mcdougall on market potential of personalized medicine

Ohio State – 4th Annual Personalized Health Care National Conference

Private and Confidential

October 7th, 2011PwC Health Industries Advisory

Gerry McDougallPartner, U.S. Personalized Medicine & Health Sciences Leader


2PricewaterhouseCoopers LLP

PricewaterhouseCoopers (PwC) is a global firm that draws upon the talents of more than 165,000 people in 150 countries.

• Established in July 1998 with the merger of Price Waterhouse and Coopers & Lybrand, PwC is the world’s largest professional services firm.

• Globally, PwC’s revenue is over 30 billion dollars, of which close to 10 billion is consultancy.

• PwC provides a full range of business services, which include audit, accounting and tax advice; management, health care, information technology and human resource consulting; and financial advisory services including mergers & acquisitions and project finance.

6/7/2011

PwC and our Personalized Medicine Practice



PwC's Healthcare Strategy is predicated on our ability to understand and help clients respond to key trends and to serve all sectors on the healthcare continuum

10/7/2011




Personalized Medicine has many different definitions, and is broader than just molecular genomics

PwC’s Definition:

A holistic, individualized model of care that examines each individual’s unique makeup and designs appropriate strategies for

maintaining wellness and treating illness.

“The right treatment for the right person at the right time”

“A form of medicine that uses information about a person’s genes, proteins, and environment to prevent, diagnose, and treat disease”

(US National Cancer Institute)

“The application of genomic and molecular data to better target the delivery of healthcare, facilitate the discovery and clinical testing of new products, and help determines a person’s predisposition to a particular disease or condition”

(Senate bill sponsored by Senator Obama, 2007)

10/7/2011




TGen: Translational Genomics Research Institute: Development of a Research Institute, creation of a partnership

10/7/2011

• PwC was engaged – first by the State of Arizona and then by Jeff Trent and Dan Von Hoff- to design and implement, from the ground up, a genome research and technology institute for the advancement of bioscience and biomedicine in Arizona.

• Key PwC efforts included:• Feasibility study and assessment• Affiliation agreements with academic and

clinical partners• Business and financial planning• Strategic, operational, facilities planning• Overall operational implementation• Board development

PwC has been and continues to be involved in many TGen initiatives -




PwC was engaged by the government of Luxembourg to assist them in diversifying their economy into the biosciences. Partner Gerry McDougall was interviewed by the news agency about PwC’s’ leadership of this initiative - Highlights include:

• PwC became involved through a series of discussions in creating strategic partnerships with TGen and other leading US Institutions in the biosciences. TGen has served as the spark that has catalyzed Arizona’s life sciences effort over roughly the past decade and was used as the case study by the Government of Luxembourg in developing their conceptual model for a bio economy.

• Luxembourg will complement what has been done in Europe by focusing initially on molecular diagnostics, and becoming a center of excellence around molecular diagnostics, in order to enable the early detection of diseases. Their aim is to not compete in established areas already, but to create a niche where they can take advantage of their geographic location.

• PwC goal with Luxembourg was to deliver knowledge transfer over the next three to five years, so that Luxembourg has the world-class sophistication to do the research — proteomics and systems biology. PwC helped facilitate the training of Luxembourg scientists in the US and then re-establish themselves back in Luxembourg once the infrastructure is in place.

• Luxembourg aimed to develop its center of excellence’ for bioscience by establishing a trans-Atlantic series of collaborations with three US-based institutions: The Partnership for Personalized Medicine, the Institute for Systems Biology, and TGen.

• PwC was the initial facilitator of these partnerships which drove over $250M into these US research organizations, and developed the plans for each of the new ventures.

PwC was the subject of an in-depth news article detailing its work with Luxembourg, partnering them with TGen to bring an integrated Biobank Center to Luxembourg

10/7/2011




Through International Project Work and Global Research, we have Developed a Deep Knowledge Base Regarding International Initiatives

One example – the development of our HealthCast 2010 report:

The PricewaterhouseCoopers (PwC) Health Research Institute developed this report. It identifies and discusses significant trends reshaping health systems around the world, specifically the creation of a new, more efficient primary health system -- one that is patient centered and takes into account the evolving power of individuals.

To complete this report, PwC:

• Surveyed more than 590 health leaders in over 20 countries, including the UK, Germany, the Netherlands, the US (50), Canada, South Africa, Australia, New Zealand, Argentina, Brazil, China and India, central Europe, Scandinavia, the Middle East and Asia.

