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Managing Healthcare Reform: Winning Strategies for Engaging the Government Ecosystem That Shapes Healthcare Policy
Managing Healthcare Reform: Winning Strategies for Engaging the Government Ecosystem That Shapes Healthcare Policy
Managing Healthcare Reform: Winning Strategies for Engaging the Government Ecosystem That Shapes Healthcare Policy
Managing Healthcare Reform: Winning Strategies for Engaging the Government Ecosystem That Shapes Healthcare Policy
Managing Healthcare Reform: Winning Strategies for Engaging the Government Ecosystem That Shapes Healthcare Policy
Managing Healthcare Reform: Winning Strategies for Engaging the Government Ecosystem That Shapes Healthcare Policy
Managing Healthcare Reform: Winning Strategies for Engaging the Government Ecosystem That Shapes Healthcare Policy
Managing Healthcare Reform: Winning Strategies for Engaging the Government Ecosystem That Shapes Healthcare Policy
Managing Healthcare Reform: Winning Strategies for Engaging the Government Ecosystem That Shapes Healthcare Policy
Managing Healthcare Reform: Winning Strategies for Engaging the Government Ecosystem That Shapes Healthcare Policy
Managing Healthcare Reform: Winning Strategies for Engaging the Government Ecosystem That Shapes Healthcare Policy
Managing Healthcare Reform: Winning Strategies for Engaging the Government Ecosystem That Shapes Healthcare Policy
Managing Healthcare Reform: Winning Strategies for Engaging the Government Ecosystem That Shapes Healthcare Policy
Managing Healthcare Reform: Winning Strategies for Engaging the Government Ecosystem That Shapes Healthcare Policy
Managing Healthcare Reform: Winning Strategies for Engaging the Government Ecosystem That Shapes Healthcare Policy
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Managing Healthcare Reform: Winning Strategies for Engaging the Government Ecosystem That Shapes Healthcare Policy

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The influence of the Centers for Medicare and Medicaid Services (CMS) on healthcare policy and reimbursement is increasing as the US population ages and healthcare reform unfolds. Federal, state and …

The influence of the Centers for Medicare and Medicaid Services (CMS) on healthcare policy and reimbursement is increasing as the US population ages and healthcare reform unfolds. Federal, state and local government healthcare spending is projected to be 50 percent of national health expenditures by 2021. Consequently, the importance of understanding, translating, and engaging CMS and other influential government agencies/groups will only grow.

Best Practices, LLC conducted this research to help biopharmaceutical executives formulate a strategic approach for optimizing engagement with CMS and the ecosystem of agencies and groups that shape U.S. healthcare guidelines and reimbursement policy. The study identifies current trends and future directions in structure, staffing, collaboration, resource allocations, and most-valued group activities across the biopharmaceutical and medical device sector.

The research examines performance excellence by probing how diverse groups such as Government Affairs, Policy, Managed Markets Marketing and other relevant stakeholders are staffed and organized to influence public policy and regulatory issues, particularly those flowing from CMS and other entities in the public sector healthcare system.

