Ex-Insider’s Reaction to today’s Blink Health / ESI news

When I was inside Pharma managing the copay business we took a very skeptical eye toward Cash Card companies including Blink Health. After all, we worked tirelessly to provide programs that:

  • Met OIG guidelines in terms of compliance
  • Captured a limited set of self-reported patient information, meeting privacy policies for future safety, drug compliance, and marketing communication opportunities
  • Were generally profitable
  • Encouraged the appropriate use of Commercial insurance (we didn’t want the cards to supersede or interfere with insurance)
  • Excluded patients in Government funded programs of all sorts

The problem with cash cards is that the math simply doesn’t make sense. Well I’ve never seen that being the case. Further, they take the market distorting aspect of coupons to another level – by blatantly making the point to payers that it’s better to go OUTSIDE of the insurance system for the provision of drugs. This can be a real problem from a number of levels, not the least of which is the times when Step Edits and Prior Authorizations are designed to protect patient safety. In these cases, ethical players should ACTIVELY take action to make sure that no patient assistance is given for very obvious reasons.

What happened in this case? We have no idea. Furthermore, we may never know. But knowing what I know about the inner working of ESI and what I’ve read about Blink Health – I’m going to write this blog and leave the conclusions up to you. Companies have contract disputes all the time. ESI has a multi-billion dollar business that’s 99%+ driven by contracting…

There are no magic bullets here. Harry, Ron, and Hermione aren’t going to fly in on broomsticks and solve the U.S. pricing system. (although how RAD would that be? I would pay to see that, and be sure to bring my kids along to double the fun). I would love to see the math at work for these Cash Card programs –they potentially help with certain fringe situations where they set the pharmacy price in a way that eventually helps the patient save money – think crazy Gx markups without a MAC for some reason.

In the meantime, I’d strongly recommend that Pharma stay away from the Cash Card end around game. After all, copay cards are here until at least 2023 – given all that we know from NCPDP. And we’ve reached a détente in the massive fight with commercial payers around allowing them. The next shoe is likely to drop in the second half of this year – I will write about that when it happens. But in the meantime, let’s not close our eyes and pretend that Cash Cards are the answer.

Learn about your programs and why they work and where they’re not working. If you need I’d be glad to help (rather self-serving but this IS a company BLOG). A well-designed program should have no need for augmentation with Cash Cards because:

  • You lose control over patient attestation
  • You lose/turn over the continuing customer communication to the Cash Card company
  • You undermine the consistency of your brand messaging both in the field and importantly with managed care payers
  • You increase the potential that access that you’ve obtained in Part D is ignored (also in Commercial, but I’m much more worried about Cards used in Part D at the moment)
  • You potentially undermine your entire response to the OIG guidelines – if the regulators take the view that the REASON you engaged with a Cash Card company was to circumvent OIG requirements (and I would argue that this would be extremely hard to prove regardless of your internal justification as folks will take the most cynical view)

These are all serious problems for marketers.

I’m here to help. Your legal and compliance teams need commercial guidance from experienced professionals to construct and implement a company-wide response to the OIG. There’s very good reason to hire an external consultant who knows this space, as the guidance wasn’t to ‘be average’ it was ‘to be among the best’ in the industry. This isn’t Lake Wobegon.

PRO TIP: Contact your copay card vendor to make sure that your cards won’t/don’t process behind a Cash Card as primary. I know, I know. Strange things happen. I also know that a major player in this market was looking to CHARGE for this – should be included for free as part of a comprehensive OIG response/partnership agreement with vendors/partners/processors. You may be covered, or you may not. Better to be sure.

So many failed business strategies…

May 14, 2017

The unofficial theme of my 15th business school reunion was: Founders or CEOs with failing business strategies missing the advice that might save their companies. I heard countless stories of companies teetering recklessly on the creation of new capabilities that nobody wanted or needed. And in each example the story teller was a high-level executive or investor with industry expertise and a broad understanding of the business. So, what’s going on?

