Drug Pricing: Is pharma really at fault?

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The debate around pharmaceutical pricing has become much more prominent in the past decade, predominantly with the emergence of the Patient Portability and Affordable Care Act (PPACA), otherwise known as Obamacare. As pressure grow from payers, and the election cycle winding up the past few years introducing a major transformation for America, drug pricing has become a top of mind issue for America, though few people really understand the many layers of complexity surrounding the topic.

Pharmaceutical drug pricing has been a contentious debate ever since the introduction of drug rebating and incentives. Pharmaceutical companies, under threat from the growing generics market, began offering competitive pricing discounts to pharmacy benefit managers (PBMs), as they jockeyed for dominant market position. This effect spiraled out of control between 1992 – 2002, as behind the scenes, the rebating and incentive programs created large financial arrangements between pharmaceutical companies and PBMs to market expensive brand name medications, under the guise of saving the healthcare system money[1]. The added focus from certain bad actors within the industry of late, such as the price hikes from firms such as Turing Pharmaceuticals, Valeant, and Mylan, have only added fuel to the fire as of late. So much so that it became a key political issue for the Presidential Election of 2016, yet few understand the dynamics of why prices increase.

To start with, the costs of research & development of a drug has increased over the years, as scientific and technologic breakthroughs have allowed more targeted delivery vehicles, so have the costs incurred. In fact, from the 1970s until 2010, the costs of both the preclinical and clinical phases of drug development have increased more than 10-fold, as expressed in Figure 1[2].

Figure 1 – Cost to Develop New Pharmaceutical Drug
20141120lnp3-ln-graph

When combined with the fact that on average, only one out of 10,000 molecules ever makes it from the discovery phase to FDA approval (Figure 2), and the additive costs of all those failed molecules balloon to alarming proportions[3]. In a study published March of 2016 by Tufts on the assessment of cost to develop and bring to market a new drug, a pharmaceutical company must spend on average $2.558 Billion. Couple that figure, with the ever growing threat from biosimilars, and the industry is fueled for even more aggressive spend into R&D to counter by scrambling to produce the next generation set of compounds.

Figure 2 – The Biopharmaceutical Research and Development ProcessDrug-Development-Failure-and-Success(1).jpg

With the costs of R&D growing, another factor affecting the pricing equation is the amount of rebating towards the pharmacy benefit managers (PBMs). Since the establishment of drug rebating between pharmaceutical manufacturers and benefit managers, the percent rebate off of the gross price of a drug’s price has only grown. PBMs realized this was an additional revenue stream for them and quickly monopolized on this trend, while leaving their clients with the burden of the cost, leading up to the class action lawsuit against Caremark in 2011[4]. To demonstrate further, in Figure 3, one can see that since 2010, while the overall invoice price of a drug has grown, the overall net brand price has decreased. This inverse relationship is largely attributed to the increased % of rebating. Going one step further, if you look at the rebate system of a PBM, they recoup a percentage off of a medications Average Wholesale Price, or AWP as known in the industry. If they were to push for decreased pricing, they would gain a smaller total sum of reimbursement, so it’s in fact in their best interest to keep drug pricing high, as they push the rest of the costs on to their member groups and inevitably their individual members.

Figure 3prescription-medicines-costs-in-context-extended-25

A final factor that has attributed to the cost of increasing drug prices is the decrease of treatable patient populations for each specific drug. As technology and medical advancements progress, drug discovery has had both the delivery as well as the specificity increase. From the days of targeting HER2 receptors for women with breast cancer, we now are seeing medications targeting specific genetic mutations such as BRCA 1/2. We also are developing even more treatments with the advent of RAS/CRISPR technology, that can isolate specific genetic mutations within the human genome. This has resulted in drugs that went from a target treatable population of hundreds of millions with disease states such as high cholesterol and diabetes, to a treatable patient population of thousands, such as in the case of Pfizer’s Embraca (talazoparib)[5].

