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- Pharma & the New Healthcare Economy. Ready or not ?
The future for the pharmaceutical industry is bright – if it can get there from here. Science and technology are poised for incredible breakthroughs, demand for better and more personalized medicine is ever-increasing, and barriers to trade are falling. However, the new healthcare economy – with its focus centered on the patient/consumer, value, digitization, and wellness through improved health management – is forcing pharma to make radical changes to its business models and organizational competencies.
These changes drive a number of challenges for pharma, highlighted by the need for better productivity, demands for lower cost drugs, tighter regulatory scrutiny, and the need to embrace the empowered patient/consumer. On the surface, these challenges may seem familiar – but the true danger for pharma is what lies beneath. Fully addressing each challenge in a compelling and timely way is critical – failure to do so will certainly curtail growth, and potentially threaten long-term viability. And few pharma companies are fully equipped to deal with the real depth and breadth of these challenges.
1. The Key Challenges
The overwhelming need for pharma in the new healthcare economy is to demonstrate real differentiable value, based not only on its traditional drug portfolio but increasingly on additional value-added solutions that address the most important challenges, including:
1.1 Engaging the patient/consumer.
For a long time now, pharma has engaged the patient/consumer, but until now it has always been from a top-down, direct-marketing approach or through clinical trials. Now the empowered patient is demanding more say in their care, with a greater understanding of medications they take, and with demonstrable positive outcomes. The relationship between pharma and patient is now being defined through medication adherence apps paired with smart drug delivery devices, active interaction driven through portals and social media, and new data sharing with a patient’s healthcare network of payers, providers, and care managers.
1.2 Engaging the provider.
Pharma’s relationship with healthcare providers is also a long and complicated one, but now the rules of engagement have changed. Even if the Affordable Care Act in the US is repealed or significantly changed, the transparency brought about through the Sunshine Act and sample disbursement reporting will likely survive. This legislation has already influenced global transparency requirements regarding interactions between pharma and health care providers and health care organizations. The impact of these requirements and the need to better manage costs has led to a need to digitize the sales process through improved provider portals, apps, and targeting through analytics.
1.3 Engaging the payer
Each payer’s policies regarding benefits are tightening because of financial pressures, and pharma needs to help payers address the HONDA’s (Hypertensive, Obese, Non-compliant, Diabetic, and Asthmatic population) that account for the majority of health costs. In addition, the ability to share real-world evidence, comparative outcomes, and other data can be the key to pharma and payer collaboration on risk, formulary, performance-based reimbursement, and other success criteria. This requires a level of interoperability and data governance that has not been typical of pharma / payer exchanges to date – and of course raises the specter of cybersecurity.
1.4 Adapting to value-based outcomes
Pharma is moving from the « blockbuster » drug as the definition of success to a greater reliance on services that ensure improved health and wellness outcomes. As one pharma exec put it, « It’s not the pill – it’s the program ». The « program » comprises multiple aspects like adherence, compliance, patient and provider education, managed expectations, and ongoing patient support and motivation. Services that address these aspects are based on properly governed data that complies with cybersecurity, data provenance, and data integrity requirements. Having the right analytics are essential to drive insights to support reimbursement, demonstrate benefits and outcomes, compile comparative data and inform other initiatives like companion diagnostics that further drive value.
1.5 Reducing costs
Clearly this challenge is too wide-ranging and complex to be succinctly summarized here. Virtually every pharma manufacturing has already focused on adopting lean practices, continuous process improvement, and initiatives to improve operational agility and equipment utilization. Biopharmaceuticals (large molecule manufacturing) brings additional complexities and challenges regarding small batch, high yield, and the potential for single-use disposable components as part of the manufacturing process. The real challenge is to get the right combination of technologies and processes that results in the most productive, cost-efficient, and predictable process. This requires advanced systems thinking and cross-industry manufacturing experience along with pharma cGMP(1) knowledge.
1.6 Complying with regulatory and legislative mandates
Not only is pharma facing increased regulatory scrutiny regarding clinical and manufacturing operations from EU and US regulatory authorities, but it is increasingly burdened with addressing medical device, cybersecurity, risk management, quality metrics, and transparency concerns as well. While pharma has struggled at times to adapt to changing pharmaceutical regulatory compliance requirements, regulatory affairs will be swamped by even greater burdens as it is forced to embrace medication adherence, greater patient engagement, and real world evidence to drive insights.
2. Ready for the New Health Economy?
To address these challenges, each pharma manufacturer is now faced with daunting reality that they may have to become:
- A manufacturer of multiple medical devices – for drug delivery devices, medication adherence apps, and companion diagnostics.
