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  • Welcome / Introduction - Comment on the extraordinary energy / enthusiasm re: PM- Reinforce the importance for payers of better understanding how to manage the advancements in genomics- Note that cost / reimbursement issues are of paramount importance
  • Could Personalized Medicine dramatically change this picture?- PwC defines personalized medicine as a holistic, individualized model of care that examines each individual’s unique makeup and designs appropriate strategies for maintaining wellness and treating illness.- Personalized medicine is often defined as “the right treatment for the right person at the right time.”
  • Market sizing- Scientific advancement and a culture of wellness are converging to drive a huge and booming market for personalized medicine: $232 billion market, growing 11% annually to $452 billion by 2015
  • PM is a disruptive innovation- It will change the role of traditional healthcare organizations and challenge their business models - Growing number of companies entering the space, even from outside health industry- Numerous challenges and risks in a rapidly expanding industry that is heavily regulated- Continuing evolution of the science of medicine
  • Diagnostics: the key- Huge growth- 1,800 tests now available- 5-10 per week coming online- Payers need to assess their effectiveness / impact on disease prevention / treatment
  • Payer landscape- Let’s take a high-level view of health landscape from the payer’s point of view- Talk through the ‘model’ PwC is building. It’s characterized by several continua:- Financial reimbursement (fee-for-service … full capitation)- Health management (preventative … episodic)- Care delivery (wellness … chronic)- Discuss the reimbursement implications and value proposition for payers- Investments in the preventive end of the spectrum can reduce costs at the episodic end of the spectrum- Note that PwC is using claims data and actuarial analysis to build a PM business model for payers

Mc dougall Mc dougall Presentation Transcript

  • October 7th, 2011
    PwC Health Industries Advisory
    Draft
    Ohio State – 4th Annual Personalized Health Care National Conference
    Gerry McDougall
    Partner, U.S. Personalized Medicine & Health Sciences Leader
    Private and Confidential
  • PwC and our Personalized Medicine Practice

    Established in July 1998 with the merger of Price Waterhouse and Coopers & Lybrand, PwC is the world’s largest professional services firm.
    Globally, PwC’s revenue is over 30 billion dollars, of which close to 10 billion is consultancy.
    PwC provides a full range of business services, which include audit, accounting and tax advice; management, health care, information technology and human resource consulting; and financial advisory services including mergers & acquisitions and project finance.
    PricewaterhouseCoopers (PwC) is a global firm that draws upon the talents of more than 165,000 people in 150 countries.
    6/7/2011
    2
    PricewaterhouseCoopers LLP
  • PwC and our Personalized Medicine Practice

    PwC's Healthcare Strategy is predicated on our ability to understand and help clients respond to key trends and to serve all sectors on the healthcare continuum
    10/7/2011
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    PricewaterhouseCoopers LLP
  • PwC and our Personalized Medicine Practice

    PwC’s Definition:
    A holistic, individualized model of care that examines each individual’s unique makeup and designs appropriate strategies for maintaining wellness and treating illness.
    “The application of genomic and molecular data to better target the delivery of healthcare, facilitate the discovery and clinical testing of new products, and help determines a person’s predisposition to a particular disease or condition”
    (Senate bill sponsored by Senator Obama, 2007)
    “A form of medicine that uses information about a person’s genes, proteins, and environment to prevent, diagnose, and treat disease”
    (US National Cancer Institute)
    Personalized Medicine has many different definitions, and is broader than just molecular genomics
    PricewaterhouseCoopers LLP
    “The right treatment for the right person at the right time”
    10/7/2011
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  • PwC and our Personalized Medicine Practice

    • PwC was engaged – first by the State of Arizona and then by Jeff Trent and Dan Von Hoff- to design and implement, from the ground up, a genome research and technology institute for the advancement of bioscience and biomedicine in Arizona.
    • Key PwC efforts included:
    • Feasibility study and assessment
    • Affiliation agreements with academic and clinical partners
    • Business and financial planning
    • Strategic, operational, facilities planning
    • Overall operational implementation
    • Board development
    PwC has been and continues to be involved in many TGen initiatives -
    TGen: Translational Genomics Research Institute: Development of a Research Institute, creation of a partnership
    10/7/2011
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    PricewaterhouseCoopers LLP
  • PwC and our Personalized Medicine Practice

