Pricing
Transcript: Price set by the perceived value to the customer Dependant on an understanding of how customers measure value- determied though observation Requires balancing many variable factors In Value Based Pricing the factors are exceedingly complicated Value to patient groups Value to Payers (CMS and Private insurers) CPT Codes the resources it took to develop and validate the test (costs of clicnal trails) laboratory charges for self-pay patients, competitors acceptance of KOLs from industry, & academia government trends Payers want to ensure they are getting cost savings from reimbursing the expensive diagnostic United HealthCare put an arrangment in place where OncotypeDX with be reimbursed a lower rate if it turned out that women with low recurrance scored went on to receive Chemo anyway Challenges/Disadvantages - additional outcome tracking requirers payers to have sifficient information systems- which may not be in place -compeittors may benefit from setting the inroads Benefits: - good to overcome initial barrier into the market - could also be used as a strategy in future development if we have a product that does not have sufficient data behind it About 1 in 8 U.S. women (just under 12%) will develop invasive breast cancer over the course of her lifetime. In 2011, an estimated 230,480 new cases of invasive breast cancer were expected to be diagnosed in women in the U.S.,1 Cost of Chemothearpy $15,000/ year (5) Tip References Most payers require new techbologies to be reviewed before setting reimburstment levels Not the ultimate decision maker or payer, but plays a key role in the purchasing decision and consideration is required to create a well rounding pricing plan This is a huge mountain CPT Codes Real Huge Case Study: Karen Greenrose, president and CEO of the American Association of Preferred Provider Organizations Value to Physicians Value Based Pricing Pay For Performance Overall cost of cancer in 2010 was 263.8 Bill (4) 102.8 Bill for direct medical 209 Bill for indirect medical (loss of productivity) 140.1 Bill for indirect due to loss of productivity from premature death Need to have a baseline understanding and acceptance of genomics – need KOLs to get there Barrier- training the physicians Current Barriers Paying for Outcomes Pay for performance could promote the adoption of personalized medicine if clinical data proves customized therapies reduce payers’ costs.3 Only 4 out of 100 patients benefit from Chemo The physical and emotional costs are severe Patient values being spared from Chemo or benefits from the confidence knowing that it is the right path for them Cost to society Greenrose was speaking from personal experience. After being diagnosed with breast cancer two years ago, she wanted to have a new test, called Oncotype Dx, that would determine her risk of having a recurrence. If the risk came out low, she probably wouldn't need chemotherapy for her small tumor, which hadn't spread beyond the breast tissue. "My insurance company refused to pay for the $3,500 test even after I appealed to them over and over again," Greenrose says. She decided to pay the cost out of pocket and found she had a low risk of a cancer relapse. That meant she probably wouldn't benefit from the chemotherapy, so she decided not to receive it. What irks her is that her insurance company would have wound up shelling out three times as much for chemotherapy, if she'd gotten it, than for the test that dissuaded her from seeking that expensive treatment. Improve quality of care, better outcomes. accurate and up-to-date patient data and sophisticated decision support tools. They will need more than just the results- decision support tools will help them use the diagnostics- added service = added value For a Personalized Diagnostic Comany... 1.http://www.breastcancer.org/symptoms/understand_bc/statistics.jsp 2. http://health.usnews.com/health-news/blogs/on-women/2009/05/18/health-reform-where-women-stand-to-gain 3.PricewaterhouseCoopers’ Health Research Institute,(2009). [The new science of personalized medicine]http://www.pwc.com/personalizedmedicine, p. 26-27. 4. Cancer facts and figures 2010 ACS Economic Analysis of Targeting Chemotherapy Using a 21-Gene RT-PCR Assay in Lymph Node-Negative, Estrogen Receptor-Positive, Early-Stage Breast Cancer J Hornberger, LE Cosler, GH Lyman Am J Manag Care. 2005; 11(5):313-324. http://www.amcp.org/data/jmcp/683-687.pdf Although in the past stacking resulted in faster processing of claims for new diagnostics However, it increases the chances of being rejected by the payer stacked cods will usually be considered out of network wich will increase the cost to patient Payers Value to Patients
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