Transcripts For CSPAN3 Pharmaceutical Purchasing Programs 20151221

And coming up, more on the recent health and Human Services forum on pharmaceutical innovation and drug costs. Up next, senators from medicare and medicaid acting administrator andy slavit and purchasing strategies for the pharmaceutical industries. This includes manufacturers, employers, consumers, Health Insurance providers and government officials. Once again, if you will all take your seats well get started on the final panel of the day. Where as promised, well devote our discussion to outcomes based purchasing, what is the potential for those, what are the obstacles and how do we get to better value and better accessibility for patients as soon as possible through these and other mechanisms. Let me introduce our panelists now. You have been introduced to at least this gentleman there, dan durham, Senior Vice President of ahib, thats americas Health Insurance plans. And ken frazier is with us, the president and chief executive officer of merck and company. One of the premier pharmaceutical companies. And ken is currently serving as the head of pharma. Steve miller is here from express scrips. They are one of the leading pharmacy management companies. Bernard tyson is with us. He is the chairman and chief executive officer of keizer p m permanente. Covering now more than 10 million americans in many parts of the United States. And finally with us is Allen Spielman who is assistant director of health care and insurance, federal employee insurance operations in the u. S. Office of personnel management. So welcome to all of you. Before we go into our topic today, which is the outcomes based purchasing of pharmaceuticals we have been hearing so much about already today, i would like to ask each of you to address from your perspective, your unique perspectives as stake holders on various sides of this equation the top opportunity and the top policy challenge that you see now in bringing to market these very innovative drugs and treatments, cures in many instances, and making those affordable and sustainable for most americans. And getting the best treatment to the right patient at the right time. So dan, from the perspective of the nations Health Insurance policy plans, give us your perspective. Well, thank you, susan. I would like to start by thanking secretary burwell for inviting ahip to be a participant in this very important discussion. I spent four memorable years here and also would like to thank the hhs team. I know how hard they work in putting this forum together in short order was a monumental task. Today were in a consumerdriven market. Consumers are demanding value. Thats quality care at the lowest possible price. Thats what health plans are focused on. Were driving value in Todays Health Care system by collaborating with providers on quality and negotiating on price. And we do this in very innovative ways. Were building highvalue networks, we are focused on payment and Delivery System reforms, including bundle payments, patients in medical homes and global budgets and the like. These are changing the incentives to drive value for patients. And when it comes to Prescription Drug prices, i think we have reached an Inflection Point here. We are still very much in the fee for service world. We have to move to the value world. And thats what health plans are focused on. And theres specific examples here that were going to talk about today. And we have already heard about some of the barriers, but recently harvard pilgrim reached an agreement with mj or the cholesterol lowering drug and focused on outcomes. We have then previously with merck and signa, specifically on lower hemoglobin levels. But we need to see more of those. Its far more prevalent in europe and other countries than what were seeing here in the United States. So the bottom line is, driving value in the system for consumers, we need innovative medicines. Health plans want to provide the best innovative medicines to their patients. But they have to be affordable. And prices have to be sustainable. So we need to focus on solutions here, private sector marketbased solutions that drive value. So were paying for outcomes, were not paying for volume. And i think doug said it best this morning, he said, 20 years out it will be outcomes equal revenue. Hopefully well get there a lot sooner than 20 years. But value is the place we need to be and all shakeholders have an Important Role to play in driving value in our system. Ken frazier. Thank you, susan. I also want to thank secretary burwell, acting secretary slavit and the hhp for slavin, and all the hhs people for giving us this tremendous forum today. And say i hope its the beginning of a serious discussion between all the participants in health care about how we can provide greater value to the people that we all exist to serve, which are patients. Let me also start by saying as a whole the research and Development Efforts of the pharmaceutical industry and the biotech industry have had an indelible, lasting effect on preventing illness and extending life, and we have the potential to do even more. And thats why were spending tens of billions of dollars each year in our quest to do just that. That said, my company and the industry share the concerns that have been expressed about the rising cost of health care, particularly when those costs are passed on to patients. We share the administrations goals of creating a more affordable and sustainable Health Care System, promoting innovation, and improving Patient Access to new medicines. We, too, believe in the potential of valuebased approaches to derive greater value from health care spending. And, in fact, as we just heard, have partnered with several private insurers, including cigna, to try to implement these things over the past five years. But its important for us to recognize that policy and systemic changes are needed to enable us to fully realize their potential. Our efforts must stop start with a holistic patientcentered focus, and with an accurate view of the role of innovation and medical progress in achieving better value. We also need to Work Together to look at the value of all components of the system, hospitalizations, drugs, devices, and all other interventions. As we continue our work to create better valuebased approaches, and while we work to address the pressing unmet medical needs of patients, diseases such as cancer and alzheimers, we need a policy and Regulatory Environment that supports and rewards innovation and allows biopharmaceutical manufacturers to be full partners in the Movement Towards this valuebased health system. Spending on Prescription Drugs has not been the dominant driver of u. S. Health care cost. In fact, just this week, avalier released a study of payer data that showed that Prescription Drug costs are not the primary drug driver premium increases for 2016. Medicines actually hold great promise for reducing future costs as we face growing rates of chronic disease in a rapidly growing aging population. Even the cbo, the congressional budget office, has recognized an increase in the use of medicines and medicare will lead to cost savings elsewhere in the system. So, let me just summarize by saying the issue that were discussing here today, the shift toward valuebased payment, is a good example of how it is that we can drive to the kinds of goals that we want. Better Patient Outcomes for lower costs in a way thats sustainable for all participants in the Health Care System, so thank you. All right. Thank you very much. Steve . Yes, susan, thanks for having me. Again, i want to thank hhs for having this forum today. This is, as ken said, hopefully the beginning of a discussion that we all need to have. As youve heard already today, pharmaceuticals are the biggest challenge in health care right now. That is, its the most rapidly rising cost in all of health care. And while were paying 300 billion today, thats going to go to 400 billion to 500 billion over the next several years. We need a sustainable system. We need a system that rewards the pharmaceutical manufacturers and allows them to continue to be the great industry they are in the United States, but we also need to have affordability and access. And so what were going to talk about hopefully in this panel is not just value base, but its indication based, its outcome based. Its all sorts of Innovative New Payment Systems that were going to have to adopt if were going to be able to continue to reward these companies but also make access and affordability available to our patients. When we started the price war for the hepatitis products, its because it was actually a new product in the marketplace, and that was formulary exclusions. By truly excluding products in the marketplace, we were able to actually shift market share and reward another company. So every time we do something thats disruptive in the marketplace, that looks to be anti one company, its actually really pro another company because were rewarding them with our market share. And what valuebased, indicationbased, outcomesbased plans have to do as we move forward is we have to identify the ways to reward people as well as to make it clear that we can shift the marketplace. Hopefully, there