Merely hype or the precursor to real model change for pharma?
When 800 or 900 senior pharmaceutical company and healthcare executives sign up for a webinar you know the topic is really important to the whole industry. Getting that many senior executives to dedicate time to listen to others talk about Beyond The Pill demonstrates a high level of interest.
But is there a real commitment to change or are we still at the ‘I want to understand what all the hype is about’ stage?
Certainly there was diversity in the attendees, from across healthcare, and a diversity of opinion about the importance and intent behind Beyond the Pill and the challenges of executing such a strategy, but there was much better alignment around the potential benefits of this approach in terms of reducing costs, improving patient outcomes and improving revenue opportunities for the industry.
So where does the industry stand and, perhaps more importantly, what will it do next?
I want to look at the two recent webinars and discuss what we heard from the case studies presented and the reactions of the attendees. To look at what conclusions we can draw from these events, where there is agreement and where there is not and to try and suggest some next steps.
But first let’s look at the ‘WHY’.
Why should pharma go Beyond the Pill?
I think we are all in violent agreement that the traditional pharma model is broken, some would say simply unsustainable, but I would prefer broken. We’ve all heard a lot about this over recent years and Christian Isler from Pfizer Integrated Health was very articulate in describing the why from pharma’s perspective.
This isn’t new though. The industry has been talking about the need for commercial model change for probably more than 10 years and, while there have been some positive steps towards a new approach, like Pfizer Integrated Health, in the overall scheme of things the old model remains in tact.
The reality is that the traditional model continues to produce positive results for pharma. The industry continues to make money. And lot’s of it! Probably not as much as it used to and certainly not as much as Wall Street expects them to, but these are discussions for another time. But let’s agree that the model still works but is unsustainable in its current form. So change is a given.
What we seem to have more trouble agreeing on is when the industry needs to change and how much it needs to change. And it is the issue of ‘how much it needs to change’ that will ultimately drive the implementation of a BTP strategy.
For pharma; why go to BTP? Here’s what the attendees said.
So a diversity of opinion here.
If we agree that the ultimate aim is to improve adherence to treatments then we could view this as a tactic – something that the industry could do without significant change to the business. Same with ‘improve the patient experience’ perhaps even ‘achieve higher levels of reimbursement’. Tactical execution even within the current business model.
But if we agree that this redefines the business model, then we have a high impact strategic intent. One that would require significant business model change.
For me, pharma has not made that decision yet, but it is a decision that is central to execution and implementation and what we are seeing today across the industry are trials, tests, projects, toes in the water around BTP but little in the way of strategic implementation.
So, we can agree that this shift is important financially to the industry but the industry is less aligned around scope and impact.
TACTIC OR STRATEGY?
The pharma model historically has been about the pill. Full stop. Great, innovative treatments to address unmet medical needs.
And, as a result, the industry has focused on the product and the disease. Ensuring access to large patient pools, demonstrating the value of the pill, targeting physicians to prescribe, supporting adherence to ensure patient stick to their medications, CME programs and disease awareness and more.
From my perspective even with significant environmental changes the industry remains clearly focused on products even today. Smaller field forces than before but field force non-the less, delivering messages, typically to physicians.
Certainly some improvements but really the business model has not significantly changed from 10 years ago. You may not agree with my assessment but if we look at resource spend and allocation I am sure you will find that the bulk of the budget is spent on field forces seeing prescribers and other healthcare professionals and the budgets continue to be owned and managed by the product or therapeutic franchises (or equivalent). Resources allocated to non-brand work is a very small minority indeed. It is changing but, in my opinion, not quickly or significantly enough.
The key-underlying question that needs to be asked is ‘how does pharma make money?’ Most in the industry would answer by saying they make money from their products. But really, they make money from their customers and patients. This is the huge mindset shift that needs to take place to move Beyond the Pill towards patient centricity. It should be more about patients than it is about products (an external focus instead of the more common inside out view that the industry has).
The industry continues to demonstrate the belief that the traditional reach and frequency, share of voice, product orientated model remains at the core of the business model. If the industry did not believe this approach was the best available model we would be seeing a full-scale charge towards new business models such as Beyond the Pill instead of the ‘steady as she goes’ approach we are seeing implemented.
So what’s next realistically?
There are 3 options or alternatives in the development of BTP:
Option1 as a way to add extra value to the pill with services, solutions and resources that customers find useful in helping improve patient outcomes and pharma finds helpful lifting product sales.
