Biopharma’s success in the new healthcare economy is predicated on one simple principle: prove the value of your treatments or risk losing market share and profits. Healthcare costs are climbing, regulators around the globe are requiring more information, and both providers and payers have higher expectations for a medical treatment’s proof of value before prescribing or paying for those treatments. These quality, cost and outcome driven imperatives must also incorporate efficacy, safety, benefits as compared with competing products, and overall improved quality of life.
Any definition of value in healthcare must align with the “triple aim”—to improve population outcomes and enhance quality of life while simultaneously lowering healthcare costs. Reimbursement was once viewed as the ‘fourth hurdle’ for drug developers, but as cost becomes more significant to payers, providers and patients, the healthcare community is becoming more interested in competitive pricing as a component of the value proposition. Even in markets in which cost has been a key issue historically, price alone is becoming less important as payers expect a broader suite of measures that demonstrate a new product’s value.
Achieving any one piece of this value proposition is not enough; only when all three are pursued concurrently can a value-driven healthcare economy thrive. Regardless of the stakeholders’ role in this environment, they must make these three components of value the benchmarks against which they measure their success. This includes assessing quality and outcomes against price to determine value, and broadcasting these results in meaningful ways that reinforce the validity and relevance of the value message.
Yet healthcare industry stakeholders can’t seem to agree about how they define, measure and communicate value, and new data suggest that the transition to a value-oriented marketplace may be difficult.
This is particularly true in the US, where biopharma companies have been slow to adopt the practices pioneered by some of their global peers, and continue to cling to old business models that lack the collaborative cross-industry partnerships that have been shown to drive greater value and efficiency into the drug development process.
European stakeholders, in particular, have seen the benefits of cross-industry initiatives through programs such as the nine-year, €2 billion Innovative Medicines Initiative (IMI), a joint venture between the European Commission and industry to improve the development of medicines. And while these models are far from the norm, they offer an interesting glimpse into what can be accomplished when stakeholders work jointly with value-driven goals.
Yet for the most part, industry stakeholders still struggle to find alignment. A recent Quintiles survey of close to 300 healthcare industry executives shows that there is significant disagreement over even the most basic definition of value across the industry, and biopharma in particular faces significant challenges related to perceived bias in defining and communicating the value proposition. However, biopharma executives can learn from this survey’s data to motivate the rethinking and restructuring of strategies regarding the way in which they define, demonstrate and communicate value. Organizations that choose to lead in this endeavor have a good opportunity to gain competitive advantage over their peers.