McDougall on Market Potential of Personalized Medicine

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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
  • McDougall on Market Potential of Personalized Medicine

    1. 1. October 7th, 2011<br />PwC Health Industries Advisory<br />Draft<br />Ohio State – 4th Annual Personalized Health Care National Conference<br />Gerry McDougall<br />Partner, U.S. Personalized Medicine & Health Sciences Leader<br />Private and Confidential<br />
    2. 2. PwC and our Personalized Medicine Practice<br /> – <br />Established in July 1998 with the merger of Price Waterhouse and Coopers & Lybrand, PwC is the world’s largest professional services firm. <br />Globally, PwC’s revenue is over 30 billion dollars, of which close to 10 billion is consultancy.<br />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.<br />PricewaterhouseCoopers (PwC) is a global firm that draws upon the talents of more than 165,000 people in 150 countries.<br />6/7/2011<br />2<br />PricewaterhouseCoopers LLP<br />
    3. 3. PwC and our Personalized Medicine Practice<br /> – <br />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<br />10/7/2011<br />3<br />PricewaterhouseCoopers LLP<br />
    4. 4. PwC and our Personalized Medicine Practice<br /> – <br />PwC’s Definition:<br />A holistic, individualized model of care that examines each individual’s unique makeup and designs appropriate strategies for maintaining wellness and treating illness.<br />“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”<br />(Senate bill sponsored by Senator Obama, 2007)<br />“A form of medicine that uses information about a person’s genes, proteins, and environment to prevent, diagnose, and treat disease”<br />(US National Cancer Institute)<br />Personalized Medicine has many different definitions, and is broader than just molecular genomics<br />PricewaterhouseCoopers LLP<br />“The right treatment for the right person at the right time”<br />10/7/2011<br />4<br />
    5. 5. PwC and our Personalized Medicine Practice<br /> – <br /><ul><li>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.
    6. 6. Key PwC efforts included:
    7. 7. Feasibility study and assessment
    8. 8. Affiliation agreements with academic and clinical partners
    9. 9. Business and financial planning
    10. 10. Strategic, operational, facilities planning
    11. 11. Overall operational implementation
    12. 12. Board development</li></ul> PwC has been and continues to be involved in many TGen initiatives - <br />TGen: Translational Genomics Research Institute: Development of a Research Institute, creation of a partnership<br />10/7/2011<br />5<br />PricewaterhouseCoopers LLP<br />
    13. 13. PwC and our Personalized Medicine Practice<br /> – <br />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<br />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:<br /><ul><li>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.
    14. 14. 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.
    15. 15. 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.
    16. 16. 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.
    17. 17. 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. </li></ul>10/7/2011<br />6<br />PricewaterhouseCoopers LLP<br />
    18. 18. PwC and our Personalized Medicine Practice<br /> – <br />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. <br />To complete this report, PwC:<br /><ul><li>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.
    19. 19. 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.
