Physicians in ACOs believe pharma companies could help reduce the cost of healthcare--but suspect they won't

Physicians in ACOs believe pharma companies could help reduce the cost of healthcare—but suspect they won't

Patrick Clinton(212) 345-3013

Doctors believe that the pharmaceutical industry could play an important role in helping value-based healthcare providers such as accountable care organizations (ACOs) to deliver better care at lower cost. But pharma companies currently do a poor job of delivering the kind of data needed to accomplish that goal. The insight comes from a new survey of physicians in value-based delivery models conducted by Oliver Wyman. The 200 respondents currently make at least 25 percent of their income through value-based care arrangements.

  • Sixty-one percent of respondents said they agreed or strongly agreed that there is a role for branded drug therapies in reducing the overall cost of patient care when used appropriately
  • Only 37 percent agreed or strongly agreed with the statement, "Pharmaceutical companies have the capabilities to reduce the total cost of care and improve patient outcomes."

Accompanying interviews with senior executives at ACOs at various stages of development echoed physicians' views. "Drugs can cost more, but they have to prove real value to the patient in order for payers to agree to pay more," said the former CEO of a Medicare Advantage ACO. "You can't just charge money for a new therapy unless the economics work."

"Drug spend is not considered today in most contracts between ACOs and payers," explains Mark H. Mozeson, a partner at Oliver Wyman and co-director of the survey. "Many in the industry expect that to change in the near future. And as it does, drug makers will have the opportunity in many cases to move away from negotiating unit price with commercial health plans and instead contract directly with providers based on outcomes and ability to manage total disease costs. Their ability to demonstrate value will determine whether they have a seat at table."

Physicians' lack of confidence in pharma companies makes sense to Peter Gilmore, an Oliver Wyman partner and co-director of the survey. "Pharma companies have an image problem," he says. "For years they have gone to payers and providers with data on how their drugs compare to the standard of care. They haven't given their customers what they wanted: true evidence on how their drugs optimize total disease costs. That needs to change."

Oliver Wyman is a global leader in management consulting. With offices in 50+ cities across 25 countries, Oliver Wyman combines deep industry knowledge with specialized expertise in strategy, operations, risk management, and organization transformation. The firm's 3,000 professionals help clients optimize their business, improve their operations and risk profile, and accelerate their organizational performance to seize the most attractive opportunities. Oliver Wyman is a wholly owned subsidiary of Marsh & McLennan Companies [NYSE: MMC]. For more information, visit . Follow Oliver Wyman on Twitter @OliverWyman.

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