Terry Hisey, Senior Principal in the Life Sciences & Healthcare Practice, Deloitte.
As one of the Big Four accounting and advisory firms, Deloitte deals with a large portion of the pharmaceutical industry, both domestically and internationally. In fact, the company says that it has not only the leading position with pharma, but also with healthcare providers, which gives it a broad perspective of both the buyers and sellers of pharmaceutical products. The company is organized around four basic functions—auditing, tax, financial advisory and consulting (and these business units are each independent of each other, as are the various national companies around the world; in the US, the companies operate under the umbrella firm, Deloitte LLP). Of its 225,000 personnel worldwide, there are 5,000 professionals working healthcare and life sciences.
Terry Hisey, now senior principal in the Life Sciences & Healthcare Practice, previously spent eight years as vice chairman of Deloitte, leading its efforts in life sciences across all service areas of the firm. Recent work includes commercial program execution, implementation of real-world evidence (RWE) initiatives, and developing a research program on the impact of social media in life sciences. Trained as an engineer (at Penn State University), he is also a guest lecturer at Drexel University and the University of Pennsylvania (from which he also obtained an MBA), both in Philadelphia, PA, and the Haas School at the University of California at Berkeley.
Pharmaceutical Commerce sat down with Terry to hear about his work and career; here's what he had to say.
1) Let’s start with a quick rundown of the services available to life sciences companies through Deloitte.
Deloitte is a global professional services firm, with operations in more than 100 countries. We have an advantage in that the company is both a leading provider to life sciences and the leading provider to healthcare systems, which gives us a unique value in being able to provide insights to both the suppliers to healthcare, such as life sciences companies, and the healthcare providers themselves. From a size standpoint, there are more than 8,000 professionals around the world dedicated to healthcare and life sciences. We consult with manufacturers, providers, payers and governments on healthcare activity.
Specific services include corporate strategy, information technology, human capital, tax, regulatory and audit—virtually any type of business support a corporation needs. For an engagement, we dynamically assemble a team from all these capabilities to meet client needs.
If I were to characterize the overall focus, I would say the key business needs are managing innovation, providing services for the benefit of patients, and helping businesses drive growth and enable their people in pursuit of these missions.
It’s also worth noting that the international presence of the company has tremendous value to firms that have global operations, with people on the ground in more than 100 countries, who speak the language, understand the regulatory issues and have a cultural awareness of how business gets done.
There’s a widely noted trend among the leading professional services firms toward outsourced operations, and we participate in that. It’s actually a surprise to me that, according to several external analysts of our sector, Deloitte is a second-largest digital agency in the world, and a leading systems integrator of such marquee enterprise systems as SAP, Oracle or SalesForce.com. Our people build websites and portals for clients, deploy applications, and analyze data. For life sciences and healthcare, a big emphasis these days is digital services for patient support, ensuring a better patient experience with providers or with healthcare products.
2) In this presidential election year, drug pricing has been a headline topic, and candidates of both parties have been proposing broader federal pricing roles (such as negotiating drug prices with Medicare), or tying prices to R&D investment. A related topic is simply the lack of transparency in pricing, with off-the-table discounting and dealmaking. How successfully are pharma companies addressing these concerns?
Pricing is an incredibly complex factor for all drug companies to deal with. If you like, it’s the consummate multivariable equation where you can’t simply solve for a single variable and think you’ve got the answer. What we’re spending increasing amount of time on with our clients is not the question of price but the question of value. Because we have insights across the ecosystem, we can help people think about pricing strategy in context of a total value proposition. Price is just one factor. You really need to understand the burden of disease, what is the clinical and economic value of what you’re bringing to the market, what are the costs associated with currently available therapies, and how you go about changing the paradigm. These are the things that go into informing a pricing strategy and ultimately a contracting arrangement—whether with the healthcare system or with a payer—that gets put in place.
Looking ahead, even with this value-based approach, we’re still going to have rebates to establish formulary positions in the US market, we’re still going to have copay programs to support getting medicines to the patients that need them. But the next frontier to tackle is getting more definition around the value proposition, and aligning business incentives and metrics with that proposition.
One more comment: getting reliable outcomes data from healthcare services has traditionally been a problem. Unfortunately, patients’ outcomes don’t fall neatly into a January-to-December decision event horizon, which is a way of saying that parts of the healthcare system have had the incentive to operate across short timeframes—but that is going away now. One benefit of the consolidation that’s going on now among integrated healthcare networks, and with payers, is that there’s less incentive to operate across a short event horizon, and to pass on a patient to a next delivery network or payer. Conventional wisdom had suggested that some things weren’t done because if I wait for a year, an employee will move on and it won’t be my problem anymore. With the advent of health exchanges and business consolidation, that’s a less valid assumption, and we’re seeing people begin to participate positively in the conversation.