    PwC was the subject of an in-depth news article detailing its work with Luxembourg, partnering them with TGen to bring an integrated Biobank Center to Luxembourg
    PwC was engaged by the government of Luxembourg to assist them in diversifying their economy into the biosciences. Partner Gerry McDougall was interviewed by the news agency about PwC’s’ leadership of this initiative - Highlights include:
    • PwC became involved through a series of discussions in creating strategic partnerships with TGen and other leading US Institutions in the biosciences. TGen has served as the spark that has catalyzed Arizona’s life sciences effort over roughly the past decade and was used as the case study by the Government of Luxembourg in developing their conceptual model for a bio economy.
    • Luxembourg will complement what has been done in Europe by focusing initially on molecular diagnostics, and becoming a center of excellence around molecular diagnostics, in order to enable the early detection of diseases. Their aim is to not compete in established areas already, but to create a niche where they can take advantage of their geographic location.
    • PwC goal with Luxembourg was to deliver knowledge transfer over the next three to five years, so that Luxembourg has the world-class sophistication to do the research — proteomics and systems biology. PwC helped facilitate the training of Luxembourg scientists in the US and then re-establish themselves back in Luxembourg once the infrastructure is in place.
    • Luxembourg aimed to develop its center of excellence’ for bioscience by establishing a trans-Atlantic series of collaborations with three US-based institutions: The Partnership for Personalized Medicine, the Institute for Systems Biology, and TGen.
    • PwC was the initial facilitator of these partnerships which drove over $250M into these US research organizations, and developed the plans for each of the new ventures.
    10/7/2011
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    PricewaterhouseCoopers LLP
  • PwC and our Personalized Medicine Practice

    The PricewaterhouseCoopers (PwC) Health Research Institute developed this report. It identifies and discusses significant trends reshaping health systems around the world, specifically the creation of a new, more efficient primary health system -- one that is patient centered and takes into account the evolving power of individuals.
    To complete this report, PwC:
    • Surveyed more than 590 health leaders in over 20 countries, including the UK, Germany, the Netherlands, the US (50), Canada, South Africa, Australia, New Zealand, Argentina, Brazil, China and India, central Europe, Scandinavia, the Middle East and Asia.
    • Conducted over 200 in-depth interviews globally (55 in the US) of top executives in government, hospital systems, insurance companies, physician groups, pharma and life science companies and technology firms in 25+ countries.
    • Surveyed 3,500 consumers (500 per country) in over 20+ countries including the UK, Germany, the Netherlands, Norway, the US, Canada, and Australia.
    HealthCast report: The Customization of Diagnosis, Care and Cure
    Through International Project Work and Global Research, we have Developed a Deep Knowledge Base Regarding International InitiativesOne example – the development of our HealthCast 2010 report:
    PricewaterhouseCoopers LLP
    10/7/2011
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  • The Personalized Medicine Market

    2008
    Total Market: $210-215bn
    2015
    Total Market: $344-452bn
    Nutrition & Wellness
    Total: $185bn
    Complementary & Alternative Medicine:$35bn
    Health Clubs & Spa:$35bn
    Nutrition & Wellness
    Total: $292bn
    CAGR
    ’08-’15
    Complementary & Alternative Medicine:$41bn
    Health Clubs & Spa:$61bn
    Nutrition/ Organic care:$112bn
    Medical Retail:
    $3bn
    Personalized Medical Care
    Total: $4-9bn
    RPM/ Telemedicine:$0-5bn
    EMR:
    $2bn
    Nutrition/ Organic care:$181bn
    Nutrition & Wellness
    7%
    CORE P4
    Total: $21bn
    Medical Retail:
    $10bn
    The Market Potential is Huge
    PricewaterhouseCoopers LLP
    DM:
    $2bn
    7%
    Personalized Medical Care
    Total: $9-118bn
    Nutrition/Organic
    Esoteric Lab Services:$5bn
    Esoteric Test Sales:$4bn
    2%
    Comp & Alt Medic.
    EMR:
    $6bn
    RPM/ Telemedicine:$0-109bn
    22%
    Medical Retail
    Health Clubs & Spa
    10%
    DM:
    $3bn
    CORE P4
    Total: $42bn
    Targeted Therapeutics:
    $12bn
    Personalized Medical Care
    44%
    RPM/Telemedicine
    23%-92%
    Esoteric Lab Services:$11bn
    Esoteric Test Sales:$10bn
    EMR
    15%
    Molecular Diagnostics: $3bn
    Disease Mgmt
    6%
    10%
    CORE P4
    Targeted Therapeutics:
    $21bn
    Esoteric Lab Serv.
    10%
    Esoteric Test Sales
    13%
    Targ. Therapeutics
    9%
    Note: Totals may differ due to rounding
    Molecular Diagnostics: $7bn
    Figures Not Drawn to Scale
    1 Reflects upper range of RPM/Telemedicine
    “One of the innovation areas with the highest impact will be the whole field of early and correct diagnoses.”
    - Mars di Bartolomeo, Luxembourg Minister of Health
    PwC Health Industries Advisory •
    10/7/2011
    8
  • A New Emerging Paradigm
    PricewaterhouseCoopers LLP
    Sick
    Healthy
    Vulnerable
    Affected
    The Personalized Medicine Market

