Today’s biopharma industry faces more in-market risks than ever before. These include payment reforms such as bundled payments and limited global health care budgets. The industry must also manage greater provider financial risk for outcomes and resource use, as well as payer consolidation and new insurance designs that shift more costs to patients. And this is just the tip of the iceberg. In this environment, the stakes are high. Identifying and communicating the value proposition of innovative products is nothing less than critical.
Traditionally, the biopharma industry has addressed these risks by speaking to the value of its innovations. Increasingly, however, that value analysis is not resonating with payers, providers, and even patients. They are shifting the discussion, changing the dialogue, and altering the debate. Rather than speaking of “the value of innovation,” these stakeholders are criticizing the cost (price) of drugs and are concerned about affordability.
Unquestionably, affordability is a huge issue that must be addressed – but it is really step two. Step one is the need to get the value question right. It is clear that simply developing products to meet scientifically-defined “unmet medical need” is not sufficient in today’s markets.
At a recent meeting of the International Society for Pharmacoeconomics and Outcomes Research, Penny Mohr of the U.S. Patient Centered Outcomes Research Institute said, “The health care industry needs a more crystal clear understanding of the factors important to patients, clinicians, and health systems.”
I couldn’t agree more. Innovators need a clearer view of the innovations that are important to key therapeutic stakeholders, such as helping providers meet their performance metrics or improving patient quality of life. They need that knowledge well before product launch. And they need to bring to market innovations that reflect and integrate those views.
Perhaps the most important views in the evolving markets are those of the patient. In the United States, and increasingly in other markets around the world, even insured patients are paying more out of pocket for healthcare goods and services. If a product is not valued by the patient, market access could be more difficult than it would otherwise be.
Signs of difficult market access are everywhere:
- Significant use of formulary utilization management – prior authorization, step therapy, and tiering
- Non-coverage of one or more branded products in crowded therapeutic classes
- News headlines decrying the price of innovations
All these and other market access barriers stem in large part from the lack of payer and even, patient acceptance of a product’s value proposition.
So where does that put us? A continued cycle of contention and missed opportunities for alignment? Hopefully not. Patients and their families in the United States and around the world need and deserve better. And pharmaceutical companies need to be clearer in the value their products bring and what drives product price. To achieve this, companies need a process that takes complex market dynamics into account – and they need to do this as early as possible.
While certainly not complete, here’s a beginning check list to move us in a more positive, collaborative direction. Industry must start:
- Gathering stakeholder views and opinions and evaluating what really matters to them;
- Assessing policy trends in various markets and identifying their impact; and
- Integrating the analyzed information into the research and development process.
Only with this type of “environmental assessment” can companies really begin to understand what is at stake, what matters most to decision makers and how to communicate in ways that reflect values that are important to stakeholders outside of their own organization.
While the value proposition and product price/cost are not synonymous, they are highly related. Increasingly, value is likely to be measured against costs to the patient, costs to the health care system, impact on a provider’s performance metrics and potentially even the provider’s payments. That’s a whole new set of considerations, and those also need to be subjected to a rigorous analysis and testing process
While a strong value proposition will not resolve the issue of affordability, it is the foundation for maximizing market access. Importantly, it will build a much-needed bridge to addressing the affordability of these important therapies.
Jane Horvath is the Market Access Lead for 3D Communications which is a strategic communications firm that prepares pharmaceutical and device companies for high-stakes regulatory, payer, and other stakeholder interactions.