Well, thanks for having me Williams. So as Williams said, my name is Doral Fredericks. I am the vice president of Medical Affairs and Global Communications, for Bausch + Lomb. just to give you a quick background as to why I'm actually okay to talk about this, since I'm not in sales, or I manage markets anymore. I did my PharmD., MBA at USC, and then worked at a residency at Kaiser Permanente in Harbor City, which sort of the port of LA area. was there, got hired on, and was there for about a year, and decided the industry was really where I wanted to, to go. So I started out as an MSL with Aster Pharmaceuticals which became AstraZeneca. Was there for about two and half years, and then moved over to Novartis for about nine. And at Novartis I did a variety of different things. As a medical science liaison, director of the MSO group, as a director of the managed market, hence why I'm talking about this. and then, finally left off as the Regional Medical Head for the Western Uni, or the western part of the, the States. and then moved over to Ista Pharmaceuticals as a Vice President of Medical. Ista was a small, opthalmic company, based in Irvine, which was recently acquired by Bausch + Lomb. And so I was asked to stay on as the VP of Medical and Global Communications with, with BNL. So I've been with them since about last June. All right. So I've done a variety of things in industry, and glad to be here, talking to you today. All right. All right. So talking about kind of what, what I want you guys to achieve today. Fairly easy. this'll be a casual lecture. So please, ask questions as we go along if you have them. because the more, I know this stuff already. So it's better for you to ask me the things that you're interested in, and I can give my insights on things. So what I'd like you to walk away from this lecture, is to understand managed markets and, and how it's really working in the new healthcare landscape. Because with the Affordable Care Act, things are changing very quickly. 'Kay. I'd also like to give you an idea about the things that you have to think about, with regard to putting together managed care strategy and a sales strategy. And those are the two things. So if you get that, you're good. So I'm going to break this down into kind of three ways. The first one being sort of an overview of managed markets, the healthcare landscape, and, you know, what we're really thinking about when we're talking about managed care right now. 'Kay? We'll then go into what makes up a good manage care strategy, and how that relates to a sales strategy. Now have you guys had your marketing lecture yet? The pieces of like, what goes into marketing for commercialization product? I'll take that as a no. [LAUGH] Alright. I'll be touching a little bit upon that, normally that lecture comes first, but I know it's always changing based on when the lecture available. So if you have any questions about how that fits in, let me know. But, managed markets sales and marketing, all really fit very closely together. So it's really important to understand and think about aspects of each of them. 'Kay? When we're thinking about the first thing is who our managed, managed markets customers. There's two main things to really think about. First one, they are entities that play a key role into how drugs are delivered to patients, and the rates that they're going to be paying for it. Alright? they do exert a lot of influence now, especially more than ever, over the choices of drugs that physicians and pharmacists can give to their patients. and what's interesting is they can become, they can be public or private. So the, the public is really the government paying. And the government is becoming a larger and larger piece of this whole puzzle. 15 years ago, Medicare Part D didn't exist. Medicaid was relatively small, and it was the manage care landscape was dominated by, by the Signa's, the Aetna's and the United's. That power is actually shifting, and I'll show you how that impacts pharmaceutical industry, in just a minute. Okay? So we when talk about sort of the largest manage care channels, what are we thinking about? So the first one, are commercial plans. And these are private entities that are either Manage Care Organizations, or Pharmacy Benefit Managers. Okay? What's interesting and something to keep in mind about these, is Manage Care Organizations probably aren't quite as price sensitive as you might think. It depends. It, it really depends on if they're an integrated force, or if they're carved out. And what I mean by that, is companies that sort of do disease state management are much more conscious of the overall cost of care, as opposed to just the cost of medications. So even though a medication may be little bit more expensive, they may be willing to put it on formulary, because, overall it may decrease utilization. Alright? As opposed to, like, the Pharmacy Benefit Managers, or carve outs, in the Managed Care Organizations that are interested only, well really only in price. So a couple of things to keep in mind. People have different reasons for making decisions. Alright? Now, the commercial plans are really still the principle source of coverage for a lot of people, specifically those who are employed or retiree coverage. it covers about 100, 170 million Americans, and this, you know, continues to grow as the population gets, it gets larger so, it's still a very, very important piece. And they administer, like I said, either medical or pharmacy benefits for these patients. Medicaid is, as you guys are probably aware, a public source. It's, it's a combination of federal and state funding for low income Americans. All right? currently about 55 million Americans are enrolled in the, in the different states. What's interesting is under the Affordable Care Act, there's discussion that up to about 12.5 