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How the ACA Will Affect Pharma—in Kansas and Beyond

Posted By Administration, Friday, June 20, 2014
Originally posted on 11/25/2013

The 2013 ASAP BioPharma Conference concluded with a presentation on the U.S. government initiative that will arguably impact the biopharmaceutical industry more than any in recent memory—the Affordable Care Act (ACA). Perhaps that statement is too hyperbolic, but it’s still safe to say the ACA—a.k.a. “ObamaCare”—will test the adaptability skills of companies of all sizes in the industry.

The ACA is poised to bring a certain level of chaos and disruption, but opportunities could abound in inverse proportion for alliance management. Trumpeting Winston Churchill’s quote “Never let a good crisis go to waste,” Nathaniel Welch, senior manager at CFAR, and Adam C. Powell, Ph.D., president at Payer+Provider Syndicate, forecasted a great chance for alliance managers to shape strategic alignment, partner selection, and metrics, among other areas, as their organizations come to grips with the changes that will be mandated by this piece of legislation.

In their session “We’re Not in Kansas Anymore: How the Affordable Care Act Will Rock Your World—and Create Opportunities for Alliance Management,” Welch and Powell outlined the broad areas in health care that will be transformed by the ACA:
  • How providers are paid
  • Incentives for population health (with an emphasis on primary care)
  • How people buy insurance
  • Patients and providers exposure to cost of pharmaceuticals
Big Pharma will specifically see disruptions in the areas of selling, pricing, generics, and incremental drug substitutions.

Interestingly enough, in a series of interviews conducted with several players in the alliance management and general pharmaceutical worlds prior to the BioPharma Conference, Welch and Powell found that not everyone feels a storm is coming. In addition, they outlined a few other themes that emerged from these conversations:
  • Value will be viewed through an “outcomes” lens—this will entail a shift from a product-centric view (drugs and devices) to a solutions/outcomes orientation.
  • The emerging health care ecosystem will demand new kinds of alliances—pharma, providers, life sciences, patients, etc. will be more interdependent.
  • Legacy structures and “tribal behavior” impede Big Pharma’s agility—unresolved internal challenges will kill Big Pharma’s chance to move forward.
  • Planning and execution need to be integrated across silos—integrated planning and collaborative execution is necessary to bridge geographic silos.
  • New strategies and a different culture are sorely needed—for example, ACOs are coastal phenomenon (i.e., places with high density). Other approaches work in the heartland. The healthcare ecosystem will need to accommodate all approaches.
In order to turn challenges into transformations, the presenters urged the audience to seek ways to bring alliance skills to the table by considering the needs of payers and providers (i.e., the people with the data) against your company’s strengths, weaknesses, and strategic objectives to figure out new mutually beneficial arrangements.

In short, biopharma organizations have to find their fit in the value chain, a similar phenomenon described by Steve Steinhilber, vice president of emerging solutions ecosystems at Cisco, at the 2013 ASAP Global Alliance Summit.

Strategic Alliance Magazine hopes to explore the ACA’s impact on strategic alliances in 2014.

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