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 3 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 4
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
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 5 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 6 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 7
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 9
The Broad Health and Wellness Perspective of a Large Global Consumer Products Company Demonstrates the Wealth of Potential Strategic Partners 10/7/2011 10 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 11 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 12 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
Diagnostics are the Foundation of Personalized Medicine 10/7/2011 14 PricewaterhouseCoopers LLP Risk Analysis (modeling) Prediction Risk Mitigation Prevention Risk monitoring Early Detection Intervention
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 15 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 16 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 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.
Lengthy process for new code development
CPT: uncertain granularity of Tier 1 codes, and lack of granularity of Tier 2 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
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
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
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 21 PricewaterhouseCoopers LLP
The Changing Healthcare Landscape – Payment Volume based Performance based Towards Accountable Care Organizations 10/7/2011 22 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 firstname.lastname@example.org (617) 530-4471 For additional insight, see our publications: 10/7/2011 25 PricewaterhouseCoopers LLP