To an industry insider who magi- cally fell asleep in 2010 and woke up as the ball dropped in Times Square to ring in 2015, the pharmaceutical industry
might be nearly unrecognizable. Five
years ago the Affordable Care Act had just
been passed and signed by the president;
today its consequences have flowed out
in all directions, transforming the way
healthcare is provided and paid for. Five
years ago mobile web was just catching
on; today it accounts for more than 60
percent of web traffic. The pharmaceutical executive of five years ago would be
overwhelmed by all the new audiences,
new decision makers, new expectations,
new media, new data and sources of information of today; even for those of us
who have not been napping for the past
five years, it can all be a little overwhelming. For this year’s Agenda overview,
Med Ad News spoke with a long list of
industry insiders, the people who have
to deal with this sort of tranformational
change every day. Here are the trends
that they told us would be most important for pharma marketers in 2015.
The changing marketplace
Topping the list of crucial developments
for pharma marketers in 2015 is the continuing transition in how health services
are provided and paid for. Today’s brand
manager is faced with a bewildering array of acronyms – the Accountable Care
Organization (ACO) and the Integrated
Delivery Network (IDN) are the two
most prominent of many – and each of
these has its own unique decision making
processes and value definitions. Pharma
companies are having to learn on the fly
how to deal with all these new decision
makers, a process that is causing perhaps
the largest single shift in selling strategy
in the entire history of the industry.
From the perspective of the healthcare
consultants at PwC, the changes wrought
in the marketplace by ACA and the rise
of new provider and payer entities will
drive nothing less than a change in the
real meaning of value for pharmaceutical
companies and their constituencies, leading to a greater focus on real outcomes
accompanied by real data.
“The shift of risk in selection and pay-
ment for therapeutic treatment to vari-
ous provider entities introduces new
variables that the pharmaceutical prod-
uct industry will need to orient towards,
namely quality and total cost of care,”
says Warren Skea, principal, PwC. “No
longer will pharmaceutical product com-
panies’ strategy that focuses on physician
directed therapy based on their clinical
knowledge and payors processing claims
based on their approved cost of treatment
analysis, define and determine their suc-
cess.”
Nothing less than a new definition of val-
ue through outcomes-based evidence that
proves such value is what stands between
success and failure for pharma companies
now, Skea suggests. The very definition of
payer has begun to radically shift to a va-
riety of new models that are both consoli-
dating and adopting risk for cost (bundles,
capitation) and care (quality, outcomes), to
say nothing of employers and consumers
who are the primary funding sources. And
this shift is driving a corresponding change
in payer expectations.
“The payer as provider is looking for
materially different shifts in clinical qual-
ity impact and the total cost of care, both
upstream and downstream, as related to
any product therapy,” Skea says. “Pro-
viders also want to know which patient
cohorts will receive the greatest impact
from the day a therapy is authorized, not
after months or years. Determining the
holistic, incremental, and/or avoidable
costs of care, across a broad range of ac-
tual operating costs incurred by delivery
systems outweighs the incremental dis-
count that typifies the current state.”
So outcome study proof and the docu-
mentation of cost and quality differences
is going to have to take place in the labo-
ratory of every day clinical delivery where
the variables of real life impact therapeu-
tic performance. “The validity of value
measured is best spoken for by provider
industry leaders that have the trust and
stature of peers across their community,”
Skea says. “This has become necessary to
avoid the skepticism that can often ac-
company product company-led studies.
This shift to provider system definitions
for outcome value has put a premium
upon the product industry’s need to
abandon the vertically integrated model
that was committed to a pre-determined
value definition over to a highly collabor-
ative outcome model that is intent upon
discovering value as an ongoing journey.
In this way product companies can more
responsibly convert to risk based contract
agreements where outcomes and the data
to support them can be trusted and op-
erationalized across the provider com-
munity.”
In addition to the consolidation of pro-
vider networks into ACO/IDN models
and rollout of the federal and state-level
exchanges, experiments with outcomes-
based reimbursement and the muscle-
flexing of the leading pharmacy benefits
managers to negotiate exclusive deals
with pharma is continuing to put general
downward pressure on healthcare costs.
This, says CEO David Ormesher of clo-
serlook inc., presents both challenges and
opportunities for pharma to assert its role
and value.
“At this point, most pharma compa-
nies continue to play the role of vendor,”
Ormesher told Med Ad News. “Most con-
tracts are priced on volume-discounts,
not on outcomes or value. In an environ-
ment that is aligned around cost-reduc-
tion and fee-for-value, winning on price
leads directly to commoditization. For
brands that are competing with an effec-
tive generic, there are fewer options to
avoid this margin squeeze, but for many,
the path forward looks like a business
partner model. As healthcare in the Unit-
ed States moves away from fee-for-ser-
vice, pharma will need to move towards
more partnership approaches to disease
prevention, management and cure.”
Taking a similar position, Patrick Jor-
dan, chief administrative officer of En-
core, a Quintiles company, believes that
the shift in the marketplace commands
a different operating model among indi-
The Magazine of Pharmaceutical Business and Marketing • medadnews.com • February 2015 • Volume 34, Number 1 • $25
The business of marketing pharmaceuticals today would be almost
unrecognizable to a visitor from ;ve years ago; the industry’s fate
hangs on how industry leaders respond to all this change.
By Joshua Slatko josh.slatko@medadnews.com
A whole new ball game
he payer as provider is looking
for materially different shifts in
clinical quality impact and the
total cost of care. T
Amgen
AstraZeneca
Biogen Idec
Bristol-Myers Squibb
Celgene
Gilead Sciences
Merck
Novartis
P;zer
Roche