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  • 1. Managing Healthcare Reform:Winning Strategies for Engaging the Government Ecosystem That Shapes Healthcare Policy Best Practices, LLC Strategic Benchmarking Research BEST PRACTICES, ® LLC
  • 2. Table of ContentsI. Executive Summary pp. 4-17  Research Overview pp. 5  Universe of Learning pp. 6  Overview of Data and Issue pp.7-10  Key Findings pp. 11-17II. Universe of Learning: Key Demographics of Participating Companies pp. 18-22III. Align Structures, Resources & Groups To Manage The Healthcare “Ecosystem” pp.23-40IV. Intelligence Gathering: “The Capture” pp.41-55  Being well-positioned to capture vital information From Within The Washington EcosystemV. Intelligence Dissemination: “The Routing” pp.56-64  How to share intelligence & insights with key executives and functionsVI. Intelligence Translation: “The Interpretation” pp.65-72  Determining what Information Coming from the Government Ecosystem means for brands, functions & business lines BEST PRACTICES, ® LLC
  • 3. Table of ContentsIX. Intelligence Implementation: “The Response” pp.73-90  Converting Government Ecosystem intelligence into strategies, plans, tactics and messagesX. Government Affairs pp.91-97  How Companies Place Their Government Affairs Resources To Monitor & Manage Public-sector Healthcare ReformXI. Public Policy Benchmarks pp.98-109  How Companies Place Their Policy Resources To Monitor & Manage Public- sector Healthcare ReformXII. Government Affairs & Public Policy Staffing Benchmarks pp. 110-117  What Staffing Investments Are Companies Making To Manage the Government Ecosystem?XIII.Future Trends & Lessons Learned pp. 118-121XIV.Appendix pp. 122-125 BEST PRACTICES, ® LLC
  • 4. Business Issue & ObjectivesThe influence of CMS on healthcare policy and reimbursement is increasing as the US population ages andhealthcare reform unfolds. Consequently, the importance of understanding, translating, and engaging withCMS and other influential healthcare groups continues to grow.Objectives: Close gaps in how pharma engages CMS and other groups that influence federal healthcare policy, guidelines and reimbursement. Close gaps in how Policy, Government Affairs and Marketing collaborate to manage public sector healthcare changes to the benefit of product portfolio. Identify best practices in organizational form, focus, and function to best position organizations for the future where the government payer is increasingly influential. Expert Sources: Harvesting Insights & Analysis: Study Objective: Industry 23 Biopharma Companies Formulate a Strategic Benchmark participated Approach for Optimizing INFORM engagement with CMS and the ecosystem of agencies and groups that shape Expert 6 Companies participated in U.S. healthcare guidelines Interviews deep-dive interviews and reimbursement policy. BEST PRACTICES, 4 ® Copyright © Best Practices, LLC LLC
  • 5. 23 Healthcare Companies Provide Universe of LearningThis study engaged executives from 23 leading healthcare companies. Segmentation analysis was key toexamining trends and effective practices. Eight participants represent both the Large Pharma Segment(LPS) and Mid-Cap Segment (MPS). The Emerging Segment consists of seven companies. In addition,deep-dive interviews were conducted with six participating companies to gather additional insights. Large Pharma Segment: Mid-Cap Segment: Emerging Pharma Segment:(n = 8) (n = 8) (n = 7) BEST PRACTICES, 5 ® Copyright © Best Practices, LLC LLC
  • 6. Framework For Managing The Government EcosystemField insights and observations emerged across a full spectrum of management factors –including strategy, structure, staffing, process excellence, communication and cross-functional coordination. The analysis, benchmark review and insights have been organizedinto the following framework that represents key areas for engaging the governmentecosystem. 1. Align Resources & Groups To Manage 6. Resource The Healthcare Eco- Benchmarks: system (What Cross-Functional Resources Are Required To Manage The Ecosystem) 2. Intelligence Managing The Gathering: (How To Be Well-positioned To 5. Intelligence Government Capture Vital Information) Implementation: (Converting Intel into Strategies, Plans, Tactics & Messages) Healthcare “Ecosystem” 3. Intelligence Dissemination: 4. Intelligence (How To Share Intel & Insights With Translation: (Determining Key Execs & Functions) What It Means for Brands, Functions & Business Lines) BEST PRACTICES, 6 ® Copyright © Best Practices, LLC LLC
