Print BCTV: Affordable Innovation Part 2-- Impact of healthcare data transparency

Affordable Innovation

Transcript of BioCentury This Week TV Episode 137




Rep. Anthony Coelho (D-Calif.), Former Member, U.S. House of Representatives Scott Gottlieb, Resident Fellow, American Enterprise Institute, Washington, D.C. Dan Mendelson, CEO and founder, Avalere Health LLC, Washington, D.C.



Agency for Healthcare Research and Quality (AHRQ), Rockville, Md.

Gail Cawkwell, VP of Medical Affairs, Pfizer Inc. (NYSE:PFE), New York, N.Y.

Martin Marciniak, VP of U.S. Health Outcomes, GlaxoSmithKline plc (LSE:GSK; NYSE:GSK), London, U.K.

National Institutes of Health (NIH), Bethesda, Md.

Patient-Centered Outcomes Research Institute (PCORI), Washington, D.C.

U.S. Centers for Medicare & Medicaid Services (CMS), Baltimore, Md.

U.S. Department of Health and Human Services (HHS), Washington, D.C.

U.S. Department of Justice (DoJ), Washington, D.C.

U.S. Food and Drug Administration (FDA), Silver Spring, Md.



Steve Usdin, Senior Editor




STEVE USDIN: Everyone wants to promote medical innovation and avoid waste. But who decides what's innovative and how to pay for it? I'm Steve Usdin, and welcome to BioCentury This Week.




NARRATOR: Your trusted source for biotechnology information and analysis, BioCentury This Week.


STEVE USDIN: Last week, BioCentury asked a fundamental question. Can the healthcare system deliver affordable value and reward investment in new medicines? We heard that innovation can't be valued until the evidence is transparent. But Pfizer's Gail Cawkwell warned that data analysis too often fails the transparency test.


GAIL CAWKWELL: The problem is that systems are really not where they need to be to be useful. And the analytics -- it's patient identifiers, but it's also how do you look at that data?


STEVE USDIN: And Martin Marciniak of GlaxoSmithKline called on drug companies to be more transparent about their data.


MARTIN MARCINIAK: I think GSK has made a strong statement about where we feel the marketplace of ideas should go, and the transparency of data is core to who we are in terms of our strategic approach.


STEVE USDIN: And when the data are in hand, Avalere Health's Dan Mendelson said patients must participate in determining their value.


DAN MENDELSON: And so some of the metrics that we need to be developing are really about communication back and forth of patients to make sure that the therapies that are being delivered are actually working.


STEVE USDIN: This week, we'll continue our discussion with contributors to a new Avalere report on delivering value in healthcare. We'll dig more deeply into the patient's perspective about healthcare research and purchasing decisions. And we'll explore what it means to make healthcare data more transparent to patients, physicians and payers.


I'm happy to welcome back Avalere CEO Dan Mendelson, and to present the patient's perspective, Tony Coelho. As a Democratic member of Congress from California, he was the primary sponsor of the Americans with Disabilities Act. Since leaving Congress, Tony's worked as an advocate for patients with epilepsy and other diseases. We're also joined by Scott Gottlieb, a fellow at the American Enterprise Institute. Scott's a former deputy FDA commissioner. He's a practicing physician, a partner at a VC firm, and regularly writes opinion articles for the Wall Street Journal.


I wanted to start -- last week we talked about generating comparative effectiveness research. This week, what I want to talk about is communicating it, and then later on the show, about payment and coverage decisions. One of the realities of the world today is that the first doctor that most patients go to when they feel like they have a medical problem is doctor Google. That's just the reality. How does the world have to change to accept that reality?


SCOTT GOTTLIEB: I think that the information people are getting off of the internet in a lot of cases is unreliable. And I think physicians need to spend more time with patients counseling them when they go into the office, not just about what they need to understand about their illnesses, but you have to talk to patients about what they come in with, the information they come in with. And it's not always reliable.


DAN MENDELSON: Look, this is only going to grow. And with the Affordable Care Act coming online, more insurance is actually going to be sold online. So patients are going to be going online to purchase insurance, they're going to be urged by insurance companies and the federal government to go online to purchase insurance. So there's just going to be more presence there.


And I think it's not only about physicians engaging with patients, but also about the federal government trying to get in and shape the environment more, perhaps loosening up on some of the rules about what can and should be communicated on behalf of life sciences companies. And there's a whole set of decisions that will need to be made in order to shape this environment so that patients can actually benefit from it, because it's not going away.


