Benchmarking the Pharma Industry’s HEOR

Functions

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©2013 Industry Standard Research www.ISRreports.com

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Report Overview

This report provides pharmaceutical and biotech organizations an opportunity to benchmark their own

Health Economics and Outcomes Research (HEOR) approaches against that of Top 50 Pharma companies.

ISR details best practices, common approaches, as well as explains alternative styles so companies can use these assessments as a yard stick against which to measure, modify, and improve their own HEOR structures.

Major Sections:1. Understanding the HEOR Function

• HEOR Employees• HEOR Work

2. HEOR Department Benchmarking• Division of Work• Department Structure• Organizational Alignment• Outsourcing • Product Budgets

Q4, 2013 Publication Date

55Pages

Learn how you can use this report.

Methodologies: ISR interviewed 17 senior employees with decision-making responsibilities in HEOR departments among the

top 50 largest pharmaceutical companies. Pharma company rankings were determined by the “2013 Pharm

Exec Top 50” pharmaceutical companies based on 2012 Rx Sales.

• Global HEOR headquarters respondents: 13

• Regional headquarters or country affiliate respondents: 4

The titles below are held by our interviewees:

• Vice President, Global HEOR• Director, Global HEOR (4)• Director, Global Health Outcomes• Director, Global Health Economics and Market

Access• Director, HEOR (4)

• Group Director, Global HEOR• Associate Director, HEOR (2)• Deputy Director, Global HEOR• Director, Public Policy and HEOR• Group Manager, Health Economics

17 Senior employees from top 50 Pharma

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What you will learn in this report:• HEOR department operations and structuring, including:

Organizational and operational best practices HQ and regional structuring models Departmental headcounts Organizational alignment with Medical Affairs, R&D, and Market Access Division of work (i.e. Headquarters vs. in-country affiliates, the use of “Centers of Excellence”) Involvement in pricing and reimbursement Outsourcing and vendor selection Annual product budgets Challenges Future predictions for promise, growth, models, use of service providers, etc. Recommendations for staff, timing, payer interactions, etc.

• Qualities of successful HEOR employees, as well as professional development and groupstructuring strategies to improve HEOR functional effectiveness

• Ways to optimize HEOR work to avoid clinical development delays by identifying barriers and understanding ideal timing of HEOR project kickoff, design, and execution

How you can use this report:• Learn from on-the-ground professionals to develop successful and timely HEOR programs that

seamlessly integrate with Research & Development to establish a persuasive product narrative

• Benchmark the structuring of HEOR resources against Top 50 Pharma to optimize groupeffectiveness and improve resource development

• Identify best practices, recommendations, and challenges for all aspects of HEOR as describedby 1 Vice President, 15 Directors, and 1 Group Manager within Top 50 Pharma

Up next: Full table of contents and sample pages

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Table of Contents

Copyright and Usage GuidelinesMethodology

Interviewee Company Size

Interviewee Titles

Interviewee Responsibilities

Potential Best Practices

IntroductionUnderstanding the HEOR Function

Infographic

HEOR Employees

Educational Background

Employee Qualities

Key Takeaways

HEOR Work

HEOR Goals

Clinical Trial Involvement

Actual vs. Desired HEOR Involvement

Timeline

Barriers to Earlier Involvement

Key Takeaways

HEOR Department BenchmarkingInfographic

Division of Work

Headquarters vs. Affiliates

In-Country Affiliates

Work within Headquarters

Therapeutic Area / Product Alignment

Centers of Excellence

Products in Development vs.

Commercialized Products

Workload Equalizing

Pricing and Reimbursement

Pricing and Reimbursement

Responsibilities Spectrum

Desire for Clarity

Key Takeaways

Department Structure

Common HEOR Headquarters Structure

Alternative HEOR Headquarters Structure

Regional Structures

Headcount

Number of Worldwide HEOR Employees

Key Takeaways

Organizational Alignment

Medical Affairs

Research & Development

Market Access

Comparison of HEOR Locations

Key Takeaways

Outsourcing

Is Department Size a Factor?