are tasks that you take away from this of what can pharma do to make for a Better Future . What can government do to make for a Better Future . What do patients need to do for a Better Future . And what do payers need to do . Because without getting all the components of the system working together, the final thing ill say is the enemy for all of us is actually waste in the Health Care System. In the United States, we spend about 3 trillion a year. Its estimated that about a third of that is waste. Now, one persons waste is another persons profit. And weve been very ineffective in the United States at going after that waste. You heard other people talk this morning about adherence and the waste that causes. But we have to root out every bit of that waste because if we do, that money is arbitragable. It can be reallocated to pharmaceutical products, to social service products, to other things that will actually make a bigger difference. So im really excited to talk about doing this with this panel today. Great. Bernard . Thank you. And its great, really great to be here. You know, i have to tell you honestly, as i was reflecting on the topic and discussion and how to tee up my two minutes to three minutes, i struggled somewhat because i dont want to get trapped in the latest headlines of valuebased something. And ive talked to enough people to see that we dont really have a common definition for that term anyway yet. And depending on whos promoting value base, theres a usually a view of that that one may or may not agree with. Im working hard every day to make Health Care Affordable for 10. 3 Million People and hopefully for the country by demonstrating with an endtoend system how we can look holistically at the entire spectrum of health care to populations from all walks of life. As it pertains to this particular topic, i start with a different conversation at the table with my partner across the table from me of pricing. I start with i could bring 10. 2 million members and this is the price you said, but i need this kind of price because thats the way the system works in this country, in every industry. And i hear back, i would love to do that but i cant because i have this problem, that problem, and medicaid gets favorite status and, you know, the Government Forces this or that. I go, well, theres something wrong with this picture. Thats what i start with. Valuebased pricing if the market would dictate that a pill is worth 1,000 and its truly market based, but someone can charge 10,000 for that pill, and i dont have a choice but to accept the 10,000, if i go from 10,000 to 8,000, im still paying more than what the market would do if the market was really working on my behalf as i work with my partner across the table. That, for me, is a starting point of a fundamental flaw that we need to address now in the 21st century. Ive heard debate that youre going to run innovation to the ground. No, were not. Every other industry has figured out how to do this in a freemarket context. And im not saying we throw the baby out with the bath water. The fact of the matter is i cant tell you how pleased i am that the industry is now looking at possibilities to cure diseases as opposed to continue to manage the illness. Thats a major step forward. And the whole system should be rewarded for that kind of innovation. But at the end of the day, the american people, the employer, the government are paying for all of this. And it has to fit into an affordability envelope. And so when i see and talk to members and people around the country who are trying to figure out how to make ends meet and they have the additional burden of a Health Care System that is weighing them down, that they havent seen a real wage increase in 20plus years, i end up saying to myself, we have to come up with Better Solutions to produce the value while also making sure we have a viable and Sustainable Health ecosystem. And that for me at the end of the day is what the value base is all about. Are we making a difference to the affordability piece of the formula that people who are paying for all this can see it in tangible ways . Thank you. Alan . Thank you, susan. And thank you, secretary burwell. And i want to talk about the federal employees Health Benefit program and our strategic perspective. And, of course, the federal employees Health Benefit program is the original Health Insurance exchange. Founded in 1960, 250 planned choices nationwide, total of 50 billion in spend, and covers over 8 Million People, both active employees and retirees in the same risk pool. And the impact of Prescription Drugs, the Economic Impact on our program is enormous. Over 25 of that 50 billion, 12 billion or more, is represented by Prescription Drugs. And weve been on a journey for the last 25 years in managing Prescription Drugs. And it started back in introducing and enabling managed care tools and techniques and promoting transparency and contractural arrangements. And now proactively driving adoption of best practices, whether its managed formulary, promoting drug pricing tools for consumers, or management of the specialty benefit. But were entering a new phase and thats to link planned performance to quality, Customer Service and resource use. A true payforperformance. We want to put our money where our mouth is. We have about a half of a billion dollars out of that 50 billion that we can apply to this. And were adopting measures at the population level, at the plan level, consistent with our population, such as controlling diabetes. So our strategy really is threefold. Were wanting to leverage the individual choice Market Dynamics with our promotion of best practices among our plans, enabling innovation, and overlaying a value equation, where at the plan level will create financial incentives for Population Health and management of cost outcomes. And we think that will create the dynamics, the catalyst for continuous value innovation. Great. Well, thanks to all of you. So to move to our topic on valuebased payment, outcomesbased payment, et cetera, weve been tossing these phrases around all day. We probably havent done as much as we could have to really break rocks and explain how the arrangements work. Ken, im going to start with you and ask you to give us a sense of how the arrangement you struck with cigna around diabetes drugs was structured. We know its not necessarily the model that all of these arrangements follow, but give us a sense of how that arrangement came together and how it incorporates this concept of valuebased payment. Well, the outset, lets and i think several people have alluded to that, that there is no single definition of value. And thats one of the challenges that we have here is that value can be difficult to define and difficult to measure based on which person is looking at it. But in the cigna case, what we did is we sat down with a very important customer of ours. We realized that it was very important for us to make sure that diabetic patients were reaching their blood glucose goals. And so we said, lets provide an additional incentive in the form of an additional rebate to cigna if they can show that under their broad auspices, not just the pharmacological interventions, that they are getting patients to their goals. And part of that obviously is to make sure patients are taking their medicines on a regular basis. And so simply, instead of just paying people for the amount of market share that we get from that particular health plan, we just incentivize people to make sure that the patients got the benefit of the medicines and the benefit of the other interventions, and that they were, in fact, getting to goal. So you got the outcome that you wanted, which was that people were controlling their blood glucose level, and we were able to pay them for reaching those outcomes. I think thats a very good example of what we were able to do. You paid them in what form . Mailed a check. Form of a rebate. On the original cost of the drug . Exactly. Right. If youre going to pay us for a certain amount of our drugs well give you a higher rebate if you can help patients take those drugs on a consistent basis. And you can also show that the patients are not just taking the medicines, but getting the benefit we want out of them, hitting their goals. And how has the arrangement worked . I think its worked very well. I think cigna is happy and merck is happy. Thats an exemplar to one approach to valuebased pricing and pricing arrangements. Steve, you all have been involved express scripts and other types of arrangements that have been discussed between payers and providers. Give us a sense of how some of these others worked. One of you stressed indicationbased outcomes. Lets talk about that potential approach as well. One of the things weve announced is in 2016, we are actually going to introduce indicationbased pricing for cancer products. And this was an idea that i stole from someone much smarter than myself, peter bach, from memorial sloan kettering. Peters been talking about this for a long time. What it essentially does is it recognizes that a drug is initially brought to the marketplace for one indication. Lets take tarciva in lung cancer. Its a lung cancer agent. For the right patient, it can extend life by 5. 