TONY COELHO: I think it's important for patients to go to Google and find out information. They have not had good sources of information before, because they found it out from the next door neighbor. They found it out from somebody at the drugstore or whatever. And now they're able to go to the internet and find out something about it. It may not always be as accurate as people would like it to be, but it's information that they never had before. Then they need to go to their doctor and get it verified in maybe better form. But at least they're getting some information they never had before.


STEVE USDIN: The other thing I want to get at, though, is how do policymakers have to think about generating comparative effectiveness information to make it something that patients will be -- usable? In other words, it's no good just to publish things in abstracts in medical journals anymore.


TONY COELHO: Well, I think part of the problem today is that what we have is that we have researchers who prepare information that researchers read and understand, but that clinicians and patients don't understand. And they prepare it for themselves because they get paid for it, and that's good. But patients don't understand it and doctors don't understand it. And I think we've got to correct that.


SCOTT GOTTLIEB: At the same time, there are entities that have done a good job of synthesizing the information and putting it in a format that can be used in a practical sense and can be understood by patients. I think the medical specialty side plays a really important role translating information into practice guidelines. And those practice guidelines in many cases are interpretable to lay patients who have knowledge about their particular disease, and are useful.


STEVE USDIN: But it's also about generating new information, and about people being kind of fascinated by whatever the latest finding is or the most startling finding and not having the context to put it into maybe. Dan, you mentioned the idea of loosening restrictions. What were you talking about there?


DAN MENDELSON: I think part of the challenge is that historically, life sciences companies would generate a lot of evidence in clinical trials. And we really didn't have the benefit of patient experience data. And now we're in a world where not only is there more patient experience data, but patients need that data in order to understand what is effective and what is not.


And so we need a new paradigm for thinking about how the information is going to be used, and what kinds of restrictions should be placed on life sciences companies in communicating that information. And it's interesting because the more data we get, the more complicated it is. But it's potentially a very powerful tool for patients really to be able to understand what's going on.


SCOTT GOTTLIEB: Just to pick up on this point, when it comes to practical clinical data, which is what we're talking about here, there are a lot of restrictions put on the pharmaceutical companies, on the life science companies, in terms of what they can communicate right now by the Food and Drug Administration and by the Justice Department. And in many cases, they can't speak to the results of their own studies. If they go out and sponsor a study looking at the practical impacts of a treatment in the marketplace on real-world patients, in many cases they can't promulgate those findings to patients and speak about those results, let alone speak about the results or trials the government might be sponsoring to look at the same questions.


STEVE USDIN: And what the FDA would say about that, some senior people in the FDA who you know, you know what they'd say. They'd say that constitutes promoting off-label uses, or that companies are going to be misleading people about the efficacy of their trials, they're never going to test drugs if they can just promote them based on partial results from trials, things like that.


SCOTT GOTTLIEB: There are people at the FDA who would be inclined to think about, I believe, creating certain kinds of safe harbors from the regulations, assuming the FDA even has the authority to regulate this information, which is a question, whether or not it's constitutionally protected information and constitutes commercial speech. But assuming that they do have the authority to regulate it, there are people I think at the FDA who would look for policy solutions that would enable companies to be able to at least talk about the results of practical clinical trials with people who are making purchase decisions -- payers, health insurance companies, PNT committees.


DAN MENDELSON: See, I think that's a really important part of it, is that we're increasingly living in a world where there's an information asymmetry. And as health plans get more data, more data from clinical medical records, we're going to need to be looking at that.


STEVE USDIN: Well, thanks. The Affordable Care Act created the Patient-Centered Outcomes Research Institute, a public public/private partnership to conduct comparative effectiveness research. Congress also gave PCORI $3.5 billion dollars. We'll discuss how effective that investment will be. First, a look at where the money's coming from.






STEVE USDIN: We're here with Scott Gottlieb, Dan Mendelson and Tony Coelho, talking about reconciling two critical goals: reducing the cost of healthcare, and promoting medical innovation. We were talking there about kind of the asymmetry in communications. You wanted to make a point there.


DAN MENDELSON: Yeah. Just imagine, you're running a health plan and you have all sorts of really interesting information about patients, and they're using drugs and what the effect of those drugs are. And you can use that information to make decisions about cost sharing. You can use that information to even inform patients about their choices.


But if you're a life sciences company, you can't use that same information to communicate, and that's really the crux of the issue right now. So as we get more data from the real world, the life sciences companies are going to have to use those data in order to communicate with patients.


STEVE USDIN: And there's a lot of hope, at least in the administration, that PCORI, the Patient-Centered Outcomes Research Institute is going to be kind of a mediator for what's good information, what's bad information, putting it out. Tony, how do you think that they're doing -- how do you think that they -- what should they be doing?


