Until recently, commercial success for a prescription drug mainly involved getting the drug on payer formulary and creating pull-through with sales force efforts toward physicians. Success was defined as securing full, unrestricted access and building significant share through share of voice. The rapidly rising cost of healthcare, new emerging pharmaceutical technologies with breakthrough potential, public concerns over drug pricing, and a gradual shift from fee-for-service to value-based payment models are transforming the pharmaceutical market. Today’s market is much more complicated, as public and private payer management is more restrictive, medical communities are more willing to engage in value vs. cost trade-offs, and providers are taking a more holistic and integrated healthcare delivery focus.
The current environment is perhaps best described as the “world of value and affordability.” Demonstrating patient value is crucial but not sufficient to gain broad market adoption in the global post-Sovaldi prescription drug market where payers have been empowered more than ever to say no.
Success in this new payer-empowered world of value and affordability requires two fundamental changes in pharma companies’ corporate decision-making:
1. Drug development decision-making and evidence development must evolve to one that is based on a more robust trade-off analysis between revenue potential, clinical risk, investment needs and launch timing, thoroughly incorporating the impact of success at various “access journey” decision points such a price, payer access, clinical guidelines, provider formulary, prescribing, patient fulfillment and adherence.
2. Commercialization and value communication activities need to recognize the revenue impact and evidence needs of a broader set of stakeholders in the ecosystem, and they need to reach beyond physician promotion and payer account executives. A coordinated value communication program needs to include the medical communities, provider organizations, patients and their influencers.
Most pharma companies have been hesitant to recognize the need for change as creating evidence of a compelling outcomes claim usually also involves a higher risk of clinical failure. However, bringing a drug quickly to market that does not address the needs of critical decision makers can hardly be a recipe for commercial success. Companies that lag in making this adjustment are likely to underperform and see their share prices decline as real revenues don’t match their earlier forecasts.
Many professionals within the innovative pharmaceutical industry are aware of these trends and a need for change. Some may indeed be very well structured and equipped to tackle the challenges and devise optimal strategies that address all of the complex trade-offs in consideration. However, from experience, it has been proven hard to change actual decision-making in large organizations with vastly differing functional objectives and complex trade-offs.
Read my series of blogs that describe the issue and provide a structured approach to drive trade-off analyses and consensus-building within the pharma organization.