2 months. For pancreatic cancer, it will extend your life for 12 days. Now, the trouble for us as consumers is do you ever pay the exact same amount for something that works one tenth as well . Name another product that would work as onetenth as well you would pay the same market price. In our marketplace, thats what we see. What weve done to make this happen in 2016, we had to do three things. One, we had to change our systems so that we could actually adjudicate drugs at the indication level and not just the drug level. Because right now, all claims are at the drug level. But we have got to get the information on the indication that its going to be used for. The second thing we needed is we needed eternal Third Party Experts to tell us what the alternative value is. And so we again turned to peter bach and a guy named Steve Pearson at icer, the institute for clinical and economic review. They are helping us not negotiate what that price is, but give us some idea of what the true value should be. The third and most important thing i needed was i needed tens of millions of patients that would actually agree to have this on our formulary. And just like we organized our plans around hepatitis, and we are able to move our volume in hepatitis, we have gotten tens of millions of patients that will be following our formulary design to do this. We put out an rfp to the pharmaceutical companies, got a phenomenal response. We have that for 2016. We have to make sure the system works. We have to make sure that number one were giving patients the best clinical options that are available to them. At no time should patients be caught in the middle of this. Number two is we have to be giving visibility to our plan that theyre paying the right fee. We have to be giving pharmaceutical companies visibility to whats going on so they feel comfortable doing this. And if its successful in 16, we can expand this to a huge number of other drugs. But we can also expand the categories outside of cancer, like inflammatory diseases and others. So explain how this affects an individual patient that might have lung cancer who might be involved in this arrangement. This is interesting. Theres a regulatory barrier that has prevented this from happening and still prevents it from happening in most cases. Youve heard about medicare best price. Well, the trouble with medicare best price, if someone if theyll accept 100 for lung cancer but 10 for pancreatic cancer, that 10 now becomes best price. For the government, they wont care if its just for pancreatic cancer. And so what weve had to do is weve made this a math problem. Whats the net discount you would achieve . Lets give that to all the patients involved. The pharmaceutical manufacturers have accepted a blended rates across all patients. All patients will benefit from the lower prices even though its based on indication. The lower price would apply for all of the drugs in that class . It would apply for the contracted drug. Those companies that dont want to contract this way may find themselves on the outside looking in. Okay. You said that is going to go into effect, that arrangement for 2016. You dont know what the results are going to be . Dont know what the results are yet. But you know, theres a lot of great experiments going on. Sam nusbaum at anthem doing pathways. That has had Great Results as far as doctors adopting it. Were going to have to try a tremendous number of experiments and its going to take cooperation with everyone in this room if were going to be successful. And alan, from the standpoint of fehbp, you said you were very much moving in the direction of having these kinds of arrangements with the plans that are essentially making their products available to the federal employees and their dependents. Explain how some of those arrangements would work. Well, what we do and we certainly spend a good amount of time with the key pbms, like express scripts, that support a lot of our plans. I think theres over a dozen plans that work with express scripts. And what we try to do is create sort of a dynamics where these sort of experiments and pilots can happen. And whats critical for us is trying to identify are there regulatory barriers that weve had, either conscious or unconscious, that we can remove to enable some of these to happen . So i think every one of these innovations we have the capability to deploy in our program. The proof is in the pudding. Does it result in greater value and the lower cost . Whats missing from the equation is the Patient Engagement to actually see the demonstration of this value. And i think thats something we all need to work on, how can we better engage them so theyre making decisions on which plan and arrangement to go to based on clear demonstration that they have added value and thats part of our future agenda. So ken, you and others have talked about this difficulty of defining value. Are we essentially going to have to define value potentially in different ways, drug by drug, condition by condition . How are we going to approach this . This sounds like a monumental task. Dan, id like to hear your views on this as well. I think value does vary from situation to situation. Let me start by saying i think its most important we remember that individual patients lives are being affected here. We want to make sure when we define value, we think about it from the Patient Perspective. Theres obviously an economic perspective, as bernard said earlier. Just that one example, this patient has a viewpoint, the payer has a viewpoint. Its going to vary depending on the disease. Its going to depend on the time horizon. Thats a big issue that you can talk about. It depends on what time horizon youre measuring value in. Often, we have drugs that are administered today that prevent longterm hospitalizations. It depends on whats the measurement period that you look at. If you look at too short a period, you dont get the benefit because you prevented those hospitalizations and those other interventions down the line. So all of those are variables that go into the question of how you measure value. And i think all that leads to the point that you have to have a lot of different experiments, like the ones that were talking about. And thats why im a Firm Believer in allowing these private market experiments to go on. Because the example we just heard about in cancer may not be applicable to certain chronic diseases, like diabetes. So well have to experiment and find the right ways to find that concept of value. I will say we should recognize value is composed of many different factors that are viewed by many Different Actors in different ways. How do the member plans think about that question of defining value . We think its best for an independent third party to define value. And, you know, steve talked about that earlier in the work that icers doing, Steve Pearson and his group are doing. Very transparent, very open. Hes going to look at all the new medications that come to market over the next year. The highpriced specialty medicines, i think he plans to do at least 30 studies that really focus on what is the value of this product . And so thats a very important contribution to the debate in terms of how you define value. We also look at our own data. Health plans have a lot of data. And bernard talked about that as well. To see what the customer is saying in terms of outcomes as another way. We have committees that develop the formularies based on therapy committees. Based on the evidence, based on the best evidence out there to determine how to place a particular product. So there are a lot of ways to define value. And the real question is, is what type of product are we talking about . If its a cancer medication, that can extend life for a couple of months, but is very high priced, does that necessarily reduce other healthcare spending . Not if you have to continue chemotherapy and have side effects and the like. That extra two months could be very important for an individual and their families. So it becomes challenging to get a specific measure of value thats consistent across all drugs. How do you measure the value of Lifestyle Drugs . You know, which are big sellers in the marketplace. We will have a whole separate forum on that one. Bernard, you talked about sitting across the table negotiating these kinds of arrangements. As you would sit across the table talking to somebody about a valuebased arrangement, one of the issues that ken identified was what if the payoff is way down the line . With your health plan integrated Delivery System, youve got to pay the bill for the drugs today. How do you factor in a benefit that may be ten, 20, 50 years down the line . Who is that rebate check going to go to someday when that benefit crops up . Somebody enrolled in kaiser today may be someplace else, cigna, wherever else tomorrow. How do these how do you perceive these contracts are actually going to work in the real world . Well, its you know, its a combination of who benefits. And how do you project the future risk of individuals and populations based on the result that will happen today . To put it in your analogy. So in our example, we now know, because we have all of our patients