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As the national debate surrounding healthcare costs continues to swirl, few have as informed a perspective on the evolution of healthcare as Dan Renick, president of Precision Value and Health.
After graduating from pharmacy school at the University of Kentucky in 1994, Renick began working at a community pharmacy. Twenty-three years later, that work still has an impact on him today.
“When you’re on the front line of the prescription counter, it’s where reality hits as to what patients can afford,” Renick says. “I saw firsthand that patients would struggle to pay their out-of-pocket costs.”
The empathy for patients Renick cultivated as a pharmacist informs his work today. At Precision Value and Health, Renick is responsible for helping clients understand the ever-changing prescription drug market and devising strategies to demonstrate a new drug’s value—always keeping patient well-being front and center.
The industry is quite different from Renick’s early days, when patients primarily paid cash for their medications. Now, most individuals rely on third parties such as insurance companies to help secure their prescriptions. Additionally, Renick says he is witnessing a push in the industry toward paying for prescription drugs based on value provided rather than traditional unit price-based reimbursement.
That change comes with its own challenges for manufacturers trying to achieve widespread usage of their medication, but Renick is prepared to help them navigate the changes.
Why do you think the prescription drug industry is shifting from paying for volume to paying for value?
Renick: The industry had a huge wave of innovation about twenty years ago, and a lot of great brands addressed a number of conditions, such as high cholesterol and high blood pressure. In the past 4–5 years, those drugs have become available as very low-cost generics. So now, drugs that follow them have to compete with these low-cost generics, and the bar has been raised to demonstrate that there’s value to moving to a more expensive, new brand.
The other thing that’s driving this shift is the fact that our ability to research and discover new compounds has expanded exponentially. That means a large surge of products are in the drug pipeline or have been recently approved, and they are coming to market at a time when our ability to pay is probably the most strained it’s ever been. So our technology-enabled R&D throughput is outpacing our ability to pay for medical innovations, especially under our outdated fee-for-service arrangements.
In this new era, how can companies demonstrate their drug’s value to the marketplace?
Renick: They need meaningful health economic data that’s relevant to a diverse group of stakeholders. One of the most straightforward data points I’m referring to would be event avoidance: did a drug result in fewer hospitalizations or fewer readmissions? Drug makers have to focus on altering these types of events in a positive way because a payer—be that an insurance company, provider system, or patient—is going to think, “I might need to spend more money on a new drug, but if I offset my costs in other ways, my net gains will be positive and patient care will improve.”
There also needs to be a focus on other benefits, such as a reduction in caregiver burden. Another is an improvement in work productivity because an individual misses work less, or they’re a better worker when present.
One last thing that gets lost is the impact on future health considerations. For example, when we now cure people with hepatitis C (HCV), we lower infection rates in the future because those cured patients won’t transmit the virus to others. This also serves to increase the availability of liver transplants for non-HCV patients, which is critically important and of significant future value that needs to be accounted for when evaluating overall product value.
How can manufacturers gather this data in a cost-effective way?
Renick: It’s a real catch-22 right now. To get real-world data that can potentially be converted to meaningful evidence, you first need a drug to be utilized, so you need prescriptions to generate the data so that a drug can be assessed on actual outcomes. Since access is not easily granted and uptake can be hindered, we have a two-fold approach with our clients to address this.
First, within a clinical trial, we try to gather as much outcomes data as possible. I’ll use an easy example: In a trial of a drug that’s meant to lower blood pressure, the goal used to be just to lower blood pressure compared to a placebo or competing product. But that didn’t necessarily mean there was a reduction in actual clinical events, such as heart attacks or strokes. Companies have to focus on conducting clinical trials that allow them to gather as much outcomes data as possible, especially data that can be translated into various value endpoints that matter to payors. We can and do model the various impacts of these decisions to better inform the eventual study design because our clients need to bring drugs to market that have a reimbursable label rather than just an approved label.
Second, the best studies tend to have endpoints that matter to payers if they have clinical endpoints that can be translated into various value endpoints. These tend to be event avoidance, medical side-cost reductions, and the like. Even then, it might not be good enough for payers because it’s all based on clinical trial results versus real-world observations. So, as quickly as possible, we support our clients in securing formulary coverage with payers that links back to the initial trial results but becomes predicated on future real-world results. This might take the form of risk-based contracting or some other type of contracting that will allow for some early utilization that can then be viewed through the lens of real-world evidence needs. Real-world evidence is key to understanding the value of positive outcomes in the postapproval treatment population. Some might refer to this as “coverage with evidence development,” and there are a host of ways we support this activity with our clients.
There’s a national debate going on right now about healthcare in the United States. How does politics influence your work?
Renick: For basically a century now, about every ten years there is a big development in healthcare that tends to be tied to the White House, going back to the launch of Medicare and Medicaid in the sixties to the HMO Act of the seventies, with the latest being the ACA under the Obama administration. And we’re still waiting to see what we might get now—or not—with the current administration.
We were front and center when the ACA was launching about eight years ago. In that case, the big considerations were around coverage expansion, primarily to lower-income groups. The question becomes, within that population, “What are their most frequent diseases and conditions?” Our pharma clients have to decide if they’re going to focus a lot of attention on those new markets or if they aren’t. This means they have to evaluate their portfolio and determine, “Is this going to be a group that we want to place a lot of emphasis on?”
What have you learned throughout your career?
Renick: Collectively, what my experience has taught me is that all the different parties in the healthcare system want to do the right thing. Across the payer group, the pharma group, and the provider group, we all want to see patients get better and be healthier. We may have differences on how we evaluate what each party is doing and what we’re charging for various activities and products, but the good news is there is a collective, strong desire to elevate quality in healthcare and to improve patient outcomes. What’s so incredibly rewarding about the work we do on behalf of our clients is that the end result should be value realization for all parties, with the ultimate beneficiary being the patient.
