A Win-Win for Pharma

Among the latest organizational attempts to provide Medicare patients with access to high-quality, cost-effective care are Medicare Accountable Care Organizations (M-ACOs). The novelty of M-ACOs: Shared savings meant to incentivize quality performance and include providers in governmental savings. One issue: M-ACOs are not responsible for Medicare Part-D treatments but are responsible for negative outcomes costs due to failing to treat appropriately. Reducing healthcare provider costs is pivotal in delivery of the Triple Aim, and partnerships between pharmaceutical and ACOs are essential in forming effective solutions.

Pharmaceuticals can partner with M-ACOs in many ways including through vaccinations and disease screening promotion. Both can be seen as public health measures for prevention, early identification and disease treatment. All vaccines (with a few exceptions) are covered by Medicare Part D. Because M-ACOs are responsible for episode treatments, disease prevention will decrease the overall M-ACO’s treatment costs. Some examples of covered vaccine-preventable diseases include shingles, measles, mumps, and rubella. Shingles presents a case in which the long-term sequelae such as hearing problems, pneumonia and postherpetic neuralgia come with significant costs.

Promotion is a Positive

When patients are not properly vaccinated, the likelihood is that the M-ACO will be responsible for covering high medical expenditures. Vaccines covered by Medicare Part D are not the M-ACO’s responsibility, but the costs of caring for a patient with shingles or other Medicare Part D vaccine-preventable diseases are. As a result, promotion of these vaccines is a positive for patients, payers, and pharmaceutical manufacturers.

Vaccination cannot prevent every disease. Instead many diseases require early identification and treatment—another potential source of increased cost efficiency for pharmaceuticals and M-ACOs lies in early screening and treatment. Hepatitis C virus (HCV), for example, cannot be vaccinated against and presents high medical treatment expenditures. In the case of a liver transplant the average total cost can be more than $570,000.

This represents a medical cost an M-ACO would be responsible for under Medicare Part B, but again in this case, the HCV treatments covered under Medicare Part D—while expensive ($100,000 per course)—are not the M-ACO’s responsibility. Pharmaceutical manufacturers have an opportunity to help establish a process for HCV patient identification and treatment, which in turn could provide M-ACOs a path to reducing expensive consequences of HCV management failures.

Finally, M-ACOs can allay cost responsibility by utilizing Medicare Part D treatments in lieu of potentially less effective Medicare Part B treatments. Disease states here include multiple sclerosis (MS) and rheumatoid arthritis (RA). Again, the pharmaceutical industry’s opportunity is to provide M-ACOs with resources to develop processes for their providers to efficiently and effectively identify and treat patients with Medicare Part D treatments. This truly represents a win-win situation. Patients, payers (M-ACOs), and the pharmaceutical industry benefit—at least those Medicare Part D pharmaceuticals that know how to work with M-ACOs.


1. Complications. Centers for Disease Control and Prevention. 2014.

2. Bentley, TS. “2014 U.S. Organ and Tissue Transplant Cost Estimates and Discussion.” Milliman Research Report. 2014.

  • Dr. Richard Stefanacci

    Richard G. Stefanacci, DO, MGH, MBA, AGSF, CMD is Chief Medical Officer at The Access Group. Dr. Stefanacci is a recognized thought-leader in healthcare reform. In addition, he leads the Government Policy Systems team, which ensures pharmaceutical products and diagnostic devices gain appropriate access and utilization.


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