on the Electronic Health records and we have detailed information, we know that based on the population inside of kaiser, who will qualify for the hepatitis c drug, i now can quantify that thats going to run me an additional half a billion dollars or more per year over the next several years to administrate a drug to our physicians to all of the patients who qualify for that. Thats now a couple billion dollars that i can see into the future over the next couple of years, because were going to do the right things by our members. In return, our members are going to be healthier, but that doesnt mean theyre not going to have other issues that theyre dealing with. But over time, the risk will be in theory and hopefully in reality lessened. In my affordability formula, i get to reduce my risk factor, therefore, i can take a lower rate overall to the market and pay the market back, my customers, my employers, the government, and how much im actually charging. So my line of sight is very direct, that if i can produce these savings, whether its through Prescription Drugs or just sound preventative care, that means i need to have less money to take care of this individual and that population, then i give that back to my customers in forms of the rates that they pay overall for me to do what im doing inside of the system. So thats how i see and thats how the ecosystem works for mean. As it pertains to the value to the patient, it really depends. Its a complicated question. Because if i know for a fact, as we do, you can do certain things to prevent something from happening, then the person who youre trying to convince to do this, that or the other, because its the right thing to do, may be conflicted by wanting to do it, but not being able to afford to do it or not willing to make that economic choice to pay for this now that could prevent something from happening in the future. Because its unaffordable. If youre sitting with a chronic disease and it is interfering with your functionality in life, your incented in a different way to accept the medical advice and all of the things that we can bring to bear. And so over time, you know, you start to tease out the difference between someone who has cancer or diabetes or Heart Disease that is impacting the functionality of their every day life, versus someone who has been told that you have high Blood Pressure and we can get this under control and the economics of you feeling fine every day and the economics of what will take to prevent that from turning into a stroke or a heart attack in the future, depending on how that economic is working, you might render a different decision as to whether or not you would use that drug. Affordability is central to what were talking about. The value based formula for me starts with the equation of affordability. Thats not based on how much it costs me to provide the care. Its how much can people truly pay in that affordability envelope. No matter how you define it. Has Kaiser Permanente entered into valuebased contracts with pharmaceutical companies . And if so, how do they work and how do they address the issue of maybe the benefits really are way down stream . The rebate check may be coming, but it may be 15 years from now. Well, its a combination of things. We use the same tools that youre hearing from rebates to areas that we can contract, we contract. We have different ways in which we manage the drugs inside of Kaiser Permanente. Quite frankly, we spend more energy focused on trying to make sure our members are adhering to taking the drugs, which is a major problem as you know. That youve got people in our Healthcare Systems in our country who might start taking the drug and stop after a while. We invest in those systems that keeps our clients motivated and to allow us to make sure we have that kind of partnership. The things i invest in around the pill is for example a pharmacy system that will let us know if a member hasnt refilled their prescription. Over a period of time, if you have 30 days worth of medicine and you havent refilled it in 60 days, we want to know whats going on with you. So we build signal systems like that, that allows us to help manage the person in a holistic way in taking of drugs. That has a long turn return because were keeping the patient as healthy as possible. So thats part of the ecosystem im able to build inside of a system like kaiser because our interest is in the Long Term Health of that individual who more than likely are going to stay with us for many, many years. So another concept that has come up in todays decision is the notion of shared risk. Shared risk between manufacturers, providers potentially also pbms. Lets talk a bit about those kinds of models . What do you see as the viability of those models . How broadly could those be extended and what difference would those make to the whole question of enabling manufacturers to bring to market these very important new products, new treatments, new cures, but also make the pricing more sustainable, ken . I think there are a number of contracts that where we do share the risk today with our customers. I think one of the challenges that we face in some of the public contracts that we have is were restricted in some of the tools that we can use in risk sharing. Give us an example. Well, you know, i would just say a couple of things. First of all, in order to have a good sense of what the true real world risks are and benefits associated with medicines, we sometimes have to look beyond whats in the label of the drug. Were restricted in communicating those things to our customers by fda regulations. That would be one restriction. Lets take a specific example. The drug has been shown in the Clinical Trial to be effective in this particular condition, but we think there is another condition it could be effective in . Build out that example. It may be weve measured certain outcomes, certain chemical outcomes, but we havent measured the impact on hospitalizations. Thats not a part of the Clinical Trial, right . One of the things we wanted to do one of the things you hear people say often is that the drug spend as a percentage of aggregate healthcare spend has gone up. Thats true. In some ways, its because weve prevented some downstream things. Thats not always in the Clinical Trial. We didnt study the impact of this drug on hospitalizations over a five or tenyear period. When the drug is out in the marketplace and we have postmarketing data, we have a lot of data about that. That would allow us to talk with our customers about arrangements where we could, in fact, share the risk of that patient subsequently being hospitalized for a heart failure, for example. But thats a difficult thing for us to do in a world in which were constrained by the way the drug was originally studied in a registration study to get it approved. So, we discussed some of that on the earlier panel. We need some leeway from the fda on that to make those discussions possible . That is one of the many restrictions that we face. Okay. Lets also broaden the question a bit and talk about incorporating valuebased payment and some of the new alternate payment delivery models that are coming online now courtesy of cms. Bundles, for example, i think one of you mentioned bundles. Can we think about incorporating medication new contractual arrangement of Prescription Drug use into bundles or these alternative payment models, dan . Yes, thats critical. Health plans have been doing this for quite some time. Were working collaboratively with cms to bring Innovative Systems at the health plans have been doing in the private space into Government Programs. And its critical. Whats a good example of one of those . You could see what theyre doing on hips and knees bundle payments. The conference of exactly. Something health plans have been doing in the private sector. Just like with the risksharing arrangement with Prescription Drugs. Its getting the incentives right. We do it with providers by collaborating with them on the Quality Metrics and then on the price side, through bundle arrangements, through global budgets and the like, so the incentives are to get the outcomes, quality outcomes, not volume. Thats the key. I think the challenge is theres no Silver Bullet when it comes to Prescription Drugs. These types of risksharing arrangements work when you have competitors in category or class. Then the pharmaceutical manufacturer has an incentive to differentiate themselves from their competitors. When youre a singlesource drug with no competitors, whats the incentive . You have a monopoly. You have a monopoly. And thats what we saw when civaldi came on the market. Health plans are price takers, we had no leverage to negotiate. That changed when a competitor came on the market. Steve and health plans were able to negotiate to get discounts. But the real challenge is, how do we deal with those Single Source drugs that have no competitors . Whats the answer to that . Steve and then allen, well go to you. Let me come back to when you talk about risk sharing. There is other innovative ways to risk sharing. When it comes to hepatitis c is not only did we get the price down so that we could treat everyone regardless of stage, but express scripts guaranteed