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Three Stubbornly Difficult yet Critical Areas of Concern for Pharma

Reputation, Business Model Redesign and Patient Centricity.

EyeforPharma recently conducted an online survey – a Health Check of the industry, and the results highlighted a couple of interesting challenges for me.

Let’s begin with the good news. And, as usual with industry specific surveys of this nature, what comes through loud and clear is that there is a lot of confidence in the future of the industry. And that is as it should be; one would expect employees to be optimistic about the future of the industry and company they work for.

Counting the top 2 boxes: 80% and 70% see their company increasing revenues and profits in 2016. 50% believe the industry knows what it needs to do to improve it reputation. Nearly 60% are driven by making a genuine difference to patient lives, with 40% seeing an improvement of the industry’s reputation with physicians and slightly less 29% with consumers. 55% sees their organization as excellent or good in their approach to patient centricity.

All relatively positive. But it identifies huge gaps, and highlights incredible opportunities for those few companies that choose to grab hold of the nettle and really addresses some of the issues that we seem to know quite well but that continue to hold the industry back.

The overall reputation of the industry and the individual companies in it remains poor, yet just over 50% of survey respondents confirm that the industry knows what to do to improve its standing. And while we can discuss at length if this is a fair overall picture it highlights the issue that, obviously, for pharma at least, it is very different ‘knowing what to do’ compared to ‘actually doing it’.

We all know at a high level, what businesses need to do to build trust and enhance their reputations and it seems amazing that most don’t actually seem to be doing much about it. Of course, the challenge, as always, is in execution and for pharma this is particularly difficult.

One of the biggest challenges is that no one in the company has the responsibility to oversee trust and reputation (except perhaps the CEO). Who is responsible in your company at a very senior level to challenge behaviors, initiatives and strategic planning to ensure that everything it does improves its reputation and builds trust. Who challenges a pricing decision for a new product for example when it could negatively impact reputation? I doubt anyone seriously challenged some of the recent price increases and new product prices because of the negative impact on reputation. Pfizer’s recent decision to merge with Allergan is yet another example and has been called a disgrace by many and a ‘cynical move designed to boost its stock price’ with Pfizer itself described as a ‘greedy tax exile’. Profits seem to always trump these ‘soft and fluffy’ concepts within pharma.

Closely linked to reputation are the topics of new business models and patient centricity.

There is strong support for significant change to the pharma business model. More than 67% agree that pharma’s biggest competition will come from outside the industry and 52% believe the model will change quickly even as it continues to deliver good results.

Even with the clear threat of outside industry players threatening to further disrupt healthcare pharma’s response seems remarkably relaxed and lacking both seriousness and urgency.

Business model redesign has been high on pharma’s agenda’s for more than 10 years. This is not anything new at all, but the traditional model continues to be the mainstay of the industry. What is it going to take before this change actually takes root?

Perhaps patient centricity will be a catalyst for change, although more than 54% of respondents believe their company is good or excellent at positioning patients at the centre right now.

If the majority believes they are already pretty good at this, then there seems to be little impetus to drive the change even more.

The majority of respondents commented that they are driven to make a genuine difference to patient’s lives, which is no surprise, as this has always been a strong point for the industry. What should be a surprise is that it is only 57% of respondents and not much more. It does raise the question; what drives the other 43% of respondents if it is not about patients?

Taking the pulse of the industry has highlighted that it remains healthy today but that there are some very worrying underlying issues that could well negatively impact the business in the very near future unless seriously addressed today.

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Good Guys Can finish First

Something has been happening to big pharma over the last 10 years or so.

Something not good!

Over the years an insipid, festering malaise has crept up over pharma destroying much of the value it could bring to humanity and destroying trust along the way. It was not one single event that did this, just a slow, creeping, virus-like stumble that infected the industry.

It is certainly not the case that the industry is becoming evermore unethical but clearly something has changed over time that has, in essence, eroded what pharma itself once highly valued.

Gone are the days when companies like Merck & Co were the most admired in the US, when they were respected, held up as a shining example to others and to some extent, revered.

Sure spectacular drug failures and aggressive side effects didn’t help. Neither did the court cases and the huge fines for less than stellar marketing and sales practices, or more recently, the high prices and lack of transparency. It was a combination of all these things and more that resulted in the industry ‘loosing its way’, ‘it’s moral compass’, call it whatever you will. But the result is an industry that has lost the respect and trust it once had.