3) Even as the costs of specialty therapies skyrocket, medical researchers are getting closer to real personalized medicine—which brings in a host of new concerns (e.g., rigorous genomic diagnostics, and developing individualized therapies based on patients’ own immune systems), most of which will add to costs. How should the pharma industry position itself to capitalize on these opportunities?
In my opinion, the biggest impact of personalized or precision medicine in the near term is addressing acute conditions like cancer. The fact that it took $100,000 and weeks to sequence an individual’s genomic profile in the recent past, and that that is on a trajectory to cost $100 and take 30 minutes, is really going to help improve those serious conditions. Companion diagnostics growth is also a factor.
I do think that getting to individualized products for individual patients is still quite a ways off from that. Precision medicine will take far greater hold in healthcare by leveraging real-world evidence coming off clinical information systems. We’ve made significant investments in therapeutic transformation—working with the available science and marry that with the available technology to become more effective in treating populations of patients, that is, population health. A new realization here is that a lot of this is dependent on patient behavior—getting the right medicine to the right patient, and then providing patient support programs, adherence programs and the like. This is going to have a big impact.
For today’s drug developers working on disease areas, our footprint of services involves leveraging the understanding of those disease areas, and helping developers understand the potential value proposition of their innovation. Who is the potential collaboration partner? Who is the appropriate developmental partner? How will their technology help fill the gap of a larger company’s portfolio, and how should a deal be structured?
On the flip side, we work with the larger pharma companies to evaluate their portfolio and to identify candidate companies to work with. Deloitte can handle conventional M&A work, but can also serve as a “science broker” to find the right collaboration partners for technology development, and create the right relationships for business development.
4) Yet another topic with both scientific and financial implications is the advent of biosimilars, a few of which are now on the US market. Some observers believe there will be relatively little financial benefit to payers; others, looking at the European experience, foresee dramatic price reductions. What’s Deloitte’s perspective, and how should the innovator companies position themselves for the entry of biosimilars?
Biosimilars continue to be a bit of hope and an enigma for marketplace. The jury is still out on the real ultimate impact. It’s important for people to understand that biosimilars will have dramatically different market behaviors than the introduction of small molecule generics under the Hatch-Waxman Act in the 1980s. Biosimilars are just that—similar, and not identical. So there won’t be automatic substitutions; and more clarity is needed on the approval pathways and on things like reimbursement codes.
Moreover, biosimilars are biologics, obviously, and our belief is that physicians will demand clinical evidence of the product’s effectiveness. Biosimilar producers will need a sales organization, a medical affairs team and many of the things a conventional innovator company has. Given all of this, there could be only a modest price differential between the originator molecule and the biosimilar. Companies will need to be careful about market sizing—my belief is that biosimilars will only be competing for newly diagnosed patients, so the products will have a slower ramp-up in the US market. It’s a valid approach, I think, to go the route of conventional clinical trials and bring a new “biobetter” on the market, as opposed to offering a slight cost improvement over existing products.
FDA is committed to biosimilars and continues to study and refine their pathway and guidances on biosimilars, while Europe has been a step or two ahead on biosimilars as well as other products. Many people have embraced strategy of wanting to gain market approval in other markets first, utilize the evidence of success there to bolster their case and move toward securing product approval.
Multiple biosimilars for the same condition could cause significant price reductions. The question will be how crowded the market is and this begs the question of the attractiveness of such a market. Will it be able to draw the necessary financial and human capital? What is the economic return? Biosimilars will definitely have a place, but they’re not a panacea.
5) Healthcare “consumerization” has been a favorite theme of Deloitte in recent years, with the annual Healthcare Consumer Survey and the insights obtained from that. Has the consumer market for healthcare “arrived”? Does the pharma industry have farther to go in consumerization?
Healthcare consumerization is like the horizon—I can always see it, but I never seem to be able to reach it. While pharma companies—indeed, any company—is continually adjusting, technology is driving it further and faster. Technology is creating better transparency, and providing more insights on consumer behavior. Our annual Consumer Surveys are segmented not based on attitudes but on behaviors, and the behavior cohorts are changing their orientation toward healthcare. A couple of things stand out: for some cohorts, being able to provide broadbased patient services makes a difference in patient attitudes. Also, being able to support physicians with their patient-care services, showing how products should be used, and getting patients to opt into the support they’re looking for, also makes a difference.