the adherence. If a patient didnt adhere, we refunded the money. Because if you think about it, if were going to treat these patients in this case, its 84 days. When you look at the price difference, i could have sent a nurse out to the house every day to give the patient their drug for what it was worth. We developed predictive models. We were able to predict which patients were most likely not to adhere. We developed cell phone apps to help the patient. Were doing the exact same thing with the pcsk 9s. Were accepting the risk to the total budget of our plans. If we dont do utilization management well, we actually dont get a good rebate, we will actually backstop the plan at a pmpy. There is lots of different ways to look about risk sharing as we go forward. And the same thing goes for bundles. Theres innovative ways to think about bundles. Think about bundles in a different way. If you have a pharmaceutical manufacturer that makes all the drugs in a disease, like diabetes, could you offer a pmpy pmpy . Per member, per year, where the doctor could choose any product as long as they use that companys products. So that way they have availability so the patients love it because theyre not going through a prior authorization. The docs love it. They can use every class of the drugs. The manufacturer loves it because theyre getting the entire market share and we like it because its easy to administer. Theres not just regulatory burden, theres Administrative Burden. And one of the big problems is when you do outcomes based contracting, you continue the Administrative Burden will eat up much of the savings. Let me give you an example that ken knows well. You have a drug for diabetes, youre going to guarantee the blood sugar. The patient doesnt achieve the blood sugar. I say to ken, you owe me money. Ken says the patient didnt take the medicine theyre not adhering. I dont owe you any money. The patient didnt take the medicine because they had a side effect. Its a long conversation. But its every single patient. Youre adjudicating every single patient and its eating up all the savings. The definitions are incredibly simple. The administration is incredibly easy and the flow of the monies can go back very quickly so that the patients and the plans can benefit. Allen, i know you wanted to get a word in. Building on his comments on bundling, and that is we need to strive more to include pharmacy in the bundles. Theres a lot of surgical bundles for a variety of reasons post acute care. Thats right. Not been able to include pharmacy costs in that. Some health plans are doing that with cancer care. United and other health plans are including the price of the cancer medication in the bundle. Again to change the incentive. The oncologist is paid based on average sales price plus 6 . If you have an oncology medicine that a thousand dollars, in a bundled arrangement youll use the cheaper drug. There are examples here that are working on the bundle side that include drugs. We need to continue down that road. Can i just build on this . So because im in total agreement. There are a lot of innovative ways to do the things that were describing. One of the thats exciting, quite frankly, in terms of thinking differently about how to do it, how to ultimately drive costs down. Drive quality up, access, et cetera. The challenge inside of that for me, though, that i see and feel every single day because i have all of it, is that i can look at the innovation that we have going on that ultimately will reduce hospital days. Right . So i or liver transplants. Yeah, so i invest billions of dollars in our diagnostic systems in our hospitals, why . Because the quicker our physicians can nail whats really going on, to then start the treatment, the quicker our patients can get out of the hospital. They want that. We want that. Then theres a warm hand off to the out patient and so you end up with a whole ecosystem of how you care for that person end to end. The challenge is when you begin to slice different parts, you know, you might create that economic value here, but somewhere else is going to go up and down that may still end up with a Healthcare System that is unaffordable and still out of whack. So part of this challenge is how do we think about in particular now the specialty drugs that will impact large populations and produce no question about it a real value to someone . The fact that we have a drug that can cure hepatitis c is a beautiful thing. The question is can we afford it at a 100,000 treatment times whatever the ultimate population that might look like. I think we all will come to the answer, no, we will bankrupt the whole system. The question is, how do we start solving to a value based system for large populations who are is inevitable that the direction that were going with the innovation is that well be able to pick over time these massive illnesses that weve all dealt with, Heart Disease, cancer, diabetes and start to move away not to mention alzheimers where we dont right. And start moving away how do you manage the illness to how do you eradicate that illness. The hepatitis c gives us hope that this might be possible. Inside of that, all of us will have to rethink the restructure of how do you think about the financial models that will support the combination of innovation, curing diseases, and people hopefully living much healthier lives and takes on more responsibility for the Overall Health as opposed to managing to a sick care system that is only there to deal with episodic cases. And i think thats where the valuebased conversation ultimately needs to get to at a population and individual level because healthcare is not just one interaction, its a series of things that go on to help people to live healthy lives. I think this discussion also raises another aspect of what period of time do you measure the value of a new drug in . You know, bernard said a couple times, you know, we cant pay 100,000 for a hepatitis c treatment. And thats a general comment because we know because we have competition, were able to drive those costs down in the near term. And effective price, as we heard earlier, is closer to 50,000. Which is actually, interestingly enough is essentially the cost per patient of the last series of drugs, where you cured essentially one out of three patients. So you spend 150,000 to cure one patient. And now youre almost 100 svr, is the point i was going to get to. Its actually, per cure, much cheaper. So i think weve got to look at things in a holistic way. I made the point because i was at merck when we came forward with a protease inhibitor when we came out with an hiv drug. People had forgotten that people were building hospital wings to house aids patient. That drug is now 20 years old. When it was introduced, we heard very similar conversations about the affordability of the drug. The drug now is available in perpetuity at a generic rate. Look at what statins have done to the population. Think about how many heart attacks and hospitalizations have been prevented by statins. Statins are available today for pennies a day. There was a period of time when those drugs were viewed as relatively expensive. How you judge the cost and the value of medicine depends in large part of what time period your talking about. From our perspective, because we have these relatively short patents, and because we get so much competition, the way we did on hepc, that return was made on the value of the drug as an annuity, is what i was saying. And what i was saying earlier, to this exact point, what i was saying earlier, i dont want to pay that 150,000 when i know over time that drug should be priced at 50,000. Right now, unlike another part of my industry, i can work it down to 50,000 because there is a mutual win that i get the win on my affordability for 10 million plus people to take care of and the person on the other side of the table will win because their company gets the masses of ten million, if you will, to offer their product. But to sit across from someone and to be told i wish i could give it to you for 50,000, guess what . I cant. Im restricted. Single source or i need to get my return back or whatever the mental mindset is. And i think ken is right in terms of if it isnt set up correctly, you end up with this kind of dynamic thats going on. But i do not want my members to have to pay 150,000 because theyre at the front of the line which is what were talking about and then people who are later on is in the system might get it for 50,000. While i feel good about the 50,000, i promise you ive already paid for ten x the investment in the 150,000 which is the way this is calculated. Im sitting here going that is not how the free market is supposed to work. So lets stay on this point about the free market. All of you, with the exception of allen, are in the private sector. Allen is primarily dealing with plans that are in the private sector, although the employees and dependents are working for the government. Youve all talked about your preference for private sector solutions. You perhaps heard our earlier panel, primarily of patients, who came down hard on the side of we need some more government intervention, we need to have the secretary able to negotiate prices