Despite all of the compliance training, CIA agreements, mission statements and company values the industry seems unable to move the needle back towards most respected and trusted.

However there is hope!

Pharma needs to join the commercial model equivalent of AA (Alcoholics Anonymous).

In order to drive transformational change one needs to first of all agree that there is a huge problem – think, ‘Hi, my name is Dave and I am an alcoholic’, and secondly, that the problem needs to be addressed today. And I don’t think the industry has agreed on these two points although most would agree that a problem exists.

However, there is a growing sense that the time is fast approaching when pharma will have no choice other than embrace change. This is not a pharma specific phenomena rather one that is impacting the entire business sector, but clearly the implications for the pharma industry will be spectacular, as it will perhaps demand significant business model change. Speakers, academics, consultants, business writers and commentators and some visionaries in business are speaking about the need for business to reinvent itself. That things need to change. That consumers and customers are demanding that business change.

Some industries of course choose to ignore or pay lip service to such demands and ideas, as is their right, but we are seeing the rise of not only customer power but e- empowered people more broadly. For many industries not taking consumers seriously results in often-disastrous business repercussions.

Last week I spoke with Doug Sandler one of the growing number of voices ‘out there’ that speak of a new paradigm, a new way of doing business, regardless of the industry.

Doug Sandler, entrepreneur, speaker, healthcare consumer (I added that one in, he does not describe himself as such, as most of us don’t), and author of Nice Guys Finish First, has a timely reminder for us all. It is well worth reading, even if you struggle to see how it can be applied to Big Pharma, you will most certainly come away nodding your head in agreement to his proposition.

There is nothing really new in this short, easy read, but it is a great reminder that it is the little things that really add up to making a significant difference. And every one of us can make a difference everyday by making simple changes to how we engage with others, whether that is at an individual level or as a business.

Although Doug has not been directly involved in the healthcare industry his comments to me about the industry were incredibly insightful. Borne out of the simple fact that we all have some level of engagement with the healthcare system at some point in our lives. He sees very clearly the challenges that pharma and other stakeholders in healthcare are facing, and the need to change behaviours at a fundamental level.

Doug has a well-articulated plan that we can each execute that will change how we are perceived and improve business results. And, I suspect, improve our own personal satisfaction with what we do.

This is not just about ‘feeling good’, Doug provides practical advice that can really make a difference. His framework is mostly common sense and most of us would be aware of these fundamentals, but what Doug does is empower readers to execute that plan by making a straightforward, stepwise approach to changing behaviour.

Small changes can change the world.

How easy is your company to work with? My experience is that most of big pharma is very difficult to work with. They still want to control their environment and continue to have a very internal view of the world. It is not easy to speak with someone in pharma. They are usually busy doing ‘important work’. So when a customer or stakeholder tries to connect with a decision maker it is incredibly difficult. Try it for yourself. How easy is it?

Do folks live up to their commitments. Does ‘I will call you back’ really mean you will receive a call back, let alone in a timely manner? How long does it take your organization to respond to an email? How quickly are decisions made and executed?

Just image if even those small things changed. Calls are returned promptly, commitments are met, customers and stakeholders feel that they are taken seriously, that pharma can be relied on. Not such a big step or a huge expectation but a good start that will have an immediate impact.

I have little sympathy for the industry, with the challenges it now faces and the lack of trust that continues to plague it. The situation pharma finds itself in today is completely of its own making, and the power to change this is entirely in its own hands.

If pharma could grab hold of the nettle and commit to significant transformation then it will make an even bigger contribution to improving peoples’ health as well as its own business performance.

We all want to see a healthy pharmaceutical industry, one that continues to make a massive difference to the lives of millions, we want to see an industry that makes profits and is sustainable, we want to see an industry we can look up to, to admire and trust.

And it starts, not with a big bang transformational change program rather it begins by the people –starting with senior leaders and working on down through the organization, changing some behaviours to actively build trust with stakeholders and how together they can change the world.

It is the little things that people do that can make a huge difference. Doug’s book speaks to those small things, that when practiced day in and day out deliver a huge benefit. It is not a cynical tactic to increase sales, it is the right thing to do, and it makes people feel good about themselves and about what they do. And when that happens, great things can happen to the bottom line.

Patient Associations are NOT customers

With all of the hype and attention around patient centricity and the need to engage patients (customers) in their health, many folks in pharma are rushing to engage with patient associations like never before.