I would call these ‘product plus services’. Typically most adherence programs would fit in this category, as would patient support programs and disease awareness. Things that pharma has been doing for years. Certainly an increased use of new and emerging technologies, alternatives channels to communicate more effectively but founded upon what the industry has typically done in the past.
The next option could be to sell these services and solutions instead of providing them for free. But still the connection to products.
The other, more exciting, game changing opportunity area could go to the sale of services and solutions that help improve patient outcomes and reduce healthcare costs that are independent of products.
This last option speaks to the objective to change the business model and requires significant change.
David Doherty co founder of 3GDoctor, spoke about Beyond the Pill in terms of a disruptive change and I think he is absolutely correct in this. This is so far away from pharma’s past approach, requiring new skills, a new mindset, new solutions separate from the medicines business that it is hard to see anyone taking dramatic steps to leap frog away from the core business into something so new and full of risk. So we are seeing a much more considered approach to developing this new capability.
THERAPY AREA OR BRAND SPECIFIC
Can we agree that we are seeing lots of activity in the first 2 spaces. Good work being done by many pharma companies though still in the learning phase but with the risk of, as Matt Bonam from AstraZeneca called ‘the path to disappointment’.
One of the case stud by AZ highlighted an adherence project that was not tied to an AZ brand but aimed at improving patient outcomes independent of a particular brand, but, for me, still brand focused (across all products available to treat this condition), but a patient adherence program none the less.
Pharma has a brand view of the world. It is in the very DNA of most pharma organisations. Historically structured and aligned around products, so the temptation is to look at Beyond the Pill in the same way. After all, the funding is within the brand teams so it seems to be logical that the approach will be by therapy area or brand specific.
The downside of this thinking is that it automatically reinforces the product focus. How can it do anything other than that? Even if, like the AZ example, the initiative is not aligned to a particular product it is aligned to ‘products’ nonetheless and I think Matt was right in describing this as Intelligent Pharmaceuticals.
The challenge is to genuinely move ‘Beyond the Pill’.
So how do we break away from being product focused and do we want to anyway?
All of the speakers have spoken about being ‘patient centric’, putting outcomes and patients at the centre, so it seems that the starting point should be patients.
WOULD PAYERS BE PREPARED TO PAY?
There is an openness today to payers partnering with pharma that has typically not existed for many years. In part this is due to the tremendous pressure all the stakeholders in healthcare are under, but it is also due to pharma’s openness to trying something different.
But, and it is a big but, the pharma industry is still regarded with a high level of distrust and caution by most of the healthcare industry. History has demonstrated and reinforced the industry’s focus on relentlessly pushing its brands – putting its best interest in front of other stakeholder needs. We can discuss this until the cows come home, but reality is that there is still a low level of trust in healthcare towards the pharma industry and this remains one of the biggest challenges for the industry as a whole. Mark Wilkinson spoke to this point and reinforced the need to build more open, trusting relationships between not only pharma and payer but also with the other stakeholders too. Including patients.
For me, it is a question of ‘intent’.
As David mentioned if all pharma wants to be is a medicines manufacturer and marketer and compete in a commoditized market then it will need to compete on price and see strong downward pressure on prices. t needs to reposition itself to add more value to stakeholders and moving Beyond the Pill is one of the options available.
Given the lack of trust, selling to payers is not going to be easy and may not be possible at all unless pharma can clearly demonstrate that services are not connected to products. Selling a service or solution to payers that drives up product sales is a terrific double win in terms of revenue growth for the industry but less attractive to payers.
Today we see payers more willing to partner with pharma to develop solutions and services but are usually only willing to pay if these services are disconnected from pill sales.
Historically pharma has provided services to stakeholders in support of their products and there remains a high level of expectation that pharma will continue to develop these services and solutions and provide them for free to the various stakeholders. This seemed an appropriate expectation given that these value added services support a company’s products and stakeholders were generally accepting of this happening.
On the downside though, the value of many of the services that pharma brought to stakeholders were seen as background noise in many cases and did little to drive additional business for pharma beyond some level of differentiation or add much value to customers. Of course, there have been exceptions, but these are certainly in the minority.
Over the last few years we have seen most, if not all of the big pharma companies talk about becoming a ‘leading healthcare company’ – they are saying that they are moving from being a research and development, drug sales, manufacturing and marketing company to a healthcare company. A part of the system and not solely a provider to it. If that is the case what needs to change?
It is a significant shift to move away from being seen as a supplier to healthcare to becoming a participant and stakeholder in healthcare.
PATIENT CENTRICITY AND OUTCOMES FIRST
Attendees agreed that patients were the most important stakeholders followed closely by payers then physicians and the idea of patient centricity is again one that is much talked about. But I am not sure that we all agree what this will actually look like.
