A New Key to Access: Solve the Payer's Problem
Since publishing "A New Key to Access: Solve the Payer's Problem", Oliver Wyman has seen a new level of interest in the results of our research in which we analyzed the 122 new molecular entities (NMEs) launched in the U.S. between 2005 and 2010, supplementing our statistical analysis with conversations with payers and others. The data provided a revealing take on the disconnect between the health economics pharma is providing and what payers value – largely a drug’s impact on the total cost of care.
Oliver Wyman set out to test the hypothesis that quality economic evidence—at or close to the time of launch—should lead to better overall commercial performance. In short, we found no correlation between economic differentiation and commercial performance. This suggests the industry’s standard definition of health economics is fundamentally wrong and pharma is “spinning its wheels” to solve the payer’s problem. Learn more by viewing a recent Web seminar led by the study’s authors.
IN FOCUS
WEB SEMINAR: HOW PHARMA CAN RESPOND TO THE PAYER’S PROBLEM
Study authors Pete Gilmore and Mark Mozeson share their findings in this special Web seminar, offering their perspective on current access practices and the market dynamics driving a new approach. They also provide concrete examples and practical implications in the specific disease area of diabetes, while a Q&A with industry stakeholders captures the very real challenges pharma companies face as they look for ways to solve the payer’s problem.
To truly solve the payer’s problem, pharma needs to provide data on a drug’s impact on the total cost of care. Oliver Wyman research shows that pharma delivers it only about 5 percent of the time.
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Why is now the time for pharma to rethink its approach to market access?
We believe the time is right to begin shifting the pharma/payer dynamic in unprecedented ways mainly because of the momentum building for change in how care is delivered and how much it costs. In the U.S., healthcare reform has catalyzed experiments to shift the care delivery model from fee-for-service to fee-for-value through the rise of accountable care organizations and other models that emphasize reducing cost of care while improving outcomes for patients. In Europe, recent waves of draconian cost cuts amid fiscal crisis only signal the unsustainability of the current system in an adverse macroeconomic environment that is likely to persist. In both cases there is an opportunity for pharma to show payers—and their provider partners—how pharmaceutical innovation can improve care while alleviating the cost burden.
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Where is the biggest disconnect between pharma and payers?
By far the biggest opportunities lie in providing data on a drug’s impact on the total cost of care. Our study reveals that pharma delivers it only about five percent of the time. Ninety-five percent of the time it offers data on comparative drug costs—data that payers see as part of their problem, not part of their solution.
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How will pharma provide information that payers value?
Pharma will need to leverage new sources of information, including claims data, covering not just the cost of drugs but the full spectrum of treatment. We also found that one size does not fit all when it comes to economic evidence. Different disease groupings will require different strategies for economic evidence. In some diseases, economic data will be crucial; in others it may make almost no difference so companies should focus accordingly.
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Where should pharma start to change the relationship with payers?
Our recommendation is to truly commit to focusing on the areas that can reduce the cost of care. Our research shows that pharma has lost sight of this core payer problem. For example between 2005 and 2010, 60 percent of new drugs were launched with little or no attention to broader drivers of cost of care. Another 35 percent avoided the cost-of-care issue altogether. That leaves pharma addressing what payers care most about only five percent of the time. This trend must be reversed. Start by analyzing your current portfolio. Identify development programs that are likeliest to show a reduction in cost of care. Look the other direction as well, and identify NMEs with the greatest risk of being marginalized by payers. We also encourage pharma companies to look across your entire discovery network—internal discovery platforms, research collaborations with commercial biotech, and academic research partnerships—and ask how well the disease-area footprint you are moving toward lines up with the unmet needs of patients and payers. It won’t be an easy or fast transition but these first steps are critical for the long-term role of pharma.
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What role do you envision the access organization playing?
We believe the access organization should be a full participant in defining strategies, making decisions, and governing the development process and commercialization process. Our research has made it clear that pharma needs more objectivity and a higher bar when it comes to economic and clinical differentiation. For that to be infused in what drugs come to market, access organization’s role should extend to the budget where funding choices are made, and that the access and development organizations should share accountability for the results achieved in both of their areas. Access should have a stake in development and development a stake in access and pricing.