Friday, December 20, 2013

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

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