European health care agencies are increasingly interested in new clinical service programs for drugs to create greater cost savings in light of growing inflation and budget deficits, according to Medco executives.
The clinical approach is viewed as a way to move beyond the focus in recent years on drug price controls, the company said. In Europe, what the public health organizations "are buying from Medco is the clinical service capability around [price], because they have none of that," CEO David Snow said during the firm's investor day Nov. 20.
"They've been dependent almost solely on top-down price control" to manage cost, and "it's run its course," he added.
Since early 2008, Medco has launched service-oriented pharmacy benefit ventures in Sweden, Germany and the UK in collaboration with local companies. The company described the ventures as "beachheads of modest size" but emphasized the growth opportunities available in EU markets.
Chief Financial Officer Rich Rubino explained: "In Europe ... you can have all the price controls in the world but if you have waste and if you have people going to the emergency room because they don't know how drug A is interacting with drugs B and C, you haven't accomplished anything."
Further, Snow pointed out, "Europe has an aging population that's further along than our baby boomer generation. ... So therefore, their rate of [health care] inflation is actually worse than here in the U.S." Higher costs, combined with reduced public funding due to unemployment, have led to deficits in the large public health care programs operating in the EU, company executives noted.
For example, the UK's publicly funded health services program, the National Health Service, is facing a £15 billion shortfall. In Germany, the nonprofit sick funds are running at a €7.5 billion deficit. Funded by payroll taxes, the funds cover about 90 percent of the German population.
The most recently announced of Medco's three European ventures is a partnership in the UK with Dublin, Ireland-based pharmaceutical and health care services provider United Drug, disclosed in August 2009.
A Focus On Specialty Drugs In The UK
The project involves use of a homecare model for administering specialty drugs in patients with chronic and complex conditions. The joint venture focuses on offering patients within the National Health Services system a lower-cost alternative to hospital administration.
The program's services range from drug dispensing and home delivery to on-site nursing for the administration of oral, injectable and infused agents, as well as case management.
In Germany, Medco acquired a majority interest in Europa Apotheek Venlo, a privately held provider of clinical health care and mail-order pharmacy services, in early 2008.
Mail-Order Pharmacy In Germany
Describing the current status of the collaboration, Medco New Markets President John Driscoll said that initially the project focuses on consumer savings from mail-order drug delivery. Now, "the sick funds ... are looking for any way they can to improve the care of patients with chronic conditions. So we're starting to develop gap-in-care analysis at the local level in the German marketplace."
Medco's program in Sweden involves a collaboration with the country's government-operated retail pharmacy authority, Apoteket, to develop an automated electronic prescription review system to improve clinical and financial outcomes.
An adaptation of the drug utilization review programs widely used in the U.S., the system performs safety checks on drugs prior to dispensing to help avoid drug interactions, excessive dosing or other problems.
"In Sweden we expect to develop more opportunities around this intelligent services model," Driscoll commented. He explained the program has been introduced in 10 regions of that country and Medco expects it will be rolled out nationally in 2010.
- Cathy Kelly ( 1 c.kelly@elsevier.com )
This article also appeared in "The Pink Sheet" – Nov 30, 2009
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