In conclusion, between increasing R&D costs, increased pressure and rebating from payers, and diminishing target patient populations, it’s little wonder why the prices of medications keep increasing. What many do not seem to understand however, is that drug pricing is overall still only 10% of the total healthcare spend in the US, see in Figure 4[6]. Yet there is still tremendous political focus on lowering drug prices when in reality, it’s not in the hands of the government, but in the hands of the payers. Without regulation of the payers, there can be no lowering of drug pricing. Biosimilars will likely have minimal effect on the long-term reduction in drug spend, as the overall industry will focus on pushing next generation, more specific compounds with higher prices to alleviate the burden of R&D and ever diminishing treatable patient populations. The focus should instead, be directed towards correcting the overspend in the hospital and provider side of the healthcare system, reducing fraud and abuse of CMS billing, and shifting the entire industry towards proactive, preventative health.

Figure 4
share_of_us_national_health_expenditures_by_major_spending_category_1974-2024

 

Sources:

[1] Martinez, Barbara (August 14, 2002). “Pharmacy-Benefit Managers at Times Toil for Drug Firms”. The Wall Street Journal. Retrieved December 27, 2015.

[2] https://www.scientificamerican.com/article/cost-to-develop-new-pharmaceutical-drug-now-exceeds-2-5b/

[3] http://www.phrma.org/resources/resource-library?keys=keys&sort_by=created&sort_order=DESC&page=7

[4] http://latimesblogs.latimes.com/money_co/2011/12/cvs-caremark-to-pay-20m-to-three-states-over-fraud-allegations.html

[5] http://files.shareholder.com/downloads/MDV/2370126714x0x898732/BB3A5044-7FBC-4CDA-96CB-810A55269B7D/Talazoparib_IR_Presentation_2016-07-06_FINAL.pdf

[6] https://askapharmd.files.wordpress.com/2016/12/3a85b-share_of_us_national_health_expenditures_by_major_spending_category_1974-2024.png

Drug Pricing: Is pharma really at fault?

How socialized medicine “should” work and why the U.S. desperately needs it. 

We’ve all heard about the Affordable Care Act (ACA), or as most people in America know it, “Obamacare”; and we as a nation, are mostly divided about the program. In truth, the ideal that President Obama and his administration tried to achieve is admirable, but their execution is largely flawed. The critical missing ingredient, the regulation of the third party payers.

Our Broken System

Our healthcare system is built upon a divided set of smaller industries. We have hospitals and doctor offices, medical devices, pharmaceuticals, biotechnology, pharmacies, and largest of all, insurance companies. All of these business entities are operated, as well as governed, independently. While independence of each other may work well in regulation, it does not work well when we are speaking of the benefit to the end user. Multiple industries all having a part in the overall healthcare of the patient means multiple times the cost is driven up in order for each industry along the way to make a profit. That also means multiple opportunities for companies to focus on the business over patient care.

Do the industries even care? 

The further separated from direct patient care you go, the more likely you will see a larger focus on profits, than on patient well being. This is not to say that the bigger players don’t care about the patient, they do, but their greater focus is not the individual patient, but on the patient population as a whole. For instance, point of care facilities like doctors and pharmacies focus on each individual patient and how they can help improve their quality of life. Higher up the ladder, the train of thought changes. Pharmaceutical companies may think of how shifting trends in patients’ health can help them to shift their focus on specific treatments and therapies to increase their drug pipelines. Even higher, you have insurers that will look at shifting trends in medications and therapies and how they can minimize their expenditures while still providing a patient with a baseline standard for care. I don’t believe that what these industries are doing is inherently wrong, after all they are a business and their primary focus is on their shareholders, not the patients. That being said, I do believe we need to change the system and find a way that benefits both the patients, as well as the shareholders.

Crisis

The United States is at the center of a healthcare crisis. We are one of the most obese and unhealthy nations in the entire world, and our healthcare system is also one of the most flawed. A large majority of those living in the US do not have access to quality health care, and worse, the systems in place to provide healthcare for the poor are not being utilized correctly, which in turn fuels the negative cycle. All across the nation we see patients on Medicaid treating emergency rooms like a doctors office because it’s simply easier than making an appointment at a doctors office.

