Entrepreneurs, empowered by competitive markets, drive economic progress. When market regulations incentivize productive activities, entrepreneurs radically improve existing goods and services and create new products we never knew that we couldn’t live without.
The wrong regulatory structures misalign these positive incentives. They thwart or misappropriate entrepreneurial efforts resulting in lost opportunities to improve consumer welfare and, when the disincentives are particularly pernicious, can even worsen consumer outcomes. A fitting example is the policy obstacles in the drug market that empower industry middlemen to the detriment of providers and patients.
Current drug regulations create an opaque price system where the incentives of the empowered middlemen – insurers and other industry intermediaries referred to as pharmacy benefit managers (PBMs) – diverge from patients and providers. Consequently, the needs of patients and the knowledge of providers are subjugated to the interests of the middlemen who are paying the bills. Troublingly, the adverse consequences created by this misalignment of incentives often arise when patients are at their most vulnerable. Take the issue of community cancer care.
Thanks to the development of new therapies, numerous types of cancers are no longer terminal conditions for many patients. As the American Cancer Society states with respect to breast cancer, cutting edge drug therapies can target “proteins on breast cancer cells that help them grow, spread, and live longer. Targeted drugs work to destroy cancer cells or slow down their growth. They have side effects different from chemotherapy and can be given in the vein (IV), as an injection under the skin, or as a pill.”
Of course, innovative new treatments can alter the best way to deliver care. And this is where the benefits from competition and entrepreneurship arise.
These new cancer treatments are complex medicines that must be purchased through specialty pharmacies, or pharmacies that specialize in providing patients with complex therapies that treat rare or complex diseases. While of great value, these medicines typically require care in dispensing and come with potentially troubling side effects.
One competitive healthcare delivery model integrates a specialty pharmacy into an oncology practice providing what is referred to as integrated cancer care. According to its proponents, integrated care offers patients superior treatment for several reasons.
First, the integrated model typically provides patients with their medicines faster compared to an outsourced specialty pharmacy. Patients can get their medications when the drugs are prescribed rather than having to wait for the script to be filled off site or shipped through the mail. Faster access to medicines meaningfully improves patients’ quality of care, particularly when facing a progressive, potentially fatal, disease.
Second, the integrated model improves the communication between doctors and pharmacists relative to the outsourced specialty pharmacy, which helps healthcare providers better manage patients’ dosages. Getting the dosing correct can be difficult because, even though these medicines are efficacious, cancer drugs have toxicities that can cause adverse side effects. These adverse side effects reduce patient quality of life and are linked to reduced patient adherence to their medicines, which meaningfully reduces health outcomes. The improved ability of the healthcare providers to establish the right dosing will, consequently, improve treatment efficacy, help minimize the adverse side effects, and improve patient adherence to their medicines.
Third, having a specialty pharmacy integrated into an oncology practice enables clinicians to monitor patients more closely and track dispensing outcomes. This is especially important when dealing with the side effects associated with cancer treatments that may require earlier intervention.
While this model is relatively new, some larger oncology practices, such as Tennessee Oncology and Texas Oncology, integrated their pharmacies into their respective practices more than a decade ago. And both practices have seen better time-to-treatment and treatment adherence results for their patients who use the integrated specialty pharmacy versus patients who are forced to use their PBMs’ preferred outsourced specialty pharmacy. Typically, the “preferred specialty pharmacy” is the PBM’s own outsourced entity.
Specialty practices that don’t have the capital or expertise to stand up their own specialty pharmacy can access the medically integrated dispensing model through new marketplace entrants, such as House Rx. These entrepreneurs offer resources, technology platforms, and infrastructure support that help specialty practices start or better optimize the practice’s ability to dispense specialty drugs, which includes accurately measuring dispensing outcomes and integrating this information into its electronic health records.
Unfortunately, competition in the specialty pharmacy space is weakening. The blatant nepotism of PBMs steering patients to their affiliated specialty pharmacies is antithetical to healthy competition. If allowed to persist, the opportunity to find better ways to deliver patient care will be lost. Addressing this problem requires fundamental reforms to the drug supply chain to promote greater price transparency and empower patients and providers to make critical healthcare decisions.
The integrated care model exemplifies the benefits created when entrepreneurial innovation is incentivized. In the case of the integrated care model, it puts doctors and pharmacists back in the driver’s seat – not the middleman – and promotes a patient-centric healthcare model that improves health outcomes and value.
