Value-based healthcare models have upended traditional patient care, becoming the wave of the future. How can pharma effectively ride this wave?
The pharmaceutical industry is facing rapid and comprehensive change, spearheaded by a new trend in consumerism, a move towards a value-based economy. This move puts the patients firmly in the driver’s seat and presents increased opportunities and challenges, requiring drug companies to work more closely with patients than ever before. According to a recent report by PwC Health Research Institute, pharma’s new strategic partner may very well be patients.
Value based consumerism is coupled with shifting reimbursement and regulatory environments, demanding that drug companies justify prices and demonstrate value to educated, informed and opinionated consumers. Healthcare providers in the U.S. are already moving away from the traditional fee-for-service system to a pay-for-performance reimbursement model providing tiered payment based on patient outcomes. There is a sense of inevitability that performance-based pricing model is moving into pharma as well.
In an outcomes-based contract, the price of a drug depends upon its performance within a patient population. Patients pay the premium asking price for a medication only if it achieves agreed upon desired outcomes. Your Viagra isn’t working as promised? Sleep eludes you even after a couple Ambien? Under the pay-for-perfomance model, you could potentially pay nothing or a discounted rate at best.
There are three strategic moves pharmaceutical companies can make to position their companies effectively for the new value based economy: engage consumers early and often, build and maintain trust and collect and organize patient data for regulatory purposes.
Engage Early and Often
Consumers, trying to squeeze more value from their healthcare dollars, are scrutinizing drug companies and demanding greater value for less money. This is not necessarily bad news for drug companies since they are in the unique position of having a consumer base that is willing to provide useful information; 79 percent of frail elderly consumers indicated they would be willing to share data about the efficacy of treatments.
Engagement with consumers is currently being incorporated into regulations and contracts with insurers such as Aetna and Cigna. Both insurance companies have entered into deals with drugmakers to pay for products based on performance. In addition, patient engagement will become a core part of the FDA’s regulatory approvals process as part of the planned reauthorization of the Prescription Drug User FeeAct in 2017.
Build and Maintain Trust
Building and maintaining trust is a critical component of patient engagement. Although patients may be willing to share data, it is only with understanding that it will be utilized to develop more effective treatments and improve health. This trust can be easily abused (and lost) without thoughtful application of collected data, transparency and a commitment to improving patient health while reigning in costs.
Organize Patient Data
With the advent of the novel regulatory emphasis on patient engagement, data reigns supreme. The collection, organization and analysis of that data may be the difference between a seamless approval process, or an outright denial of a New Drug Application. Pharmaceutical companies that can justify drug products through patient data that is complete and organized may be able to paint a more compelling picture for regulators focused on patient needs.
The McKinsey Global Institute estimates that applying data strategies to better inform decision making could generate up to $100 billion in value annually across the US health-care system. Multiple benefits can be realized such as optimizing innovation, improving efficiency and developing individualized approaches.
As Christopher Reeves said, “So many of our dreams at first seem impossible, then they seem improbable, and then, when we summon the will, they soon become inevitable.” Change is truly inevitable, and the pharmaceutical industry must learn to embrace the ups and downs and thrive on the wave of change.