BIO2016: Pharma Business Models Are Predicted To Shift To Patient Outcomes And Value
June 9, 2016 (Last Updated: 9:40am PT)
By Alex Keown, BioSpace.com Breaking News Staff
SAN FRANCISCO – New business models are emerging that will reshape the healthcare and the pharmaceutical industries over the next 15 to 20 years. The industry is predicted to shift from rewarding volume of sales, procedures performed and patients treated to a focus on improving overall health, patient outcomes and value for the health system.
That wide-ranging prediction was the subject of a panel at BIO 2016 called “Healthcare Disrupted: Moving Towards the Patient-Centered, Value-Driven Biopharma.” The panel was moderated by former Novartis Institute for Biomedical Research executive Jeff Elton, who is currently the managing director at Accenture Strategy, Life Sciences.
Elton, and others, predict the pharmaceutical industry will shift beyond the idea of being simply the maker of drugs and overwhelmingly shift into drug education for healthcare prescribers, patient follow-up and more. Companies that were once focused on product manufacturing are in the process, or will soon be in the process of becoming more service focused, Elton said in an exclusive interview with BioSpace. As an example, Elton said companies that were primarily science-based are now developing analytic tools to “help patients beyond the development of the therapeutic.”
“Pharma and medical technology and health services companies are having to interact with a healthcare system that’s thinking a new way, which makes them think about how they’re contributing to a specific outcome,” Elton said. “There will be an ecosystem of developments coming.”
This is not a new area of conversation for Elton. He and Anne O’Riordan, senior managing director of Accenture’s life sciences division, authored a new book, “Healthcare Disrupted”, which addresses the issues he raised at BIO. In their book, O’Riordan said these predicted changes will “dramatically improve patient care around the world.”
“New targeted therapeutics, smart diagnostics, advanced informatics and digital technologies promise to redefine healthcare, as the proactive management of health versus the largely reactive state it’s in today, with strong dependencies on acute interventions and physical care centers,” O’Riordan said.
As the direction of the industry shifts over the years, Elton said pharma executives will be asking questions such as:
• "How did the drug get used?”
• “What was its effectiveness?”
• What was patient adherence?”
All of those questions will cause companies to initiate new ways of acting, Elton said. Once those questions are asked, then companies will begin wondering if they need to develop their own digital tools to help patients manage their treatments. As an example, Elton noted that companies developing PSCK9 inhibitors, like Regeneron ’s Praluent, co-developed with Sanofi , can create databases that target users who will directly benefit from those drugs, rather than them having to go through several rounds of treatments with statins that do not address their issues.
Elton noted that several companies are already shedding older business models and embracing a multi-tiered approach, including lighting company Philips that has shifted into the healthcare industry.
“Now it’s integrating and making solutions for diabetic patients, or making solutions for elderly with cognitive impairments. That’s all they’ll do, a new focus for that company,” Elton said. “Google is another example with Verily and Apple has gone into the life sciences industry with its ResearchKit platform.”
Those examples represent emerging strategies in the healthcare industry that can add overall value. And an emphasis on value will be critical as companies undergo these shifts. The healthcare and pharma industries are on the defensive regarding costs of treatment, but if the conversation is shifted to the idea of value, rather than a mere dollar sign, the industry will fare better, Elton said.
“Part of what we’re trying to say … if I tell you the cost, but I don’t know how patients and the health system benefitted from taking on the costs, I can’t tell you the value,” Elton said. “We need to focus on the value for the metric. That notion of value is important.”
While driving home the idea of value is key, pricing will certainly be addressed during the BIO conference, Elton said. Value-based pricing and pricing strategies are of high interest to the industry, especially when it’s added to the idea of patient-centered treatment.
“This is all about changing models and how people operate… This isn’t an overnight change. We’ll have to build new capabilities and assess how we change R&D and clinical development and how we manage commercial contracting,” Elton said. “These are implications impacting all the life sciences industry. A new definition of value will increasingly be the metric that matters, as healthcare pivots back to the patient in extraordinarily new and different ways.”
The idea of patient-centered healthcare and value-based pricing is something the pharmaceutical industry has been adapting to for some time and has been addressed, in part of in whole, at other conferences. Earlier this year the concept of innovative pricing, part of the patient-centered business model, was addressed at the Massachusetts Biotechnology Council (MassBio) meeting in April. During the discussion, representatives from pharma and biotech-related companies addressed the concept of innovative pricing—an idea of performance-based payment for innovative medicines used to treat serious medical conditions. The idea is to set pricing for some medicines based on how well they work for patients. Peter Pitts, president and co-founder of Center for Medicine in the Public Interest, told BioSpace in an earlier interview that older pricing models are no longer working and the industry must look at new methods to ensure the drugs get into the hands of people who need them.