TONY COELHO: Well, PCORI is young, and it's starting to put out information now. And it should be putting out more information. Congress basically said that PCORI should be patient-centered, and it should be doing things differently than NIH, and differently than AHRQ. And it should be getting information out to the patients, and out to clinicians so that they can have this information.


It should be getting out in a way that clinicians can understand it, and patients can understand it. And they should be getting that information out. They're starting to get it done. They haven't done, I think, an effective job as yet, but they should be getting it out. We're working with them to get it done.


STEVE USDIN: So Scott, is that a good idea, to kind of have a government agency determining what the truth is, and telling people that?


SCOTT GOTTLIEB: Well, PCORI has a voice, and it's going to have a point of view, but they have their own external pressures. I think the bottom line is, getting to Dan's point, there's no single truth standard when it comes to these questions. What you want, ultimately, is a vigorous debate. And if you try to encompass all the authority and the power and the resources in one entity, you're only going to get a one-sided debate.


And I think you want the life science companies able to not only promulgate their own information, but frankly, respond to the information PCORI's putting out. And right now, in many cases they probably won't be able to.


STEVE USDIN: So I want to talk about a debate. I want to switch over to payment and coverage. And one of the kind of givens that people make about payment and coverage decisions is that eliminating fee for service is a good idea, and going to some system of kind of bundled payments, where physicians have a stake, or the health care system has a stake in reducing costs. Scott, is that -- everybody says that's a good idea. Is it a good idea?


SCOTT GOTTLIEB: Well, I think when you look at the Affordable Care Act and you look at the payment reform, they were all forms of capitation basically putting an economic burden on the physician. I think if you believe that the incentives work to incentivize physicians to do too much under the fee for service system, you have to acknowledge that the incentives can work in the opposite direction, too.


And if you place too much economic burden on the physicians, they might underutilize certain things. The problem with bundling in particular, giving the physician a lump sum to take care of a patient through a given disease or a treatment episode, is you're pitting the doctor against his or her choice of technology very directly. So if a doctor chooses to use a more expensive drug, more expensive treatment, it's going to come out of their hide financially.


I think that's terribly problematic. I think you could capitate the physician, but you have to pay for the technology separately, presumably in a competitively bid system, so you know the government's getting a good price.


DAN MENDELSON: I think every form of payment system has its upside and downside. And doctors respond to financial incentives. So if you give a doctor an incentive to set up an imaging facility, she's going to do it. And if you give a doctor an incentive to see more patients, she's going to do it. And so then the question becomes, how do you move to a world where you can actually pay for value?


And I think that's really what all of the stakeholders in the system want and need, and I do think that if you are paying a bundle for medical care, that it has better potential so long as you adjust for some of the things that Scott is talking about.


So you want to make sure that they're getting paid for quality, and that quality becomes one of the differentiators, and one of the reasons why they will succeed under a capitated system to kind of mitigate the concerns that come in in that way.




TONY COELHO: I think what you've got to be careful of is that as a patient, one of the things I worry about is that you start to do cookie cutter, or you do averages, and so forth.


And those of us like me with my epilepsy, is that I may have a particular type of epilepsy that doesn't fit into a certain type of average, or whatever, so that those patients that are not in the mode that is taken care of by a payer that says, I'm not going to take care of you because you're outside of the average. We are the ones that get hurt. And I don't want to see that happen.


That's why you had in the Senate and the healthcare bill that costs are not to be considered, and so forth. I think that's the thing you've got to be careful as a patient advocate.


STEVE USDIN: We're going to talk more about that, and about heterogeneity when we get back. You can download a copy of Avalere's report on delivering value in healthcare. Visit We'll continue the discussion in just a moment.




STEVE USDIN: We're talking to Scott Gottlieb, Dan Mendelson, and Tony Coelho about innovation and healthcare value. Scott, earlier you made the case against capitation. You said that it can lead to perverse incentives. It could lead to incentives for physicians not to use expensive new technologies. But the alternative isn't there anymore, just to say, well, everybody can use anything that they want, regardless of the cost. So what can we do?


SCOTT GOTTLIEB: Well, regardless of how I feel about capitation, it's inevitable. We're moving towards a capitated environment. I think you can hold the physician accountable for some overall measure of resource utilization. I think what you don't want to do is pit them so directly against their choice of technology. That's going to lead to bad incentives.


The challenge for Medicare as a remote agency far removed from the practice environment is measuring value. They haven't come up with good ways to do that. So they don't have ways to tie reimbursement to notions like value.


