Is Patient Centricity the New Trend for Pharma?

In the post reform environment the pharmaceutical industry has been shown by many to have emerged triumphant. Pharmaceutical executives were deeply embedded in the process of creating healthcare reform legislation and the industry orchestrated a balanced trade whereby they would agree to financial offsets posed by closing the Medicare Doughnut Hole, provide increased Medicaid rebates for prescriptions and treatments, and incur user fees in exchange for access to the newly expanded market of individuals who will not have insurance coverage.  In an all that glitters is not gold turn of events, the industry is recognizing that as part of the new healthcare delivery system is shifting to value based care with a patient centered emphasis, it may be necessary for the pharmaceutical industry to make a similar philosophical shift in order to create product differentiation in a market where cost containment and quality outcomes reign supreme.

Understanding Market Pressure

In fact, there is market pressure on multiple fronts that will change the way that healthcare is delivered, provided, an reimbursed for, and these pressures will have a ripple effect impacting the pharmaceutical industry and its business models.

Retail Marketplace – the retail marketplace for insurance will begin giving the patient unprecedented input into care and delivery, and will significantly increase the number of patients seeking treatment due to new insurance coverage.  In fact, some estimates indicate that 17 million previously uninsured individuals will be entering the healthcare system by the close of 2014.  This is a tremendous new market for the pharma industry, and one that has the power to dictate the care that they receive, including pharmacological treatments

Provider Pressure – in the post reform environment providers will find themselves increasingly “at risk” and will be forced to provide value based care rather than volume based (fee for service) care.  The emphasis will be on patient satisfaction and quality outcomes.  Those who do a good job of simultaneously controlling costs, producing optimal treatment outcomes, and ensuring patient satisfaction could benefit from financial incentives.  Those who could fail could endure penalties.

Payer Pressure – Insurers will see similar quality emphasized cost containment pressures as the dictates of legislation require them to provide insurance at a flat rate to all risk pools, and prevent them from controlling profit by excluding those with pre-existing conditions.  Indeed, profit margins for insurers will be capped with loss ratios which require insurance plans to direct 85% of premiums into toward medical costs (read reimbursement)

What is the Cumulative Effect?

In culmination these changes create and atmosphere where quality is king, customer service and satisfaction can dictate reimbursement, and costs must be controlled.  This cumulative pressure effect is creating value driven alignment between providers and insurance companies, and it will be important for the pharmaceutical industry to align themselves with the prevalent thinking of these major stakeholders.  This is where patient centricity could play an important role in the future of the pharmaceutical industry.

What is Patient Centricity and How Does it Fit Into the Equation?

Patient Centricity is essentially a way of thinking that will put the patient preference at the center of pharmaceutical marketing and development.  Its goals should be to produce the following outcomes:

• Cost savings – either through affordable treatments, or treatments which can establish a value differentiator due to superior impact on a patients outcome
• Improved outcomes – the most effective treatment
• Increased satisfaction – customer satisfaction related to the treatment which can encompass method of delivery, price points, and supports
• Responsive Development of Supports – what the pharma industry will provide to the patient in terms of education, tools, and resources to accompany the treatment
• Improved Adherence – making it easier for the patient and the provider to adhere to a treatment plan by providing appropriate support and follow up
• Appropriate Utilization – creating clear utilization guidelines which make it easier for the provider from a reimbursement standpoint, and for the patient in terms of understanding impacts and options

The challenge facing pharma will be to see how they can work to develop products which are truly responsive to the needs of patients, and how they will market these products so that patients show a clear preference for the developed treatments.  Simultaneously the business case will need to be made for providers to show how the treatment adds value either due to low cost, or increased efficacy.  This will be especially critical as more treatments become available in generic forms and as increased legal oversight and transparency is required concerning how medication currently is chosen by the provider for the patient. Just as providers and insurers will now need to put the patient, or the healthcare consumer, at the center of strategy development in order to be successful – pharma will need to do the same thing in order to remain profitable and relevant in a post reform environment.  We are excited to see how the Pharmaceutical Industry responds to the challenge, and what new innovations in the field of treatment, support, education, and provider/payer collaboration this movement will catalyze.