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Current Economic and Health Care Conditions call for Companies to Hire Experienced Executives
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Mark N ReevesExperienced Pharmaceutical
& Biopharmaceutical Account Manager
http://www.linkedin.com/in/mreeves4
Outline Models of Change The Quest for Value Political Scenarios and Implications What does all this mean for the
Pharmaceutical & Biotech industries and your customers?
Reasons why I can help your organization
Page 2
Models of Change Pearl Harbor
A sudden crisis causes fundamental change The Tipping Point
Pressures build to an inflection point of change Glacial Erosion
Steady growth of grinding, inexorable and hard to resist pressures Aging Technology Unaffordability Disparities Tiering
Page 3
The Holy TrinityCostQualityAccess(Security of Benefits)
Page 4
Page 5
Value = (Access+Quality+Security) Cost
Health Care Spending per Capita in 2004 (Adjusted for Differences in the Cost of Living)
$6,102
$3,165 $3,043 $3,159 $3,120
$2,552 $2,508$2,249 $2,083 $2,094
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
UnitedStates
Canada Germany France Australia OECDMedian
UnitedKingdom
Japan NewZealand
Spain
Page 6
Source: OECD Health Data Published in Health Affairs, Volume 26:5 2007
International Health Comparisons, 2004-05Country Health
Care Spending ($ per Capita) 2004
Pop’n over 65 (percent) 2004
MRI per million
Female Life Exp (years)
Infant Mortality (per 000) 2005 est
USA 6,102 12.4 8.2 79.8
6.5
Canada 3,165 13.0 4.2 82.2 4.8
Germany 3,043
18.3 5.5 81.3 4.2
France 3,159 16.4 2.7 83.0
4.3
UK 2,508 15.7 4.0 80.4 5.2
Japan 2,249 19.0 35.3 85.2 3.3
Spain 2,094 17.6 6.2 83.1 4.4
Hungary 1,276 14.9 2.5 76.7 8.6
Korea 1,149 8.5 7.9 80.0 6.3
Turkey 580 6.6 3.0 70.9 41.0
Page 7Source: OECD 2002-2007
International Health Comparisons, 2004-05Country Practicing
MDs per 1000
MD Visits per capita
Acute Care Bed Days per capita
Alcohol Consumption (liters per person aged 15 plus)
Tobacco Consumption (% pop daily smokers)
Overweight or obese (BMI > 25)
USA 2.4 3.9 0.7 8.4
17.0 66.3
Canada 2.1 6.1 1.0 7.9 15.0 57.5
Germany 3.4
n/a 1.8 10.1 24.3 49.2
France 3.4 6.7 1.0 14.0
23.0 34.6
UK 2.3 5.3 1.1 11.5 25.0 63.0
Japan 2.0 13.8 2.1 7.6 29.4 24.9
Spain 3.4 9.5 0.8 11.7 28.1 48.4
Hungary 3.3 12.6 1.7 13.2 30.4 52.8
Korea 1.6 10.6 n/a 8.3 n/a n/a
Turkey 1.4 3.1 0.4 1.5 32.1 43.4
Page 8Source: OECD 2002-2007
Why the Big Difference? The Fallacy of Excellence The Six-Point Spread
Everyone makes more money: Not just doctors; higher prices and incomes for everyone
Administrative waste motion: 25%-30% price of pluralism
Intensive and expensive use of technology End-of-life care: 30% of Medicare Intensive use of diagnostics, procedures and high-tech
interventions Primary versus specialty care balance
Is It Fixable?Some is culture: Values, expectations and attitudesSome is population differences: Way too much is
made of this; e.g., The Natural Experiment PaperMost is policy, management and payment system
Page 9
Page 10
Premium Increases Compared to Other Indicators, 1988-2007
0.02.04.06.08.0
10.012.014.016.0
1988
1993
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Perc
enta
ge
Health Insurance Premiums Workers EarningsOverall Inflation
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2006; KPMG Survey of Employer-Sponsored Health Benefits: 1988, 1993, 1996, 1998; Bureau of Labor Statistics, 2000.
