Latest News

Alex Azar the new HHS Secretary has promised to make healthcare value a top goal. Azar says he will shake up the healthcare system to deliver value to patients. He delivered that message this week to hospital executives at a convention in Washington. Azar said that America is not getting enough for the money spent on health services.

In his speech he outlined ways he plans to encourage better bang for the buck. Azar wants patients to have control of their online health records so they are easier to access across providers. He also wants much greater price transparency so patients know how much they are spending. This is because patient deductibles and co-pays have risen so much that patients, not insurers, are the payers for much of their care. Azar said the fee for service model must change to encourage delivery of outcomes rather than just encourage more tests and procedures.

Citing the Trump philosophy that shaking things up is necessary, Azar promised that innovation will be encouraged through the Medicare system. He vowed to remove regulation that impedes innovative approaches. Although he was talking to hospital executives, Azar said drug companies and doctors also must also deliver value.

Drug companies will be under intense pressure to justify the value of newer and often much more expensive treatments. From Azar’s speech and Trump’s past criticism of drug prices, it is likely we will see government be more willing to intercede on drug pricing. Whether that is through Medicare price negotiation, reimportation, or pressure on patents, it is clear drug companies will feel pressure.

What does all this mean for DTC? It makes it more likely drug companies will advertise branded drugs. They want to raise awareness among the public and doctors of new treatments. By doing so that keeps pressure on payers to cover the newer drugs that are generally much more expensive than older alternatives. While advertising drugs that cost $100k a year might annoy insurance companies it does force them to decide faster on formulary status. They have to respond to their consumer and physician base about why a life saving drug is not covered. Insurers are justified in demanding outcome research but it is hard to refuse covering a drug that extends the lives of patients, particularly if it is advertised widely.

What is clear is American consumers cannot keep paying higher premiums, deductibles, and co-pays that are well above their wage increases. That is not sustainable and the public will demand action. Azar saying a shake up will occur is not bluster. It has to happen or else the single payer advocates will get what they want, a government run healthcare system.

Alphabet, formerly known as Google, has decided to enter the health insurance business according to a CNBC report. The entry of big data companies into health insurance could have significant impact on costs. The Alphabet health subsidiary is called Verily. Why might big data companies affect costs of care?

They have tremendous capabilities to know their user base’s behavioral tendencies. That could lead to better analysis on how to improve communicating targeted health information. This capability is both on a group level and increasingly on an individual basis. Verily could have an enormous opportunity to effect change in terms of health behavior. Knowing us as they do, one can envision an automated outreach to help prevent and treat illness before it escalates into expensive hospital care.

Verily will likely try to work with existing insurers, both public and private, to use their data smarts to lower payer costs. This could be through better identification of populations to message needed health information or to provide individual outreach to individuals identified as high risk or non-compliant on treatment.

If it sounds like big brother watching over you, it is. We may eventually see Verily or another data giant like Amazon become your health advisor and remind you to take a diagnostic test, track your vital signs, analyze your DNA, find the best doctor, make your appointments, store your medical data, and potentially use algorithms to diagnose and offer treatment plans. One can envision an avatar of a doctor replacing the real doctor one day.

Verily is likely trying to make insurance cheaper and more widely available. Clearly, they have a huge financial incentive to enter the market where premiums have become too high for many Americans. I love to hear when innovative private companies are entering the health care sector. I bet they will do a better job at innovation than HHS or some other government department. Whether they merely support the existing insurance industry with consulting or expect to replace it entirely remains unclear.

Drug companies should expect these data innovators to be adept at negotiating prices based on patient outcomes. Verily and others will eventually be able to advise providers, payers, and patients which branded drugs to use. They may also be the ones to sell drugs to patients. No one expected Amazon to dominate the retail world 10 years ago. I would not bet against Verily, Amazon, or a new tech company to reinvent the whole health care delivery system. The world of 2028 will be significantly different in how we interact with payers and providers. Of course, if we get single payer government run healthcare then all bets are off as to innovation. Let’s hope the innovative tech giants get their chance first.

While branded DTC Ads dominate the spending, there are some drug makers investing heavily in disease education. Most do it because when they have a drug for the disease coming out shortly or are in the introductory physician awareness phase for a newly approved drug. They usually have the only drug available for the condition or are the dominant drug in a category.
Disease awareness ads help on many fronts. First, they create patient conversations during the sell in phase between patient and doctor. By not mentioning the brand, the drug maker will not embarrass the doctor if they have not yet heard about it or tried it with patients. Second, drug makers can give insurers some pressure to put the drug soon to be approved or just approved on formulary. Finally, disease education ads can be more flexible creatively as there is no fair balance.

One of the most interesting new ads is on the lesser known effects of Parkinson’s disease. We all know about the tremors from Parkinson’s. I was unaware that one of the effects of Parkinson’s is experiencing delusions. Acadia has launched a compelling disease education campaign on the delusions and hallucinations experienced by sufferers. They call it “Secret Visitors” which was created with their agency STRIKEFORCE. We see those “visitors” in the spot through the eyes of a man who hallucinates and are told over 50% of disease sufferers experience such hallucinations or delusions. The first part of the 60 second ad is shot in a low light as the man is seeing things that are not there.

The final part of the spot is then seen in normal daylight as the voice over discusses treatment options and the man sees his grandchild outside coming for a visit. “Secret Visitors” is a very engaging spot that highlights the effectiveness of disease education ads. Devoting a full 60 seconds to telling a compelling story is what makes a disease education spot a good DTC choice. Acadia has the only approved drug to treat Parkinson’s delusions called Nuplazid, which was approved in the United States in April 2016.

It is not uncommon for drug makers to hold off on DTC until the physician community has been detailed and opinion leaders get some prescribing experience. Allowing the 18 months from approval to the disease education spot, as in this case, is not atypical for a first in class specialty drug. I do not know if a branded spot will follow as that may depend on whether a competitor will enter and when. Nuplazid is a premium priced drug costing about $3000 a month at retail. While not at the very top of the cost curve, $3000 a month is at the higher end of Rx drugs. Of course most patients are insured or get patient assistance so their cost is much less.

Nuplazid may be a blockbuster for Acadia, with some analysts projecting a billion dollar potential. At that sales level, we can expect DTC advertising to continue beyond the well crafted introductory disease education campaign. DTC television used to be for big high incidence disease categories only, but the recent trend is for small market premium priced drugs to do DTC television. Acadia continues the trend and is off to a good start with this campaign.