PBMs: Something old and something new


You may not know this (I admit I didn’t) but there’s a trade association for PBMs called the Pharmaceutical Care Management Association which yesterday was one of the first to come out and laud the Administration’s call for improving the Nation’s Health Care Information Infrastructure. That reminded me of something old and something much more recent about PBMs. I’ve written pretty widely about PBMs in THCB, with the much shorter version being that despite the fact that they have totally failed in their stated mission to keep the lid on drug prices, and for that matter haven’t really done much to advance care management (or "health improvement"), they have made a business out of being decent claims processors and by inserting themselves firmly in the financial dealings between their clients and their "partners" in the pharma world. filed Monday against Caremark:

  No wonder that the biggest PBM, Medco, is starting its first ever PR campaign. There’s no question in my mind that PBMs need to find what we consultants call a new value proposition–but then I’ve been thinking that for a while. What that new value prop is and whether they can get away with doing what they’ve been doing for a while longer while they figure it out is of course up in the air.

It’s interesting that the PBMs are now loudly backing the new health IT initiative (more on that from THCB tomorrow when I hear back from my spies in DC) as the data processing part of their business was indeed launched by the last major change to Medicare. That was the ill-fated Medicare Catastrophic Act which was passed in 1988 and repealed in 1989. One thing that its passage caused was the installation of what ended up being NDC and PCS’ pharma claims and editing transaction systems. So now when you go to the drug store, your claims and co-pay information is right there for the pharmacy tech to read off to you–no, you didn’t notice that happening in the doctor’s office! So it looks like PBMs have decided that the new Medicare "Modernization" Act with its somehow associated IT initiative will do something equally good for its business in the future.

They’d better hope so. Whatever the future holds, their present continues to come under increasing attack. THCB has mentioned before the attempt by large employers to go around the PBMs in negotiating rebates, and several of the bigger PBMs have been settling with trial lawyers and their customers over the extremely opaque nature of their rebate mechanisms. I thought that the plaintiff’s attorney put it rather well in a further lawsuit

The lawsuit says that Caremark keeps discounts from drug makers and pharmacies instead of sharing them with members of the Morrell benefit plan. It says Caremark secretly negotiates rebates for drugs and keeps that money. It also says that the company provides plan members with expensive drugs, instead of cheaper alternatives, to get rebates.

Health Information Technology: A Guide to Study Design For the Perplexed


Evidence is mounting that publication in a peer-reviewed medical journal does not guarantee a study’s validity. Many studies of health care effectiveness do not show the cause-and-effect relationships that they claim. They have faulty research designs. Mistaken conclusions later reported in the news media can lead to wrong-headed policies and confusion among policy makers, scientists, and the public. Unfortunately, little guidance exists to help distinguish good study designs from bad ones, the central goal of this article.

There have been major reversals of study findings in recent years. Consider the risks and benefits of postmenopausal hormone replacement therapy (HRT). In the 1950s, epidemiological studies suggested higher doses of HRT might cause harm, particularly cancer of the uterus. In subsequent decades, new studies emphasized the many possible benefits of HRT, particularly its protective effects on heart disease — the leading killer of North American women. The uncritical publicity surrounding these studies was so persuasive that by the 1990s, about half the postmenopausal women in the United States were taking HRT, and physicians were chastised for under-prescribing it. Yet in 2003, the largest randomized controlled trial (RCT) of HRT among postmenopausal women found small increases in breast cancer and increased risks of heart attacks and strokes, largely offsetting any benefits such as fracture reduction.

The reason these studies contradicted each other had less to do with the effects of HRT than the difference in study designs, particularly whether they included comparable control groups and data on preintervention trends. In the HRT case, health-conscious women who chose to take HRT for health benefits differed from those who did not — for reasons of choice, affordability, or pre-existing good health. Thus, although most observational studies showed a “benefit” associated with taking HRT, findings were undermined because the study groups were not comparable. These fundamental nuances were not reported in the news media.

Another pattern in the evolution of science is that early studies of new treatments tend to show the most dramatic, positive health effects, and these effects diminish or disappear as more rigorous and larger studies are conducted. As these positive effects decrease, harmful side effects emerge. Yet the exaggerated early studies, which by design tend to inflate benefits and underestimate harms, have the most influence.

5. Use measurement to promote the concept of the rapid-learning health care system.


Initiatives to promote performance measurement need to be accompanied by support to improve care. Quality measure data should not only be technically correct, but should be organized such that their dissemination is a resource to aid in quality improvement activities. As such, quality measurement should be viewed as just one component of a learning health care system that also includes advancing the science of quality improvement, building providers’ capacity to improve care, transparently reporting performance, and creating formal accountability systems.

