Changing Payment Landscape Rewards Adaptability

As an increasing emphasis continues to be placed on value and patient outcomes, drug makers are being presented with an opportunity to jockey for market share and brand differentiation by staying ahead of the curve when it comes to presenting outcomes data that correlates to therapies.

As an increasing emphasis continues to be placed on value and patient outcomes, drug makers are being presented with an opportunity to jockey for market share and brand differentiation by staying ahead of the curve when it comes to presenting outcomes data that correlate to therapies.

According to a report by the Health Research Institute (HRI) at PwC, health insurers and patients are primarily concerned with the efficacy of drugs and how those drugs will affect total medical costs. With payment shifting to improved patient outcomes, the onus is now put on health organizations to provide clinical evidence of efficacy as well as cost effectiveness. Although this objective can be rigorous, there is an upside for companies that are able to present these data.

HRI’s report, which features survey responses from 100 US health insurers and pharmaceutical benefits managers, identifies “5 major forces” that are altering pharmaceutical revenue models. They are as follows:

  1. The pharma industry has created a dilemma for purchasers by investing so many resources in the creation of biologics. Despite the fact that biologics represent the majority of products in the pipeline, they create a cost/benefit dilemma for purchasers because they treat smaller, more targeted patient populations.
  2. When it comes to health plans and the federal government, unit-based payment rewards are giving way to processes that reward outcomes-based payments.
  3. As a result of #2, health plans and providers are demanding more data that displays correlation between medications and outcomes and are utilizing several forms of technology (EHRs, mobile applications, medical devices, etc) to measure outcomes.
  4. Health plans and employers are recognizing that they lose money on patients who have poor adherence.
  5. Technology has enabled patients to more informed decisions about their health; when this occurs, manufacturers’ discounts “may carry less weight in formulary design,” making quality and outcomes the larger decisions.

To learn more about how these forces are impacting pharmaceutical and life sciences companies, visit the PwC website.