STEVE USDIN: And we're not just talking about Medicare, right?


DAN MENDELSON: I would argue that there are some. So for example, there's a new payment system for Medicare-managed care, a star rating system. And we are paying managed care companies, whether for doing things like mammography and routine immunization. And some of these public health measures are actually really improving as a result of a pay for quality-type system.


Then you move to the things that are more subtle. And I think that we will be relying on professional standards. And then we also need to do a lot of work to try to develop better metrics. And this is one of the things the we emphasized in the report, is that if you want to move to a world where you are paying for value, there's a lot of work to be done to define what value is in these cases that are more subtle, as opposed to the more public health-type metrics that we kind of know how to pay for.


SCOTT GOTTLIEB: And I think some of the plans are doing a good job of trying to look at outcomes and measure values in terms of outcomes. It's more challenging for, you know, big agencies.


STEVE USDIN: So is this something really that's going to have to be done disease by disease, condition by condition, to look at what these kind of metrics are? And then we're going to have this extraordinarily elaborate system of metrics and positions being measured against them?


DAN MENDELSON: It ultimately has to be very simple. And this is to Tony's point that any system that is not simple will fail. But you do not want to have a system that just, for example, gives an incentive to use any old lipid-lowering medication if one lipid-lowering medication is more successful. And so you have to have an outcome-based system that is not specific to technology.


STEVE USDIN: And Tony, to your point about heterogeneity, how do you think that patients can have an input into that? One of the questions is, are patient groups organized well enough, are they savvy enough to be able to participate as a real stakeholder in these groups? Or are they always going to be at the children's table?


TONY COELHO: At NIH and at AHRQ, we are at the children's table, because we're not included. At PCORI we are actually voting at the table. We are actually part of the decision-making process. And that's why Congress set up PCORI to have us at the decision-making table so we can participate.


And we're for value. We're for reducing costs. We're for all these things. But we want to be there. We want to have an input so that we can participate. And we're concerned about the decisions that are made. We want to make sure that the value is right and so forth.


But we want to make sure that we're not excluded like we are at NIH and like we are at an AHRQ. And they just say, we'll pat you on the head and we'll take care of you. Don't worry about it. We know best. And so we want to be able to be there and participate in that decision making.


STEVE USDIN: One of the things, Scott, when you were at CMS, at Medicare, was the creation of coverage with evidence development. And that was supposed to help to solve some of these problems, that Medicare would pay for something -- if there wasn't real complete clarity about safety and efficacy, it would pay for it in a clinical trial, and then that data would feed back into the system and they'd be able to make more intelligent decisions. Has it worked out that way?


SCOTT GOTTLIEB: Well, it was designed to help facilitate access, because the payment process was very binary. Either Medicare paid for everything, or paid for nothing at all. And sometimes by paying for everything, it paid for a lot of uses that really were substandard. And by paying for nothing at all, sometimes it didn't pay for things that would have been beneficial to patients. So this was a way to titrate coverage and provide broader coverage while you continue to collect evidence.


STEVE USDIN: Has it worked out?


SCOTT GOTTLIEB: I think it worked out to a point, but it's being used more recently as a punitive tool, rather than a tool to try to enable market access.


STEVE USDIN: Dan, when you start -- if you look at the whole drug pipeline today, what drug companies are doing, it's inordinately -- it's focused on specialty drugs -- for cancer, for rare diseases, and in many cases, drugs that cost hundreds of thousands of dollars a year. Is that a result of some of the kind of incentives in the payment and coverage world today?


DAN MENDELSON: You know, it's very true that the pipeline is predominately these more expensive specialty drugs. And I think part of it is science. Part of it is what we can do for patients. And part of it is also, as we learn more about how medicines work, we can narrow down the patient populations in which we are applying the new medical therapies.


And I think that one of the things that we focused on in the report is this idea that as the healthcare system integrates more, we have to make sure that there are mechanisms through which these products are actually going to be paid for when they add value. And that's one of the big concerns, I think, with these more integrated systems, which is whether or not there's going to be a market for these new therapies in the system that we are creating under the Affordable Care Act.


SCOTT GOTTLIEB: I would just add, a part of the reason I think you've seen a lot development shift into specialty areas is because there's still some latitude to price products and get market penetration when you're targeting a truly unmet medical need. So you're seeing the companies go after these very niche indications where there aren't available therapy, and away from the big primary care indications where you have a lot of drugs already on the market.


STEVE USDIN: And people deride drug companies for working on me too therapies. But I don't think that anybody would look at it and say, in hypertension or diabetes or some of these big indications, that we've just got everything solved and we don't need any more innovation.