Resolution

The solution is a difficult one, and may ultimately prove impossible. While a regulating body for insurance companies based on evidence based medicine may be the easy way out, it’s not likely going to happen in our society. Perhaps a better solution is one we are already seeing in the industry. Pharmaceutical companies are changing the way they develop and market drugs to incorporate market access in their decision planning, making even the newest drugs more accessible than before. We also see retail pharmacies creating new patient focused services such as medication therapy management, which provides medication reviews and consultations to patients. The focus is on reducing the need for costly treatments and procedures, while proving to third-party payers that we did our best to maintain the health of an individual, so now the therapy we are proposing is the most logical and reasonable conclusion. Yes, the ACA is flawed, but with proper adaptation by the various industries, there may be a light at the end of the tunnel.

How socialized medicine “should” work and why the U.S. desperately needs it. 

CVS buys out Target pharmacies. Prepares to move in on Target patients. What’s the long term outlook?

http://money.cnn.com/video/news/2015/06/15/target-selling-pharmacies-to-cvs.cnnmoney/
In a $1.9 Billion move, CVS buys out Target pharmacies in an effort to expand their reach. For those of you that don’t know, they also run the second largest pharmacy benefits manager (PBM) service, Caremark, and with their latest purchase of 1,600 Target pharmacies along with their 80 clinics, they will also be operating over 1,000 clinics under their Minute Clinic trademark. Sounds like just another acquisition by a Fortune 500 to get a little bigger market share? Maybe, maybe not.

It may seem natural for a retail pharmacy chain to acquire competitors, but this is the first move by a major retailer chain to buy out pharmacies belonging to a major corporation who’s major revenue comes from front store sales and not pharmacy. Previously, retail chains such as CVS and Walgreens would buy out large pharmacy chains or independents (think CVS’ acquisition of Long’s Drugs in CA and Walgreens purchase of Happy Harry’s in DE). This new purchase marks a first, and interesting prospect of partnership with other big name retailers.

This new partnership is mutually beneficial, with CVS gaining more prescriptions and patients from Target, and Target gaining a new customer base coming in from CVS. The question then is if CVS is aiming to push Walgreens out of retail pharmacy?

My opinion is that CVS understands their front store market is fading and trying to move into the healthcare side of their business model. Much like Walgreens’ new patient-centric focus, CVS may push their Minute Clinic and mail-to-retail model as their long-term outlook. The scary part is that it looks like they are moving towards a vertical integration business model. What’s vertical integration you might ask? In economics, vertical integration is where a supply chain of a company is solely owned and controlled by that company. Translated, this means CVS will be in full control of the patient interaction from a provider visit in their in-store Minute Clinic, to prescription fills within their pharmacy, to maintenance fills from their mail order pharmacy.

Great! That means I can see a doctor AND get my prescription all in one place, right?

Well yes, technically that would be true, BUT in the long run, it may potentially mean patients get locked into CVS exclusively. With greater control of the supply chain, CVS is in a position to negotiate a better contract with third-party-payers, or insurance companies. Ultimately, they may be able to create a new contract system that’s fully in-house, meaning that the only in-network or preferred providers are ALSO the only in-network or preferred pharmacies. This would be damaging not just to patients, but to the entire healthcare industry, as they are now able to undercut other pharmacies as well as provider offices. Suddenly patients may notice the primary doctor they’ve had for years is no longer a preferred provider, or is now out-of-network, meaning higher co-pays. Considering 75% of the entire U.S. population lives within a 3 mile radius of a CVS compared to a 5 mile radius for Walgreens, many insurance companies may prefer CVS as a provider and servicer for both medical AND prescription.

While there are still many regulatory and legal hurdles in place to prevent such an occurrence, if CVS is indeed planning such a strategy, we may be heading towards interesting times for the entire healthcare industry.

CVS buys out Target pharmacies. Prepares to move in on Target patients. What’s the long term outlook?

Why the Affordable Care Act fails, and why we really can’t do anything about it. (It’s not Obama’s fault)

The real reason is…. regulation, or lack thereof. The Affordable Care Act, in my opinion, is Obama’s attempt at trying to mitigate the rising cost of healthcare. I’m guessing he was hoping that with more people insured, the insurance companies may work more effectively with care providers like hospitals and doctors to cut down the costs. The reality though is the exact opposite is happening. Insurance companies are gaining more power, while providing less benefits. How can this be?

