US FDLI ON CHANGES IN HEALTH CARE PROVISION

5 June 1994

The changes in the US health care environment have threatened to make any health care reform bill an also-ran, Donna Boswell of Hogan and Hartson told the Food and Drug Law Institute's annual Pharmaceutical Update meeting. Coverage decisions and reimbursement issues are of the utmost importance to drugmakers, and have moved from public relations and marketing concerns to major marketing strategies.

Instead of specifically excluding treatments, health maintenance organizations and pharmaceutical benefit managers are developing treatment protocols, which previously were proprietary and often inconsistent with labeling. it is unclear how drug firms and HMOs will deal with this issue, but protocols remain a heavy set of weapons for HMOs to wield. There will be disincentives to overpricing, from patients who could become indigent and doctors who could become alienated by high pricing. Cost-effectiveness depends on the price being paid for a drug, she said. Even if research does not show cost-effectiveness, things could change if a drug is discounted enough. Guidelines being developed by the Agency for Health Care Policy and research will be useful in helping payers and purchasers evaluate company claims, and even in the new environment drugmakers with good pipelines and innovative products will prosper.

Customers (patients, doctors, HMOs and PBMs) are asking what value to place on drug therapies, said Joseph Jackson, executive director of outcomes research at Bristol-Myers Squibb. Quoting Victor Fuchs' three reasons for health care cost containment, he said perceived patient benefits do not equal costs, administrative and infrastructure inefficiency and too-high returns. Society must decide the optimal mix of structural resources to accomplish optimal health care delivery, and if a uniform data set can be designed for health care delivery, reform will have been achieved. As for high returns, he said even cutting company profits and doctors' salaries by 50% would have little real impact on costs. the bias towards in-patient care is being removed by changes in reimbursement. The PBM stress on a component management to manage costs will eventually die, he said, and there will be a shift to disease management, where doctors will again emerge as influential.

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