This change arguably has had the biggest impact in product life cycle management. Increasingly, pharma companies are realizing that the loss of exclusivity is not an “event”—you knew it was coming for 17 years!—but a step in a product life cycle. Recognizing the value of interacting with patients at that point can lead to higher brand loyalty, or better success in the transition from branded product
Another aspect of consumerization is acknowledging that patients come to their doctor’s office today much more informed on therapy options. Supporting the consumer’s own research, and helping physicians interact positively with knowledgeable patients, can make a difference.
6) It’s been about two years since Deloitte made a substantial investment, $150 million, in ConvergeHealth, its ongoing effort to draw meaningful outcomes data from patient records. How has this business been progressing? What can both the pharma industry and payers look forward to in outcomes research and real-world evidence?
Deloitte has made substantial investments in healthcare analytics, and within ConvergeHealth we’ve built our therapeutic-area transformation teams focused on outcomes-based analytics or real-world evidence (RWE). Once upon a time, RWE was viewed as a back office function in the bowels of a pharma company or healthcare organization. Now it’s come out of the shadows, and is pervasive across organizations.
One part of ConvergeHealth’s work is accumulating patient data and performing studies, and we’ve had considerable success with that. Another part is advising pharma companies and healthcare organizations how to set up their own internal analytics function. It’s an imperative now. Big companies have the resources to set up their own RWE operation, but all pharma companies need to have this either internally or through business partnerships.
One example of the value of RWE is in evaluating a pharma company’s portfolio. At a strategy level, RWE can tell how products are performing and to take a look at where the products are in their life cycle. Will an existing portfolio have a problem three years down the road if a clinical question can’t be answered? RWE obviously has value as well in outcomes-based contracting.
Stepping back, we’re working with clients to educate simply on how well they understand today’s evidence-based environment. What is the ‘evidence intelligence’ of an organization? Does it have the institutional capability of making decisions on capital and asset allocation, based on RWE? All this points to the fact that increasingly, companies are more insights-driven organizations and these efforts support that work.
Pharma companies need to recognize that facts beat messaging. Increasingly, healthcare organizations will listen to the messaging a pharma company offers, but they are more and more seeking to perform RWE on their own patient populations, and to take RWE tools and algorithms and run them on their own data. This is an area that is continuing to evolve. Four or five years ago, this activity used to be about data partnerships to have access to data to answer questions; now it’s about putting capabilities in place to have end-to-end evidence capability, and a data-governance policy with enabling technologies.
7) Deloitte has been involved in a variety of digital health initiatives—mHealth, wearable technologies and the like. These are exciting opportunities, but the value of them to the pharma industry (as compared to their value to healthcare providers) is unclear. How should pharma be responding to these supposedly disruptive technologies?
I don’t think these technologies are disruptive so much as transformational. mHealth and related technologies are useful to collect data or provide product information of benefit to patients. Over time, they will help patients manage their health conditions in ways that are minimally disruptive to their lifestyles. Once these technologies and the “Internet of Things” gets more established, we’ll see more of a transition occur. What one used to have to do only in a hospital to manage a condition has been transferred to an outpatient clinic; what is being done in the clinic is now being done in the home, and eventually what’s being done at home can be done anywhere. Patients embrace the idea of “anywhere, anytime, all the time” healthcare management and delivery.
Pharma companies can participate in digital health by figuring out how to step in and lead the conversation. There will be opportunities to collaborate with patients better, and drive a higher-value relationship with them. The smarter companies will figure out how to leverage these technologies to forge a better relationship with patients and providers.
8) What’s your personal stake in your work? What, for example, would you say to a new college graduate about entering the life sciences arena? Looking ahead, what parts of the industry are akin to buggy whip manufacturing, and what are the new future businesses?
First of all, I have to point out that as someone who grew up in Lancaster County, PA, where many Amish reside, the buggy whip manufacturing business is alive and well!
More seriously, there are a lot of challenges to life sciences today, and a lot of negative commentary on its practices. Nevertheless, it’s still a field driven by innovation, and there’s genuine excitement for individuals who want to work in innovative ways to bring a better quality of life to us all. If you’ve got a science background, there are many places where you can fit, and to be an agent of change to drive up the level of insight intelligence of the organization. Today’s digitally savvy young people—whether technologist or not—can capitalize on digital technologies in the context of interactions with patients, physicians and other healthcare providers.
Back in the mid-1990s, I had the pleasure of doing some things with Nicholas Negroponte, founder of the MIT Media Lab and a visionary who wrote the book, Being Digital. It’s 20-some years later, but only now is the digitization of business becoming a reality in healthcare. Even now, it’s hard to say what, exactly, ‘being digital’ means, then or now, but it’s clear that many exciting opportunities are emerging.