No matter what industry you look at, at the end of the day, it’s a business. While hospital organizations and big Pharma look to make a profit, they dump most of their money back into their projects and R&D. Insurance and third party payers however don’t really provide any other service than insurance. They only seek to expand their profits. Therefore, they are in the business to gain as much profit while spending as little as possible. Unlike other healthcare provider services, they don’t care about the best treatment for the patient, they care about the baseline.

What I mean by that is they are completely evidence based. Unlike doctors who are willing to risk a new experimental therapy because they believe the benefit outweighs the risk, the insurance company does not inherently like risk. For the insurance company, they run statistical models on therapies and medications to see what the effectiveness of said therapy will be across the wide range of patients. I often get frustrated patients asking me why their medication isn’t covered and to run it through the insurance thinking that the roadblock to their therapy is me. When I tell them the truth sometimes it’s almost like an epiphany to them. So what is the difference is between pharmacies and insurance companies? The difference is doctors, pharmacists, nurses, anyone that actually sees you face to face to help you with your health and well being will treat you as an individual. The insurance company does not. In essence, what I mean is that to the insurance company, you are not a person, you are a number. Sure we can get you that therapy we’ve been wanting to give you all along, but that takes stacks of extra paperwork, many phone calls, as well as time waiting for some supposed “clinician” to assess the situation and make a decision. What that really means is they have to check to see if you’ve followed their step therapy procedure and have done all previous therapies so that there is no choice but for them to cover this therapy. By the time we have finished this process, the patient has had to wait weeks to months without their treatment or medication.

So how did we get here? The point where, before explaining the situation patients automatically thought everything was covered and that we, as healthcare professionals, are the bad guys, when really the situation is reversed? Well in my opinion it’s two reasons. The first is people don’t read the fine print anymore, and the second is that the insurance companies have effective marketing, which is so effective because of the first reason. I’ve noticed the vast majority of people do not read the fine print on their insurance plans. This is most evident during the time of Medicare open enrollment. Part of the reason that Walgreens offers Medicare D price comparisons is that we know people need someone to explain the plans to them. I can tell you personally that over 80% of all the patients I have counseled on Medicare D prescription plans had absolutely no idea about the beginning deductible or the coverage gap. The biggest reasons for that are because they either trusted the Medicare representative over the phone that they had nothing to worry about, or had someone enroll them in the plan without spending time looking at the details, or just didn’t read the plan specifics themselves. The other problem is the patients see our faces on a daily basis and not that of the insurance, so naturally they will assume we are at fault for their insurance problems since we are the only face they see. Insurance companies are back end if you will while we are front end. We, the healthcare providers know there is a problem, yet we can do very little without the help of the patients. The truth is that we healthcare professionals care about YOU, the patient. The insurance companies only care about how little they need to spend on you. They claim they have the patient’s best interests at heart, but how is that true when they don’t consider you an individual, and only want you to get the “standard” treatment?

Is there a solution to this crisis? Possibly, but the path is long and difficult, as there will no doubt be lobbying upon lobbying by the insurance companies. I’m not a proponent for governmental regulation, as I believe personally the government is about as effective as using gas to put out a fire, but what can potentially make a difference is to evolve the healthcare system in a manner that adapts to the third party payer system. What I mean specifically is to increase the number of studies and trials on new medication in order to generate that evidence based medicine. With this method, we can challenge their decision making process by providing clinical documentation that the newer or riskier therapies can generate a more significant result. To take it one step further, with the advancements in gene therapy as well as biotech companies, we may potentially develop the ability to sample patients genetics and test their cells in-vitro first to see if the therapy will yield a positive result. In this way we can both individualize care, as well as provide to the third party payers irrefutable evidence that this patient should indeed receive the newer therapy.

Also, once we’ve fixed the issue with third-party payers, we can then reduce the charges to the patient as well as the third-party payers. For years medical organizations have charged seemingly high prices to the insurance, and the insurance re-negotiating to a smaller sum, due largely to the fact that insurance companies were refusing to reimburse for treatment. If we can offer more data to show that this treatment is the best suited for the patient, the insurance company will cover it, the hospital can reduce the costs since the insurance is willing to cover the treatment, and the patients can get the most effective treatment while having reduced expenses.