There are several strategies to make quality measure data more actionable for quality improvement purposes. For example, for publicly reported outcome measures, CMS provides hospitals with lists of the patients who are included in the calculation. Since the outcomes may occur outside the hospital for mortality and for readmissions that are at other hospitals, this information is often beyond what the hospitals already have available to them. These data give providers the ability to investigate care provided to individual patients, which in turn can support a variety of quality improvement efforts.

PHARMA: The Industry Veteran responds to “mountebank” Brian Towell


Oh dear.  The Industry Veteran was not pleased about what he read from Brian Towell in THCB two days ago.  And he’s in a particularly feisty (not to mention rude) mood about it! So send the women and children outdoors before you read this:

    The quality of THCB took a precipitous decline yesterday with your decision to print Brian Towell’s display of excrement.  The substantive content of his long, tedious wail consisted largely of his claim that he possesses wiser approaches to drug discovery than the clinicians and bench scientists now working for the pharmaceutical companies.  Maybe so, and maybe he also has a direct line to the Almighty, but somehow I doubt the likelihood that either condition obtains.  The drug discovery wisdom he chooses to impart in messianic tones consist of such claims as: organizing development by therapeutic category limits opportunities for serendipitous discoveries in basic science; blockbusters dontt necessarily come from targeting big patient populations; combinatorial chemistry isn’t the pat answer for drug discovery and; the one pill per genotype approach has major holes.  Well, a dog has four legs and if your parents don’t have any kids, there’s a good chance that you won’t either.  Simply put, anything of value that your countryman says about drug discovery is not new.  Pharma companies big and small are all trying the approaches he suggests to one degree or another.  All senior R&D managers know that we’re dealing with gambling probabilities here and they’re all smart enough to hedge their bets.  Anything that Brian says outside the common practice possesses the value of a three-dollar bill.    I find Brian’s evangelical tone especially annoying.  By turns he adopts postures that are prophetic, beleaguered, resentful and beatific.  It’s charming that you may want to buck up the prospects for a fellow Brit, but this guy reminds of the transplants satirized by Evelyn Waugh.  After leaving the motherland and landing in a country with a looser social structure, he thinks he has arrived over the rainbow.  Like Humbert Humbert at the end of Lolita, Brian probably figures he might as well drive on the wrong side of the road too.     What are you doing giving so much space anyway to a soothsayer on drug discovery?  Let him peddle his shopworn ideas over to DB Medical Rants or some other such site.  I thought THCB focuses on issues involving healthcare access, quality, cost, marketing and ethics.

OFF-TOPIC/TECH: In the shower this morning I was thinking of going short, with UPDATE


And in my fantasy stock trading moments — Damn Damn Damn

But you might like my commment buried in a post over at Ezra’s when the stock was at $450, ooh as long ago as early last month!

Ezra’s one line post was  Not that I don’t love my magazine and all, but I’m applying for a job with google. He was excited about the ncie work benefits and the stock options. My comment was “I’m thinking of going to work there, so long as the options they give me are puts.”

Once again—all talk no action at this end!

UPDATE: While I was mentally jerking off, this guy closed the deal using logic as well as intuition.  But for some reason only went short 10 shares. Still he’s up $500 more than I am!

Calendar: Medically-Related Social Media Websites


As four Doctor of Pharmacy (PharmD) fellows affiliated with Rutgers and Thomas Jefferson University, we are conducting an online survey on the use and evaluation of medically-related social media websites. We are aiming to gather your feedback as the end-user on what you expect to find or benefit from medically-related social media sites.  This way, any potential unmet needs can be addressed in the future based on your valued responses.

Please visit our survey here: https://www.surveymonkey.com/s/T6K8XW8. All participants will remain anonymous and the survey will not ask for any private health information.  It should take a maximum of 10-15 minutes to complete all of the questions.

We plan on presenting the results of our survey as a poster presentation at the annual Drug Information Association (DIA) conference in Carlsbad, CA on March 9th, 2011.

We appreciate your participation and support. Please feel free to reach out to us if you have any questions. Thank you!  Dipam Doshi, Ashley Johnson, Edward Lee, and Irene Wang.

Irene Wang is a PharmD fellow affiliated with Rutgers University. She works for Daiichi Sankyo Inc.

Sex Sells (or at Least Leads to Some Interesting Analytics)


One guarantee in the healthcare sector is that when it comes to personal health information (PHI), there is no lack of issues and pundits to discuss security and privacy of such information/data. If one does not jump up and down bleating on about the sanctity of PHI and the need to protect it at all costs, well then you may be labeled a heretic and burned at the proverbial stake.