    Expanded view of Health & Wellness
    Traditional view of Health & Wellness
    Treatment
    Delivery
    Consumer
    Problem
    Diagnosis
    Treatment Plan
    Treatment
    Delivery
    Patient
    Problem
    Diagnosis
    Treatment Plan
    Resort/Spa
    Preventative
    Hospital
    Surgery
    Patient
    Diagnosis
    Home/Gym
    Emotional
    (Social / Spiritual)
    Preventative
    & Chronic
    Group/
    Community
    Physician
    Diagnosis
    Chronic
    Physical
    Discomfort
    Physician
    Physician/nurse
    Clinic
    Surgery
    Mental
    Physician office/Clinic
    Nurse
    Diagnosis
    Chronic & Clinical
    Preventative
    Physical
    ASC/
    Outpatient center
    Alternative
    Diagnosis
    Physician office
    Exam
    Clinical
    Preventative
    Hospital
    CDC Definition of Wellness – covers all phases of patient well being
    10/7/2011
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  • The Broad Health and Wellness Perspective of a Large Global Consumer Products Company Demonstrates the Wealth of Potential Strategic Partners
    10/7/2011
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    PricewaterhouseCoopers LLP
    Key players:Molecular Diagnostics
    The Personalized Medicine Market

    Sports Nutrition
    Programs
    Digital Coaching Programs
    Health
    E-Games
    Health-Based
    Social Media
    Personalized
    Fitness
    Wellness Mobile Applications
    Weight Management Centered Media
    Exergame Equipment
    and Fitness Centers
    Personal
    Monitoring
    Sports
    Entertainment
    Wellness Market
    Technology
    Sports Nutrition Programs
    Health Data
    Aggregation
    Nutrition /
    Consumer Goods
    Healthcare
    Employer Initiatives
    to Decrease Health Costs
    Personalized
    Skincare & Cosmetics
    Personalized Medicine / Genetic Testing
    Functional Foods
    and Drinks
    Community Based
    Awareness Initiatives
    Personalized Health
    and Lifestyle Coaching
    Government Initiatives to
    Decrease Health Costs
    Activity Management
    and Wellness Programs
    Home Health Monitoring

  • Watch Video
    The Trends We Are Seeing…
    10/7/2011
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    PricewaterhouseCoopers LLP

  • Social Media puts pressure on scientists, politicians and funders to alter research priorities despite absence of credible scientific evidence
    • An MS theory coined in 2008 about how MS was not an autoimmune disease but rather a vascular disease caused by blockages in the brain received a lot of internet attention in Canada
    • more than 500 Facebook pages, groups or events devoted to the theory
    • tens of thousands of followers
    • A poll shows more than half of Canadians are familiar with the theory
    • Resulted in demands for clinical trials for controversial treatment
    • Reports have sparked a national debate about whether publicly funded trials should be conducted and whether MS patients should have immediate, publicly funded access to the vein-widening treatment known as venoplasty
    Research Priorities Can Be Altered By Social Media
    10/7/2011
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    PricewaterhouseCoopers LLP
  • A Closer Look at Diagnostics

    Supports the decision to treat
    Predicts likelihood of an adverse reaction
    Better outcomes
    Lower treatment costs
    Prevents warnings and recalls
    • Countless patients will benefit from molecular diagnostics which informs their clinical treatment based on their individual genotype
    • 1,800 diagnostic tests available now
    • 5-10 new diagnostics tests per week
    • Diagnostics provide value at every stage of clinical care
    U.S. Healthcare
    ≈ $2 T
    *Over 72% of all medical decisions are made based on the $14B IVD
    U.S. Lab
    Billings
    $55 B
    <3% of total spend
    Spending on Diagnostics is the Most Efficient Use of Health Dollars
    PricewaterhouseCoopers LLP
    U.S. IVD Revenue
    $14B
    <.7% of total spend
    Source: Noel Doheny
    10/7/2011
    13
  • A Closer Look at Diagnostics