^
Health Care Costs and Consequences For the Uninsured: Rising From 45 Million Today to 56 Million in 2013 For the Working Poor: In 1970, Health Benefits Cost 10% of the
Minimum Wage; Today It Is 100% For the Median Household: Health Benefits Are 20% of Median
Compensation; Will Rise to 60% by 2020 if Trends Continue For Retirees: A Couple on Retirement at 65 Needs $200,000 in Cash to
Pay for Lifetime Out-of-Pocket Costs for Medical Care For Small Businesses: Only 60% of Firms Offer Insurance in 2005;
Down From 69% in 2000 For Big Business: Delphi Goes Bankrupt; Big Auto Renegotiates
Because Corporate Health Care Costs Surpass the Net Profit of All Business
For Big Labor: UAW, SEIU, AFL-CIO Conflicts, Challenges and Opportunities for Strife
Page 11
Quality Shortfalls: Getting it Right 50% of the Time
Adults receive about half of recommended care
54.9% = Overall care 54.9% = Preventive care 53.5% = Acute care56.1% = Chronic care
Page 12
Adherence to Quality Indicators
10.5%
22.8%
32.7%
40.7%
45.2%
45.4%
48.6%
53.0%
53.5%
53.9%
57.2%
57.7%
63.9%
64.7%
68.0%
68.5%
73.0%
75.7%
0% 20% 40% 60% 80% 100%
Alcohol Dependence
Hip Fracture
Ulcers
Urinary Tract Infection
Headache
Diabetes Mellitus
Hyperlipidemia
Benign Prostatic Hyperplasia
Asthma
Colorectal Cancer
Orthopedic Conditions
Depression
Congestive Heart Failure
Hypertension
Coronary Artery Disease
Low Back Pain
Prenatal Care
Breast Cancer
Percentage of Recommended Care Received
Not Getting the Right
Care at the Right Time
Source: McGlynn EA, et al., “The Quality of Health Care Delivered to Adults in the United States,” New England Journal of Medicine, Vol. 348, No. 26, June 26, 2003, pp. 2635-2645
Quality and Efficiency Vary Widely by State
Health AffairsApril 7, 2004
The Progressive Transformation Story Cost and Quality Are Correlated Inversely Utilization Is Not Based on Need and Doesn’t
Create Outcomes Measurement Matters Transparency on Cost and Quality Will:
Embarrass providers to improveMotivate payers to differentially payMotivate consumers to change providersSteer business to the high-performance providersDo all of the above given enough time
Re-engineering of Delivery System Will Ensue Value Gains Will Make Health Care More
Affordable and of Much Higher Reliability and Quality
Page 14
The Future of Health Care in the OECD
Fat People Meet Skinny
BenefitsPage 15
Consumer Use of Quality Ratings Remains Low
Page 16
Considered a change based
on these ratings
Seen information that rates ...
Actually made a change
Physicians 13% 2% <1%2001
15% 1% 1%2006
Health Plans18% 4% <1%2001
23% 4% 1%2006
Hospitals22% 4% 2%2001
21% 3% 1%2006
Source: Harris Interactive, Strategic Health Perspectives 2001-2006
Page 17
Primary Care PracticesWith Advanced Information Capacity
* Count of 14: EMR, EMR access other doctors, outside office, patient; routine use electronic ordering tests, prescriptions, access test results, access hospital records; computer for reminders, Rx alerts, prompt tests results; easy to list diagnosis, medications, patients due for care.
Percent reporting seven or more out of 14 functions*
72
8
32
59
87 83
19
0
25
50
75
100
AUS CAN GER NETH NZ UK US
Source: 2006 Commonwealth Fund International Health Policy Survey of Primary Care Physicians.
Page 18
Capacity to Generate List of Patients by Diagnosis
Percent reporting very difficult or cannot generate
14
43
10 7 61
33
0
25
50
75
AUS CAN GER NETH NZ UK US
Source: 2006 Commonwealth Fund International Health Policy Survey of Primary Care Physicians.