Proportion of HEOR Work Outsourced

by Company Size

Why Outsource?

Lack of Capacity or Technical Expertise

Data Needs

Credibility

Strategic Focus

Vendor Selection

Vendor Selection Process

Vendor Attributes

Work-Related Attributes

Customer Experience Attributes

Key Takeaways

Product Budgets

Product Coverage

Funding Source

Product-Level HEOR Spend

Low-End Annual HEOR Spend Per

Product

High-End Annual HEOR Spend Per

Product

Key Takeaways

Challenges

Stringent Payers

Skepticism of HEOR Work

Objectivity

Communication

Workload

Key Takeaways

Future Predictions

Summary: Potential Best Practices

Recommendations

About Industry Standard Research

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Introduction

www.ISRreports.com ©2013 | Russia: Clinical Development Country Profile 7

Introduction

One way to think about the Russian clinical trial and pharmaceutical environment is to think of the country as a publically traded pharmaceutical company� If you were leafing through a prospectus or an investor presentation, you would find a com-pany with strong macro fundamentals, historic growth, inconsistent performance, and some regulatory uncertainty� In short, Russia has many of the same character-istics as a mid-stage pharmaceutical company� And, if you take a portfolio theory approach to investing, you would likely want to invest some portion of your assets in Russia� Why?

↑ Macroeconomics: Russia is the world’s 10th largest economy

↑ International recognition: Joined the World Trade Organization (WTO) in 2012

↑ Positive balance sheet: Russia has ~$240B trade surplus from fossil fuel reserves

↑ Focus: Putin announced $3�9B plan aimed at having 90% of medicines to be locally produced by 2020

↑ Reimbursement structure: Medicines Insurance System (Aug 2012) is to be in place by 2020 that will include a tiered rate of reimbursement, depending on the nature of the illness, and improve access to medications

↑ Growth: Russian pharmaceutical market has been growing 17% annually since 2005

↑ Untapped potential: Many patients are treatment naïve, offering opportunities for clinical trial patient recruitment

↓ Uncertainty: Regulatory environment and customs practices are unstable and unpredictable

↓ Difficult: In 2012 the World Bank ranked Russia 122nd on their list of economies by ease of doing business, 21 spots below China

↓ Skills: Finding highly qualified healthcare professionals can be difficult

↓ Protection: IP protection is concerning

Sample Page: Report Introduction

Reimbursement is becoming more difficult to obtain and favorable reimbursement is more difficult still. As the pharmaceutical industry adapts to the changing reimbursement environment, Health Economics and Outcomes Research (HEOR) continues to grow in prominence within pharma and is becoming an increasingly important piece of the puzzle in terms of successfully commercializing products.

Pharma can no longer simply demonstrate to payers that a product works and is safe and expect reimbursement to be easily checked off the to-do list. Pharma needs to sell the story of a strong value proposition for its products and HEOR is the way to do it.

As HEOR is still evolving, ISR wanted to gather a better understanding of HEOR as a function: what types of work HEOR departments do, how HEOR departments are structured, and how they fit within the larger organization. While we’ve found that there are some sub-topics in HEOR in which Top 50 pharma companies subscribe to similar schools of thought, there are also many areas in which large pharma approaches HEOR-related decisions quite differently.

ISR presents with this report an opportunity for pharma companies to benchmark their HEOR approach against that of Top 50 pharma companies. ISR will detail what we’ve found to be common approaches as well as explain differing styles so companies can use these assessments as a yard stick against which to measure their own HEOR structure.