On the one hand, if you need strategic help you’re in good hands with MBA grads with 15 years of post-MBA experience. And it’s no surprise that we have front row seats to some of the worst train wrecks in the global economy. These are exactly these kinds of minds and hands needed to solve difficult problems. Further, as much as I respect my classmates some degree of discounting of their perspectives is in order – I certainly don’t want to suggest that we have all the answers. But what struck me was that these stories weren’t coming from the career consultants, they were coming from Chief Financial Officers, Chief Marketing Officers, and other operational professionals. These stories were being told by individuals who were brought in to do another job, other than strategy, but being smart, observant students of business they could diagnose the problems and develop viable solutions.

I want to illustrate something general about business that becomes particularly important in Market Access. Why aren’t these business leaders listening to their junior executives? Why are investors continuing to fund companies with bad business models? Why don’t my classmates quit and find something more fruitful to do? (the answer here is simple, almost everybody in these kinds of companies was either ‘riding it out,’ currently out or in the process of leaving, or job searching).

Why don’t business leaders listen to their (junior or other) executives?

I’m not clear on this. I think that our business culture has developed into a command and control type of so called ‘leadership.’ We mistake direction for leadership. Clearly people closest to the customer have ideas and insights that management does not. And the reverse is true too. There does need to be some form of positive feedback loops from BOTH bottom to top and top down. Problems develop when one part of the organization (sales or product development or compliance) becomes too powerful – and management gets the sense that if they listen to these loud voices they’re being accountable to the rank-and-file. The questions are always to whom? And why?

Further, we may also mistake excellent management (keeping the business alive and running smoothly) with strategic vision and industry leadership. If the highest levels of management benefit largely from keeping the company going, why do they care whether the assets are viable after they’ve left the company for retirement or another CEO/Senior Leadership Team role?

Here are three highly stylized examples adapted from stories reported to me this weekend – (stylized to protect both company and individuals – they do NOT represent any real companies)

A media company currently contracts with music labels and bands to buy the rights and then resells these titles to the likes of Apple Music, Spotify, Amazon Prime, etc. The CEO’s vision was good for the competitive environment from the past, and they are probably 3 years behind in terms of the way they do business with the labels, how they serve the product to their customers, etc. My friend was reporting to the CEO and continuously drove the company to develop new business models and the technologies to support them. Instead of developing a medium-term defensible and unique position, the company continues the same middling strategies – and it looks like my friend will leave the company as revenues and long term fortunes decline.

Here the CEO’s inability to articulate the company’s vision lead to a lack of direction and an inability to hear and integrate outside thinking. You can improve a strategic vision that doesn’t exist.

A healthcare company has developed a product for a foodborne ailment. The first dosing regimen wasn’t realistic and my friend asked the clever entrepreneur/developer/CEO to reformulate. The reformulation was successful and the product was ready for immediate commercialization. However, the start-up had none of their Series A funds left. With a market ready product, the company raised another large tranche. But instead of going directly to the market with the available presentation, the CEO decided to go directly into an end stage consumable. My friend, who is both an advisor and investor in the company, advised against as it limits the company’s potential marketing and partnering scope while dramatically limiting potential consumer product exposure.

Here the CEO’s tunnel vision and lack of marketing chops lead to the development of a product that few will want to buy and a missed opportunity to partner more broadly and expose the product to a much larger audience.

Friends working as junior executives for global fortune 50 companies complained of a limited ability to change the course of business units they oversaw much less the general strategic vision of their companies. A few mentioned ‘just riding it out’ – and these are not the kinds of brains we need riding anything out.

Here brilliant junior executives feel marginalized and ignored as they are subjugated to direction from above instead of being able to set their own courses for their businesses and employees.

The problem

There’s a problem with the way we invest in, incent senior management, and structure companies. With massive consolidation comes the intrinsic problem that the biggest companies in any industry have a strong survivorship bias. The biggest companies can make hundreds of mistakes and still soldier along. Small companies, on the other hand, succeed or fail often due to one product or one extremely unwise decision.

Why, therefore, are we providing excellent MANAGERS huge financial incentives to keep large companies profitable? Are they taking any risk? I’d argue that with large golden parachutes they make a ton of money for failure and only slightly more for success. That’s not an environment where creativity at the Junior Executive level is going to win out.

