(This is the tenth in 10-part blog series on industry trends that are shaping the future of healthcare. To see a report on all ten trends click here)
Today’s economic climate is intensifying the financial pressures felt by health care systems. As a result, healthcare payers are increasingly demanding real-world evidence of value for all players, products and services. There is a spectrum of activity ranging from health technology assessments, risk-based contracting and value-based insurance design – all geared to measure outcomes and compensate based on real-world performance. In one noteworthy example of a value-based approach, UnitedHealthCare implemented a cancer care payment model
that rewards physicians for focusing on best practices and health outcomes rather than the number of drugs they prescribe. The program was rolled out over three years within five medical oncology groups resulting in a 34 percent reduction in overall treatment costs without affecting the quality of care.
Pre-market data on efficacy and safety generated by experimental trials sets the foundation for a product’s evidence platform, and is necessary but insufficient at predicting actual product performance in the community setting. Real-world patient experience data is the supporting research track that provides a comprehensive product value story in the natural environment, which can be much more telling than the clinical trial “snapshots” that merely provide a preview of product performance under ideal treatment conditions.
Similarly, regulators are calling for real-world evidence with initiatives dedicated to quantitative risk-benefit analysis and more stringent post-marketing surveillance program such as risk evaluation and mitigation strategies (REMS). This regulatory mandate for post-marketing research will only be amplified by the expected increase in expedited review pathways for ‘break-through’ products. Going forward, industry stakeholders should expect further alignment between regulatory and reimbursement decisions on this front, such as provisional reimbursement coverage linked to adaptive licensing.
How should biopharma respond?
The biopharma marketing mindset needs to migrate from one historically based on product promotion to one governed by dynamic differentiation. Traditional promotional efforts based on trial data should be replaced by real-world performance-based differentiation of a product, with a focus on identifying incremental cost-benefit and risk-benefit versus competitors.
This will require life science companies to generate multi-faceted evidence packages communicating their products’ comparative effectiveness, safety and economics, considering both treatment process and outcomes. Deeper and broader data on product performance will allow them to continually mine for new value stories that will resonate with an increasingly information-hungry customer base. They will also need to model conditional regulatory approval and reimbursement scenarios, to build an understanding of the data that must be developed to demonstrate value to regulators, payers and patients. Finally, biopharma companies should tailor their product and associated “value-add” offerings to optimize system ROI in a market increasingly governed by pay-for-performance.
Ultimately, the health care system will reward biopharma companies for the value they provide to consumers. The value they create is modulated by many different players in the system, each demanding favorable economics along the patient’s journey. Macro-economic pressure and pricing scrutiny will only sharpen this already intense focus on value and outcomes. If life science companies want to improve their return on innovation in the future, they need to integrate clinical and commercial functions to ensure their assets are value-priced, based on real-world evidence, and supported with the appropriate customer service to optimize healthcare system value.