  • 7. Pharma Coverage of the Federal “Ecosystem” Is Uneven –With Largest Competitors Pursuing Most Strategic ApproachThe patchwork of federal agencies and groups that shape healthcare policy is like an ecosystem ofinfluence in Washington, DC. Field research reveals that there is significant variation in terms of howwell different companies cover the various groups influencing public healthcare policy. The very largestbiopharma companies invest resources to cover all these agencies and influence groups.Q. Coverage of Federal Healthcare Groups: Which groups do you monitor as part of covering federal government? (Percentage of Companies Covering Federal Agency) VA 1) Many Cover HRSA FDA, IRS <15% 2) However, only <15% <15% FDA During 78% Product the largest NIH, IoM, Introduction & companies Cover 56% 44% CMS Regarding Other Agencies AHRQ, Reimbursement CDC That Influence 39% 78% Healthcare Policy, HHS Tax or Therapeutic CMS, PCORI <15% Issues. 94% 79% ONC <15%(n=18) BEST PRACTICES, 7 ® Copyright © Best Practices, LLC LLC
  • 8. Median Global Revenues for Participants Is $11.5 BillionThe global revenues in 2011 for research participants ranged from $200 million to $67billion – illustrating how the study attracted organizations of all sizes. To better reflectresponses from like-sized companies, data is presented in three Segments whenappropriate: Total Benchmark Class, Large Pharma, and Mid-Cap pharma. Q. Revenues: Estimate total sales revenues for your organization for the last completed fiscal year (2011). Global Revenues: Total Benchmark Emerging Large Pharma Mid-Cap Class PharmaMax $67,400,000,000 $67,400,000,000 $17,000,000,000 $6,000,000,00075th Percentile $32,400,000,000 $43,886,750,000 $11,500,000,000 $872,000,000Mean $18,304,300,000 $36,905,875,000 $8,909,000,000 $1,695,200,000Median $11,500,000,000 $33,800,000,000 $11,000,000,000 $754,000,00025th Percentile $3,775,000,000 $29,250,000,000 $4,131,500,000 $650,000,000Min $200,000,000 $16,700,000,000 $3,100,000,000 $200,000,000 (n=20) (n=8) (n=7) (n=5) BEST PRACTICES, 8 ® Copyright © Best Practices, LLC LLC
  • 9. Companies Monitor Most Major Agencies & Influencing GroupsMost companies monitor major federal healthcare agencies and influencing groups. Thevery largest companies also extend coverage to various groups – like HHS, VA, IRS andONC – that smaller and mid-cap companies seldom engage. Scope of coverage reflectmaturity.Q. Coverage of Federal Healthcare Groups: Which groups do Q. Coverage of CMS Influencing Groups: Which groups do you monitor as part of covering the federal government? you monitor as part of covering CMS?Total Federal Agencies & Groups Covered Total Influencing Groups CoveredCMS 94% PCORI 79%AHRQ 78% MedPAC 68% NCQA 58% FDA 78% NQF 58% NIH 56% MACPAC 47% IoM 44% Regional CMS Offices 32% CDC 39% Quality Alliance Steering Committee 26%Other 22% Other: • HHS; ONC; VA, HRSA, IRS; None 11%None 0% Various other agencies like PCORI that resulted from Other 5% Other:(n=18) ACA • MACs (n=19) BEST PRACTICES, 9 ® Copyright © Best Practices, LLC LLC
  • 10. Many Mid-caps Fail to Forge Formal Strategies for Engaging the FederalGovernment. Big Pharma Is Far More StrategicWith the exception of the FDA and CMS, most companies have yet to devise formalstrategies for engaging and working with a wide range of federal agencies that affecthealthcare policy. The Large Pharma Segment is more than twice as likely to have formalstrategies to engage the Federal Government across multiple agencies. Q. Strategic Engagement Strategy for Federal Government: Please note whether your organization has an engagement strategy (detailed plans with groups assigned roles, responsibilities and tactics) for working with each of these Federal Government groups or healthcare agencies Total Benchmark Class: Formal Strategy: No Strategy Informal Strategy Formal Strategy n= LPS: MCS: Federal Drug Administration (FDA) 5% 19% 76% 21 100% 29% Center for Medicare and Medicaid Services 9% 36% 55% 22 88% 43% Veteran Affairs 14% 48% 38% 21 43% 43% National Institutes of Health 24% 43% 33% 21 43% 0%Dept. of Health & Human Services (HHS) At 19% 52% 29% 21 43% 14% Large (overseeing CMS, FDA, NIH, etc.) Agency for Healthcare Research & Quality 33% 38% 29% 21 71% 0% (AHRQ) Institute of Medicine (IOM) of National 57% 29% 14% 21 14% 0% Academy of Sciences Center for Disease Control (CDC) 50% 40% 10% 20 29% 0% (n=8) (n=7) BEST PRACTICES, 10 ® Copyright © Best Practices, LLC LLC
