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Beyond the Pills: When Value Meets Pharma

A move toward value-based arrangements in pharmaceuticals is a positive step toward creating a more sustainable healthcare system – Value Meets Pharma. But this will require broader changes in pharmaceutical business models than many anticipate. Ensuring a medication’s maximal value is delivered requires interaction with a complex side of the healthcare system most pharma companies (Value Meets Pharma) are unfamiliar with.

Pharmaceutical cost volatility and growth are major concerns for healthcare stakeholders, from the government down to the general public. Drug manufacturers face increasing pressure to address this issue. But simple answers or scapegoats are hard to come by, as there is a perceived mismatch between drugs cost and value.

Ground-breaking digital technology and the convergence of escalating priorities and unmet needs in wellness (eg, nutrition, weight management, physical activity, managing and sharing personal health data and consumer-genomics), medical (chronic respiratory disease, telemedicine, diabetes, cardiovascular disease and cancer) and consumer (digital/mobile, personalized, social media, customer support, reminders and education) categories in healthcare are transforming the landscape, and radically redefining the possibilities of tomorrow.

As a result, healthcare will be designed around us: patient-centered, with wearables at the forefront, digitized and with decentralized doctors and evolved healthcare provision.

In the Outcome-based contracting model, pharmaceutical manufacturers and payors enter into a risk-sharing agreement where drug reimbursements are based on outcomes in actual patient populations. Payors are responsible for gathering and analyzing patient data to determine whether cost negotiation is necessary. If care outcomes are unfavorable, the pharmaceutical manufacturer is responsible for issuing a refund to the payor.
A primary benefit of this model is the potential for cost savings on experimental drugs, which are often more expensive than commercially available treatments. In some cases, promising drugs may not be effective outside clinical trial settings. The OBC model allows cost negotiation that reduces risk for prescribing physicians and could lead to widespread use among patients.

Pharmaceutical manufacturers need not immediately invest in an army of medical assistants to cut the toenails of anyone who uses their drugs. But they would be well-served to think through the new skillsets, technical capabilities, and partnerships needed to thrive in a value-based world.

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