Economic pressures are changing the face of the healthcare industry. Along with proving that a new treatment options is safe and effective, biopharmaceutical companies also have to show that it is fiscally attractive to patients, providers and payers. If they fail to meet this cost/value benefit equation, payers won’t cover it and providers won’t subscribe it because patients won’t be able to afford it.
We are already seeing this trend in many counties, where medications are only paid for when their relative value is proven to be worth the price. And the same is beginning to occur in the U.S. as biopharma companies struggle to prove the economic benefits of their drugs.
To do this, biopharma companies must factor fiscal considerations of target populations into the business case for new treatment options. This evaluation process doesn’t just consider the final price tag for a potential drug, but also the fiscal implications for the patient’s care.
Imagine, for example, developing a treatment for Alzheimer’s. When you consider the total cost of caring for that patient, knowing that a drug might allow a person with Alzheimer’s to live independently as opposed to in an assisted living setting is a huge beneficial economic benefit and will make that drug more valuable. Conversely, a treatment that has only incremental impact on quality of life and is prohibitively expensive will be far less economically appealing.
In order to succeed in this economically driven environment, biopharma companies have to move toward a more collaborative systems-thinking environment that focuses on cross-industry collaborations. This new business model will enable them to take advantage of more robust data sets to identify and deliver treatments that have positive value statements, and more effectively prove that value through the data they generate.
Fortunately, biopharma executives have begun to acknowledge the benefits of a systems-oriented approach. In our recent Quintiles report
, they cited getting drugs to market faster, improved health outcomes, and innovation among the top benefits of collaboration. One biopharma executive surveyed was quoted as saying: “Alignment on shared goals provides superior, mutually-beneficial business results versus antagonistic relationships.”
We also are starting to see many of these value-driven collaborations taking shape. The Quintiles report, The Collaboration Mandate, highlights several cross-industry partnerships that are working on innovative strategies to cut costs, improve efficacy, and generate new innovations. They include the Sanofi Medco collaboration to maximize the value of potential of R&D innovation through early alignment of patient population assessments, payer and medical needs; and the Innovative Medicines Initiative (IMI), where the European Communities are working with the European Federation of Pharmaceutical Industries and Associations (EFPIA) to improve the efficiency and effectiveness of the medicine development process so that the pharmaceutical sector can produce safer and more effective innovative treatments.
As the benefits of these collaborations emerge, we expect more industry players to embrace systems-thinking and to work more transparently with their peers.