• Conducted over 200 in-depth interviews globally (55 in the US) of top executives in government, hospital systems, insurance companies, physician groups, pharma and life science companies and technology firms in 25+ countries.

• Surveyed 3,500 consumers (500 per country) in over 20+ countries including the UK, Germany, the Netherlands, Norway, the US, Canada, and Australia.

HealthCast report: The Customization of Diagnosis, Care and Cure

10/7/2011




The Market Potential is Huge

PwC Health Industries Advisory •

Targeted Therapeutics:$21bn

Esoteric Lab Services:

$11bn

CORE P4 Total: $42bn

Esoteric Test Sales:$10bn

Nutrition & Wellness Total: $292bn

RPM/ Telemedicine:

$0-109bn

EMR: $6bn

DM: $3bn

Personalized Medical Care Total: $9-118bn

Nutrition/ Organic

care:$181bn

Complementary & Alternative Medicine:

$41bn

Medical Retail:$10bn

Health Clubs & Spa:$61bn

2015Total Market: $344-452bn

Molecular Diagnostics: $7bn

CAGR’08-’15

Nutrition & Wellness

Personalized Medical Care

CORE P4

Health Clubs & Spa

Nutrition/Organic

Comp & Alt Medic.

Medical Retail

RPM/Telemedicine

EMR

Disease Mgmt

Esoteric Lab Serv.

Esoteric Test Sales

Targ. Therapeutics

10%

2%

7%

22%

7%

15%

23%-92%

6%

44%

13%

10%

9%

10%

1 Reflects upper range of RPM/TelemedicineNote: Totals may differ due to rounding

Figures Not Drawn to Scale

2008Total Market: $210-215bn

Targeted Therapeutics:$12bn

Molecular Diagnostics: $3bn

Esoteric Lab Services:

$5bn

CORE P4 Total: $21bn

Esoteric Test Sales:$4bn

Nutrition & Wellness Total: $185bn

RPM/ Telemedicine

:$0-5bn

EMR: $2bn

DM: $2bn

Personalized Medical Care Total: $4-9bn

Nutrition/ Organic

care:$112bn

Complementary & Alternative

Medicine:$35bn

Medical Retail:$3bn

Health Clubs &

Spa:$35bn

“One of the innovation areas with the highest impact will be the whole field of early and correct diagnoses.”

- Mars di Bartolomeo, Luxembourg Minister of Health

10/7/2011

The Personalized Medicine Market



A New Emerging Paradigm

CDC Definition of Wellness – covers all phases of patient well being

PatientDiagnosis

Preventative

Hospital

ASC/Outpatient

center

Physician office/Clini

c

PhysicianDiagnosis

NurseDiagnosis

AlternativeDiagnosis

Preventative

& Chronic

Chronic

Chronic & Clinical

Preventative

ClinicalPreventati

ve

ConsumerProblem

DiagnosisTreatment

PlanTreatmentDelivery

Resort/Spa

Home/Gym

Group/Community

Emotional

(Social / Spiritual

)

Mental

Physical

Expanded view of Health & Wellness

PhysicalDiscomfo

rtPhysician

Physician/nurse

HospitalSurgery

ClinicSurgery

Physician officeExam

Traditional view of Health & Wellness

PatientProblem

DiagnosisTreatment

PlanTreatmentDelivery

Healthy Vulnerable Affected Sick


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The Broad Health and Wellness Perspective of a Large Global Consumer Products Company Demonstrates the Wealth of Potential Strategic Partners

10/7/2011

Key players: Molecular Diagnostics

Digital Coaching Programs

Health-Based Social Media

Wellness Mobile Applications

PersonalMonitoring

Employer Initiatives to Decrease Health Costs

Personalized Medicine / Genetic Testing

Community Based Awareness Initiatives

Government Initiatives to Decrease Health Costs

Health Data Aggregation

Personalized Health and Lifestyle Coaching

Functional Foodsand Drinks

Exergame Equipmentand Fitness Centers

Personalized Skincare & Cosmetics

Sports Nutrition Programs

Home Health Monitoring

HealthE-Games

Sports Nutrition Programs

Activity Managementand Wellness Programs

PersonalizedFitness

Wellness Market

Weight Management Centered Media


http://www.nestacertified.com/













































http://www.dossia.org/



































Research Priorities Can Be Altered By Social Media

10/7/2011

An MS theory coined in 2008 about how MS was not an autoimmune disease but rather a vascular disease caused by blockages in the brain received a lot of internet attention in Canada

more than 500 Facebook pages, groups or events devoted to the theory

tens of thousands of followers A poll shows more than half of Canadians

are familiar with the theory

Social Media puts pressure on scientists, politicians and funders to alter research priorities despite absence of credible scientific evidence