Page 19
30
95
79
58
4341
72
0
25
50
75
100
AUS CAN GER NETH NZ UK US
Percent reporting any financial incentive*
Primary Care Doctors’ Reports of any Financial Incentives Targeted on Quality of Care
* Receive or have potential to receive payment for: clinical care targets, high patient ratings, managing chronic disease/complex needs, preventive care or QI activities.
Source: 2006 Commonwealth Fund International Health Policy Survey of Primary Care Physicians.
What We Have to Change …Not Much Except … Our Values Our Strategic Focus: From Pimp My Ride to
Primary Care and Prevention Our Reimbursement System Our Delivery System Our Individual and Collective Behavior Our Expectations Our Business Models Our Electronic Infrastructure to Support It All
Page 20
Key Driving Forces: Political Presidential Election Year Where Candidates Are
Focusing on Change Many Republican Incumbents in House and Senate
Not Seeking Re-election Possible Big Turnout of Youth: The Echo Boom Can’t
Drink Yet, but They Can Vote Health Care Is the Number Two Domestic Issue
(Behind the Economy) Among Democrats and Independents
Growing Sense of Anti Corporatism Even Among Republican Candidates (Huckabee and McCain)
The big move to a Government driven Health Care System
Page 21
Republican and Democratic Attitudes about Who Has the Best Health Care System
Debating Health: Election 2008, Harvard School of Public Health/Harris Interactive. March 5-8, 2008
19%
68%
52%
32%
The healthcaresystems ofsome other
countries arebetter
United Stateshas the besthealthcare
system in theworld
DemocratsRepublicans
Republican and Democratic Beliefs about the State of Healthcare
55%
58%
32%
94%
20%
10%
Very serious problemthat many Americans
do not have healthinsurance
Satisfied with qualityof healthcare in this
country
Satisfied with cost ofhealthcare in this
country
Republicans Democrats
NEJM, “Health Care in the 2008 Presidential Primaries,” January 2008.
Key Driving Forces: Economic Economic Slowdown 2008-2012 and may a slow recovery Continued Involvement in Iraq Short Term Means Big
Government Deficits Little Government Opportunity for Big Expansion in
Short Run Subprime Mess Lingers and Perhaps Worsens, Declining
Consumer Confidence, Weakening Dollar, Continued High Energy Prices.
Out of control stimulus packages that have done little more than make the possibility of future high inflation
Business Sees Profit Squeeze After Long Run-up and High Performance Expectations From Investors
Page 24
Key Driving Forces: Health Reform Health Reform Options Are in a Narrow Range (Democrats’ Positions Are Right
of Richard Nixon’s) New American Compromise of Shared Sacrifice and Incremental Expansion of
Coverage Is Favored by Both Democratic Presidential Candidates and Some Republicans at State Level
Focus Is on Coverage Expansion for an Anxious Middle Class; Not Wholesale Transformation of Health Care, but …
Health Care Glitterati Honing in on Elements of a Compromise (Commonwealth Fund 15 Is a Good Starting List of Cost Containment Options)
Unlikely Coalitions Are Forming; e.g., SEIU, Wal-Mart Big Actors Are Staking Positions Near and Around the New American
Compromise; for Example, the AHA, AHIP, Mayo Clinic, Committee on Economic Development and Others
Big Business Not as Ready to Bail Out of Health Care as Some Pundits Think Seniors Are Satisfied With Medicare (Including Part D) and Are Not Pressing for
Health Reform of Medicare Yet, but How Will Part D Play in 2014? Doctors Are Cranky and Depressed Managed Care Organizations are struggling to survive and keep their doors open
Page 25
Page 26
61%
96%
18%
42%
85%
85%
100%
10%
20%
77%
We have to stay involved in health benefits;otherwise, the government will take over health care,
and our employees will not be well served.
It is important for us to continue to provide healthbenefits to attract and retain workers in a competitive
labor market.