Why the Affordable Care Act fails, and why we really can’t do anything about it. (It’s not Obama’s fault)

Opinion requested: Should regulatory bodies be strengthened as individual agencies?

My answer? No. I believe the most effective way to regulate is to create a single agency designed to help create laws and regulate all healthcare organizations, from pharmacy, to hospital, to long term care facilities. Creating one regulatory body would not only allow for more efficient adoption of new policies, it would also be much easier to later unify the various sectors together in the forthcoming technology age. My reasoning is this: too many regulating bodies creates too much confusion. Just take a look at our current healthcare regulation. If you look at just pharmacy, each pharmaceutical business is first regulated by the federal government, ie. FDA and DEA, before then subsequently being regulated by the individual state boards of pharmacy. When it comes down to the states, state laws on pharmacy cannot be more lenient than a federal law, it CAN ONLY be more specific than federal law. So then you have to ask yourself, why doesn’t the federal law just become more clear and efficient?

Now some may argue that because each state is run differently and operates under different circumstances (ie. drivers for that state’s revenue), each state should thus be it’s own regulating body. Well yes I would agree for general business, but when we are talking about healthcare, it’s not the business we need to focus on, but the quality of care. The minimum standard for care should not be a variable, but an established baseline across the board. So then why not just have the federal government regulate all of healthcare? Not only would there be a faster adoption rate for any new policies or procedures, instead of wallowing around waiting for the states to come up with an approval or a law more specific, we would also reduce the number of potential errors that occur from misinterpretation of the federal guidelines, or not noticing the more strict modifications placed by the state. What’s more, the states base their own regulations off the federal statutes anyway, so why not just create a system that works for every state? This regulatory model would benefit all industries in the sector, including more importantly hospital.

Hospital regulation is, in effect, a mess because there are numerous organizations that regulate hospital organizations. Besides federal and state regulations from the Centers of Medicare and Medicaid Services (CMS), there are also private organizations each offering accreditation or prestige associated with an award from said respective organization. One of the largest of the private organizations, the Joint Commission for Accreditation of Hospital Organization (TJC or JCAHO), has almost 5,000 hospitals and almost 10,000 other healthcare facilities participating. The other two include the Healthcare Facilities Accreditation Program (HFAP) and Det Norske Veritas Healthcare, Inc (DNV). All three regulating bodies have been given “deeming authority” by CMS. What I notice when I look at how these organizations work, is our government has effectively given authority to these private organizations to essentially do it’s job for them. What’s more, each accrediting body requires annual fees to be paid to the organization by each hospital organization. Hospitals looking to get accreditation from any of these organizations have to, in essence, pay to play. Annul fees are on average about $11,000 per year for TJC and $25,000 and $23,100 on average yearly for HFAP and DNV respectively. Those are only the top three organizations, I haven’t included the numerous local accreditation organizations, such as the California Hospital Association, and smaller national organizations such as the American Hospital Association, all of which offer similar accreditation.

So what does that all mean? It means if we allow individual agencies to have more authority, we will only create mass confusion. What we need is only one regulatory agency per industry, for the entire sector. With just one agency having authority, we reduce the chaos of having multiple policies and accreditation. Yes, I think accreditation is important, because that creates a drive for the hospital to constantly improve upon itself, or at the bare minimum, continue operating at an established baseline for patient safety and effective care. However, having too many different options for accreditation creates confusion for both patients and policy makers. Which organization creates better policies, or focuses on improving patient care the most? In my opinion, rather than creating a whole new system, we should roll these existing organizations into CMS, and allow that newly created branch to continue regulating the industry as a unified collective. We continue to allow accreditation but establish varying grades for each organization. After all, one of the biggest reasons for having an accreditation is to be able to be listed as providers with CMS. Well, why do we need multiple organizations handing out accreditation for approval of healthcare providers for CMS? Why not just streamline the process and just have one organization?

Opinion requested: Should regulatory bodies be strengthened as individual agencies?

Opinion requested: Should new drugs always be compared not just with placebos but with old drugs for the same conditions?