on medicare. We left on the table the problem of singlesource drugs. It doesnt appear theres a competitive private market response readily at hand for singlesource drugs. What aspects of Public Sector regulation do you think do merit exploration . Is it having the secretary negotiate medicare prices . Should there be particular steps in the area of singlesource drugs where you dont have a negotiating partner or another company you can shop the business with because theres only one supplier . Ken . Let me start by saying, you know, i think the concept of the Medicare Part d plan as its been constructed is a construct that actually balances a lot of interests. My patient satisfaction. It has been one of the few Government Programs to my knowledge. I hesitate to say this in a government building that has come in so far under any projected budget. Its probably one of the most efficient Government Programs in the history of Government Programs. It has with the exception of the federal employees which is also based on a private model. Exactly. Right. So the simple fact of the matter is you will be able to find this Single Source situation. That will be a problem. But across those plans i can tell you, we are negotiating like mad for access to that. And you have to take a step back and say well, whats so broken about a system that has High Satisfaction and is substantially below any projection thats been made about what it would cost . That doesnt mean its perfect. But lets be clear, there is no such thing as a perfect system. This system, i do believe, strikes as balance between creating the incentives for Drug Companies to come up. The solution to the singlesource drug, was a competitor that invested in that same program. And my company is coming out, as you know, very soon with yet another drug in that category. If you take away those incentives in the marketplace, the singlesource situation is actually a longer term problem than it would be otherwise. So but what would be the regulatory role, if any, in that situation . And particularly now its not so much even in these newer drugs, we have Single Source suppliers of other drugs who driving up the pricing. I want to be very clear. I can only speak for merck when im talking about pricing. I want to be very clear. There have been people who i believe have abused market breakdowns to charge more than they should have charged for individual drugs. I dont think thats the typical situation. When we price a drug, we just came to the market with a very important cancer drug in melanoma. We made the choice to price it equivalently with the prior drug, even though its substantially more effective and substantially less toxic. Were saying whats the value to the patient and the system . What do we have to do about access . What do we have to do to sustain our own ability to do the alzheimers program were hoping will work . So we have to balance those things. Our challenge is not to maximize profit and pricing but to optimize short term and long term. We want todays patients to have access to todays medicines, but we want tomorrows patients, including all those alzheimers patients to have access to the disease modifying agents that have not yet been invented. Lets be clear, alzheimers is going to bankrupt us. Not singlesource drugs. Alzheimers in 2050 will cost our society in the u. S. 1. 1 trillion if we dont get a diseasemodifying agent. So we want to be able to balance todays patients with tomorrows patients. Steve . I think theres things that pharma can do, government can do and payers can do. Pharma, actually has to show great leadership. In the past, they have and we need that. We need moderation in pricing. We also need to quit raising the price of old and existing product in the marketplace. When you bring a product to the marketplace, you brought it out with the idea this product was going to give you x return. When we see the price of a cancer agent go up by threefold over a decade, it really is unacceptable. You cannot imagine apple increasing the price of an old ipad. No one would pay for it. You have to come up with new features. In pharmaceuticals, we actually pay more even though the product hasnt changed at all. We need leadership at the pharmaceutical manufacturers. We need to support biosimlars. Biosimilars will make a lot of headroom to pay for your product. We need to quit paying the patent games or evergreening because all that does is keep expensive older products in the marketplace and doesnt allow them to get to generics. Somebody mentioned this earlier this morning, we need to quit the International Price disparity. We cannot have america paying 33 more. Were 4. 6 of the worlds population, 33 of the worlds drug spend. Were somewhere between 50 and 75 of the profitability. 300 million americans are paying for all innovation where we need to really spread that out over 600 million. What can government do . We need to modernize the fda. Youve heard this time and time again. The fda is underfunded and they need to treat every drug as a breakthrough. You want the first drug, second drug, third drug to get breakthrough designation. Because if i can get his hepatitis product into the marketplace also, think about what we can do to leverage that to actually drive down prices even faster. So we need not just the first drug to get breakthrough designation, we need all drugs. We need the fda to speed the approval process. It takes too long to get your generic back in the marketplace for the market to be selfregulatory. We need to fund the nih because it has been an engine for innovation. If you want things that industry will not develop, lets say an ebola vaccine, you can direct money for an ebola vaccine. And finally, this has been brought up earlier, people say they want outcomes research. But we have stripped the opportunity to look at the cost of drugs. Theyre not allowed to consider economics. If were going to be Cost Effective research we have to add the ability to have dollars as one of the features we look to. Finally, what do payers have to do . We have to continue to pay. Their drugs are going to be expensive. We have to be willing to continue to pay. The other thing we have to be is for consumers, we have to make sure the copays make sense. This idea that we have patients on the hook for these incredibly high copays, so yes, they need to have some economic incentive in the copay, but if we let patients have excessive copays, we know it drives down adherence. We have too many cancer, ms patients not taking it. Finally, is we need to advocate. Because unless we have the patients advocating and the payers advocating, were not going to change the system. Ill stop filibustering there. A short list of activities. A very important one. Thank you, steve. All right, once more. For our final session, were going to open it up. Oh, boy. In 15 minutes, well try to get through as many of these we can. I apologize because we wont make it through all of you. Well do our best. Please. Michael sherman, so applaud the discussion. Pharma is lagging behind other providers in being paid for value. Some companies in a deal with us have been at the table. Others have said no, thank you, we dont need to do this. How can we encourage them to be a part of the solution . And im wondering, can we along those lines, if a company cant explain their price in a way that makes sense, tied to reasonable return to shareholders, why cant we allow importation from europe . Were going to stop you there. Ken . Take that first part of that question. How do we get all the pharmaceutical companies to the table for these valuebased and outcomesbased discussions . Well, i think the reason they should come to the table is the reason why merck did. And thank you for acknowledging that. Our shareholders are important to us. Patients are important to us. Weve existed for 125 years by looking at whats in the best interest of patients. Ultimately, we all have to think about the sustainability of this system. If we dont think about the sustainability of the Healthcare System there wont be any hospitals, there wont be any pharmaceutical companies. I dont know how to encourage the other ones to come to the table. Lets demand that they do. Let me suggest that you take up the importation discussion perhaps at another time. So lets move to our next questioner. Hi, thank you for taking my question. Im lisa gill with consumer reports. You know, a couple weeks ago actually maybe a little longer than that, we heard public outrage about pharmaceuticals price hike of a toxoplasmosis drug. Their ceo became one of the most hated men in america. And by public pressure, you saw all over the internet, all over the twitter feeds, he relented and brought the price down. Hang on. Hang on. He promised. He did. So i think thats a very important point. But my most important question here is really to ken, just to give us a little bit more context. From a consumer standpoint, we look at that and we say theres only one guy that makes that drug and he can charge whatever price he wants, right . How is this situation differnet . We are struggling with that. Actually, all day today, has tried to distance themselves from this situation, but actually, its the same thing. You have a lock on this problem. Let me answer the question by saying the first thing is that is an aberration. How is it different . Theres a drug thats used for Bladder Cancer patients. We were one of three suppliers, two generic suppliers went out of the market for quality. Weve had to spool up to supply the whole market and havent charged one penny more. We think of ourselves as a responsible company. Now the other two guys are out of the market we can jack up the price. When somebody asks me about the touring, i want you to understand that is a Hedge Fund Manager masquerading as a phrma company. The researchers at merck come to work because they want to make a difference in the world. We believe great drugs can change the world. This is a bernard, question, too. Is valium a one off situation . Those of us who invest 7. 