Health care is not our company's core competency,and we would welcome any opportunity to transfer
the responsibilty to the government.
Health care is not our company's core competency,and we would welcome any opportunity to transfer
the responsibility to individual employees.
Employers can effectively manage the health andhealth care on behalf of employees.
Jumbo Employers * (PBGH)Employers
Source: Harris Interactive, Strategic Health Perspectives 2007N=20* Pacific Business Group on Health, July 2007 Retreat
% Answering Describes My Company Well
Page 27
61%
96%
18%
42%
85%
85%
100%
10%
20%
77%
We have to stay involved in health benefits;otherwise, the government will take over health care,
and our employees will not be well served.
It is important for us to continue to provide healthbenefits to attract and retain workers in a competitive
labor market.
Health care is not our company's core competency,and we would welcome any opportunity to transfer
the responsibilty to the government.
Health care is not our company's core competency,and we would welcome any opportunity to transfer
the responsibility to individual employees.
Employers can effectively manage the health andhealth care on behalf of employees.
Jumbo Employers * (PBGH)Employers
Source: Harris Interactive, Strategic Health Perspectives 2007N=20* Pacific Business Group on Health, July 2007 Retreat
% Answering Describes My Company Well
Page 28
5867
57
4233
43
70666272
78
293438
2822
1995 1997 1999 2000 2001 2002 2006 2007
Physician Satisfaction with Current Practice Situation
% Satisfied
% Dissatisfied
Source: Harris Interactive, Strategic Health Perspectives 1995-2007
The Commonwealth Fund 15 Promoting Health Information Technology Center for Medical Effectiveness and Health Care Decision Making Patient Shared Decision Making Public Health: Reducing Tobacco Use Public Health: Reducing Obesity Positive Incentives for Health Hospital Pay-for-Performance Episode-of-Care Payment Strengthening Primary Care and Care Coordination Limit Federal Tax Exemptions for Premium Contributions Reset Benchmark Rates for Medicare Advantage Plans Competitive Bidding Negotiated Prescription Drug Prices All Payer Provider Payment Methods and Rates Limit Payment Updates in High-Cost Areas
Page 29
Covering the Uninsured:Who Pays? Who Gets? Who Cares? Who Pays?
American health care financing is regressiveSingle payer is a massive transfer of income from rich
to poorMaking $20,000 earners buy a $15,000 health care
policy is problematic Who Gets?
Having a card doesn’t guarantee getting careGrowing use of ER, minute clinics and off-shore options
even by the insured population Who Cares?
How much reimbursement goes with the card?Do we need coverage, or do we need care?Are the insured getting the right care?
Page 30
Number of Uninsured 200516.7
13.3
10.7
5.3
0
2
4
6
8
10
12
14
16
18
<100% 100-199% 200-399% 400%+Family Poverty Level
Mill
ions
of N
on-E
lder
ly U
nins
ured
Page 31Source: KFF, 2006
Payment to Cost Ratio (Illustrative)
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
Payment to Cost Ratio
Uninsured Medicare DementedSaudiPrince
Page 32Source: Morrison Estimates, in other words a good guess
Payment to Cost Ratio (Illustrative)
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
Payment to Cost Ratio
Uninsured Medicare DementedSaudiPrince
Page 33Source: Morrison Estimates, in other words a good guess
Single PayerSchwarzenegger
Political Scenarios Scenario 1: Democratic Landslide
Big majority in SenateMake health reform the key domestic prioritySeize a historic opportunity for reform: coverage
expansion and health system transformation Scenario 2: Democratic Incrementalism
Bailing out Large Banks and Automobile Makers who made bad loans and promised too much to Unions concerning benefits thus creating the current situation
Scenario 3: Republican Landslide Republicans win back the White House Republicans work to regain certainty for small to large
companies sitting on large chunks of cash The stock market rebounds as investors gain
confidence that their life’s saving won’t go down the tube again.