While I agree this would make determining drugs more effective for treating patients, this process will likely never happen. As it stands now, most clinical trials for investigational drugs are not designed to evaluate if the new drug is going to be more effective or safer than a previous drug, but only to prove that the agent being tested will work for the disease/condition the company is applying for. It’s real purpose is making sure any adverse effects or reactions are not severe enough that it would overstep the risk vs benefit comparison. We have to keep in mind that the FDA drug approval process is really nothing more than the government stepping in to say, “Hey, does this drug do what it says? But above all, can it harm or kill people?” The FDA is essentially a reactionary regulating body. Prior to the establishment of the Food Drug and Cosmetics Act (FDCA), which gave the FDA the power it has now, they had little to no regulatory power. The passage of the FDCA itself was largely due to the sulfanilomide disaster during that time.

Also, let’s look at who is actually paying for these clinical trials. There are grants and foundations here and there that help with mitigating some costs, but largely they are funded by the pharmaceutical companies. Costs for running clinical trials generally range from millions to tens of millions, and since the companies have a vested stake in the result of their product being successful, the data they want has to be as convincing as possible that their agent works. That’s the reason that most of the studies are going to compare to placebo, and not an API. There are definitely some trials that do compare active ingredients, called active-treatment concurrent control studies, but if you think about it from a financial standpoint, a pharma company will generally avoid those sorts of trials unless pre-clinical or Phase I testing has shown great promise. To be asking those companies to compare a potential pipeline agent is like asking a trader to only invest in high risk stocks.

This current system isn’t exactly efficient, nor does it really benefit the general population. The industry landscape is changing however, since we are moving into the direction of outcomes based medicine. With the fall of the patent cliff and fewer drugs in the pipelines, pharmaceutical companies are hard pressed to recover that lost profit. One way we can combat the rising power of third-party payer is to prove that their current brands or pipeline drugs are more effective than existing therapies. If we can replace the existing “gold standard” with a a newer agent, then everyone wins. However, for a pharmaceutical company to shift focus from their existing drug development phase to this new method requires substantial risk. In my opinion, if an industry giant were to take this leap of faith, and others follow, we may be able to both improve the quality of care for patients, while also create a potential new revenue stream. There are two ways to deal with the rising power of third-party payers: fight them and delay the inevitable, or find a way to use that changing landscape towards your benefit by changing your existing structure to work with the new dynamic.

Opinion requested: Should new drugs always be compared not just with placebos but with old drugs for the same conditions?

How is “Big Data” going to change healthcare?

I’m sure you’ve all heard the term. Whether it’s being used with technology, finance, marketing, healthcare, and even with gaming. But what is it exactly? You’ll find many different interpretations and definitions, but the one that most resonates with me, and what I believe the actual definition is is this:

Big Data is the collection and availability of multiple forms of data from multiple sources.

So what does that mean specifically to you or me? Well, we are at the cusp of transitioning into a brand new age. Up until now we’ve still been living in the Industrial Age. Business has been focused on creating products and centered on industry. The future is changing however, and up ahead is the Information Age. This new age is seeing integration of technology and data into all facets of business. From healthcare to video games, it’s revolutionizing how we look at our products and services and how we can better market and improve them.

Let’s start with the potential benefits that big data can bring. Multi-dimensional data can be used to collect data from patients to help with everything from clinical trials down to medication adherence. Big Pharma can use these tools to filter out potential “guinea piggers” from trials to help ensure higher quality data. They can also use that information to create more effective marketing platforms for their drugs by improving user interaction and engagement with the company and its products.

Hospitals and doctors can use big data to improve and streamline diagnostics. Social media data can be useful to tell where a patient has recently been or what they ate to aid in diagnosing any potential infections from food or outbreaks of a specific contagion. We may even be able to use this data to minimize the outbreak of a potential new contagion such as the Ebola outbreak into the western world in late 2014 into early 2015. Medicine is entirely based on data. From evidence based medicine to outcomes based medicine, it’s all about the data. So having more data may potentially make medicine both more efficient and more accurate. Think of how much faster we can catch an outbreak of E. Coli or Salmonella when we can see that the first two patients to have contracted the pathogen both posted on Instagram or Facebook about going to the same restaurant earlier in the week, or we see that two patients checking in to two hospitals around the US having both contracted the avian flu were both on the same flight coming out of the same country? While that data may likely raise more questions than answers, it may very well point us in the right direction and help us find the answer faster. It may very well be the next big breakthrough in medicine.

