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A new, market-driven model of drug development and commercialization is appearing*
Successful companies, even entire industries, have a life cycle. All of them eventually reach the point where their current business model is no longer viable. Companies that recognize the shift early on and take action to reinvent and execute a successor model effectively become leaders as the next stage emerges.
Inherent limitations of the current pharma business model are driving the emergence of a fundamentally new approach for the industry. A market-driven model rests on the assumption that successful companies of the future will determine what therapeutic areas they will “own,” which in turn will drive investments. Unlike the current approach, which is really product-centric, the new model will be patient-centric and take a continuum of care approach versus an episodic care approach. What this will mean is a core focus on prevention, diagnosis and treatment of the range of conditions within a therapeutic area, taking into account the needs of specific markets around the globe.
The central imperative of the new model is delivering real value to all stakeholders—payers, regulators, physicians, providers and patients—and understanding whose voice matters in terms of relative weight is of critical importance.
The power of payers is growing globally as product acceptance and purchase decision-making moves further and further from the physician. Payers and hospitals are clamping down on healthcare costs by saying “No” to new products, line extensions and, of course, price increases. Reacting to the prospect of exponentially increasing liabilities, payers of all types are demanding hard comparative clinical and economic data to justify any change with bottom-line impact.
This represents a significant change for many companies. Those tasked with product marketing face internal resistance in trying to address market access considerations—specifically, the need for comparative effectiveness research and the identification of new ways of obtaining appropriate evidence. They are increasingly seeking help translating these messages internally and implementing sustainable changes within their companies.
Regulators also remain a critical constituency. FDA has created new regulatory programs in an attempt to expedite the approval process in order to get much-needed drugs more quickly to patients requiring them. One of these, the Breakthrough Therapy designation, has had a successful start since its creation in 2012. In its first year, the regulatory agency granted the designation a total of 31 times, compared to initial estimates that only three or four drugs per year would earn the designation. Even with these expedited programs, manufacturers will still need to ensure that the right evidence is being collected to gain approval in the accelerated time frame.
Companies need to change their go-to-market models, redefining the value delivered to physicians, payers and patients, while lowering costs. While the numbers have declined since their peak, there is still heavy reliance on physician detailing. This practice is inconsistent with cost constraints and the need for more tailored and responsive dialogue. The role of personal promotion to physicians hasn’t disappeared, but it requires greater sophistication, clinical knowledge and business acumen than typical sales reps possess today. Companies will need to define new approaches and develop new competencies to deliver value in ways that are cost-effective and tailored to meet individual needs. In addition, opportunities to develop relationships with patients/consumers need to be part of the equation.
The new world of patient-centricity means changing the way in which manufacturers engage with patients, acknowledging them as legitimate healthcare decision-makers, essentially “patients as partners.” This means identifying the types of evidence (e.g., patient-reported outcomes) that will best resonate with patients, and incorporating patient perspectives into trial design. Just as manufacturers must leverage comparative effectiveness research (CER) and real-world evidence (RWE) to gain favorable positioning with payers, they need to collect data and demonstrate outcomes that matter in a way that makes patients listen.
*excerpted from Bringing Value to Healthcare: Practical Steps for Getting to a Market-Based Model, R. Numerof and M. Abrams, CRC Press, available at www.bringingvaluetohealthcare.com.
ABOUT THE AUTHORS
Rita Numerof, PhD, is president of Numerof & Associates (St. Louis, MO), a firm that helps businesses across the healthcare sector define and implement strategies for winning in dynamic markets. Her bachelor’s degree is from Syracuse University, and her PhD is from Bryn Mawr College.
Michael Abrams, MA, is co-founder and managing partner of Numerof & Associates. In addition to his consulting work, he has been an adjunct professor at Washington University in St. Louis and other schools. His MA is from George Washington University, Washington, DC.