Page 34
Features of Building Blocks + System Reform and Presidential Candidates’ Approaches to Health Care Reform
Building Blocks/ System Reform Clinton Republican Obama
Coverage Expansion
Aims to cover everyone X X XIndividual requirement to have insurance X X Children onlyEmployer shared responsibility X X XGroup insurance “connector” X X XMedicare/public plan option for < 65 X X XSubsidies/tax credits for low- tomoderate income families X X X X
Regulation of insurance markets X X XImproves Medicare benefits for > 65and buy-in for older adults X
Medicaid/SCHIP expansion X X XSystem Improvements
Expanded use of Health IT X X X XMedical effectiveness research X X X XPay providers for performance X X X XReduced Medicare Advantage payments X X XNegotiated Medicare Rx prices X X XPrimary care and care coordination X X X X
Source: S. R. Collins and J. L. Kriss, Envisioning the Future: The 2008 Presidential Candidates’ Health Reform Proposals,The Commonwealth Fund, January 2008.
Reputation of Pharma and Other Healthcare Industries was Improving after declines in 1990s
2000 2001 2002 2003 2004 2005 2006 2007 1997-2007 2006-2007
Supermarket N/A N/A N/A 74 79 84 83 84 N/A +1
Computer software companies 71 72 48 57 62 67 67 61 -10 -6
Online search engines N/A N/A N/A N/A N/A 68 67 77 N/A +10
Computer hardware companies 70 71 49 57 64 74 64 64 -7 0
Banks 49 46 54 50 52 57 61 56 +4 -5
Packaged food companies N/A N/A N/A 58 62 67 59 55 N/A -4
Hospitals 48 41 56 53 49 59 51 58 +1 +7
Life insurance companies 39 36 34 29 27 44 42 18 -17 -24
Airlines 45 15 47 40 61 62 42 26 -40 -16
Telephone companies 32 27 22 20 17 42 38 35 -26 -3
Car manufacturers 40 40 41 38 44 34 31 46 +2 +15
Pharmaceutical and drug companies 24 20 30 4 -4 13 25 21 -39 -4
Managed care companies such as HMO -27 -30 -12 -23 -23 -13 -3 -20 -33 -17
Health insurance companies -15 -19 13 -12 -20 -19 -3 -21 -34 -18
Oil companies -13 -39 -6 -6 -25 -36 -24 -33 -57 -9
Tobacco companies -34 -37 -36 -32 -30 -28 -25 -46 -18 -21
*Condensed list of industries. (1) *In 1997 “computer companies” were rated together (i.e., hardware and software companies were not measured separately). (2) The trends for airlines are from 1998, as they were not included in the 1997 survey. N/A= Not Asked . Source: Harris Poll #79, August 8, 2007.
Do you think each of the following generally do a good or bad job of serving their consumers?
% Point difference between those indicating good vs. bad
Reputation of Pharma and Health Insurance Industries was Improving after big declines in the 1990s
-40
-30
-20
-10
0
10
20
30
40
50
60
70
2000 2001 2002 2003 2004 2005 2006 2007
Do you think each of the following generally do a good or bad job of serving their consumers?
% Point difference between those indicating good vs. bad
Pharmaceutical and drug companies
Managed care companies such as HMOs
Health insurance companies
Source: Harris Poll #79, August 8, 2007.