Hospitals and industries are not the only ones to benefit. Pharmacies will also be able to use that data to enhance services. Data from avenues such as social media and wearable tech may help the chains better patient behaviors and narrow down barriers to issues such as medication adherence. There is also the potential to integrate with existing technology to improve patient medication adherence by creating apps that can generate alarms to remind patients when to take certain medications they’ve been prescribed, or how best they can modify their diets or physical activity with reminders or built in phone or web apps that offer coaching or guidance.

On the flip-side of the coin, we have those that would use that data for purposes other than improving healthcare. That purpose would be to build business. Companies such as pharmacy benefit managers (PBMs) such as Express Scripts, Medco, and third party payers, such as the Centers for Medicare and Medicaid Services (CMS). These are in essence insurance companies. Let’s face it, they are a business, and as a business, their model works very well. They may be a proponent for using big data to improve healthcare, but the way in which they will use it is different. They will seek to use big data to enhance data or currently available generics, and drugs that are cheaper for them for buy and reimburse. Their entire logic structure is based on the following:

Why pay much more for a newer drug when the old one works well enough already? 

From a business standpoint, it does make sense. If we already know that the medicine that has been around for decades is already good enough, why should we pay for something that might work better, but is a lot more expensive? And that’s where we have the issue. Insurance companies are the middle of the road people. To them, “good enough” is all they need and want. As the British call it, “cheap and cheerful.” But let’s analyze that term. Cheap AND cheerful? Isn’t that an oxymoron? How can someone be cheerful about getting something cheap? The insurances can, but they’re a giant corporation, not the individual being treated. That, is exactly the problem, they are not thinking of the individuals. To the insurance companies, you are not a person, you are a claim number. Their entire purpose is to take your money, and try to minimize what they pay out. And while I’m not saying that’s right or wrong, because that IS how the business model operates, that needs changing. However, insurance companies using your data against you isn’t the biggest problem, the data itself is.

Not sure what I mean? Well, what is and has always been the biggest problem with technology, and everything that “smart” technology has brought? Not sure? The answer is security, as in privacy. In healthcare, we are talking about patient privacy, YOUR privacy. Whether it’s you have chronic headaches, or you have a debilitating disease, that knowledge is and should be only known to your healthcare providers, and yourself. The problem with using big data, is since nobody really knows how to use it yet, there are ways to get all sorts of information. The risk with that is you may see people or companies use it for more nefarious reasons. Imagine being blackmailed by someone to pay a ransom just for them not to tell your private patient information to your family members, or even worse, put it up on the internet. What would that privacy be worth to you? Would you pay? Worst off, what if your employer could use it to actually monitor your sick leaves or medical leaves? Not a big deal you might think, “because I only take sick days when I’m actually sick.” Well now what if they start polling that data and say that an average person with the flu is only out for 4 days, and if you take more than those allotted 4 days, it is no longer classified as sick? Changes things around does it not? The point, is that when they start using big data against you, there is no end to the limitations that can be imposed upon you.

There are THREE sides to every coin.

Now before you start writing on posters and printing up pickets, remember this, there are three sides to every coin. Don’t think so? Then let’s review. You have heads, tails, and the edge or rim of the coin. Yes, technically that counts as a side because a coin is a 3-dimensional object right? Right. Why did I bring that up randomly? Well, the sides of a coin present a great metaphor what approach you should use to view something. You have the good, the bad, and the line in between. Real life is often never as simple as a yes or no, a true or false. There are usually multiple approaches to the same situation.

Big Data is inescapable. It will change everything. What we need to do though, is try to sift through all the possibilities of big data, and try to separate out what’s useful, from what is not. We also need to take a closer look at what is beneficial, and what steps we can take to prevent data from being used against us. These are all issues we must deal with in the coming years. The first step in my opinion, is that we must try to make preventative steps now, rather than reactive steps later, when it’s too late.

How is “Big Data” going to change healthcare?