    20. 20. Surveyed 3,500 consumers (500 per country) in over 20+ countries including the UK, Germany, the Netherlands, Norway, the US, Canada, and Australia.</li></ul>HealthCast report: The Customization of Diagnosis, Care and Cure<br />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:<br />PricewaterhouseCoopers LLP<br />10/7/2011<br />7<br />
    21. 21. The Personalized Medicine Market<br /> – <br />2008<br />Total Market: $210-215bn<br />2015<br />Total Market: $344-452bn<br />Nutrition & Wellness <br />Total: $185bn <br />Complementary & Alternative Medicine:$35bn<br />Health Clubs & Spa:$35bn<br />Nutrition & Wellness <br />Total: $292bn <br />CAGR<br />’08-’15<br />Complementary & Alternative Medicine:$41bn<br />Health Clubs & Spa:$61bn<br />Nutrition/ Organic care:$112bn<br />Medical Retail:<br />$3bn<br />Personalized Medical Care <br />Total: $4-9bn <br />RPM/ Telemedicine:$0-5bn<br />EMR: <br />$2bn<br />Nutrition/ Organic care:$181bn<br />Nutrition & Wellness<br />7%<br />CORE P4 <br />Total: $21bn <br />Medical Retail:<br />$10bn<br />The Market Potential is Huge<br />PricewaterhouseCoopers LLP<br />DM: <br />$2bn<br />7%<br />Personalized Medical Care <br />Total: $9-118bn <br />Nutrition/Organic<br />Esoteric Lab Services:$5bn<br />Esoteric Test Sales:$4bn <br />2%<br />Comp & Alt Medic.<br />EMR: <br />$6bn<br />RPM/ Telemedicine:$0-109bn<br />22%<br />Medical Retail<br />Health Clubs & Spa<br />10%<br />DM: <br />$3bn<br />CORE P4 <br />Total: $42bn <br />Targeted Therapeutics:<br />$12bn<br />Personalized Medical Care<br />44%<br />RPM/Telemedicine<br />23%-92%<br />Esoteric Lab Services:$11bn<br />Esoteric Test Sales:$10bn <br />EMR<br />15%<br />Molecular Diagnostics: $3bn<br />Disease Mgmt<br />6%<br />10%<br />CORE P4<br />Targeted Therapeutics:<br />$21bn<br />Esoteric Lab Serv.<br />10%<br />Esoteric Test Sales<br />13%<br />Targ. Therapeutics<br />9%<br />Note: Totals may differ due to rounding<br />Molecular Diagnostics: $7bn<br />Figures Not Drawn to Scale<br />1 Reflects upper range of RPM/Telemedicine<br />“One of the innovation areas with the highest impact will be the whole field of early and correct diagnoses.” <br />- Mars di Bartolomeo, Luxembourg Minister of Health<br />PwC Health Industries Advisory • <br />10/7/2011<br />8<br />
    22. 22. A New Emerging Paradigm<br />PricewaterhouseCoopers LLP<br />Sick<br />Healthy<br />Vulnerable<br />Affected<br />The Personalized Medicine Market<br /> – <br />Expanded view of Health & Wellness<br />Traditional view of Health & Wellness<br />Treatment<br />Delivery<br />Consumer<br />Problem<br />Diagnosis<br />Treatment Plan<br />Treatment<br />Delivery<br />Patient<br />Problem<br />Diagnosis<br />Treatment Plan<br />Resort/Spa<br />Preventative<br />Hospital<br />Surgery<br />Patient<br />Diagnosis<br />Home/Gym<br />Emotional<br />(Social / Spiritual)<br />Preventative <br />& Chronic<br />Group/<br />Community<br />Physician<br />Diagnosis<br />Chronic<br />Physical<br />Discomfort<br />Physician<br />Physician/nurse<br />Clinic<br />Surgery<br />Mental<br />Physician office/Clinic<br />Nurse<br />Diagnosis<br />Chronic & Clinical<br />Preventative<br />Physical<br />ASC/<br />Outpatient center<br />Alternative<br />Diagnosis<br />Physician office<br />Exam<br />Clinical<br />Preventative<br />Hospital<br />CDC Definition of Wellness – covers all phases of patient well being<br />10/7/2011<br />9<br />
    23. 23. The Broad Health and Wellness Perspective of a Large Global Consumer Products Company Demonstrates the Wealth of Potential Strategic Partners<br />10/7/2011<br />10<br />PricewaterhouseCoopers LLP<br />Key players:Molecular Diagnostics<br />The Personalized Medicine Market<br /> – <br />Sports Nutrition <br />Programs<br />Digital Coaching Programs<br />Health<br />E-Games<br />Health-Based <br />Social Media<br />Personalized<br />Fitness<br />Wellness Mobile Applications<br />Weight Management Centered Media<br />Exergame Equipment<br />and Fitness Centers<br />Personal<br />Monitoring<br />Sports<br />Entertainment<br />Wellness Market<br />Technology<br />Sports Nutrition Programs<br />Health Data <br />Aggregation<br />Nutrition / <br />Consumer Goods<br />Healthcare<br />Employer Initiatives <br />to Decrease Health Costs <br />Personalized <br />Skincare & Cosmetics<br />Personalized Medicine / Genetic Testing<br />Functional Foods<br />and Drinks<br />Community Based <br />Awareness Initiatives<br />Personalized Health <br />and Lifestyle Coaching<br />Government Initiatives to <br />Decrease Health Costs<br />Activity Management<br />and Wellness Programs<br />Home Health Monitoring<br />
    24. 24. – <br />Social Media puts pressure on scientists, politicians and funders to alter research priorities despite absence of credible scientific evidence<br /><ul><li>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
    25. 25. more than 500 Facebook pages, groups or events devoted to the theory
    26. 26. tens of thousands of followers
    27. 27. A poll shows more than half of Canadians are familiar with the theory
    28. 28. Resulted in demands for clinical trials for controversial treatment
    29. 29. 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</li></ul>Research Priorities Can Be Altered By Social Media<br />10/7/2011<br />11<br />PricewaterhouseCoopers LLP<br />
    30. 30. A Closer Look at Diagnostics<br /> – <br />Supports the decision to treat<br />Predicts likelihood of an adverse reaction<br /> Better outcomes<br />Lower treatment costs<br />Prevents warnings and recalls<br /><ul><li>Countless patients will benefit from molecular diagnostics which informs their clinical treatment based on their individual genotype
    31. 31. 1,800 diagnostic tests available now
    32. 32. 5-10 new diagnostics tests per week
    33. 33. Diagnostics provide value at every stage of clinical care</li></ul>U.S. Healthcare<br />≈ $2 T<br />*Over 72% of all medical decisions are made based on the $14B IVD<br />U.S. Lab<br />Billings<br />$55 B<br /><3% of total spend<br />Spending on Diagnostics is the Most Efficient Use of Health Dollars<br />PricewaterhouseCoopers LLP<br />U.S. IVD Revenue<br />$14B<br /><.7% of total spend<br />Source: Noel Doheny<br />10/7/2011<br />12<br />
    34. 34. A Closer Look at Diagnostics<br /> – <br />Susceptibility<br /><ul><li>Monogenetic
    35. 35. Complex</li></ul>Diagnostics are the Foundation of Personalized Medicine<br />10/7/2011<br />13<br />PricewaterhouseCoopers LLP<br />Risk Analysis<br />(modeling)<br />Prediction<br />Risk Mitigation<br />Prevention<br />Risk monitoring<br />Early Detection<br />Intervention<br /><ul><li>Stratification
    36. 36. Target ID/Validation
    37. 37. Rx algorithms
    38. 38. PGX
    39. 39. Therapeutic monitoring</li></ul>Prognosis<br />Companion Dr<br />Source: Dr. Franklyn G. Prendergast, Mayo Clinic<br />
    40. 40. The Importance of HIT<br /> – <br />Health intelligence<br />Health management<br />Offerings<br />Quality & efficiency management<br />Decision<br />support<br />Provider<br />Health plan<br />Channels<br />Chronic care management<br />Health plan<br />Health outcomes <br />& economics<br />Provider<br />Health informatics<br />Health informatics<br />Employer<br />Medicationtherapymanagement<br />Electronic Patient Information Network<br />Demand for information-enabled health services <br />Clinical research optimization<br />Life Sciences<br />Public sector<br />Health & wellness management<br />Safety surveillance<br />Clinical,<br />financial & <br />operational<br />data<br />Consumer<br />Public sector<br />Disease/ <br />bio-surveillance<br />Personal health records(Shared decision making)<br />Data network <br />Information Systems will Serve as the Foundation for Personalized Medicine<br />10/7/2011<br />14<br />PricewaterhouseCoopers LLP<br />
