By David Gregory
Whether or not national healthcare reform occurs in 2010, there are several compelling reasons for your organization to collect and analyze economic data (hospital, physician, pharmaceutical, or other provider billing information) during your product development (clinical trials), launch, and postmarketing business cycles (including registries):
In short, economic value is and will continue to be an important part of the market adoption process for a new drug or medical technology as well as existing drugs for which multiple (and comparable) choices exist.
Simply stated, “economic value” derived from drugs and/or biologics can include:
How To Calculate Economic Value
Of course, quantification of economic value is highly dependent on data, and life sciences companies need to leverage all of the data sources they have available to them, including economic data collected during studies/registries, MedPAR (Medicare Provider Analysis and Review), various state and research databases and registries, and most importantly, commercial claims data sets. In fact, access to commercial claims data sets that include all levels of care and treatment (they are available!) can often provide the longitudinal perspective that is required to derive the true economic value of an agent or intervention.
In addition, these databases can be used for retrospective economic analyses after a formal clinical study has been conducted. Analyses that focus on a per member per month (PMPM) impact can be extremely effective with commercial health plans that track certain aspects of their business performance with this particular metric.
Creative Pricing Arrangements Are Here
Another big reason life sciences companies need to proactively understand the economic impact or value of their agents is the emergence of creative pricing contracts driven by employers and health plans seeking to increase accountability for purported value propositions. Such arrangements include:
Going forward, the economics associated with improved medication compliance is going to be critical for the life sciences sector. Some experts estimate that the costs associated with medication noncompliance exceed $100 billion annually just in the United States. While remote patient monitoring is on the rise for measures such as blood pressure, weight, and blood sugar, meaningful medication monitoring and compliance remains elusive despite being a goal of all stakeholders. With costly “intelligent pill” technology starting to emerge amongst other possible (and costly) approaches to improving compliance, the life sciences sector must be prepared to be even more accountable for justifying these incremental costs through economic value analyses that governments, employers, payers, and providers can understand and embrace.
David Gregory, FACHE, is executive VP at Presscott Associates, Ltd. He has a diverse background in healthcare, ranging from private health plan operations and underwriting to life sciences reimbursement and hospital administration.