    Susceptibility
    • Monogenetic
    • Complex
    Diagnostics are the Foundation of Personalized Medicine
    10/7/2011
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    PricewaterhouseCoopers LLP
    Risk Analysis
    (modeling)
    Prediction
    Risk Mitigation
    Prevention
    Risk monitoring
    Early Detection
    Intervention
    • Stratification
    • Target ID/Validation
    • Rx algorithms
    • PGX
    • Therapeutic monitoring
    Prognosis
    Companion Dr
    Source: Dr. Franklyn G. Prendergast, Mayo Clinic
  • The Importance of HIT

    Health intelligence
    Health management
    Offerings
    Quality & efficiency management
    Decision
    support
    Provider
    Health plan
    Channels
    Chronic care management
    Health plan
    Health outcomes
    & economics
    Provider
    Health informatics
    Health informatics
    Employer
    Medicationtherapymanagement
    Electronic Patient Information Network
    Demand for information-enabled health services
    Clinical research optimization
    Life Sciences
    Public sector
    Health & wellness management
    Safety surveillance
    Clinical,
    financial &
    operational
    data
    Consumer
    Public sector
    Disease/
    bio-surveillance
    Personal health records(Shared decision making)
    Data network
    Information Systems will Serve as the Foundation for Personalized Medicine
    10/7/2011
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    PricewaterhouseCoopers LLP
  • The Importance of HIT

    Personalized
    medicine
    Richness and timeliness of information
    Distinctive
    Competitive
    advantage
    Health management
    (Systemic management of outcomes)
    Advanced
    Marketadvantage
    Healthcare measurement
    (Quality, safety,
    Outcomes and cost)
    Advanced
    decision support
    Opportunities
    Foundational
    Building blocks to success
    Organizations grow their informatics competency, which increases the availability and portability of secure and protected clinical information
    Health managementalgorithms and tools
    Analytical competencies and tools
    Integrated patient records
    Evolution of evidence-based medicine knowledge base
    Required capabilities
    HIT Systems fall on an Evolutionary Continuum that Supports Personalized Medicine
    10/7/2011
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    PricewaterhouseCoopers LLP
  • The Multiple Myeloma Example

    DIAGNOSTICS
    TARGETS
    BIOMARKERS
    SEGMENTATION
    TARGET ID
    Longitudinal Study
    LS Tissue Bank
    LS Data Bank
    Cure for Multiple Myeloma
    Innovative Clinical Trials
    Patient Focused Outcomes
    Bio-Infomatics and Data Analytics
    Genomics
    Initiative
    MMRC Tissue Bank
    Drug Pool
    Novel & Existing Drugs
    Integration of the Personalized Medicine Value Chain – Biology to Cure – will be Critical to Curing Multiple Myeloma
    PricewaterhouseCoopers LLP
    10/7/2011
    17
  • The Multiple Myeloma Example

    WISER
    FASTER
    The MMRF/C must Balance its Focus on Accelerating Drug Development with Identifying the Right Drug(s) for the Right Patient(s)
    PricewaterhouseCoopers LLP
    MMRF
    Resources
    10/7/2011
    18
  • The Changing Healthcare Landscape

    Healthcare Reform Landscape
    10/7/2011
    19
    PricewaterhouseCoopers LLP
  • The Changing Healthcare Landscape
    Advances in PM will Influence the Full Healthcare Continuum
    PricewaterhouseCoopers LLP
    Financial Reimbursement

