Inside This Issue - News
McKesson plans to leverage its health care scope
August 13th, 2012
LAS VEGAS – As one of the nation’s largest providers of health care services, McKesson Corp. stands at the nexus of health care delivery, an enviable vantage point from which to observe and help shape the rapid evolution of the way Americans access, receive and pay for care.
Brian Tyler, a 15-year McKesson veteran who has been president of its U.S. pharmaceutical business unit for the past 18 months, said the company intends to aggressively leverage its position for the benefit of customers, patients and shareholders.
“Our reach in areas like drug distribution, health care technology and medication adherence; the markets where we operate; and the customers we serve give us two things,” he noted during an interview, his first in his current role, at McKesson’s recent ideaShare 2012 conference here. “First, we have an extremely broad view of the landscape. We know what payers are thinking. We know what hospitals are thinking. We know what pilots are going on with ACOs [accountable care organizations]. We know how physicians and pharmacists are reacting to changes in the marketplace. We can coalesce that and put together a 360-degree view of health care today.
“Second, we have the tools and the assets within the company to stitch together solutions that can help our customers succeed. Because of the variety and depth of the solutions we offer, change in many ways is our friend. We have more assets to navigate what lies ahead than anyone else.”
The Affordable Care Act, most of whose provisions were upheld by the Supreme Court in late June, is a catalyst for the transformation of health care delivery, and, according to Tyler, any provider that fails to adjust will put itself in jeopardy.
“Anyone who doesn’t have a view that they’re going to have to change will be in trouble,” Tyler said. “If you’re not moving forward then you’re moving backward, because there really is no standing still anymore.
“There are a lot of organizations that fear change, maybe because they’re in a comfortable place and like where they are. But that thinking is just not reality in today’s market. If they stand still they’re going to see their model get chipped away at. We know, for example, there are retailers thinking about providing catastrophic coverage in health and wellness. Does that become a new health care product? How could that potentially threaten insurers? Like it or not, change is coming for all of us.”
An economist by training with a Ph.D. from the University of Chicago, Tyler, who served as president of McKesson’s medical-surgical distribution business and its specialty care solutions division before assuming his current post, brings an unusual perspective to his work.
“At its most basic level the study of economics is really the study of human behavior and how that behavior responds to incentives,” he noted. “When you think about what’s going on in health care, a lot of the challenges come from the incentive structures that we put in place. People consume very expensive products and pay zero to $5 for them. How does that manifest itself in the way they demand and consume health care?
“Anytime you have a payer between the consumer and the provider of a service you run the risk of messing up the incentives and either encouraging people to overconsume or encouraging them to under-consume. In health care those can be equally bad outcomes.
“If we want to attack the health care problem in this country we need to start looking at things like nutrition and the behaviors that we reward and encourage. At McKesson employees can earn money toward the subsidization of their health insurance premium by attesting that they are tobacco-free or demonstrate that they work out regularly. As a health care company we know these are the types of behavior that are going to change the way health care works and bend the cost curve.”
McKesson is striving to take costs out of the system in other ways as well. A premium is placed on maximizing the efficiency of its core drug distribution operations, and broader utilization of low-cost generic medications is promoted.
“We’re at the crest of the generics wave this year, with branded products generating $33 billion in sales coming off patent,” commented Tyler. We’re encouraging all of our pharmacies to capitalize on that to the fullest extent they can.”
McKesson is committed to putting generics in the hands of its customers as soon as they become available. In addition, it is developing ways to customize generics programs for individual retailers, based on such factors as predictability of supply and cost.
“There’s a lot of innovation going on in the generics marketplace,” said Tyler. “We’re seeing new vendors come up. India and other emerging countries are going to play a significant role in all this. It remains very dynamic and is a big area of opportunity for the whole industry.”
Specialty pharmaceuticals are another point of emphasis for McKesson, which is one of the largest distributors of such products and biologics, with 90 million vaccine doses delivered to more than 45,000 providers annually, according to Tyler.
“When you look at the product pipeline you recognize that specialty medications are here in a significant way,” he noted. “They’re rapidly moving away from a niche and becoming a mainstream part of what happens in health care every day.
“There are pluses and minuses to that. They’re expensive drugs. They’re drugs that tend to require high engagement with the patient; a lot of service is needed to make sure people comply with their therapies, stay on their therapies and actually get the benefit of these drugs. That plays into a lot of retail pharmacy’s strengths. On the other hand, mail has really grabbed an early, large share of the specialty business. It’s a threat in that regard.
“How to participate in specialty medications is clearly something that retail pharmacy is going to have to figure out. It won’t be involved everywhere and in all disease states, but there is a set of conditions in which we believe pharmacy can play an important role. We’ll look to take advantage of the assets that we have to help preferentially position our customers in those areas.”
Another promising initiative for retailers is the McKesson Sponsored Clinical Services Network, which fosters pharmacist interaction with patients to improve medication adherence.
“As a result of our partnership with many of the top pharmaceutical companies, pharmacists in the network have taken on a greater role in providing patient care while increasing their revenue,” said Tyler. “Last year pharmacies in the Sponsored Clinical Services Network earned $1 million in fees [from drug makers] for providing patient support services for an estimated quarter-million individuals.
“Programs like this demonstrate McKesson’s belief in the future of community pharmacy. We are fully committed to doing everything we can to help pharmacy operators achieve better business health and deliver better patient care.”