While acknowledging the importance of patients moving forward, there seems a bit of a contradiction in play in that most of what we are talking about seems to be aimed more at payers than anyone else. Are we saying that Beyond the Pill is an approach aimed at payers but with benefits for patients and perhaps other players in healthcare. Does that mean that BTP services will not be attractive to hospitals, HCP’s, pharmacy etc?
I remember talking with a pharma company about ‘customer focus’ as it was called at the time. What I heard was ‘that we are already customer focused we talk to customers all the time’.
And that was true. For example, if we generalize for a moment and that a typical representative sees 8 or 9 customers per day, and in the US a total field force of 5000 representatives was not uncommon, then that suggests that the company talks to 45,000 typically HCP customers EVERY DAY.
But what we see is not a company that has deep understanding of its’ customers rather we see that the company really does not know its customer very well, beyond their prescribing. Because, in part, pharma has focused on delivering messages not understanding customers. It still does this today.
It’s the same with patients. One can, and folks do, argue that their adherence program is patient focused and in one respect it is, after all it is about patient behaviour. But if we were to look at the objectives of the program and the measures and metrics, in the past we would undoubtly see ROI as a key measure, together with brand sales lift, market share data etc.
Today things have moved on and we may see some customer data but if you want to see if an initiative is patient centric or not, take a look at the intent and the measures.
If the adherence program is about improving patient outcomes then that is what should be measured and I am not talking about a patient with a chronic disease staying on medication for an extra three or four months – that does noting to improve their health outcomes – I am talking about measuring the impact on their long term health, Of course there will be some measures around program ROI and sales impact but if these are the primary measure and the ones the marketing team are rewarded for, then this is not a patient centric program. Sorry!
STRUCTURE EATS STRATEGY FOR LUNCH
This is why this is so difficult. Typically the money is held and managed by the product teams, who are focused, measured and rewarded on product performance so they are intent on building the brand. And it is disease and condition orientated.
They know a lot about the disease and the treatment, but not always a lot about the patient. They know about diabetes the disease for example and understand how the disease impacts a patient, but to be patient centric one needs to understand that a patient would not describe themselves as a diabetic rather I am a patient who just so happens to have diabetes (and other co morbidities as well probably).
It does not sound so different but it is.
Traditionally pharma is organized and structure around the products in a series of very insular silos, often competing with each other for the attention of key physician customers.
This siloed structure helps support a by-product view of the world and is a major huddle for significant model change. Where does Beyond the Pill sit within a company today and how important is it in the ‘pecking order’ compared to the major brands?
THE IMPACT OF TECHNOLOGY AND DATA ON HEALTHCARE
3GDoctors’ David Doherty did a great job showcasing some of the disruptive strategies and tools that are beginning to have significant impact with patients and healthcare stakeholders but we have still not reached the tipping point in adoption that will see a paradigm shift in the use of these tools.
Mark Brincat from Exco In Touch reinforced that technology per sec is not the solution and there is a real need to develop solutions that can reach down to perhaps even the individual patient level to deliver appropriate solutions and services to specific patients.
WHAT NEEDS TO HAPPEN TO ENSURE WIDE SPREAD ADOPTION
There are a number of choices that still need to be made right at the beginning. Is this going to be a significant strategic imperative or will it be more of a tactical approach. Whichever, there will need to be a clear and concise strategy that could be agreed and supported by the whole company.
It’s not enough for the CEO is say the company is moving beyond the pill. Indeed most CEO’s are not prepared to even say that publically. Novartis CEO, Joseph Jimenez is one of the few senior executives who has stood up and publically stated the need to move beyond the pill. But this on it’s own is not enough.
There needs to be complete senior level support for the strategy, which should to be clearly and concisely articulated. Resources need to be allocated appropriate to the commitment and people should be measured and rewarded for new behaviours.
Mark Wilkinson’s experience with Pfizer Integrated Health confirms that it probably requires at least a separate division if not indeed a separate legal entity in order to ensure due separation from the core business. The challenge here is the need to change the pharma model. Setting up a separate company allows the core business to continue on its merry way, leaving the responsibility of Beyond the Pill to another division. Getting the balance right is a critical challenge.
Of course, new skills and new capabilities will be required together with significant training and it may be that the people required to work in this new environment may well not come from within the pharma business.
The challenges are enormous and the difficulty of executing such a significant change on an industry that has demonstrated its resistance to change but what choice does the industry have.
Let’s leave the legal and compliance issues to be addressed by others more qualified.