Payers Drive the Value Conversation
By: John Doyle, DrPH, MPH | March 04, 2014
Across the healthcare community, most stakeholders believe that payers will wield the most influence going forward, according to our recent survey on defining value. And it makes sense: Payers decide which treatments they will reimburse, and that decision determines whether a treatment will have value in the marketplace.
Payers are becoming more sophisticated in their evidentiary requirements coverage and reimbursement policy. They aren’t content to pay for a treatment simply because it’s received regulatory approval. They want real world data proving the value of that treatment in a format that is tailored to their system and relevant to the target population.
They are also beginning to shift some of the risk and payments to providers and patients, under value-based insurance designs, which is manifesting a new level of consumerism in the market. Through this system, providers and patients are gaining influence over the valuation of products, and requiring new communication channels and language to showcase that value in a consumer-focused market place.
Couple this with rapidly escalating costs across the healthcare system, and biopharma is facing serious risks of its own – they need to figure out how to rein in costs throughout the drug development and delivery cycle so they can deliver safe, effective, and economically feasible treatments to market. And if they don’t, they risk payers and providers rejecting their treatment options as useful but too expensive.
Biopharma is aware of the rising cost pressure as part of the value proposition for new treatments, though they seem to have lost site of the power that payers wield. In our survey, 41% of biopharma executives said that they were among the leading influencers of value going forward, yet an almost equal 40% of US payers and providers, said biopharma will actually have the least influence.
Biopharma should be concerned both that payers are setting the tone for value, and that the industry has such a low opinion of their own influence over the value conversation. Biopharma is the first, and arguably most important player in the healthcare value chain, uniquely positioned to define what a valuable healthcare treatment looks like. Their declining lack of influence in this area suggests that the industry does not feel it can rely on them to set the value tone -- a message that is echoed throughout the survey data.
It’s time for biopharma executives to take a hard look at their role in the industry, and to figure out how they can regain the trust of other stakeholders, and participate more fully in defining value. This will only result in their being able to drive waste and inefficiencies out of their processes, and ensure the most innovative treatments are successfully brought to market.
You can learn more about our survey results by downloading the Value is the Target.