Thursday, June 25, 2009

Health Care at the Forefront

I'm just back from a trip to Bethesda, Maryland and Washington, D.C., where Health care issues are front page news each and every day. Last night ABC had a one hour special featuring Oboma as he answered questions from a group of people at the East wing of the White house . It was really interesting and I think he spoke very clearly about the challenges to this reform. But, I was left thinking about how this issue is not a US issue , it is an issue facing virtually all countries. Here in Canada our Industries and governments are sharing in the pain. provincial budgets are hovering around 50% going to health care. Corporations, organization , unions, and private payers are all struggling with the rising cost of drugs. There does not seem to be any sort of Federal direction on reform and the provinces are individually dealing with the public side of things .

Now just recently, at the 2009 Western Premiers’ Conference , the premiers announced they were taking action on Pharmaceuticals and forming a buying group. So It would appear that they will tender for drugs which will increase competition between the Generic companies and now the Brand companies as well. So we will have a large public buying group out west, then the tendering in Ontario and most likely Quebec These three buying groups would represent over 90 % of the public drug spends in Canada. Unfortunately , Atlantic Canada doesn't seem to have moved in this direction yet but perhaps soon. In any event, they will remain a small piece of the puzzle and most likely to see higher prices than with the other larger groups.

So, what about the Private Plans that are actually footing a larger portion of the drug spend across the country? What will these changes mean to them? Most likely higher costs and as we have seen in Ontario , two prices for a particular drug. One price for the public insurance and another higher cost for third party.
Will the Plans react to this? Perhaps. There is an initiative developing in Atlantic Canada that is gaining momentum. But more on that later.

Another interesting , development is with GM and Chrysler. They have their service provider de-listing the generic versions of the following drugs.
Zocor, Vasotec, Fosamax, Neurontin, Zoloft,Diane-35, Adalat-XL, Zithromax.

They will be covering the brand drugs only here. So it is reasonable to assume that a deal was struck for better pricing of these products. It is unclear if the deal is with the insurance provider or with the individual companies. This move has major implications for the pharmaceutical industry , plan payers and insurance.

This is similar to what an Atlantic Canada based provider attempted to do with one pharmaceutical company last year but the attempt failed with pressure from several groups. This move may be smoother as it involves more than one pharmaceutical company, a need for cooperation by the pharmacies due to GM and Chryslers economic position and the sheer size of the business in the Ontario region.

Dependent upon how the deal above is structured, it gives the Brand companies stronger ties with the payer groups, allows them to better manage loss of patent, increases competition directly with the generics. But, It also gives them the opportunity to better manage their core business in the Physicians office.
If one manufacturer is supplying both the Patent drugs and off patent, and is also directing the physician education and marketing to the new products, they then have even more control over the supply chains. If GM and Chrysler don’t make a concerted effort to educate physicians to help then nothing has changed. The Pharmaceutical companies will educate the physicians that they can now get this new product as they just listed it directly with GM. Or help them walk through the process required to have it covered. It points to need of having a voice for GM and Chrysler and their employees directly involved with physician and employee education. Now is the time to initiate this.