Industry Innovation
Payers are already demanding data from manufacturers that demonstrates a product’s economic and clinical value in directing reimbursement decisions. Moving forward, hospital administrators with decision-making power will rely on published evidence as well as the experience of their clinical teams to determine a product’s value. To this end, clinical studies must continue to become more comparative by design, not just to the “gold standard” treatment, but also to non-pharmaceutical comparators and watchful waiting.
Similarly, while randomized controlled trials (RCTs) are still essential for regulatory approval and market entry, payers and healthcare administrators are becoming more focused on measuring outcomes in the broader population. Biopharmaceutical manufacturers will need to place greater emphasis on post-market surveillance studies and real world data to ensure their product’s claims of effectiveness are being met. If biopharmaceutical manufacturers fail to plan for and conduct this research, be assured that decision-makers will gather the evidence to determine how competitive products at different price points actually compare. Today, true innovation (things that make healthcare better and cheaper) that addresses broader stakeholder requirements is able to command premium pricing, but marginal improvements focused on incremental features and benefits are suffering.
As healthcare consolidation continues, payers and delivery institution management increasingly share the physician’s once exclusive role in treatment decisions. With cost as a significant driver, for example, payers and provider systems already place pressure on physicians to use generics. In fact, this pressure is built into computerized physician order entry (CPOE) systems, making branded drugs an exception requiring additional justification. Clear differentiation in terms of clinical outcomes and economic value will be a primary way for manufacturers to take on this issue.
Within this context, the concept of bundled pricing is gaining momentum as a reimbursement model designed to address demands for better health outcomes at lower cost. Promising to deliver a standardized set of services for a fixed price with specific quality commitments will create incentives—lacking in the current fee-for-service payment system—for providers to align their efforts to contain underlying costs. Providers adopting bundled pricing must focus on evidence-based care paths that allow them to define the crucial actions, decision points, and products used in treatment. When optimally formulated, such care paths will provide the much-needed link between clinical activities and associated costs. They offer a tool that hospitals can use to gain control of their core production process, using data to collaboratively lower costs and improve outcomes. Being unable to produce a compelling economic and clinical value narrative may set the stage for a product being left out of a provider’s care path, and that will have a significant impact on market access.
Keys to Success
There is still an urgent need to innovate. With the decision maker (stakeholder) set expanding and the criteria for purchasing and defining innovation changing, business model change is required for success. The reality of the new world is that resistance to new products by decision makers is increasing while access and physician influence decline. Healthcare providers (and payers) are focused on the cost and quality of the care they provide and are increasingly risk-averse about new technology and products. Overall, this scenario does not augur well for innovation and, in fact, suggests the need for change in what products are developed and how they are commercialized.
To be successful in this new environment, biopharmaceutical companies must adopt business strategies that consider the interests of all key stakeholders who can influence medical plan design, treatment, and other related decisions. This includes physicians, patients, payers, and policymakers. Every functional team within an organization, from business development and R&D to market access, pricing and reimbursement, has a role to play in making sure the company is set for success in this evolving environment:
• The business development department will need to broaden the competitive set as they look at potential opportunities. More than ever, they will need to make sure that prospective assets address unmet needs, and offer meaningful differentiation that is sustainable over the product’s lifecycle.
• R&D will need to determine the requirements for clinical differentiation and build studies to incorporate these data points, based on identification of what’s really important to stakeholders.
• Sales and marketing departments will have to develop messages, including economic messages, targeted to the specific needs of stakeholders. They’ll also need a broader group of strategic marketing capabilities as they interface in new ways with a broader group of internal and external constituents.
• Quality and regulatory functions will need to be prepared to meet new hurdles both before products get approved and once they’re in the market. With an increasing emphasis on post-market safety surveillance and real-world evidence, companies must have the appropriate measures put in place to capture this information.
• Clinical groups will need to broaden their approach to collecting data and how they look at research design. They’ll need to work closely with health economics, market access, and managed market teams. As observational and non-traditional studies play a more prominent role in defining what the specific comparators should be, companies will need to look at how they use in-market data to influence new study design and provide insights to guide future product development.
• Market access teams will become increasingly important as they’re called upon to translate the implications of what’s happening in the external environment for their internal partners. They’ll need to take on a more strategic role as they interpret market dynamics and sort out where new thinking needs to be integrated within their current structure.
• Pricing and reimbursement teams will need to clearly demonstrate how they established their price, specifically the comparators used, the data that supports it, and the particular patient population that will benefit from their product.