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Sample Page

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Understanding the HEOR Function

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Employee QualitiesQualities of Successful HEOR Employees

Technical expertise

Strong communication skills

Strong business sense or skillset

Ability to strategize and see the ‘big picture’

Understanding of marketing

Understanding of the product and therapy area

Qualities of successful HEOR employees were also discussed� HEOR employees are expected to have strong communication skills as they interface with many groups within the organization as well as with outside vendors� Business skills and the ability to see the ‘big picture’ are also noted as critical factors in effective HEOR work� “It’s hard to take someone right out of school and put them in an outcomes research job� They really need to have a business sense� There are people that are extremely technically proficient but don’t necessarily have the business skills to provide the strategic insight which is equally if not more important than the technical expertise� It’s really understanding the strategic piece of it that is more of a challenge� That’s where business and experience lend themselves” (Top 10 Pharma)�

Marketing experience is also noted as key� Being able to understand the product lifecycle helps employees decide what type of evidence is needed and then helps to disseminate that information effectively within the marketplace� “It’s about how you take the modeling from theory to practice� A lot of modeling is theoretical but you need someone to be able to deliver the model in front of the customer in a more practical sense” (Top 25 Pharma)�

Employees are also expected to know a good deal about the actual product and/or indication on which they are working� “You really need to learn the indication and its idiosyncrasies�” One respondent mentioned that she

expects to see HEOR employees being moved around the organization to achieve more cross-functional experience and learn more about the products�

A handful of respondents mention that competition for quality HEOR employees is very high and the pool of talented employees is rather shallow� There is a lot of job switching within the field and salaries and titles continue to rise for HEOR employees� One respondent receives at least two phone calls or emails per week from recruiters for HEOR positions at competing companies� Pharmaceutical organizations are reportedly always on the lookout for well-qualified, experienced employees�

It’s about how you take the modeling from

theory to practice. A lot of modeling is theoretical but you need someone to be able to deliver the model in front of the customer in a more practical sense.”

(TOP 25 PHaRMa)

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Sample Page

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HEOR Department Benchmarking

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Alternative HEOR Headquarters StructureThough the previous illustration depicts the most common structure reported to ISR, a handful of respondents portray variations of the below structure as an alternative� In this example, there are different HEOR employees responsible for the HEOR work for a product in development than those who are responsible for work while the product is in the market� The timing of the ‘hand-off’ of the product can range from as early as the Proof of Concept (around Phase II) until as late as the product already having achieved reimbursement�

Regional StructuresIn companies with regional HEOR headquarters or offices, there are several ways the regional offices can be structured� Regions frequently mirror the HEOR headquarters’ structure mapped above with fewer people in each of the mid-level roles� Regional offices may also not have a strictly defined structure as HEOR employees in smaller offices may be grouped with market access or pricing and reimbursement, particularly in Europe�

© Industry Standard Research

Vice President, HEOR

New Products Lead Therapeutic area Lead Therapeutic area Lead

Directors / associate Directors / Managers

Directors / associate Directors / Managers

Directors / associate Directors / Managers

Products in Development

Commercialized Products within

Therapeutic area

Commercialized Products within

Therapeutic area

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Sample Page

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HEOR Department Benchmarking

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Why Outsource?

Lack of Capacity or Technical ExpertiseThe reasons for an HEOR department outsourcing its work are many� Some companies “simply do not have the capacity to perform the work in-house�” Activities such as economic modeling and chart reviews are very labor intensive and departments frequently do not have the manpower to perform the work themselves�

Another frequent reason for outsourcing is lack of technical expertise� Economic models can become so complex that small HEOR departments often do not have an employee with both the capacity and expertise to build an appropriate model� “There is no way we would have the expertise to program the model and create a graphic user interface so we always work with research groups” (Top 25 Pharma)� Outsourcing to a firm that specializes in economic modeling is frequently the best solution�

Data NeedsHealth economics and outcomes work requires an immense amount of “extremely expensive” data� A significant proportion of that data must be purchased or in-licensed for the work to be performed in house and HEOR departments do not always have access to all of the data necessary to accomplish desired analyses or studies� “Buying a whole database for one study so that your own people can do the work doesn’t make sense” (Top 25 Pharma)� Working with external research groups or vendors allows access to the needed data without the HEOR department having to purchase the entire costly database�

Lack of Capacity or Technical Expertise

Data Needs Credibility

Strategic Focus

©Industry Standard Research

Reasons to Outsource

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