    Fee for Service
    (APR-DRG)
    Capitation or Global Payment
    APC and EAPG
    RBRVS
    Pay for Performance
    Episode or Bundled Payments
    Benefit Challenges
    • Actuarial calculations disruption and redefinition
    • Services need to be defined as covered versus excluded category.
    • States may require specific test benefits.
    • Medicare statute excludes “screening” services unless previously enumerated, but the border between screening & diagnostic services is sometimes problematic.
    Coding Challenges
    • Lengthy process for new code development
    • CPT: uncertain granularity of Tier 1 codes, and lack of granularity of Tier 2 codes
    • Multiple methodology-based or misc. (NOC) CPT codes (incl. molecular diagnostics “stacking” codes
    • Laboratory test CPT coding is not well suited to coding for information services
    Coverage and Evidence Standards Challenges
    • Coverage determination that has few standards, varies widely from test to test,
    • CMS’s coverage determination process lacks sufficient predictability in its evidence requirements
    • Human factors confound coverage review, especially gaps in technical expertise and ability to determine true value
    Payment and Diagnostics Reimbursement Challenges
    • Characteristics of the CLFS and PFS make their application to payment problematic
    • Payment system anchored in the costs of tests developed and performed decades ago, and applied inconsistently
    • Payment-setting process fails to recognize their clinical utility and economic value
    Volume based Value based, quality, outcomes
    Payment
    Healthcare Continuum
    Prevention and Wellness
    Monitoring and Management of Condition(s)
    Risk Assessment
    Diagnosis
    Prognosis
    Clinical Decision Making for Treatment
    Hospital based / Acute Integrated, outpatient, patient centered
    Care Venue
    • Diagnostic tests to complement traditional risk factors
    • Risk assessment based on genomic and proteomic profiles and information
    • Used for definitive diagnosis and disease typing
    • Better accuracy in diagnosis through tests with improved specificity
    • Focus on prevention and prediction of disease rather than reaction to it
    • Probabilistic health history through DNA sequence
    • Early warning about predisposition could promote healthier lifestyles
    • Recurrence monitoring
    • Monitoring for treatment efficacy
    • Leverage population based therapeutic research
    • More targeted treatment for mgmt. and late stage
    • Used to predict efficacy or safety response for specific treatments
    • Right treatments at right time for right patients
    • Genomic and information based clinical decisions
    • Less variability
    • Assess severity and/or risk of recurrence
    • Informed decisions on clinical decisions and pathway
    • Know what is true stage of disease progression
    • Reduced possibliity of side effects
    Records / Info.
    Paper, Fragmented Electronic / Usable / Transparent
    Accountability for care, cost, and outcomes is shifting during the US era of reform
    Healthcare Delivery Models
    One size fits all Personalized
    Treatment
    Acute Care Management
    ACO
    Chronic Care Management
    Medical Homes
    Specialty Medical Homes
    Episodes of Care
    • Focus on late-stage detection and intervention (High cost, variable quality and outcomes)
    • Multiple reimbursements for fragmented (siloed) care versus integrated management of patient needs
    • Medical professionals paid for illness versus wellness
    • Inadequate social and economic incentives for wellness
    • Inadequate medical training/understanding of genetics/genomics/proteomics
    Accountability? Clearer risk, accountability, cost
    Risk Share
    10/7/2011
    20
  • The Changing Healthcare Landscape

    Financial
    Reimbursement
    Health
    Management
    Care
    Delivery
    Fee-for-
    service
    Full
    capitation
    Episodic
    Preventive
    Chronic
    Wellness
    Payer Landscape Continuum
    10/7/2011
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    PricewaterhouseCoopers LLP
  • The Changing Healthcare Landscape

    Payment
    Volume based
    Performance based
    Towards Accountable Care Organizations
    10/7/2011
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    PricewaterhouseCoopers LLP
    Venue
    Hospital based
    Integrated, outpatient
    Records
    Paper
    Electronic
    Treatment
    One size fits all
    Personalized
    Accountable Care Organizations: Patient Centric Model
    1990
    2000
    2010
    2020

  • PwC will be a key contributor to the initiative intended to:
    • Foster and apply disruptive innovation to effect transformative, systemic change in health care
    • It is designed to provide stakeholders in the health care with an actionable plan
    • Led by Harvard Business School professor Clayton Christensen, creator of the theory of disruptive innovation.
    • The Roadmap will draw from and build upon Christensen’s analysis of how disruptive forces can be put to work to help effect systemic change in diagnosis and patient care.
    National Initiatives: The Forum on Personalized Health Care Announces Launch of The Roadmap for Personalized Health Care
    10/7/2011
    23
    PricewaterhouseCoopers LLP

  • Several articles yesterday as follow up to the ASCO Conference in Chicago, applaud the new wave of personalized cancer treatments in development
    Personalized Medicine has Momentum
    10/7/2011
    24
    PricewaterhouseCoopers LLP

  • Gerry McDougall
    Personalized Medicine Leader
    PricewaterhouseCoopers
    gerald.mcdougall@us.pwc.com
    (617) 530-4471
    For additional insight, see our publications:
    10/7/2011
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    PricewaterhouseCoopers LLP