    41. 41. The Importance of HIT<br /> – <br />Personalized <br />medicine<br />Richness and timeliness of information<br />Distinctive<br />Competitive <br />advantage<br />Health management<br />(Systemic management of outcomes)<br />Advanced<br />Marketadvantage<br />Healthcare measurement<br />(Quality, safety, <br />Outcomes and cost)<br />Advanced<br />decision support<br />Opportunities<br />Foundational<br />Building blocks to success<br />Organizations grow their informatics competency, which increases the availability and portability of secure and protected clinical information<br />Health managementalgorithms and tools<br />Analytical competencies and tools<br />Integrated patient records <br />Evolution of evidence-based medicine knowledge base<br />Required capabilities<br />HIT Systems fall on an Evolutionary Continuum that Supports Personalized Medicine<br />10/7/2011<br />15<br />PricewaterhouseCoopers LLP<br />
    42. 42. The Multiple Myeloma Example<br /> – <br />DIAGNOSTICS<br />TARGETS<br />BIOMARKERS<br />SEGMENTATION<br />TARGET ID<br />Longitudinal Study<br />LS Tissue Bank<br />LS Data Bank<br />Cure for Multiple Myeloma<br />Innovative Clinical Trials<br />Patient Focused Outcomes<br />Bio-Infomatics and Data Analytics<br />Genomics<br />Initiative<br />MMRC Tissue Bank<br />Drug Pool<br />Novel & Existing Drugs<br />Integration of the Personalized Medicine Value Chain – Biology to Cure – will be Critical to Curing Multiple Myeloma<br />PricewaterhouseCoopers LLP<br />10/7/2011<br />16<br />
    43. 43. The Multiple Myeloma Example<br /> – <br />WISER<br />FASTER<br />The MMRF/C must Balance its Focus on Accelerating Drug Development with Identifying the Right Drug(s) for the Right Patient(s) <br />PricewaterhouseCoopers LLP<br />MMRF<br />Resources<br />10/7/2011<br />17<br />
    44. 44. The Changing Healthcare Landscape<br /> – <br />Healthcare Reform Landscape<br />10/7/2011<br />18<br />PricewaterhouseCoopers LLP<br />
    45. 45. The Changing Healthcare Landscape<br />Advances in PM will Influence the Full Healthcare Continuum<br />PricewaterhouseCoopers LLP<br />Financial Reimbursement<br /> – <br />Fee for Service<br />(APR-DRG)<br />Capitation or Global Payment<br />APC and EAPG<br />RBRVS<br />Pay for Performance<br />Episode or Bundled Payments<br />Benefit Challenges<br /><ul><li>Actuarial calculations disruption and redefinition
    46. 46. Services need to be defined as covered versus excluded category.
    47. 47. States may require specific test benefits.
    48. 48. Medicare statute excludes “screening” services unless previously enumerated, but the border between screening & diagnostic services is sometimes problematic.</li></ul>Coding Challenges<br /><ul><li>Lengthy process for new code development
    49. 49. CPT: uncertain granularity of Tier 1 codes, and lack of granularity of Tier 2 codes
    50. 50. Multiple methodology-based or misc. (NOC) CPT codes (incl. molecular diagnostics “stacking” codes
    51. 51. Laboratory test CPT coding is not well suited to coding for information services</li></ul>Coverage and Evidence Standards Challenges<br /><ul><li>Coverage determination that has few standards, varies widely from test to test,
    52. 52. CMS’s coverage determination process lacks sufficient predictability in its evidence requirements
    53. 53. Human factors confound coverage review, especially gaps in technical expertise and ability to determine true value</li></ul>Payment and Diagnostics Reimbursement Challenges<br /><ul><li>Characteristics of the CLFS and PFS make their application to payment problematic
    54. 54. Payment system anchored in the costs of tests developed and performed decades ago, and applied inconsistently
    55. 55. Payment-setting process fails to recognize their clinical utility and economic value</li></ul>Volume based Value based, quality, outcomes<br />Payment<br />Healthcare Continuum<br />Prevention and Wellness<br />Monitoring and Management of Condition(s)<br />Risk Assessment<br />Diagnosis<br />Prognosis<br />Clinical Decision Making for Treatment<br />Hospital based / Acute Integrated, outpatient, patient centered<br />Care Venue<br /><ul><li>Diagnostic tests to complement traditional risk factors
