Diagnostic and therapeutic innovations present important opportunities but also challenges to the health care delivery and financing system. The Berkeley Center for Health Technology (BCHT) promotes research and educational initiatives that foster the development, insurance coverage, appropriate use, and affordability of these medical technologies.
Prices paid for the same services vary significantly even within the same market yet, consumers often lack access to information about price and quality when seeking medical care, and providers are not required to justify higher prices with evidence of better quality. Reference pricing can motivate providers to compete based on price as well as quality, and to pursue cost-reducing innovations. The Berkeley Center for Health Technology (BCHT) conducts reference pricing research in order to identify and refine methods to control health care spending while insuring access and quality.
The prices for drugs and biologics are interpreted in quite different ways by policymakers and by innovators. For policymakers whose principal concern is patient access and affordability, prices for drugs and biologics are simply too high. And for those whose principal concern is supporting research and innovation for unmet health care needs, they are not high enough.
BCHT is pursuing a range of research projects and professional educational activities related to value-based pricing and patient access, including innovative and value-based pricing, physician payment methods for drug-related services, insurance benefit designs, and the application of reference pricing to drugs.
Alternative Funding Sources for Pharmaceutical R&D
Efforts by public and private insurers to moderate the escalation of specialty drug prices encounter the objection that industry revenues are essential to fund research and development. But industry prices and profits are only one of several mechanisms available for funding pharmaceutical R&D. Others include governmental and philanthropic research grants; commercialization grants for startups; targeted tax incentives; innovation prizes for the achievement of developmental milestones; and special regulatory incentives from the FDA. This project analyzes the alternative mechanisms for funding R&D and explores potential reforms that would reduce the threat to innovation that may occur as a byproduct of downward pressure on drug prices.
As the United States looks for new ideas on pharmaceutical reform, it is instructive to look at drug assessment and pricing in Germany, a prosperous nation that features universal coverage, a private multi-payer health insurance system, a large pharmaceutical industry, and drug prices that are lower and more directly linked to clinical benefit than those in the US.
Value-based Purchasing of Medical Devices
Implantable medical devices, ranging from artificial knees to cardiac pacemakers to deep brain stimulators, offer substantial benefit to patients and value to society. This clinical and social value depends, however, on the high quality but affordably priced devices being used on the appropriately selected patient, by an experienced surgeon, and in the least costly site of care. Over the past ten years BCHT has conducted a series of quantitative and qualitative studies of device assessment, pricing, and utilization, with the results disseminated through peer-reviewed journal articles, Issue Briefs and journalistic reports, and presentations at professional, governmental, and scholarly conferences. Some of the key findings of the research were brought together in a book, Purchasing Medical Innovation, published by the University of California Press in 2015.
Hospitals increasingly are purchasing physician practices and employing individual physicians as part of their strategy to evolve into fully integrated health systems. This consolidation offers the potential for improvements in care coordination and efficiency, but also the risk of increased pricing power and organizational complexity. This study uses 2013-14 claims data from Anthem Blue Cross of California, covering all commercially insured enrollees in the firm’s PPO products, to examine the cost of care incurred by patients treated by hospital-affiliated physicians in comparison to costs incurred by patients treated by physicians not employed by hospital-owned medical groups and practices. The total cost of care per patient is measured using claims for ambulatory, hospital, pharmaceutical, and ancillary clinical services. This study also examines selected measures of clinical quality, which vary by specialty. Data were obtained from Anthem. This study is funded by the California Public Employee Retirement System (CalPERS).
BCHT held a symposium April 28-29, 2016, to explore Innovations in Diabetes Prevention and Management. The first day of the two day event included a keynote address by Stephen Shortell, a conversation with Lisa Suennen and Amy Belt Raimundo on methods for effective behavior change, and a panel on digital solutions for the underserved. The Hack2Health Design Challenge finals were held on day two. The day began with a keynote address by Dan Gillette, Research Specialist, CITRIS, who also served as judge with Rhonda Shrader, Director, Institute for Business Innovation at Haas School of Business.