In an ever-more complex pharma landscape, a focus on patients and patient outcomes is the safest route to commercial success, say four top pharma executives.
Pharma is fast emerging from a golden era of high profit margins and a largely unblemished reputation that saw the industry ride the crest of a lucrative wave for many years.
In recent years, the landscape has changed as leaner health budgets prompt payers to demand lower prices and greater value, empowered patients demand better care, and advances in medicines result in ageing populations with more complex and chronic diseases.
Add to that tighter regulations around industry access to physicians, increased competition, a rise in generic medicines and the behaviour of a small number of companies causing scandals that have seen pharma’s reputation plummet.
All of this has left industry’s once highly successful commercial model dead in the water, prompting pharma to rethink.
“We have turned death sentences into chronic diseases,” says Peter Guenter, EVP, Diabetes and Cardiovascular at Sanofi, citing HIV, Type 1 diabetes and some forms of cancer. Vaccines have eradicated smallpox, child mortality has dropped dramatically thanks to infant vaccination, countless lifelong disabilities, such as paralysis from polio, have been prevented. It has been a fantastic journey.”
However, what made pharma successful in the past will not necessarily make it successful in the future, he says. “The transactional model of research – approval – manufacture – physician marketing – prescription saved lives and created jobs. The pharmaceutical industry was one of the most admired industries in the world, but this system is no longer sustainable. It is bound to come to an end.”
For Guenter, there are two reasons behind the demise of this model. “The occurrence of chronic disease and our incapability of managing them in a cost-effective way is putting too much strain on budgets. Worldwide healthcare expenditure has been growing faster than GDP; in the US, from 1995 to 2014, healthcare expenditure has risen from 13% to 17% of GDP.”
Poor outcomes are the second reason for the failing pharma model. “In the field of diabetes, there has been exponential growth in new drug launches. All these drugs in typical randomized phase III trials gave good results but the problem is real life.”
He points to a recently published study in the journal of the American Diabetes Association that revealed how modern insulins and oral diabetes drugs, given to 1.5 million patients over a period of seven to eight years, offered no improvement in overall HbA1C control, in reducing occurrences of severe hypoglycaemia and in decreasing co-morbidities.
A more integrated model combining medicines, technology, devices and services carries the promise of better outcomes, he says. “It will be a win for patients, a win for the payer and more than a win – an absolute necessity – for us as a healthcare industry to be able to remain sustainable.”
Certainly, in the field of diabetes, life must be made simpler for patients so that they can take greater ownership of their condition, he says. This is the driving force behind Sanofi’s focus on increasing adherence and compliance through connected devices; if patients adhere to their medicines, outcomes are better, which leads to better value for money.
This is music to the ears of Gitte Aabo, CEO of Danish-based LEO Pharma, who believes the industry has failed to provide treatments that work conveniently in real life. “It requires more than a great treatment. It requires information, inspiration to follow a treatment and maybe advice on your diet. For me that requires partnership and collaboration,” she says. “It’s not about finding a better way to reach one’s own goals. It’s about finding a better way to reach common goals. We need to do that to provide better care for patients.”
The company would be willing to give countries a price per patient for a treatment, says Aabo. “It would then be our responsibility to ensure the patient gets the right treatment and the right support.”
Sanofi’s Guenter believes the short-term rebate game “must be replaced by constructive discussions and partnerships. If we want to be relevant and sustainable we have to sit at the table. The tech companies and the big data companies are already there.”
For Anders Tullgren, former President, Intercontinental, at Bristol-Myers Squibb, the mantra is ‘adapt or die’. “We had a business model that is obsolete and needs to change. New technology and new data are giving the patient the power, so the pharma industry, healthcare and physicians, and payers will need to adapt to deliver real value to the patient. Companies need to get paid only when they deliver innovation and are able to document real value to patients.”
New payment models are inevitable, he says. “There may be systems in the future where we do not get all our money upfront. Perhaps we will not get paid until the value is delivered. We will have to demonstrate benefit through real-world data. Cash flow could be a real problem for payers in the future while future payment systems could be linked to real-time real-world value documentation.”
If current trends continue, the cost of global healthcare could reach USD 13 trillion by 2025, says Richard Francis, CEO of Sandoz. “Governments and payers simply don’t have the money to finance this anymore; as an industry, we need to face this fact and become a partner in driving the solution. We need to understand that there are clear budgetary constraints and help to address them. This doesn’t necessarily mean profit margins will decrease [but only] if we can also get far more efficient, from development to manufacturing through to commercialization.”
He calls for a deeper debate on the issue. “When it comes to the pharma business model, we need to think about what will really help most to address patient needs in a sustainable way? Is it all about a constant flow of new medicines? Or should we cut back on financing breakthrough medical technology and pharmaceuticals, and reinvest that money to increase access to existing therapies? In my view, the answer is not one or the other; we need both innovation and access, but we also need to innovate our approach to access,” says Francis.
There is little doubt that the writing is on the wall; pharma’s commercial model is already evolving but, in the absence of a blueprint, only the more innovative companies have already taken steps to address the issue.
What is clear is that pharma must move from pushing pills to ‘enabling solutions’, and it must be more transparent in its dealings with stakeholders. Care and support must become more integrated and efficiency savings made, while companies must demonstrate the value of their medicines by moving beyond clinical attributes to economic and public health benefits.
In the future, a successful model must take into consideration patient outcomes, digital technology and value-based pricing. What that model looks like is still unknown but, as Charles Darwin wrote: “It is not the strongest species that will survive, it’s not the most intelligent, it’s the one that adapts the best to change.”