5 billion of our Share Holders money in areas like alzheimers spending money where weve had 400 drugs fail in a row do that because we believe that this company has to have value of multiple stakeholders. You dont get to be 125 years old if you havent been doing this for years. So i actually dont like touring being used as an exemplar of this industry. I dont consider them to be a part of the industry. I dont want to comment except to say their model is to not do any research. Bernard . Yeah, i really appreciate that question. I want to offer a slightly different perspective. Without talking about individual companies, but just what i see in terms of a flaw with the model here. Because that example is not just an individual, there are Big Pharma Companies who buy Smaller Companies who have spent all their time inventing a drug and innovating a drug and then they buy that company and then they charge what we see happening, right . It goes back to an earlier question. I absolutely believe that the government should be sitting at the table with this purchasing power sitting across the table from the Pharma Industry saying, we will negotiate a price for this population. Not that theyre going to break ken and his company. Ken has to make a research. Its inside of the market based system we all respect in this country. But the idea that i get to sit back and produce this wonderful drug and i can decide whatever price i want to charge at the end of the day because there are no forces that will effectively address that issue, at least over a period of time. To me, that says were not on a level Playing Field yet. Thats what i think the government needs to look at. How do we make sure the field is level . The government should not be in pricing control and doing all those kind of things. But to make sure that the economic value is being had inside of that marketplace. So this gentleman who is an investor, looked out and said this is a wonderful opportunity to make a lot of money. And thats what the net effect is. Bought a company, charged what he wanted to charge. I dont believe the price has come down yet. But i can show you a lot of examples where innovative Smaller Companies were bought up by bigger companies, pharma, and what i get is the 100,000 bill. So theres something wrong with the whole ecosystem i think of what were saying that we have to address in a holistic way. Thank you very much. Lets move to the next question. Thank you, amy with the National Alliance of state and territorial aids directors. Weve heard on this panel and throughout the day talk of hepatitis c and hiv and the treatment advances and the impact on individual Health Outcomes which i think cannot be overstated. But we havent talked about the Public Health implications as much and the idea that treatment with hiv is prevention. And that with a cure were preventing and overt infections. Im curious to your thoughts in the value equation, should we and how can we measure the Public Health impact and value when were talking about the tremendous new treatments and interventions . I want to thank you for making the comment. Its another exemplar of what i was saying, value gets measured by different constituencies different. Its hard to evaluate the impact of the person who doesnt get hiv. We know it exists. Right . We can start to think about eradicating hepatitis c if we cure enough people. Theres tremendous societal value, you know, and our company weve had Infectious Diseases forever. We have 4. 5 million children born every year, 42,000 would have a serious illness if you didnt have vaccines. We dont measure the impact of that on the Healthcare System. We want to encourage these kinds of cures and make sure theyre affordable and available to people in the prison population, for example. That is an important thing and something were going to take very seriously in hepatitis c. We wanted everyone with hepatitis c treated. I found as a physician not acceptable we were only treating those with the most advanced disease. To your point from a Public Health standpoint even someone with early disease can transmit it to somebody else. Theres more and more diseases we need to do this. If jonas salk had priced the polio vaccine the way they do today, there would be people who have polio today. We need to find the patients, engage the patient and get them treated. Thank you. Now to peter bach who has been mentioned earlier and was attempting to pose a question earlier today. Sorry we didnt get to you. Please go ahead. I ask the same question no matter who im asking it to. I want to ask it to steve. I dont want the intelligence grading to go in the wrong direction. My group invented the drug, this is a question about value. Theres a discussion around value pricing or finding the right prices for drugs based on the attributes. Ken, you made a comment about the broad landscape of possible value, i want to ask a granular question. The is it that we cant define what the domains of value are, or we dont know the relative contribution of each of them . The reason i ask this question is i created the drug atticus as a way of looking at cancer drug prices with what i thought were a reasonable array of domains that could define value. But on a flexible way so you could manipulate how much you thought things like prolongation of life or scientific novelty of rarity of the condition mattered. So i want to know am i in the right place . Do we know what the domains are, but we dont yet know how to weight them so we can come to a value based price . Are we sort of before that stage still . So i mentioned you anyone who wants to give me an answer. Were a big proponent of what peter does. Were using the drug, because peter has been thoughtful. Theres a lot of argument. So what i value versus what you value is going to differ. And so the value is in the eyes of the beholder. Seeing my daughter walk down the aisle in three weeks made me really really valuable versus prolonging my life but having a lot of side effects for another year. And so you heard it earlier today. We have got to figure out how to add value at the individual level. Oftentimes the individual will require less care, less expensive care. You heard that from heather on our panel earlier that given the choice she would not opt for extending her life if it was at serious cost in terms of side effects and so on. So next question. Id edith mitchell. Im a professor at Thomas Jefferson university. And i am president of the National Medical association. My question is related to the changing demographics in our country. Its wellrecognized that minority populations are increasing in numbers significantly. And at a rapid pace. In using all of the information that you have discussed today, i wonder if one of you can comment on how were using these processes to address the disparities that occur in minority populations . Specifically with poorer outcomes in most disease states. How are we utilizing our information to determine the effectiveness in disparate populations and how can we use the value based outcomes to lead to equity . Thats another example of what i was saying, are the challenges associated with saying that we can only proactively communicate whats in the label. Because those subpopulations we have drugs that work in a broad population that have the exact opposite impact in a minority population, hypertension drugs as a classic example of that. We need to be able to talk about the value in the real world, including to subpopulations who need better care. The other piece just to build on that right quick, i really appreciate you using that term, equity. Because the other piece is in having the information and the data base and the systems to know that if a drug can be very effective to a given population, but if there are challenges in how that population is taking that drug or other issues to be able to tailor how you administer that drug to the population or those individuals becomes a leg up in dealing with the disparity issues. Its not one size fits all, its how do we think through the best way to take care of our different subpopulations were responsible for. I hesitate to disenfranchise our last four questioners, lets just make an attempt at a round robin. If you could just quickly and well go quickly among the four of you. Get your question on the table and well ask them all at once. Cat davis, id like to ask how can the system incorporate the