CLSA in Bloomberg: Payers’ Accountants Can Help Determine Cost Benefits


Payers’ Accountants Can Help Determine Product Cost Benefits
California Life Sciences Association event on Product Reimbursement Decisions

Development: Speakers discuss ways life sciences companies can work to get reimbursed for their products.

Takeaway: Sharing data about life science product’s effect on outcomes, savings builds trust and supports decisions by payers, providers.

By Joyce E. Cutler

Nov. 18 –Life sciences companies like Amgen Inc. and Gilead Sciences Inc. need to show the clear financial benefits of their products to health-care payers and providers if they expect to get paid, speakers said Nov. 17 at a meeting on reimbursement decisions.

To help decide what information to convey, talk about cost benefits with cost accountants or process engineers on institutions’ or other providers’ value teams, said Tim Maurice, University of California Davis Health System chief financial officer.

Suppliers should share information. “But don’t share it with the doctors. Share it with the cost accountants. We’re not the boogeymen. We can help you. We actually can be very good partners for you to provide evidence to those value analysis teams and that really does drive the decision,” Maurice said.

The best way to build trust and support “is to allow us to do our own analysis using your data as well as our data,” he said during a California Life Sciences Association luncheon in San Francisco.

This is especially true for providers of care to the uninsured or Medicare and Medicaid patients, Maurice said. He noted that 35 percent of admissions at UC Davis Health System are Medi-Cal or uninsured patients.

“If somebody wants to help me find a way to serve the population that can’t afford health care, I’ll be glad to have that discussion. But if somebody wants to sell me another product or just for commercial patients with a high-deductible health plan, I just don’t have time,” Maurice said.

Defining, Showing Value Essential.

The payer community has no definition of value for drugs, devices and diagnostics and instead looks at evidence of medical necessity and health outcome, said Dr. Alan Rosenberg, Anthem Inc. medical and clinical pharmacy policy vice president. It’s also looking at exponential growth in specialty pharmacy spending to $400 billion in 2020 from $80 billion today, he said.

“That’s about a thousand dollars per person per year for every man, woman and child in this country in growth. And how are we going to fit that in this equation of value” and incremental benefit, Rosenberg said.

Value wasn’t part of the discussion 10 to 20 years ago, said Brian Solow, chief medical officer for Optum Life Sciences Inc., an information and technology health services consultancy.

Value is “total overall cost. And I still believe that we have to convince them with data, with material, with information that what you all bring here is not just a new, novel therapy but to show this can bring down that overall cost,” Solow said.

Life sciences companies are “going to need to show the health plans, whether it’s Blue Cross Blue Shield, Aetna, Cigna, Humana, United, that deriving data from 20 source sets,” including some 75 million electronic health records Optum has access to, can provide information needed to make decisions “and somehow have them not come back to us and say, ‘Yeah, but we don’t believe it,’” Solow said.

“I think they want data but they don’t believe data,” Solow said. “I think data in the future and now is going to be key. We just have to figure out how as organizations together in partnership to present” that data.

Opening Doctors’ Eyes.

Providers defined value 30 years ago as quality of outcomes and quality of patient experience divided by cost, Maurice said. “In fact we had cost accounting for some time. We just haven’t shared it with physicians. Why haven’t we shared it? That’s a very good question I don’t have the answer for. But I can tell you today that we are sharing it and their eyes are opening.”

Doctors order thousands of complete blood panels a day, 80 percent of which have no input into clinical decision making, Maurice said. “And that’s to me what value is all about. It’s increasing the transparency of metrics around quality of patient outcomes, quality of patient service and real costs so that we can have a real dialogue about appropriate modes” of care and cost decisions, he said.

To contact the reporter on this story: Joyce Cutler in San Francisco at

To contact the editor responsible for this story: Randy Kubetin at

Reproduced with permission from Life Sciences Law & Industry Report, 9 LSLR 23 (Nov. 27, 2015). Copyright 2015 by The Bureau of National Affairs, Inc. (800-372-1033) <>