Why not split these companies into fast growing parts and cash cows – and hire and pay the appropriate management teams for each division? Having one giant conglomerate with a ‘growth’ mandate means that the highest levels of management can continue in their jobs despite being completely wrong about where the growth drivers for the future will develop within their own companies. So long as the company grows a total of 5% it doesn’t matter if management missed an opportunity to grow it by much more.

In smaller companies the problems may be more acute once the vision goes haywire. Investors are often bound to the CEO through equity and corporate history – American Apparel is probably the best/worst example – how can the other investors remove the CEO to save everyone’s investment and re-establish corporate direction?

One possible solution – Internal competition

Truly independent boards of directors could identify skilled professionals to run the mature divisions with excellence as well as the in-house entrepreneurs to develop the business opportunities of the future. We can then imagine a healthy and friendly competition between divisions where rewards are handed out according to performance (medium-term, not quarterly!). Each manager could be weighed against her opportunities and leaders can be reassigned as needed. There’d be a REAL war of talent for hard working, outspoken employees at all levels – since part of the evaluation would be made based on resource utilization and the folks closest to the work often know where to make the best investments.

Another solution – it’s free and easy, but under used

Enable the voices of the ‘black hats’. It’s not fun seeing negativity in every situation. It’s not enjoyable to work with someone who always sees the flaws with everything you’re doing. And, if Pete from Accounting never has a positive thing to say about the company or the management team, maybe he needs to find another job. On the other hand, if Pete spends 80% of his time seeing flaws that others don’t, or that others are too scared to admit, and has solutions 20% of the time – why aren’t we listening to Pete? Is it better to let our CUSTOMERS find the flaws? Or to have them blow back at our company through lost sales or regulatory findings and government actions? It’s bloody HARD to speak up in many corporate cultures even to provide reasonable solutions for obvious flaws and gaps.

The most beautiful thing about this suggestion is that it’s FREE! 100% No external vendors needed, nothing. All we need is to change our mindset to see constructive criticism as the first step toward improvement. As employees, we are often closest to the products and services we produce and can therefore see things before they become a problem in the market.

A related solution – be more humble – Business Strategy comes from everywhere in your company

In each example employees and advisors already had solutions for the companies’ most intractable challenges. Unfortunately, none of these people were the CEO or on the company’s Sales or Marketing teams. Instead they were financial, operational, information technology, or other ‘support’ staff. Because of their “non-strategic roles,” their strategic insights were marginalized or ignored. This makes no sense – why pay a premium to hire professionals with years of experience on top of an internationally competitive MBA, and then don’t listen to their advice? Why hire outsiders to help develop your strategy, before sitting down and really listening and internalizing your own direct reports’ visions? Who else has your best interests at heart? Who else has more aligned incentives than you? In every example, the story teller had enough equity that it “mattered” to them financially. They cared and genuinely believed that they were providing valuable advice.

Tying it all together (generally)

It’s also possible that investors (PE for portfolio companies, boards of directors, CEOs) should make more of an effort to identify key thought leaders at the Junior Executive level (2-4 levels below the CEO) and develop pathways to communicate with these managers directly. Note that these thought leaders may NOT be the high fliers identified by management for promotion – those kinds of people will simply spout the company line and regurgitate information from the current annual plan. Similarly exclude round-table discussions as all feedback in front of peers and superiors will be whitewashed. Anonymous surveys could be good but present their own challenges. One-on-one discussions directly or via highly respected and impartial consultancies would work.

Are most of the answers the same and in support of the messages presented in the Board Docs? Are there significantly different responses from some business units that suggest a change in leadership or direction are needed?

If it sounds like I’m highly skeptical of CEOs and Senior managers it shouldn’t. But having put together board presentations and seen the process I’ve been alarmed at how much a management team could control the narrative IF THEY WANTED to do that. In my experience, there was no need to since the corporate culture was very strong, we all had the same financial instruments, and the company was doing consistently well. Merger after merger, I became more amazed that management doesn’t do more checking in with folks two or more layers below them – especially in key parts of the organization, like pricing, market access, finance, product development, regulatory, etc.