Patient Perspective, including the data that we bring to the table with registries for example . Are there formal mechanisms that we can put in place at this phase of the process were discussing today . To be sure that the Patient Perspective and relevant data is incorporated into Decision Making i think youd find wed have better decisions. Great, well put that to them. Wendell premise, following up on the discussions and all the issues. Whats the one specific change you would recommend government making law or policy or practice at fda or cms that you think would improve the space here . Kind of following up on steves list. Okay. Great. Patient engagement has been talked about the blockbuster intervention of the century. I want to hear from the Payer Community, how are you working on Patient Engagement . So this is a follow up to what cat just brought up. They have amazing value, and in their data registries, and were having a really hard time getting through to the Payer Community that they want a seat at the table, they want to be participants in this conversation. I think in the biopharmaceutical industry, the train has left the station. Theres a lot of engagement, a lot of work, a lot of science that has to be developed. Were not getting there in the Payer Community. I want to hear about how youre working on that. And then the last one. Thank you. Ellen licking. My question is alsmore pragmatic. Its on these new risk and outcomes based models. Frankly, how scalable are the models for the organization to get to a point where we can bend it the cost curve. Lets do quickly incorporating the Patient Perspective and getting more Patient Engagement, particularly with the payer. Stan, why dont you take that . Were in a consumer driven market and thats what health plans are focused on. The plans that will survive are those that are focused on the consumer and the consumers are demanding value and plans are responding to that. With tools on their websites to help patients find the best value for their money. And well continue to do that. Okay. On the question of shared risk. And these other outcome based models, how scalable are they. Can we do this fast enough we can get out ahead of these enormous price increases and the big pipe line of specialty drugs. Steve, why dont you take that . No. The reality is were behind the curve. We cant afford whats already out there. So it cant happen fast enough. Where the things are scalable, speed is of the essence and were already behind. Okay. Our companys ability to communicate broadly would be helpful and also clarification about the antikick back statute and how it applies to some of these relationships. Because those in fact be apparent violations. So if youre helping somebody to adhere, is that an ensiincen. We wake up one day and turn on the news and secretary burwell is telling all of us that well be negotiating prices. In medicare. Spoken from a man who has a Medicare Advantage plan or two. As the only Government Employee here, i dont pretend to suggest what the government should do in law, but i think in general i think more research and development. What are the tools, goals and standards that question measure and define value for more payors and more patients. All right. Well, i think as youve heard very eloquently stated these valuebased and outcomebased strategies critically important, critically important. Theyre probably not going to get us quite far enough. There are probably going to have to be other strategies employed. Whether government intervention, more regulation, whether looking at some of these other aspects what is going on at the fda, et cetera. Its a big job, a long one. You heard steves list, probably add about 20 more things to that based on the conversation all of today but we have come to a very important ending. I want to ask you all to join me in thanking this panel for getting us there. A terrific discussion. [ applause ] thank you. I want to welcome to the stage mena seshamanny, an md and ph. D. Director of the office of Health Reform at the department of health and Human Services. She helps to drive strategy and manage the implementation of the Affordable Care act and Delivery System reform and previously she practiced as a head and neck surgeon at bernard shaw, Kaiser Permanente in san francisco. Thank you very much, susan. What an incredible discussion we have had today. And first, i want to start by thanking you for moderating the discussion. You really made it very productive and it is much appreciated. [ applause ] and thank you to all of how have joined us here in the great hall and also to all who have participated online. The consumers, the health care professionals, employers, manufacturers, insurance issuers, government representatives and all of our other partners. As a provider, i know how powerful pharmaceuticals can be in promoting health and treating and curing illness. The high and growing cost of drugs has created hardship for families, employers and states. So todays discussions really reflect the perspectives of the Diverse Group of stakeholders impacted by the rising costs of drugs. And echo the complexity of transforming our Health Care System into one that delivers quality over quantity and puts the patient at the center. We set out here with the goal of bringing stakeholders together on a discussion of how our nation can lead in innovation and deliver access to highquality, affordable medicines. And today, we made progress toward that goal by identifying Common Ground to Work Together and heard ideas about how best to protect consumers access to important drugs while we continue to improve affordability and promote innovation. In our first panel, we heard from consumer and Patient Advocates on the challenges facing patients and providers in accessing innovative, lifechanging therapies, such as how the cost of Prescription Drugs are affecting family budgets. Patients and providers value innovative therapies and cures, but consumer and Patient Advocates talked about the struggle to access therapies that promote quality and health. We also heard ideas on how to provide patients and providers with relevant information to support Better Health care decision. And in particular, we saw that the Patient Perspective needs to be at the core of how we define value. Keeping drugs accessible and affordable is on the minds of all the stakeholders in this room and our panel after lunch focused on how to balance access and affordability. The panelists talked about current purchasing models in the public and private sectors. We discussed the Important Role of generic drugs in curbing drug spending and providing patient choice. We also heard how States Health plans and employers are innovating about utilization Management Controls to control overall drug spend but make sure individuals are accessing the medications they need. For example, our panelists discussed using formulary and plan design to make sure that the right people get the right drug at the right amount at the right time. Importantly, data such as comparative effectiveness can help make more informed decisions at the point of care. As we see, theres much more to be done. Taking a cue from our Delivery System reform efforts, we can deliver better care, spend our dollars in a smarter way and put patients in the center. You just heard from the last panel, they discussed valuebased and outcomesbased purchasing strategies, what has worked and what the hurdles are in expanding these models. Merck and novartis spoke to their outcomesbased purchasing arrangements for drugs treating diabetes and multiple sclerosis, creating a winwin where the manufacturer, the payer and the patient all benefit. We also heard of innovations in indicationsbased pricing and the need to better engage patients. It is clear from the discussion that all of us in the room have a stake in working together around valuebased reimbursement and fair drug pricing. Just in this last panel, we heard from a payer, a manufacturer, an integrated healthystem, a plan and a pharmacy benefit manager on how they are working on innovative models to promote Better Health and share decisionmaking. Although we have our work cut out for us, we know we come together to drive innovation and reward value. Keeping Health Care Affordable for the long term is a priority for the department. We want americans to have access to the latest innovations in pharmaceuticals that save lives and improve the quality of life for people with illness. Our goal is to foster a Health Care System that leads in innovation, delivers the most affordable, highest quality medicines and results in healthier people. As you have heard, this is a complex problem and there is no one solution. However, the most Effective Solutions will be a result from all of us working together, the consumers, the health care professionals, employers, manufacturers, insurance issuers, government representatives and all of our other partners. Thank you again to all the stakeholders engaging with us on this issue and those of you joining us today. We look forward to continuing this discussion and the important work to foster innovation and increase access and affordability to Prescription Drugs. Thank you very much. [ applause ]