    56. 56. Risk assessment based on genomic and proteomic profiles and information
    57. 57. Used for definitive diagnosis and disease typing
    58. 58. Better accuracy in diagnosis through tests with improved specificity
    59. 59. Focus on prevention and prediction of disease rather than reaction to it
    60. 60. Probabilistic health history through DNA sequence
    61. 61. Early warning about predisposition could promote healthier lifestyles
    62. 62. Recurrence monitoring
    63. 63. Monitoring for treatment efficacy
    64. 64. Leverage population based therapeutic research
    65. 65. More targeted treatment for mgmt. and late stage
    66. 66. Used to predict efficacy or safety response for specific treatments
    67. 67. Right treatments at right time for right patients
    68. 68. Genomic and information based clinical decisions
    69. 69. Less variability
    70. 70. Assess severity and/or risk of recurrence
    71. 71. Informed decisions on clinical decisions and pathway
    72. 72. Know what is true stage of disease progression
    73. 73. Reduced possibliity of side effects</li></ul>Records / Info.<br />Paper, Fragmented Electronic / Usable / Transparent<br />Accountability for care, cost, and outcomes is shifting during the US era of reform<br />Healthcare Delivery Models<br />One size fits all Personalized<br />Treatment<br />Acute Care Management<br />ACO<br />Chronic Care Management<br />Medical Homes<br />Specialty Medical Homes<br />Episodes of Care<br /><ul><li>Focus on late-stage detection and intervention (High cost, variable quality and outcomes)
    74. 74. Multiple reimbursements for fragmented (siloed) care versus integrated management of patient needs
    75. 75. Medical professionals paid for illness versus wellness
    76. 76. Inadequate social and economic incentives for wellness
    77. 77. Inadequate medical training/understanding of genetics/genomics/proteomics</li></ul>Accountability? Clearer risk, accountability, cost<br />Risk Share<br />10/7/2011<br />19<br />
    78. 78. The Changing Healthcare Landscape<br /> – <br />Financial <br />Reimbursement<br />Health<br />Management<br />Care<br />Delivery<br />Fee-for-<br />service<br />Full <br />capitation<br />Episodic<br />Preventive<br />Chronic<br />Wellness<br />Payer Landscape Continuum<br />10/7/2011<br />20<br />PricewaterhouseCoopers LLP<br />
    79. 79. The Changing Healthcare Landscape<br /> – <br />Payment<br />Volume based<br />Performance based<br />Towards Accountable Care Organizations<br />10/7/2011<br />21<br />PricewaterhouseCoopers LLP<br />Venue<br />Hospital based<br />Integrated, outpatient<br />Records<br />Paper<br />Electronic<br />Treatment<br />One size fits all<br />Personalized<br />Accountable Care Organizations: Patient Centric Model <br />1990<br />2000<br />2010<br />2020<br />
    80. 80. – <br />PwC will be a key contributor to the initiative intended to:<br /><ul><li>Foster and apply disruptive innovation to effect transformative, systemic change in health care
    81. 81. It is designed to provide stakeholders in the health care with an actionable plan
    82. 82. Led by Harvard Business School professor Clayton Christensen, creator of the theory of disruptive innovation.
    83. 83. 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. </li></ul>National Initiatives: The Forum on Personalized Health Care Announces Launch of The Roadmap for Personalized Health Care <br />10/7/2011<br />22<br />PricewaterhouseCoopers LLP<br />
    84. 84. – <br />Several articles yesterday as follow up to the ASCO Conference in Chicago, applaud the new wave of personalized cancer treatments in development<br />Personalized Medicine has Momentum<br />10/7/2011<br />23<br />PricewaterhouseCoopers LLP<br />
    85. 85. – <br />Gerry McDougall<br />Personalized Medicine Leader<br />PricewaterhouseCoopers<br />gerald.mcdougall@us.pwc.com<br />(617) 530-4471<br />For additional insight, see our publications:<br />10/7/2011<br />24<br />PricewaterhouseCoopers LLP<br />

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