NICE dishing out nationwide reimbursement advice, each region may choose to fund different drugs.

There was also little sign of forward momentum in establishing precisely how the new VBP system will provide the necessary incentives for innovation. There are two fundamental issues that need to be defined: the cost of incremental - or what Barker termed "progressive" - innovation; and how to assess the cost-effectiveness of a new technology against a rock-bottom priced generic.

Here's a suggestion: why can't the UK just cherry-pick the best of value assessments of drugs from the rest of Europe? They could pluck, for instance, societal aspects from Sweden, emulate France's consideration of innovation, and pick some of Germany's assessments of value which the ABPI considers to be quite advanced. The ABPI claims that it's looking at other nations' systems as they help design the UK's VBP ... but few concrete details were forthcoming.

Ok, so there's still two and a half years to run before VBP is slated to arrive. And the government has bigger fish to fry right now: it's still struggling against opposition to its broader health care system reform proposals, which is probably why it hasn't given industry much to work with.

But, at the risk of delaying the arrival of a system that appears fair in theory - and certainly better for industry than most alternatives - we would have expected at least mini-steps of progress by now. The ABPI appears to have missed an opportunity to seize the bull by the horns and lay out what it would like to see in a VBP scheme. That, at least, would have been a reason to hold a press conference. -- By Faraz Kermani