Ted Okon Discusses Nontraditional Mergers and the Move to Value-Based Care

Healthcare is experiencing something fundamentally different with nontraditional mergers across industries, explained Ted Okon, executive director of COA, at the 2018 Community Oncology Conference.

Transcript

What is the Community Oncology Alliance's view on the possible impact of nontraditional mergers, such as CVS and Aetna, and partnerships, like that between JP Morgan Chase, Berkshire Hathaway, and Amazon?

The word of the day in consolidation, consolidation, and consolidation. We’re used to what we call “horizontal integration,” which is mergers, for example, hospitals and drug stores, and sort of like entities. But what we’re seeing now, is this vertical integration, where you’re seeing basically the top PBM [pharmacy benefit manager] in the country, which is run by CVS Health, wanting to buy the fifth-largest insurer, that’s Aetna. You’re seeing the second-largest PBM, which is Express Scripts, being acquired by the seventh-largest insurer, Cigna. And already, the third-largest PBM, OptumRx, is owned by the number 1 insurer, UnitedHealthcare.

So, what we’re seeing is some fundamental change that we’ve never seen in healthcare before. We’re seeing all of a sudden the idea that Amazon may be getting into the act, and if you’re an Amazon Prime customer and you’re used to getting your product a day or 2 later, imagine the same thing holding for your drugs. We’re all of a sudden seeing Walmart talking to Humana. So, we’re seeing something that’s really unprecedented in healthcare. I’ve gone back to the ’90s, when managed care was going to rule the roost, there were going to be no physicians, there was just going to be managed care.

Now, we’re talking about something that’s fundamentally different, and that’s that you’re having different parties merging and getting together. And the problem with that is that all this consolidation in healthcare has only produced one thing: higher costs. And in some cases, less accessible medical care. So, I think that this is something that we really need to watch and something that I think you’re going to see more of going forward.

The Trump administration has undergone some changes with leadership at HHS. What is the current view of how the federal government is approaching the move to value-based care?

I think the first thing that the federal government has been looking at, specifically the Trump administration, is some of the drug prices. They’re supposed to come out with some more things on drug prices now that Secretary [Alex] Azar is in place. Obviously, the rebalancing of 340B cuts was put up as savings patients more in terms of some $310 million in 1 year alone, 2018. And I think that now they’re looking at these rebates on the PBM side and going after those as well, too.

But, I think we’re going to see a lot more come out that has to do with controlling drug costs and even going after drug prices. I think it’s just inevitable given the promises that the president has made.