Pharma now knows that it needs to better understand it’s customers and be better attuned to what they perceive as value and one of the best ways to do this is to pay close attention to the voice of the customer. Associations are not one of pharmas’ customers. By almost any definition of ‘customer’, associations do not fit that definition.

Let me say that again just to be clear. They are not customers!

The reality is that engaging patient associations is no substitute for engaging directly with patients. Sure, it is a step in the right direction but also one that carries with it a risk of going down the wrong path. Maybe they –pharma, think that building relationships with patient associations will help make them more patient focused? Or perhaps there is another motive?

In most cases pharma works with them and in return either pays them in cash, support, or sponsorship. They may be, at best, stakeholders or at worse merely another supplier to pharma.

Associations come in all shapes and sizes, many are substantial businesses in their own right, but they all need to balance carefully how they support their members while meeting the needs of operating as either a for profit or not for profit corporation.

There is a huge potential for a conflict of interest.

Now don’t get me wrong, working with Patient Associations is better than not working with patients but it is no substitute for actually working directly with individual patients and caregivers.

Let me give you an example. I guess most of you are car owners. And most of you belong to one of the many motorist associations around the world for a variety of reasons. These motoring organisations play an important role in advocating on key issues and sometimes speaking as a representative of their membership. But, I know in my case, they do not, and indeed cannot, speak on my behalf on many of the issues that I am concerned about as a motorist. They play an important role but less so actually representing the views of their individual members.

OK, I can hear many of you saying…’but healthcare is different, it is not about cars’ and that’s true but the principle remains.

Patients Association represent large numbers of patients and caregivers in a particular disease area and their powerful voice is certainly useful in advocacy and awareness, but there are obvious limitations to their ability to represent individual patients and caregivers.

One of the keys to working closer with customers, being patient centric if you like, is that the ‘customer segment’ or ‘target group’ is actually made up of individuals, and the only way to better understand customers is to engage them as individuals. Most of the time pharma looks at groups of customers (often members of these groups or segments are only ‘similar’ when looked at through the pharma lense) and takes this aggregated data and makes the assumption that it is representative of most customers in this segment.

It is a pretty blunt way of understanding customers!

Anyway, pharma has used, and continues to use, associations in awareness and advocacy, both directed at patients as well as payers and government, and clearly associations can contribute or even start an active debate on topics of importance to their members and pharma.

Vertex Pharmaceuticals is a great recent example of a company that continues to mobilise patient associations in support of many of its products such as those in CF. It has gained very visible support for treatments in CF from the various associations, but there seems a clear sub context here. Certainly the association wants it’s appropriate patients to have access to break through treatments (often without any mention of cost and avoiding that discussion all together) however, the relevant pharma company sometimes has more invested in the strategy than simply that objective.

Using Vertex as an example, and clearly there are many other pharma examples to choose from as well, this time in Australia, again with CF. One of their treatments cost, in round figures, about A$300,000 per annum. Luckily – in more ways than one, there are not that many patients in Australia, so the burden to the payer while significant is not over whelming. Vertex realizes and acknowledges that the treatment will only work on around 90 per cent of patients. The government has already agreed to reimburse this important treatment, as it should, but takes the position that if it only works in 90% of patients then it should not be used or reimbursed in all patients, only those that it is relevant for. A straightforward pay for performance approach.

Now the CF patient association is active in this debate, but, at least from what I have seen and read, it has stayed out of the pricing/appropriate patient identification/pay for performance side of the discussion and remains focused on access, pushing that all suffers should have access to this government paid treatment.

I don’t think there is anything untoward happening in this case, but it is clear to me and perhaps I don’t know all the facts, but it certainly looks like conflicting and differing interests between the association and pharma. The association is pushing for access for all, while the pharma company, clearly wanting access to all, is pushing for payment for everyone who uses the drug even though it will not work as advertised in all patients. The negotiations between the government body and Vertex, as I understand it, has been resolved with some pricing agreements based on pay for performance, which seems like a win/win for everyone.

The debate though was very public and quite intense, but, in my opinion, not particularly transparent. I did not see any attempt to solicit feedback and comment from patients themselves about the cost/effectiveness discussion and how patients felt about the situation as a whole.