plus or minus a million patients may actually go into the Medicaid system. So you're going to have more patients in that piece. And there's a continual struggle, because the Federal government doesn't want to pay for it necessary. The States don't want to pay for it, so it's like, we're getting these people in the system, but who's going to pay for it? So it's always, always a challenge. We then have Medicare, which is a government funded as well. specifically for the elderly and disabled. And this is the probably the fastest growing sector within the Managed Care field right now. basically there's an expected increase in current enrollees from about 46 million beneficiaries, to about 78 million beneficiaries between 2010 and 2030. So a hugely growing segment. And again, think about this. 15 years ago Medicare part D didn't exist. So these 78 million patients that we're talking about at 2030, had Medical coverage, but not necessarily pharmaceutical coverage. So you can see how things are really, really shifting in the landscape over the last, you know decade or so. Alright, and then finally you have the DOD, and the Veteran's Administration, which is about another 30 million folks covered under those plans, but again though the government. So that gives you kind of the overall landscape. Alright. So how, or go ahead, sorry. >> What's difference between medical coverage versus pharmaceutical coverage? >> The difference between medical coverage and pharmaceutical coverage, specifically in the Medicare group or. >> I have no idea because I'm not from the US, but either way, [INAUDIBLE]. >> Well, so, so typically medical coverage is revo, revolves around hospi-, hospital visits, physician visits, anything that's not specifically a pharmaceutical product. Alright? and prior to, the early 2000s, patients who had Medicare coverage, unless they bought supplemental insurance, didn't have pharmaceutical coverage. Okay? Commercial plans typically did, but not specifically for Medicare. Alright. So overall today's environment of the landscape in the US 2011, health care costs reached, reached about $2.7 trillion. That's a big, big number and why everybody is talking about it. But the interesting thing is you don't hear people talking necessarily as much about healthcare as a whole, as you do about prescription drug coverage. And I think a big reason for that is, because patients are more opt to pay a larger portion of their prescription drug coverage bill, than they are if they're over all medical coverage bill. So that's why there's a lot of dialogue right now. Prescription drug pr, spending was actually not that high, when you consider the overall landscape, at only about two hundred and six, I say only, but $263 billion. And that stayed relatively flat year over year. It was only about a 2.9% growth, whereas the the overall health care spending grew at about 4% per year. Okay, year over year. So, there weren't a whole lot of notable changes with the Affordable Care Act coming in, in line. We'll see a lot more of that in 2014. But in 2013, what we did see that affected the pharmaceutical industry specifically, were three things. First one, there was a provision in the plan that allowed for dependents to stay on, or to move into their parent's coverage up to the age of about 26. Okay, or up to the age of 26. So it actually moved about 2.7 million people into having coverage, where they didn't necessarily have it before. It's not to say all of them didn't have it, but it certainly moved more people into the, the whole health care landscape that would, before was there. It extended and increased the rebates that pharmaceutical manufacturers had to pay for certain Medicaid plans. And it also increased and changed the whole dynamic of, the the Medicare part D structure, and the amount that, that pharmaceutical industry had to pay into what was called the doughnut hole. Now, are you guys familiar with Medicare part D and the doughnut hole at all? Okay no. So, it's kind of complicated, I'll, I'll try to walk you through it, because everything with the government is complicated. Right? Basically, for some body that has Medicare coverage, part D, which is their perscription drug coverage. They're responsible, the beneficiary's responsible for about, and I'm going to get these figures a little bit messed up, but, about the first 100, $325. Okay, they, they pay the entire amount. That's considered their deductible. It then goes into a second tier. And for the next, like, $2600 give or take, of their drug coverage, they're responsible for 75% of it. The plan pays for 25% of it. Okay. It then goes into what's called the doughnut hole, for about another $6,000 or so. In that doughnut hole, for brand name drugs, pharmaceu, pharmaceutical manufacturer needs to provide a 50% discount on the brand of drugs. And then, for the rest of that 50%, the beneficiary pays 47.5% of the cost, and the plan pays 2.5%. 'Kay? So the interesting dynamic here, is that, as you, oh and the generics, by the way, is that same 75-25 split where the, the patient actually pays for 75%. So the interesting dynamic when you get to the doughnut hole, is that, while you may want to start a patient off on generics, because they're fronting a lot of the burden, right, of the cost of the drug. When you get to the doughnut hole, it may actually be cheaper for them to be on a brand name medication, because of the rebates pharmaceutical manufacturers are paying. So, it's, it's, actually impacting, patient, or physician prescribing in a lot of cases. Because the question becomes, do you start a patient on a generic, or do you start them on a brand, knowing that when they hit this doughnut hole, the costs are going to be less for them? It's an interesting conundrum, but to something as all these things are rolling out, that we're having to face.