Empower Entrepreneurs To Improve Outcomes: The Case Of Integrated Care
Wayne Winegarden
Entrepreneurs, empowered by competitive markets, drive economic progress. When market regulations incentivize productive activities, entrepreneurs radically improve existing goods and services and create new products we never knew that we couldn’t live without.
The wrong regulatory structures misalign these positive incentives. They thwart or misappropriate entrepreneurial efforts resulting in lost opportunities to improve consumer welfare and, when the disincentives are particularly pernicious, can even worsen consumer outcomes. A fitting example is the policy obstacles in the drug market that empower industry middlemen to the detriment of providers and patients.
Current drug regulations create an opaque price system where the incentives of the empowered middlemen – insurers and other industry intermediaries referred to as pharmacy benefit managers (PBMs) – diverge from patients and providers. Consequently, the needs of patients and the knowledge of providers are subjugated to the interests of the middlemen who are paying the bills. Troublingly, the adverse consequences created by this misalignment of incentives often arise when patients are at their most vulnerable. Take the issue of community cancer care.
Thanks to the development of new therapies, numerous types of cancers are no longer terminal conditions for many patients. As the American Cancer Society states with respect to breast cancer, cutting edge drug therapies can target “proteins on breast cancer cells that help them grow, spread, and live longer. Targeted drugs work to destroy cancer cells or slow down their growth. They have side effects different from chemotherapy and can be given in the vein (IV), as an injection under the skin, or as a pill.”
Of course, innovative new treatments can alter the best way to deliver care. And this is where the benefits from competition and entrepreneurship arise.
These new cancer treatments are complex medicines that must be purchased through specialty pharmacies, or pharmacies that specialize in providing patients with complex therapies that treat rare or complex diseases. While of great value, these medicines typically require care in dispensing and come with potentially troubling side effects.
One competitive healthcare delivery model integrates a specialty pharmacy into an oncology practice providing what is referred to as integrated cancer care. According to its proponents, integrated care offers patients superior treatment for several reasons.
First, the integrated model typically provides patients with their medicines faster compared to an outsourced specialty pharmacy. Patients can get their medications when the drugs are prescribed rather than having to wait for the script to be filled off site or shipped through the mail. Faster access to medicines meaningfully improves patients’ quality of care, particularly when facing a progressive, potentially fatal, disease.
Second, the integrated model improves the communication between doctors and pharmacists relative to the outsourced specialty pharmacy, which helps healthcare providers better manage patients’ dosages. Getting the dosing correct can be difficult because, even though these medicines are efficacious, cancer drugs have toxicities that can cause adverse side effects. These adverse side effects reduce patient quality of life and are linked to reduced patient adherence to their medicines, which meaningfully reduces health outcomes. The improved ability of the healthcare providers to establish the right dosing will, consequently, improve treatment efficacy, help minimize the adverse side effects, and improve patient adherence to their medicines.
Third, having a specialty pharmacy integrated into an oncology practice enables clinicians to monitor patients more closely and track dispensing outcomes. This is especially important when dealing with the side effects associated with cancer treatments that may require earlier intervention.
While this model is relatively new, some larger oncology practices, such as Tennessee Oncology and Texas Oncology, integrated their pharmacies into their respective practices more than a decade ago. And both practices have seen better time-to-treatment and treatment adherence results for their patients who use the integrated specialty pharmacy versus patients who are forced to use their PBMs’ preferred outsourced specialty pharmacy. Typically, the “preferred specialty pharmacy” is the PBM’s own outsourced entity.
Specialty practices that don’t have the capital or expertise to stand up their own specialty pharmacy can access the medically integrated dispensing model through new marketplace entrants, such as House Rx. These entrepreneurs offer resources, technology platforms, and infrastructure support that help specialty practices start or better optimize the practice’s ability to dispense specialty drugs, which includes accurately measuring dispensing outcomes and integrating this information into its electronic health records.
Unfortunately, competition in the specialty pharmacy space is weakening. The blatant nepotism of PBMs steering patients to their affiliated specialty pharmacies is antithetical to healthy competition. If allowed to persist, the opportunity to find better ways to deliver patient care will be lost. Addressing this problem requires fundamental reforms to the drug supply chain to promote greater price transparency and empower patients and providers to make critical healthcare decisions.
The integrated care model exemplifies the benefits created when entrepreneurial innovation is incentivized. In the case of the integrated care model, it puts doctors and pharmacists back in the driver’s seat – not the middleman – and promotes a patient-centric healthcare model that improves health outcomes and value.
Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.