managed markets monday: the value challenge in pharma
TRANSCRIPT
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Managed Markets Advertising Addressing the Value Challenge in the Evolving Pharma Marketplace
Jim Mittler, PhD, Medical Director
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The Value Challenge report from Economist Intelligence Unit
• Released February 6, 2012• Second in a series of 4
pharma reports• Global survey of 399
industry executives to better understand the nature of the “value challenge” in pharma
http://www.managementthinking.eiu.com/value-challenge.html.
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The “value challenge” in pharma
• It’s no longer enough to bring safe and effective drugs to market; new products must provide superior outcomes to existing medications
• Companies must demonstrate added value if higher costs are to be garnered for new therapies
• There is a range of stakeholders with different perceptions of value– Pharma companies– Physicians– Patients– Commercial payers– Government payers– Regulatory agencies
http://www.managementthinking.eiu.com/value-challenge.html.
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Managed markets expertise is increasingly important
• The value challenge is a long-term issue and a leading concern for the drug industry
• Pharma companies lack confidence in the ability to respond to the value challenge
• There’s a shift of power in market influence from pharma to payers
http://www.managementthinking.eiu.com/value-challenge.html.
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Divergent perceptions on the value of a new drug
• A significant gap in the definition of value exists between payers and industry, which will continue in the future
• Fundamentally different business objectives drive this; however, payers are becoming increasing more influential and pharma needs to adjust
http://www.managementthinking.eiu.com/value-challenge.html.
Which of these factors have the greatest influence on how your organization currently assesses the value of a new drug?
Biopharmaceutical company
Biopharmaceutical services provider
Generic pharmaceutical
company
Health insurance company
Government payer
Regulatory agency
Degree of improved efficacy over existing products 63% 50% 44% 31% 26% 36%
Total patient outcomes 41% 39% 29% 34% 26% 29%
Whether it addresses an unmet medical need 54% 36% 27% 15% 39% 32%
Potential number of patients who could use the drug 23% 31% 54% 33% 10% 25%
Cost compared with competing products 14% 8% 37% 38% 29% 21%
Improved longevity of patient 14% 11% 20% 31% 36% 44%
Improved quality of life of patient 25% 31% 34% 65% 52% 52%
50% and over 40% to 49% 30% to 39% 20% to 29% 20% to 29% Source: Economist Intelligence Unit Survey, September 2011.
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The lack of a clear definition of value is a significant challenge
http://www.managementthinking.eiu.com/value-challenge.html.
What are the biggest barriers to your company’s efforts to demonstrate the value of its products? (% respondents)
Different stakeholders define value differently
56%
36%
33%
26%
18%
Source: Economist Intelligence Unit survey, September 2011.
Value considerations differ for different conditions being treated
The same stakeholders in different geographies define value differently
Inability to obtain or failure to generate data related to value during trials
Lack to understanding of what stakeholders are seeking
Understanding of value differs the most according to stakeholder, type of medical condition, and geography
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The balance of power is shifting to payers
Traditional pharma companies see themselves as losing influence over the market to commercial and government payers
In your opinion, how has the influence of the following stakeholders on the type and price of products brought to market changed in the biopharmaceutical market in the past 3 years? (% respondents)
*Percentage show the difference between the positive and negative responses for each group. For example, 41% of respondents from biopharmaceutical companies say their segment has lost influence and only 17% say it has gained influence, for a net negative 24%.
-40 -30 -20 -10 0 10 20 30 40 50 60
36
40
21
12
26
15
17
32
39
37
13
19
5
-32
19
43
54
33
42
30
38
-24
Biopharmaceutical Companies Other
Traditional biopharmaceutical companies
Specialty biopharmaceutical companies
Generics manufacturers
Payers/insurance companies
Government department/agencies charged with healthcare spending
Regulators of formulary access
Regulators of drug approval
Patients/patient advocacy groups
General practitioners
Specialized doctors
Institutional healthcare providers
Who has gained influence according to:
http://www.managementthinking.eiu.com/value-challenge.html.Source: Economist Intelligence Unit survey, September2011.
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Managed markets strategy can better meet the value challenge
Traditional sales channels are giving way to health economic information targeted to the payer audience
Regarding its go-to-market strategy, which of the following has your organization done in the last 3 years to better demonstrate value to the market? (% respondents)
http://www.managementthinking.eiu.com/value-challenge.html.Source: Economist Intelligence Unit survey, September2011.
0 10 20 30 40 50 60 70
25
14
20
25
26
22
24
25
28
41
6
12
27
33
33
42
42
45
55
64
Value Leaders Rest of Survey
Shared more information on new products with medical professionals
Published different or more complete data on product efficacy
Gathered more extensive information on efficacy of drug once it reaches market
Share more information on new products with patient/patient groups
Shifted go-to-market strategies from doctors to payers (public or private)
Publish data on the overall cost of treatment for a patient rather than just the pharmaceutical cost
Increased efforts to encourage patient compliance in order to enhance effectiveness of product
Shifted resources from traditional sales channels towards making efficacy/value information better known to the market
Changed metrics of commercial performance (eg, put greater emphasis on patient trust in company)
My company has not made significant changes to better demonstrate value in the marketplace
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Three-part aim: What looks good to payers in the evolving marketplace
Value proposition
Better health outcomes for patients
Better health of populations
Lower costs through healthcare quality improvement
“A general concept that translates across all conditions and care settings.”- Dr. Shari Ling, MD
Deputy Chief Medical Officer, Centers for Medicare and Medicaid Services
http://www.managementthinking.eiu.com/value-challenge.html.