- A master of data governance and cybersecurity – for clinical trials, medication adherence, engagement with patients, providers, and payers, and other areas.
- An analytic powerhouse with hundreds of data scientists finding insights to drive value throughout your enterprise.
- A specialist not only in quality and regulatory compliance but also with the ability to streamline manufacturing operations.
A few pharma manufacturers have already embarked on efforts to address these challenges by building out all the needed capabilities – creating their own medication adherence apps, smart delivery devices, cloud-based portals, and data hosting with advanced analytics. Early indications are that these manufacturers who tried to do it all are struggling – the job is harder than it looks, and the solutions require significantly different sets of technical competencies, domain experience, R&D and operations processes, and regulatory compliance.
The fundamental actions to ensure that you are ready for the new health economy include:
2.1. Find the right partners
because you can’t do this all by yourself. Collaboration is the name of the game now given the increasing technical complexity and the multiple disciplines that need to be brought together to form meaningful, value-driven solutions. If needed, there are proven methodologies that you can use to help determine what is or should be core competencies, and what aspects of your enterprise present opportunities to partner. In order to partner successfully, you need to determine :
- Clear objectives
A shared common vision and purpose that builds trust and openness and recognizes the value and contribution of each partner is essential. Additionally, shared and transparent decision-making processes lead to efficient coordination of execution and delivery, and, ultimately, better outcomes.
- Allocation of capabilities and responsibilities
You should maintain internal responsibility for those aspects of your enterprise that you value as core or for which you have the right competencies and capabilities. The aspects that are critical or otherwise needed are those responsibilities you should seek the right partner to deliver and maintain. For instance, as a pharma manufacturer you’ll likely want to control R&D and manufacturing, but may partner with someone for a smart drug delivery device or medication adherence app, particularly with regard to ongoing maintenance and support.
2.2 Focus on productivity but don’t try using the same efficiency mechanisms you’ve used in the past.
Simple cost cutting or re-investment in existing functions is unlikely to provide the desired results. Instead, you need to take a more systemic approach based on re-evaluating each function throughout your enterprise, and determining:
- How does the function add value?
- How is the function connected to other functions?
- What are the best practices for that function, especially compared to your competitors?
- Where does the function need to done, and by whom?
- What lessons can be learned from other industries – such as how the semiconductor industry manages yield, flexibility, materials handling, and utilization in its manufacturing operations?
A systemic approach focused on value contribution allows you to capture the purposefulness, connectedness, and correctness of each function. In turn, this holistic approach lets you detect unintended negative consequences among functions and to realize emergent opportunities – those positive consequences and capabilities not apparent on first consideration.
2.3 Embrace analytics throughout your enterprise, but don’t fall for the myth of « big data ». Grabbing large amounts of data and hoping that answers will just pop out is a recipe for disaster. The best approach for enterprise analytics is to determine which decisions need to be informed by what kind of insights. That understanding guides the right data acquisition, cleansing, and staging activities essential to enable analytics to provide benefits for individual functions such as:
- R&D: Streamline the structure and protocols for clinical trials by identifying patient populations, and process results to yield insights and outcomes.
- Marketing: Drive companion diagnostics, medication adherence protocols, and other tools to better target patients that will benefit from treatment. The right insights can also help inform cost, contract, and outcome factors that define demonstrable value.
- Regulatory and quality affairs: Monitor risks and non-compliance to better manage outcomes overall and target patient outliers for intervention.
- Patient and provider engagement: Process data from mobile apps, portals, and social media to drive insights about health care behaviors, and steer product development.
Use advanced analytics driven by data science to accelerate evidence-based decision making, allowing you to improve profitability, reduce costs, streamline operations, avoid errors and out-innovate your competition.
The new healthcare economy rewards those who focus on value and deliver demonstrable positive outcomes. These outcomes have to address the needs of the payers, healthcare providers, and patients through significantly improved treatments and disease prevention. The key for real growth – and maybe for survival – in this rapidly changing economy is to embrace radical change and innovation. Focus your efforts on finding the right partners, drastically improving your productivity, and embracing game-changing analytic strategies that will allow you to survive and prosper in the new healthcare economy.
Tim BOSCH – ALTRAN
As Vice President and Chief Architect for the Medical and Life Sciences division of Altran North America, Tim has led multiple architecture and development programs for leading companies in the health information technology and device industries, including medication management systems, population health management, medication adherence, disease management (diabetes, dialysis), HIS/EMR systems, cardiac care systems, and diagnostic imaging systems. With over 35 years of experience, Tim is a thought leader with over 20 publications that cover a range of topics including architecture, interoperability and systems engineering
 cGMP : current Good Manufacturing Practice