Hospitals
Total Drug Spending in US 1965-2017
0
100
200
300
400
500
600
Bill
ions
Total PublicPrivate InsuranceOut-of- Pocket
Source: CMS, 2008
The Changing Payer Mix: The Long View
0%
20%
40%
60%
80%
100%19
65
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
Total PublicPrivate InsuranceOut-of- Pocket
Source: CMS, 2008
Total Drug Spending in US 1965-2017
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Out-of- PocketPrivate InsuranceTotal Public
Source: CMS, 2008
Public Payment: Impact of Part D
0%
20%
40%
60%
80%
100%19
65
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
Other FederalOther S&L Medicaid StateMedicaid FederalMedicare
Source: CMS, 2008
27%
41%
71%68%63%
55%
15%
17%
11%
8%
5%
12%
0%
10%
20%
30%
40%
50%
60%
70%
80%
2000 2001 2002 2003 2004 2005
% C
over
ed W
orke
rs W
/3+
Tier
ed F
orm
ular
y
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
% C
hang
e in
Rx
Spen
ding
SOURCES: Kaiser Family Foundation & IMS Health
0
10
20
30
40
50
25 30 35 40 45 50 55% Non-Compliant Patients
Mill
ions
of U
S Pa
tient
s
ADHD
SOURCE: Manhattan Research
Cancer
Heart Disease
Diabetes
HRT Skin Conditions
Asthma
Smoking Cessation
InsomniaChronic Pain
Depression
Migraine
Hypercholesterolemia
Arthritis
Hypertension Allergies
Acid Reflux
SOURCE: Ellis JJ. J Gen Intern Med 2004;19:639-646.
$0 to <$10
Compliance with Statin Therapy Stratified by Mean Prescription Copayment
$10 to <$20
>$20
NET WORTH All Workers Ages 25-34 Ages 35-44 Ages 45-54 Ages 55+ All Retirees
<$10,000 35% 50% 36% 24% 26% 32%
$10,000-$24,999 10% 18% 16% 10% 5% 13%
$25,000-$49,999 13% 9% 10% 11% 9% 10%
$50,000-$99,999 8% 10% 14% 15% 11% 12%
$100,000-$149,999 7% 7% 7% 9% 11% 8%
$150,000-$249,999 7% 1% 9% 10% 9% 12%
$250,000-$499,999 7% 1% 4% 12% 11% 5%
>$500,000 7% 4% 4% 9% 17% 9%
Reported Total Savings and Investments by Amount and Age Group
SOURCE: 2007 Retirement Confidence Survey – EBRI
Summary, Conclusions, Forecasts…“So What Does this Mean for You?”A physician-centric view of the customer base is no longer sufficient
as a tool to measure the commercial risk you faceConsumers and third party views on affordability must be evaluatedPR and policy ramifications also deserve consideration
Assumptions that the attractiveness of the current specialty drug model will continue indefinitely are probably over-optimistic – this is not a long-term safe haven
Pursuit of new markets and new customers internationally is not likely to allow you to circumvent the big policy/strategy issues of healthcare
Brand and corporate planning now needs to include payer/reimbursement considerations as a “must do” – sooner is better than later
Partnership with these entities is both necessary and possible, and should be pursued
Good insight into the “big picture” issues is important in helping you avoid “penny wise/pound foolish” approaches and allow you to develop strategically sound solutions to business problems
The New Pharma Business Model: Some ThoughtsDemonstrated Scientific Innovation will always win Payer sensitive innovation
Novel Clinical pay-off compared to all available therapies Payer’s dream: reduction in PMPM cost for therapy
Radical restructuring of the sales and marketing function Focus on evidence and guidelines Comparative Effectiveness Evidence Consultative selling Reduction in traditional channels Making the value case to end user consumers Focus sales effort on compliance, adherence and
persistence among chronically ill not just new RxConditional Approval to Market Entry
Monitoring in real clinical use Reference Pricing
Global Scale, Global Pricing, Global Product Launches It is still a great business
A compelling Story to Hire Mark N Reeves
Dynamic, award-winning, Regional & National Account Manager. 22 years of top performing sales Account management, contracting, and business development
experience. Strategic thinker and results-driven team player. Excellent collaborator, with influential interpersonal skills who works
effectively in a heavily matrixed environment. Excellent oral and written communication skills, analytic skills, and a
successful negotiator. Experienced in launching branded drugs: Cardiovascular,
biopharmaceuticals for immune diseases, Rheumatology, Endocrinology, Neurology, Infectious diseases, Lipid lowering, Nephrology, Transplantation and immunosuppressant’s, Psychiatry and Primary Care.
Out of the box thinker who do analysis first then works in internal and external customers to come up with results driven goals for their challenges and opportunities.