Tying together for Pricing/Market Access

I was recently asked what I thought would be the greatest improvement in pharmaceutical development. I said that biomedical companies of all types should put the Market Access/Pricing professionals IN-CHARGE of the development activities in the place of the commercial liaison. Certainly, clinical and regulatory professionals need to lead those R&D verticals. We can all agree that getting people to pay for our new innovations is the single most difficult challenge facing the industry today. And many companies that I respect have put together cross-functional development team where various stakeholders participate. But these teams haven’t demonstrated a marked improvement in product approvals or overall increased access. There are numerous reasons for this. And the main one is that we’re adapting a twenty-year-old development model to fit current commercial dynamics. It just doesn’t work.

Instead (and here I’m exaggerating for effect, you should not read into this about any of my previous employers) the folks on the cross-functional team all bring their biases for keeping their teams fully engaged and employed. For example, the Health Economics folks come with a highly academic view of the problem – and one that’s closely tied around what work they can do to help move the product along. And this is great. But when everyone comes up with the safest possible suggestion for the development plan it’s often not the most potentially profitable development plan. It becomes a full employment plan instead.

Thus, the pricing team becomes the black hats. We’re the black hats of pharma product development and business development (I almost always HATED the first presentations of development plans), but years later I would have to package and sell that junk to global payers. Sure, in my ideal world we might get fewer products in development – but the products that were developed would be much higher value. We might get fewer successful clinical trials because trials would be powered for superiority versus market leaders – but the products that would come to market would be higher value and clearly differentiated.

Like the other examples above there’s too much money chasing too few viable, differentiated ideas. Worse early stage investors don’t want to know the real intrinsic value of their products in development so long as they can move them for a profit down the chain. But I’m taking stock in three things – one is we can’t go on like this forever, the decreasing productivity of the industry is legendary. Second as we get older, my classmates may fill the CEO/decision maker role. Third, eventually boards and investors will get more savvy as to how to cultivate ideas at all levels – while balancing the important command-and-control function of good corporate governance.

Confirmation bias being what it is these changes will probably take longer than I hope but be here before I know it. I’ll think that I’m right when I see it.


Hire an Outsider to Improve your Corporate Pricing Process and Discipline

Photo Credit: Nguyen Hung Vu     Under Creative Commons 2.0 License

May 6, 2017

When I look back at the accomplishments of the past 7 years that I’m most proud of, the most exciting of them stem from improved corporate pricing process and discipline. On the one hand, being more disciplined is obvious, so why is it so hard? And what goes wrong within most organizations that causes the current state where pricing opportunities exist?

The Problem:

Pricing is fundamentally a commercial/marketing function. However, the analysis and governance of pricing often includes members of other cross-functional teams including data analytics and finance. Ultimately the Sales team must have clear pricing targets and guard rails for their pricing negotiations. Depending on the industry, Legal and Compliance may contribute to understanding what is and what is not permissible. Thus to optimize long-term profits clear direction must be given by Senior Management and clear, consistent communication must take place between these various stakeholders during the building and implementation of the pricing strategy, framework, and implementation phases. Any lack of clarity on the firms pricing direction may cause opportunistic discounting, often at the end of the quarter, and these breaks in discipline can have multi-year implications especially in highly contracted businesses.

The Non-Solution Solution:

Many companies are happy with the status quo. They’d rather continue to invest in R&D, hire more sales people, put more money in marketing than to discipline themselves. This can work. At the same time, if you’re a ‘non-solution’ company, you simply don’t know what you’re missing through more rigorous pricing process and discipline. It could be a 10% lift on profits, it could be much higher.

The wonderful thing about pricing is that it empowers ALL of these investments by making each sale marginally more profitable. Those profits can either be returned to shareholders or poured back into the business. Plus, I argue that, anything that has the potential to cause confusion or enable short-term thinking (remember the example above about closing the quarter with discounting) has the potential to seriously slow your business. And thus the non-solution has the potential to put even Sr. Managements’ jobs at risk through any number of bad outcomes, not only limited to missed quarterly sales.