Resulted in demands for clinical trials for controversial treatment

Reports have sparked a national debate about whether publicly funded trials should be conducted and whether MS patients should have immediate, publicly funded access to the vein-widening treatment known as venoplasty



Spending on Diagnostics is the Most Efficient Use of Health Dollars

• Countless patients will benefit from molecular diagnostics which informs their clinical treatment based on their individual genotype

• 1,800 diagnostic tests available now• 5-10 new diagnostics tests per week

• Diagnostics provide value at every stage of clinical care

Supports the decision to

treat

Predicts likelihood of an adverse

reaction

Prevents warnings

and recalls

Better outcomes

Lower treatment

costs

U.S. Healthcare

≈ $2 T

U.S. LabBillings$55 B

U.S. IVD Revenu

e$14B

<.7% of total spend

<3% of total spend

*Over 72% of all medical decisions are made based on the $14B IVD

Source: Noel Doheny

A Closer Look at Diagnostics

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Diagnostics are the Foundation of Personalized Medicine

10/7/2011

Susceptibility• Monogenetic• Complex

Risk Analysis(modeling)

PredictionRisk MitigationPreventionRisk monitoring

Early Detection

PrognosisIntervention• Stratification • Target ID/Validation • Rx algorithms • PGX• Therapeutic monitoringCompanion Dr

Source: Dr. Franklyn G. Prendergast, Mayo Clinic

A Closer Look at Diagnostics



Clinical research optimization

Clinical,financial & operational

data

Provider

Health plan

Consumer

Health plan

Provider

Life Sciences

Public sector

Offerings

Channels

Chronic care management

Safety surveillance

Disease/ bio-surveillance

Health & wellness management

Medicationtherapy

management

Personal health records(Shared decision making)

Quality & efficiency management

Health outcomes & economics

Decisionsupport

Employer

Public sector

Health managementHealth intelligence

Health informatics

Health informatics

Electronic Patient Information Network

De

ma

nd

fo

r in

form

atio

n-e

na

ble

d h

ea

lth s

erv

ice

s D

ata

ne

two

rk

Healthsystem

Researchnetwork

National association

Regional health

information exchange

Nationallab

Dataaggregator

Payor

Information Systems will Serve as the Foundation for Personalized Medicine

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The Importance of HIT



Health management(Systemic management of outcomes)

Personalized medicine

Integrated patient records

Health managementalgorithms and tools

Advanceddecision support

Analytical competencies and tools

Required capabilities

Richness and timeliness of information

Evolution of evidence-based medicine knowledge base

Healthcare measurement(Quality, safety, Outcomes and cost)

FoundationalBuilding blocks to success

AdvancedMarketadvantage

DistinctiveCompetitive advantage

Op

port

un

itie

s Organizations grow their informatics competency, which increases the availability and portability of secure and protected clinical information

HIT Systems fall on an Evolutionary Continuum that Supports Personalized Medicine

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The Importance of HIT



Integration of the Personalized Medicine Value Chain – Biology to Cure – will be Critical to Curing Multiple Myeloma

Innovative Clinical Trials

Longitudinal Study

LS Tissue Bank

LS Data Bank

Patient Focused

Outcomes

TARGETS

BIOMARKERS

DIAGNOSTICS

Cure for Multiple Myeloma

GenomicsInitiative

Bio-Infomatics and Data Analytics

SEGMENTATION

TARGET ID

Drug Pool

Novel & Existing Drugs

MMRC Tissue Bank

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The Multiple Myeloma Example



The MMRF/C must Balance its Focus on Accelerating Drug Development with Identifying the Right Drug(s) for the Right Patient(s)

Speed Next Generation Treatments

Personalized Medicine

Innovative Trials

Longitudinal Study

Next gen’omics

Pipeline/Portfolio

Correlative Studies

Current Trials/Metrics

WISERFASTER

MMRFResources

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The Multiple Myeloma Example



Healthcare Reform Landscape

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The Changing Healthcare Landscape



Advances in PM will Influence the Full Healthcare Continuum

• Diagnostic tests to complement traditional risk factors

• Risk assessment based on genomic and proteomic profiles and information

• Used for definitive diagnosis and disease typing

• Better accuracy in diagnosis through tests with improved specificity

Accountability? Clearer risk, accountability, cost

Prevention and Wellness

Monitoring and Management of

Condition(s)

