As I prepare to head out to Scottsdale Arizona for the HSCA conference to speak with Health Systems and their GPOs on what the next 3-5 years hold for us, the number one issue facing this class of trade is helping them recognize that the product landscape and reimbursement have shifted on them but they and their models unfortunately have not changed to a great degree.
Health Systems continue to place pharmacy under Materials Management, which is a supply chain function, or more accurately, a cost center. After working with Hospitals and Health Systems during my thirty-year career in industry, and having many conversations in the pharmacy department, (which is usually in the basement, somewhere behind the Lab) I’ve learned that the number one task of the Director of Pharmacy is to accurately forecast and land the spend budget for pharmaceuticals. With the evolution to Cell and Gene, Orphan, Rare, and Specialty products, this is becoming more difficult. And while the Payer team within Health Systems should be thinking about reimbursement and tasking the pharmacy department to become more adept at understanding how varies payers reimburse across the Health System’s various models, and having pharmacy purchase against those frameworks, they are stuck in some old model buying on a dead net relationship to WAC and turning to the payer to charge 2-3X for the product. This thinking and this model are broken.
During my presentation, I will cover the product archetypes and why this is having a huge impact on Health Systems and all channels, on Cell and Gene Therapies, of which we’ve seen 5-6 of the 1000 that coming in the next 2-5 years, on Integrated Health Systems and the pieces of their models from outpatient to the newly forming Ambulatory Home Infusion centers, to the power struggle that Health Systems are facing as Payer channels seek to carve out the physical service of the patient and serving the patients themselves, to the policies that are facing pharmaceutical pricing and reimbursement, and I’ll wrap with an outlook on what we can all do about this situation to prepare for the new world that is coming.
As a sneak peek, it should be an interesting session as we’ll hit the reality that is coming with direct-to-payer, where the drug will be shipped into systems pre-paid by the health plan and Health Systems and providers will simply be paid for the prep, administration and post-care of the patient. That is the world we are staring down with CGT and ORD. Looking forward to a lively discussion in Scottsdale.