The onset of the COVID-19 pandemic created a wave of uncertainty, but the pandemic has accelerated trends in the pharmaceutical market that were already underway. New marketing opportunities have resulted from the shift that prioritized payors over healthcare providers and the increasingly utilized digital and social media marketing by pharmaceutical marketers.
Priorities have evolved in recent years, and value-based pricing has begun to dominate the US pharma market; as market access shifts, pharma companies must change their business model or risk being left behind by the competition. But adapting to these market shifts isn’t easy. Robust data collection and strategic decision-making are crucial for your company in these uncertain times.
Controlling the Costs of Health Care
Many are calling for changes to the current payor model to improve availability and accessibility to needed treatments and therapeutics. But for now, private payors continue to provide benefits as patients seek ever-improving efficacy.
Payors expect pharma companies to substantiate their product’s value compared with existing therapies. Patients and physicians look for innovative therapies that provide safe and effective treatment offering a significant quality-of-life benefit. If pharma companies hope to succeed, they must prepare to provide these data.
At the same time, both government agencies and private payors are now under relentless pressure to control the costs of treatment and therapeutics, and can expect this trend to continue.
“Pressure is coming from every angle against the pharmaceutical industry, requiring a significant, integrated response,” says Alison Little, KPMG’s Advisory Life Sciences segment leader in the United States. “Life-sciences companies face increasingly high demands from payors to prove the value of their products in terms of improved patient outcomes and lower costs. This requires not only clinical and analytical rigor, but increased focus on account management and strategy. This is a significant part of the commercial model for the pharma, biotech, and medical device sectors, which need to evolve to compete in the future.”
Many pharma companies have tried making minor alterations to their marketing strategies, but companies must update their business models to emphasize the growing importance of payors who exert tremendous influence over the pharma market.
Pharma executives must revolutionize how they develop and market drugs instead of quickly getting drugs approved and marketing them directly to physicians.
Differences in Priorities
Demonstrating that a drug is safe and effective for patients can work well when marketing to physicians, but payors have a different set of priorities. Modern payors expect robust data to be gathered at every stage of the development process, which may not come naturally for some pharma companies. It’s vital to consider the payor perspective to avoid expensive mistakes later throughout the decision-making process.
Using the value-based pricing model, pharma companies must prove superiority over existing agents. Pharma companies face increased pressure to show that their products are better than their competitors’. Pharma companies also face the burden of demonstrating efficacy and cost-effectiveness in a real-life setting. The shift in the industry toward real-world evidence represents a dramatic change for many established companies. Payors want to see data from uncontrolled studies and real-life patient groups.
The Onus Is on Pharma
Pharma companies who want to succeed in this changing marketplace must understand how stakeholders responsible for market access define value and what data types support their value claims.
Individuals and organizations are increasingly wary of price-gouging in health care. Mylan Pharmaceuticals can be a good (or bad) example, as they faced a $465 million settlement with the US Justice Department.
New Strategies for Success
The way forward to succeed in this market may be to build partnerships, possibly to incorporate a dual-sided risk into the payor’s reimbursement algorithm. In 2019, AstraZeneca and UPMC Health Plan announced that they had signed a value-based pharmaceutical contract for AstraZeneca’s cardiovascular drug Brilinta®.
AstraZeneca agreed to shoulder some of the risks associated with the drug, with reimbursements determined by outcomes in targeted populations. The contract also lowered out-of-pocket costs for Brilinta for many UPMC patients.
These dual-sided risk agreements are still somewhat controversial within the pharmaceutical industry, but AstraZeneca’s approach reveals that perspectives on this issue are gradually changing.
The reality is that payors expect pharma companies to bear some of the risks associated with new treatments, or they may be increasingly reluctant to approve coverage.
The Bottom Line
Although today’s pharma companies face some critical challenges, as market access evolves, pharma companies must change their business model to avoid being passed by the competition. Organizations must make structural changes and rebuild their drug-commercialization process by integrating market access strategy with brand strategy.
By considering payors’ motivations and priorities, pharma companies can make accommodations in their decision processes. Meticulous analysis of the market landscape should become a central part of how pharma companies forge their way to success with patients and payors in mind.