Risk Assessment

Diagnosis Prognosis

Clinical Decision

Making for Treatment

Fee for Service(APR-DRG)

Capitation or Global Payment

APC and EAPG RBRVSPay for

Performance

Episode or Bundled

Payments

Acute Care Management

ACOChronic Care Management

Medical HomesSpecialty

Medical HomesEpisodes of

Care

Financial Reimbursement

Healthcare Continuum

Healthcare Delivery Models Accountability for care, cost, and outcomes is shifting during the US era of reform

Volume based Value based, quality, outcomesPayment

Care Venue

Records / Info.

Treatment

Paper, Fragmented Electronic / Usable / Transparent

One size fits all Personalized

Hospital based / Acute Integrated, outpatient, patient centered

• Focus on late-stage detection and intervention (High cost, variable quality and outcomes)

• Multiple reimbursements for fragmented (siloed) care versus integrated management of patient needs

• Medical professionals paid for illness versus wellness• Inadequate social and economic incentives for wellness• Inadequate medical training/understanding of

genetics/genomics/proteomics

Risk Share

Benefit Challenges• Actuarial calculations disruption and

redefinition• Services need to be defined as covered

versus excluded category.• States may require specific test benefits.• Medicare statute excludes “screening”

services unless previously enumerated, but the border between screening & diagnostic services is sometimes problematic.

Coding Challenges• Lengthy process for new code

development• CPT: uncertain granularity of Tier 1

codes, and lack of granularity of Tier 2 codes

• Multiple methodology-based or misc. (NOC) CPT codes (incl. molecular diagnostics “stacking” codes

• Laboratory test CPT coding is not well suited to coding for information services

Coverage and Evidence Standards Challenges• Coverage determination that has few

standards, varies widely from test to test,

• CMS’s coverage determination process lacks sufficient predictability in its evidence requirements

• Human factors confound coverage review, especially gaps in technical expertise and ability to determine true value

Payment and Diagnostics Reimbursement Challenges• Characteristics of the CLFS and PFS

make their application to payment problematic

• Payment system anchored in the costs of tests developed and performed decades ago, and applied inconsistently

• Payment-setting process fails to recognize their clinical utility and economic value

• Focus on prevention and prediction of disease rather than reaction to it

• Probabilistic health history through DNA sequence

• Early warning about predisposition could promote healthier lifestyles

• Recurrence monitoring

• Monitoring for treatment efficacy

• Leverage population based therapeutic research

• More targeted treatment for mgmt. and late stage

• Used to predict efficacy or safety response for specific treatments

• Right treatments at right time for right patients

• Genomic and information based clinical decisions

• Less variability

• Assess severity and/or risk of recurrence

• Informed decisions on clinical decisions and pathway

• Know what is true stage of disease progression

• Reduced possibliity of side effects

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Payer Landscape Continuum

10/7/2011

Financial Reimburseme

nt

Full capitation

Fee-for-service

Health Management

EpisodicPreventive

Care Delivery

ChronicWellness




Towards Accountable Care Organizations

10/7/2011

Payment

Venue

Records

Treatment

Volume based

Hospital based

Paper

One size fits all

Performance based

Integrated, outpatient

Electronic

Personalized

1990 2000 2010 2020

Accountable Care Organizations: Patient Centric Model




National Initiatives: The Forum on Personalized Health Care Announces Launch of The Roadmap for Personalized Health Care

10/7/2011

PwC will be a key contributor to the initiative intended to:

• Foster and apply disruptive innovation to effect transformative, systemic change in health care

• It is designed to provide stakeholders in the health care with an actionable plan

• Led by Harvard Business School professor Clayton Christensen, creator of the theory of disruptive innovation.

• The Roadmap will draw from and build upon Christensen’s analysis of how disruptive forces can be put to work to help effect systemic change in diagnosis and patient care.



Personalized Medicine has Momentum

10/7/2011

Several articles yesterday as follow up to the ASCO Conference in Chicago, applaud the new wave of personalized cancer treatments in development


24PricewaterhouseCoopers LLP 10/7/2011

For additional insight, see our publications:

Gerry McDougallPersonalized Medicine [email protected](617) 530-4471

http://www.pwc.com/en_GX/gx/pharma-life-sciences/pdf/diagnostics-2009-final.pdf

mcdougall on market potential of personalized medicine

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