  • 11. Merck Utilizes Influencing Groups to Promote Health, BusinessFew companies are as adroit as Merck when it comes to utilizing influencing groups to improve the positioning of itsproducts. In the recent past there was Januvia and Gardasil, and most recently was Victrelis, the company’s new first-in-class treatment for chronic hepatitis C. Through its support of both the Viral Hepatitis Action Coalition and the CDCFoundation, Merck helped influence a more favorable environment for Victrelis. All of these products are importanttherapies that together could save tens of thousands of lives and billions of dollars in healthcare spending. May 9, 2011 800,000 patients x $26k = The CDC estimates 800,000 $20B Drug for Merck Merck launches public cases will be spotted early education/support programs for through testing. Nearly 10,000 chronic hepatitis C (HCV) and HCV patients die annually. announces funding to CDC- affiliated VHAC (Viral Hepatitis Action Coalition) May 18, 2012 May 13, 2011 The FDA approves Victrelis, a 1st in class HCV treatment costing CDC launches National Hepatitis Test Day $26k to $48k. and, in a major policy shift, proposes all 75 million Baby Boomers get tested for HCV 11 Copyright © Best Practices, LLC BEST PRACTICES, ® LLC
  • 12. More than 50% of Companies Are Currently Engaging ACOsNearly two-thirds of the Large Pharma Segment have begun devising engagementstrategies for Account Care Organizations. More than half of mid-cap companies havebegun such work. Interestingly, mid-cap companies seem to have focused more closely onthe ACO’s than state Medicaid or Health Insurance issues.Q. U.S. State-Level Relationship Engagement Strategy: Does your organization have an engagement strategy regarding state-level relationships revolving around Accountable Care Organizations? Accountable Care Organizations: Total Benchmark Class: Large Pharma: (n=20) (n=8) No Yes No 38% 62% 45% Mid-Cap Segment: No (n=7) Yes 43% 55% Yes 57% BEST PRACTICES, 12 ® Copyright © Best Practices, LLC LLC
  • 13. The Connection Between State Health Exchanges (HIX),Essential Health Benefits (EHB) and Benchmark PlansThe Affordable Care Act is giving rise to the creation of state health exchanges – in short a state-approved list of health plans for consumers and employers to choose from. Individuals will choose fromplans that will fall into four categories, from lowest premium to highest premium: bronze, silver, gold,and platinum. Metal levels relate to cost-sharing features (e.g. bronze covers 60% of cost, silver = 70%,gold=80%, platinum=90%). What is a State Health Insurance Exchange? State Health Insurance• Plans in a State Health Exchange (HIX) • All exchanges must be Exchange (HIX) must cover A set of standardized fully certified and 10 Essential Health insurance plans regulated operational by January 1, Benefits (EHB) - one of by states and offered by 2014 – if states don’t set which is prescription private insurers. up, the feds will. drugs. Benchmark Plan Essential Health Serves as a reference Benefits (EHB) plan, reflecting the The EHB of the plans in scope of the services the exchange will not • Feds say EHB will be defined by a and any limits. Feds differ significantly and benchmark plan elected by each suggest four benchmark must be equal to “typical state. States told to select a plan types for 2014 and employer plan.” benchmark plan by 4th quarter 2015. 2012. BEST PRACTICES, 13 ® Copyright © Best Practices, LLC LLC
  • 14. Most Policy Staff Located Where Legislative Action Is: DCWhile organizations are divided about where Public Policy’s primary location should be,this slide shows that, on average, participants have a majority of their policy staff locatedin Washington, DC. Headquarters serves as the second largest location. Q. U.S. Public Policy Staff Mix: Estimate the percentage of your Policy-focused staff in each job location below. (The total of your percentages should equal 100% of your Policy staff.Located in Washington, DC: Total Benchmark Class: Located at Headquarters:Max 100% Max 100%75th Percentile 75% Fractionally 75th Percentile 58% dedicated, 6%Mean 53% Mean 40% Brand or BU, 2%Median 53% Median 38%25th Percentile 26% 25th Percentile 21%Min 0% Min 0% Headquarters 40%Located with Brand or BU: Fractionally Dedicated:Max 30% Washington, DC Max 50% 52%75th Percentile 0% 75th Percentile 0%Mean 2% Mean 6%Median 0% Median 0%25th Percentile 0% 25th Percentile 0% (n=18)Min 0% Min 0% BEST PRACTICES, 14 ® Copyright © Best Practices, LLC LLC
  • 15. About Best Practices, LLC Best Practices, LLC is a research and consulting firm that conducts work based on the simple yet profound principle that organizations can chart a course to superior economic performance by studying the best business practices, operating tactics and winning strategies of world-class companies. Best Practices, LLC 6350 Quadrangle Drive, Suite 200, Chapel Hill, NC 27517 919-403-0251 best@best-in-class.com www.best-in-class.com BEST PRACTICES, 15 ® Copyright © Best Practices, LLC LLC

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