How can we deeply understand customers if we don’t genuinely engage with them. Can we get the insight we need by replying on third party feedback regardless of how well intentioned that third party may be? That is one example of the tight rope that associates must walk. They can do a lot of good for their membership and can play an important role in healthcare, but they are clearly in a difficult position much of the time with pharma.

So who is a customer?

Pharma for its part needs to respect the role associates can play and tread carefully when they work with this important stakeholder group. But pharma also needs to reach out, out of their comfort zone, and engage patients in real dialogue and not be tempted to rely on a stakeholder that they have the potential to influence.

There can be no substitute for using ‘the voice of the customer’ (read patient, caregiver, healthcare consumer) to better understand customers and to develop meaningful value propositions in support of their treatments. It is certainly easier to reach out to one association than it is to engage with your customer base, it is also safer in terms of potential med legal risk and is more aligned with pharma’s skill set but. And it is big but, there simply is no alternative to speaking directly with customers to hear directly from them their hopes, needs wants and expectations beyond just your product, regardless of what industry you are in.

And healthcare and pharmaceuticals are no different.

Everyone is talking about Patient Adherence

OK. Maybe not everyone.

But certainly all of pharma! And then much of healthcare – payers, insurance companies, private medicine, even some doctors, although not all.

Notice what’s missing?

Patients! Patients aren’t talking about adherence!

So what is going on here? We all know big pharma is facing a very uncertain future. Lots of big – read profitable – products going off patent, and, of course, the rise in the use of generics, so where to go to continue to grow profits. Of course, everyone is looking to emerging markets, but even there it is becoming clear that the future is not as promising as it once appeared to be, with strong price pressures from governments, massive competition from within big pharma and a market that does not want to be dominated by big international players. So patient adherence is growing in importance.

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What is good health to you?

Health is personal.

My definition of ‘I am pretty healthy’ will probably mean something very different to what ‘being healthy’ means to you. No surprises there.

When we’ve spoken with people about this topic it has been something of a surprise to hear people’s different definitions and how they describe their current health.

What I know for sure, is that my definition does not always agree with my physician’s view.

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So my doctor told me to reduce my stress levels

What a wonderful new world.

OK. I know I needed to reduce my stress levels and get more exercise, so this sounded like the perfect solution. I’m an animal lover and have had a number of German Shepherds over the years and they have all turned out to be great companions. Great stress relievers and a terrific form of forced exercise.


I had forgotten how much hard work a puppy is. Particularly a German Shepherd puppy.

And this one is smart! She had us completely fooled. When we picked her up she was an angel. Quiet. Contented. Very cuddly. But that was a con!

Two weeks later we have a tornado on our hands. A very lovable one to be sure, but a tornado none the less.

Over the months her exploration of her world have certainly help me de-stress after a hard day at the office and the early morning walks in the park are a delight that sets the tone for the beginning of a new day.

What’s this to do with healthcare? Not a lot for you., but I am sure Nina has made an impact on my health. After all, pet owners do live longer (should be, probably is, a bumper sticker!).

Why are we not seeing the impact of new innovations in technology driving down the cost of healthcare delivery and improving patient outcomes?

English: US Healthcare Spending

English: US Healthcare Spending (Photo credit: Wikipedia)

In all aspects of life we are seeing the tremendous impact of technology, and the price of that technology continues to decrease every year.

Why is it then that we are yet to see widespread impact of technology delivering better patient outcomes at a lower cost? I’m not talking about technologies as used in the operating theatre, or in diagnostics, we can discuss another time. But in how healthcare is delivered.

Remote patient monitoring, telemedicine, patient support via smart phones and contact centres have been around for many years, but we have only seen pilots and tests and are yet to see wide adoption of these approaches.

Or am I wrong?

What needs to happen for us to see these innovations become mainstream?

So let’s talk about telemedicine as an example.

It seems pretty clear that providing patients and healthcare consumers with access to healthcare, (support, information needs, direct contact with providers etc) without the need to the visit physicians office or attend hospitals, via smart phones or the web, providing access to key medical practitioners over the phone, and easier access to vital information seems to make sense. That it would be cheaper, quicker, and more convenient seems self-evident.

Yet telemedicine is not standard practice – not a standard tool used by health systems around the world. Why not?

I’ve seen great examples of pilots deployed to test the concept. Even some good examples that demonstrate significant benefits but still healthcare systems seem reluctant to fully engage with this approach.

What is it going to take to enable these technologies to become mainstream in a healthcare system near you?