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Changing Value in America: Obamacare and Market Access

CNN recently aired the documentary film Escape Fire, a homily on the American healthcare system. The crux of the argument is that healthcare in the US has a dysfunctional pricing structure. To cut costs and improve care, value ought to be placed more on outcomes and less on treatments.

Obama Signature

Stakeholders in the system might argue that this analysis is already out of date. The rules are changing significantly and will continue to change as the Affordable Care Act is gradually implemented.

One objection in the film is a perceived imbalance between reimbursement rates for specialists and primary care doctors. Obamacare contains extensive measures designed to bolster preventive medicine and primary care, with changes effective since 2010 that include funding for scholarships and loan repayments for nurses and primary care doctors working in these areas.

This is part of a wider realignment of value. In late 2012, Hospital Value-Based Purchasing restored the link between provider reimbursement and outcomes, addressing perhaps the strongest criticism raised in the film, that providers are often paid based on quantity not quality.

In fact, Value-Based Pricing agreements are [becoming more popular internationally][2]: Germany has recently changed to a VBP structure and the NHS in the UK will use VBP for branded medicine purchasing from 2014.

There are organizational challenges associated with negotiating an evolving environment in which the stakeholders and the rules of the game are in flux. As the US market reforms, pharma companies have to be flexible in the strategies they use to gain market access.

Of course, these aren’t the only changes that need to be taken into consideration. Obamacare extends patient protections through the Patient’s Bill of Rights, and mandates the minimum amount that insurance companies must spend on treatment by introducing a statutory ‘Medical Loss Ratio’ of at least 80%. With heightened pressure on insurance companies to become more efficient, payers in the industry will look for persuasive economic arguments from companies with new products. More than ever, the benefits of effective and flexible value communication are being made clear.