Now don’t get us wrong. Here at Chilmark Research we firmly believe that your PHI is arguably the most personal information you have and you do have a right to know exactly how it is used. Whether or not you own it remains to be seen for we have seen, read and heard one more than one occasion – some healthcare providers believe that it is their data, not yours, and may only begrudgingly give you access to some circumscribed portion of your PHI that they have stashed in their vast HIT fortress, or worse, scattered in a number of chart folders.

But where we do differ with many on the sanctity of PHI is that the collective use of our de-identified PHI on a community, regional, state or even national level can give us some amazing insights into what is working and what is not in this convoluted thing we call a healthcare system in the US and needs to be strongly supported. Unfortunately, we do a terrible job as a country in educating the populace on the collective value of their data to understand health trends, treatments and ultimately ascertain accurate comparative effectiveness. This leaves the door wide open for others to use the old FUD (fear uncertainty and doubt) factor to keep patients from actively sharing their de-identified PHI.

TECHNOLOGY: More HIT notes — barriers to EHR acquisition session


Brad Holmes from Forrester breaks up docs by age (under 44 makes them much more accepting of technology). Breaks up demand for software based on what docs want. Want ePresribing and charting, get Medicalogic (GE). Want diagnosis, use Next Gen. So you buy based on what you do. No one size fits all. BUT PMS systems revenues going down, EMR applications are taking off and 2004 will cross the line of PMS revenue

Blackford Middleton (ex Medicalogic, these days at Partners Healthcare in Boston) has worked out the cost-benefit model for rolling out their "LMR". Now used by 3500 of their 7000 affiliated physicians. The biggest impact is for drug savings, by using the on-formulary drugs. For CPOE there are levels; most basic is structuring data capture, second is providing some patient data, third is decision support based on algorithms and the patient record. Partners has the most advanced, and the result is that per provider saves up to 9 ADEs per year and costs savings of up to 28K per year per provider. Most valuable ones have by far the most impact ($28K per year vs $3k). For systems capitated at 14% they think this will cost solo providers a whole lot, and only save money for big groups. BUT Of all the benefits, only 11% go to the physicians. The rest goes to everyone else in the system, primarily the payers.

Gloria Austin from Brown and Toland, a 100% capitated group in San Francisco is just getting their EMR modules up (and now have lab data online) by working with affiliated hospitals, etc , etc. It’s an interesting talk (although her charts suck for readability) but I think it’s mostly irrelevant to most physicians in the US. But they are focused on implementing the EMR by concentrating on providing the physicians with the benefits, and creating the infrastructure foundation to do that. This process started for B&T in 2000 and its taken them till now to get it up. What is it costing them? $8m in first 4 years and another $10-12m going forward. Using IDX Flowcast and Allscripts Touchcast (because they were already using them and the integration was easier) plus you can import this into the Business Intelligence tool they use (Cognos). And in a nutshell this is really, really hard work, and costly organizationally to do. But she believes that you can create a seamless group that looks like a Palo Alto clinic, or a Kaiser.

Blackford said it, in reply to a question from me….there are potential operational improvements for small and solo docs (not just savings to capitated systems) but we have a major public policy problem getting these physicians to the table. And (he didn’t say) no real answers.

It’s Amy Tendrich’s birthday, time for Grand Rounds


It's Amy Tendrich's birthday. I happen to know she's on a plane on her way to Health 2.0 Meets Ix in Boston, but that hasn't stopped her putting together a great Grand Rounds at DiabetesMine.

POLICY: Scully guilty, but not legally, with BRIEF UPDATE


In a splitting of hairs in a report from the HHS inspector general, Tom Scully the administrator of CMS when the Medicare bill was passed, was found guilty essentially of lying to Congess. In fact while Scully pressured the main CMS actuary so that he didn’t reveal that the MMA would cost more than $500 billion rather than the $400bn that the Administration told Congress, he didn’t break the law in doing so.

The irony of all this is that despite the huge pressure the Administration and the leadership brought to bear mostly on House conservatives to vote for the bill, its passage has probably been a negative for the Administration, and will probably be a liability come November.

UPDATE: While neither this story nor the related ongoing enquiry into the bribery on the floor of the House while the bill was being voted on, probably won’t make much difference in real life (i.e. the election), The NY Times report on this story has a couple of juicy factoids:

    In recent weeks, Mr. Scully has registered as a lobbyist for major drug companies, including Abbott Laboratories and Aventis; for Caremark Rx, a pharmacy benefit manager; and for the American Chiropractic Association and the American College of Gastroenterology, among other clients. All are affected by the new Medicare law, which Mr. Scully helped write.

And Pete Stark gets his snide oar in there.

    Representative Pete Stark of California, the senior Democrat on the House Ways and Means Subcommittee on Health, said, "It sounds as though the Bush administration examined itself and found it did nothing wrong."