The Internal Solution (that works!):

So many organizations leave pricing to the commercial team and put the finance team in charge of ‘monitoring the shop’. This works great; IF the commercial team is single-mindedly focused on building the brand and in creating long term value. The Commercial leaders MUST fully understand the pricing dynamics of their industry down to the transaction level. And quarterly reviews of pricing strategy, product pricing dynamics, and notable deal analytics must be performed. All of this is possible and there are numerous examples of companies where price is the main lever of their success and Senior Management ‘lives and dies’ by the margin numbers. Amazon is a good example of this kind of company. Amazon’s stated, public goal of market penetration at the cost of profitability, makes the focus on pricing and customer value easier. There are few companies that have Amazon’s market power and thus most of us must be more price efficient.

The External Solution:

It’s optimal to hire an external consultant or consultancy to assess, benchmark, and improve your pricing process and approval process. Why? How can you be sure that your internal solution works? No doubt your pricing team (you do have a dedicated pricing team, right?) does deal analysis, new product pricing, and important pricing approvals with panache. However, the current system is likely to produce the same results in the future that it does now. To continue to improve your pricing policies and processes, it can help to add in another set of experienced eyes. There are likely imbalances of power between the relevant cross-functional players that will ONLY be worked out through external ‘mediation’. At a minimum, for a very small investment, you get a clean bill of health and the assurance that your policies and practices are world class.

Finally, bringing in external experts frees your internal pricing team to focus on improving the day-to-day pricing operations while providing structure and leadership for the Corporate pricing project. It’s hard to fly the plane while fixing it.

For more information, or to schedule a discussion around Corporate Pricing Policies, Process, and Discipline please email josh@chirallogic.com

Full on Blue


Why ‘ChiralLogic’?

Full on WhiteMay 2, 2017

The first question you might ask is, ‘what’s ChiralLogic?’ ‘Why that name and what does it mean?’ So that I don’t insult those who remember their college Chemistry class, I will forego a complete explanation . I’ve always been fascinated that asymmetries in molecular structure lead to physical differences in the natural world. With a little poetic license it’s easy to see this same concept reflected in the informational and perceptional differences various players bring to reimbursement decisions. In THEORY everyone agrees that we need new innovative medicines. In PRACTICE we simply lack the appropriate language to ring-fence the analysis and speak coherently about Value in the Global Context. And, whether a blessing or a curse, with the years of experience that I have, I can see things both as they are and as they could be…another application of the ChiralLogic theme.

So who are we? And why do I keep switching nouns? (I admit it’s annoying) The answer is simple, but it depends. I will certainly be the center of every ChiralLogic project. For the most part I will be chief strategist, slide maker, Excel jockey, and bottle washer. I can and will engage my network for cutting edge solutions and to pressure test my recommendations. I’d also like to engage in bigger projects, ones where we might need geographic or simply extra hands to get work done. Thus, depending on the size and scope of the engagement, working together, we’ll determine which parts of my global network we should bring to bear. I’ve spent the last two months cultivating my network and have firm commitments of help from colleagues I’ve worked with around the world to successfully negotiate market access at optimized prices.

For more information please contact me via http://www.chirallogic.com/contact

Price better, Achieve better access, and Improve your Patient Assistance Programs through Partnership with ChiralLogic

May 1, 2017

Joshua Parks, Ex-Allergan and Bausch+Lomb global pricing executive, launches ChiralLogic today. ChiralLogic will help growing biopharma companies set better prices and achieve better access at launch and throughout the product life-cycle.

For the last 15 years, Josh optimized U.S. and Ex-U.S. prices for public and private companies. Fortunately for our clients, the numerous corporate shakeups, acquisitions, and divestitures have created a truly global network of excellent partners with whom we’ve negotiated profitable access in the past.

Throughout my career I’ve consistently:

  • established or improved corporate pricing discipline through consensus-driven pricing approval processes
  • worked cross-functionally with partners from brand/commercial teams, finance, distribution/trade, legal, compliance, development, regulatory, and others throughout the organization
  • incrementally provided both high level strategies and the finest detailed tactics to improve profitability

ChiralLogic will be a platform for a number of innovative pricing, market access, and patient assistance innovations in the coming years. Currently the focus is:

I’ve been the executive sponsor, day-to-day project manager, and consultant for these kinds of projects and know what it takes to get them done while maximizing their value within the organization.

More information is available at http://www.chirallogic.com

To contact Josh directly please see http://www.chirallogic.com/contact