SCOTT GOTTLIEB: Well, we certainly haven't optimized the treatment of a lot of even routine conditions like high blood pressure. Unfortunately, you're not seeing a lot of people invest in those conditions anymore, because there are good enough generic drugs that are very cheap.


DAN MENDELSON: This is a real problem, I think. Because there are some cases where a modest modification to a drug or to the drug's packaging would actually improve patient compliance and improve patient outcomes. So I am a little bit concerned that we're kind of throwing away these incremental innovations by setting incentives that are not sufficiently strong to improve them.


TONY COELHO: And the quality life for a lot of patients would improve dramatically by the investments that are made in these areas. So from a patient point of view, we would like to see these investments made.


STEVE USDIN: So how do you create the incentives to make that happen?


SCOTT GOTTLIEB: I think it's going to be hard going forward when you have an environment where there are good enough generic drugs that are very cheap. I think we have to look at some of these areas and be willing to pay incremental amounts of money for marginal but meaningful improvements. If you aggregate the public health benefits of something that's a marginal improvement on a treatment for a condition that has tens of thousands of people suffering from it, that could be quite substantial.


STEVE USDIN: Next we're going to talk about some take home messages about the next nexus of innovation in healthcare value.


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STEVE USDIN: With a few minutes remaining, we're going to hear some final thoughts from our panel about innovation and healthcare. I want to kind of ask each one of you for kind of a take home thought. What would be the one or two things that you think should be done in the policy arena, either by Congress, by Medicare, by other payers to try to align value and innovation?


SCOTT GOTTLIEB: I'd like to see an equal playing field for information about innovation, and about new products. And that means creating rules that allow manufacturers to talk about the value of their products as well.


DAN MENDELSON: I'd like to actually pick up on something that Tony was starting on earlier, which is the importance of the voice of the patient.


So you have all of these government agencies, the Food and Drug Administration, the National Institutes of Health, the Agency for Healthcare Research and Quality, and they will only succeed in making progress and establishing a strong climate for value and innovation if they really listen to patients and integrate the patient voice into what they're doing.




TONY COELHO: And I would like to pick up on that end by saying, by also including the clinicians, the doctors. The combination of the patients and the doctors, their voice being stronger in this process.


And if you include the two of them working together, closer together, we can be successful. I really believe we can, but I don't think that the NIH and AHRQ help us get that done right now. And that if we could make those two voices come together, be more active, be more involved, we can get there.


STEVE USDIN: I just should interject. We said AHRQ a few times. That's the Agency for Healthcare Research and Quality. It's part of the HHS that's supposed to look at issues like this. It sounds to me like you've got a recipe for cacophony here, if you're saying you want to have the clinicians talking, more you want to have the patients talking more. I don't know who's going to be listening to them. Is there a formal process that's needed to make this work?


DAN MENDELSON: Every one of these agencies has a mandate, and they have to do their thing. So it has to work in concert.


SCOTT GOTTLIEB: I think you're going to have a noisy environment, but I think there's, like we said, there's no single truth standard here so you want a vigorous debate around these issues.


STEVE USDIN: And how do you drive that into actual decisions? One of the things that you've talked about is metrics. And Dan, you mentioned that metrics have played a big part in Medicare, in the way that plans are reimbursed, and what they do. How can you on the one hand balance the need to have sensitive metrics, and on the other hand, not to have something that's so Byzantine and complicated, people can't deal with it?


DAN MENDELSON: I think we're moving down into a world where there are going to be more metrics, and we have to embrace that. And we have to make sure that the metrics work for patients, as well as for the population as a whole. I think right now we have a lot of good population-based metrics, and where we need to do a lot more work is to define metrics that really define the patient experience and help patients to get what they need.


STEVE USDIN: Can you make that concrete so people can understand what you mean? What are population -- examples of some population-based metrics, and what are some examples of some patient-based metrics?


DAN MENDELSON: So it's to pay a health plan based on how many people they are immunizing, or how many times they do mammography screening. It's a lot more difficult to define, let's say, how they should be approaching the treatment of pain in arthritis. And that would be kind of an example of a place where you need to give a lot of latitude to physicians to make good decisions on behalf of patients.


STEVE USDIN: Well, that's this week's show. I'd like to thank Dan Mendelson, Tony Coelho, and Scott Gottlieb. You can see part one of this two part series online at Remember to share your thoughts about today's show on Twitter. Join the conversation by using the hashtag #BioCenturyTV. I'm Steve Usdin, thanks for watching.