Progressions 2012: The pharma angle

Ernst & Young in their latest annual report ‘Progressions 2012 – The third place: healthcare everywhere’ tries to chalk out how companies need to fundamentally reinvent their business models to make them more patient-centric and better able to drive behavioural changes in consumers. Some excerpts from the report

Entering the behavioural change business
To understand and influence patient behaviour and successfully extend their business models in new directions, companies will need to leverage insights from the field of behavioural economics, which has made tremendous strides in the past decade at understanding the inherent decision-making biases that often prevent patients from achieving healthy changes.

Guiding principles for translating these insights into action highlighted by Ernst & Young includes:

Disrupt the business you’re in – Life sciences companies need to find more patient-centric ways of creating, delivering and capturing value. This includes producing products/services with the features that most matter to patients, developing life-long relationships with patients, focusing on the customer experience and earning revenues from multiple sources (e.g, creating data insights rather than just selling drugs or devices).
Learn from behavioural economics — Successful companies will boost adherence, enable prevention and build brand loyalty by using behavioural economics to understand what truly motivates patients. Understanding patient preferences will allow companies to “mass customise” their products and create more personalised offerings. But accounting for individual preferences will also require communicating information in more clear and neutral ways. (e.g. in direct-to-consumer advertising).
Ajit Mahadevan, Partner — Life Sciences, Ernst & Young emphasised, “As the developed economies of the world deal with spiralling healthcare costs and the challenges of universal coverage for all their people, the move from ‘sick care’ to ‘healthcare’ is a necessity to create a model of healthcare for all that is sustainable. In India, we face a large unmet need in terms of disease burden—both chronic and acute. We have the opportunity to identify the ‘India way’ towards healthcare for all. Pursuing a strategy of moving our country towards a healthy outcomes based model will certainly be a critical enabler in achieving this. It will require the various stakeholders in this process to develop paradigms and business models that are unique to our requirements. There will be new and significant opportunities for traditional and non-traditional players in the emerging environment.”

Future trends

Personalised medicine approaches – In recent years, we have seen more life sciences companies adopt personalised medicine approaches. It’s easy to appreciate why—the widespread use of targeted therapeutics and companion diagnostics could completely revolutionise health care.
R&D Focus – Using biomarkers to identify sub-populations that are most likely to respond to targeted drugs has enabled significantly more efficacious treatment regimens for several types of cancer. Similarly, the early identifi cation of biomarkers has the potential to make R&D considerably more focused and efficient.

From personalised medicine to behavioural personalised medicine
The patient-centric approaches of the third place now have the potential to take personalised medicine beyond genetics and into the realm of behaviour as well. And just as genetic personalised medicine promises to make the process of drug innovation more productive and efficient, behavioural personalised medicine has the potential to do the same for both product and business model innovation.

Market expansion
Growth opportunities have become increasingly challenging at times of patent expirations and mounting pricing pressures. The good news is that the third place will not be a shrinking market, but rather a growing one. The transition will not always be easy, but once companies are comfortable delivering in the third place and the health care system is more aligned around wellness and prevention, the market should expand dramatically.

Accessing the markets of the third place

By Frank Kumil, PhD, E&Y
Health care’s move to the third place raises a number of questions around market access. How does the increase in patient centricity affect the traditional relationship with payers? What does market access mean in a patient-centric world? And, more broadly, how does market access need to change as the focus moves from traditional products to health outcomes that are delivered with the involvement of multiple stakeholders?
Understanding and working closely with patients has always been critical to market access, and this will only become more important in the third place. For instance, the companies most likely to succeed in many risk-sharing agreements (e.g., approaches in which firms only get paid for patients responding to their treatments) are those armed with personalised medicine approaches to target the most responsive patients. This understanding of patients will need to extend beyond genomic factors to include behavioural and environmental determinants
of health outcomes.
More broadly, a successful approach to market access requires understanding the factors that are most valued by the key stakeholders in each local market — payers, providers, patients, policy makers, etc. These ‘value dimensions’ need to be integrated back throughout the value chain to shape decision-making, as early as in drug or business model development through to the launch and life cycle management phases. And they need to be further segmented to account for variance across geography, therapy areas and position in the product’s life cycle—to allow companies to better understand and influence key stakeholders.
In the third place, as patients become more empowered and involved in their own care, understanding their needs and values will become increasingly imperative. Understanding the local enabling infrastructure becomes critical when new business models rely on social media platforms, electronic health records, telecommunications networks or wireless networks. It is essential to understand the level of deployment of the infrastructure in place, how it will evolve, who the key stakeholders are and what the associated regulations are (e.g., on data privacy). Based on this in-depth understanding, effective interaction strategies need to be developed with an overarching goal of building positive and sustainable relationships. Points of interaction must be considered along patient pathways beyond interacting directly with the health care patient, to areas such as building disease awareness and interacting closely with patient organisations
or key opinion leaders.
A third-place approach to market access will also require a more comprehensive shift on the part of payers. Most payers are still focused on products rather than outcomes. While there are some pockets of change (e.g., accountable care organisations in the US), payers have not broadly adopted processes and metrics to measure and reward new models that improve health outcomes through a combination of products and services.
Life sciences companies and their associations must engage critical stakeholders — from payers to policy makers, health care providers to patient organisations, technology players to retailers — in codeveloping relevant processes and metrics. The ultimate goal is an agreement with payers on the listing, pricing and reimbursement of the product or product-service combination. As service components are added to the business model, complexity increases, but also new opportunities arise, expanding the range of possible agreements beyond pricing or risk-sharing schemes to health management and capitation.

Progressions 2012: The pharma angle

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