NEW YORK, May 17, 2012 – Pharmaceutical companies that are first to meet healthcare’s new expectations of value could have an advantage in the competition for market share and brand differentiation, according to a report published today by the Health Research Institute (HRI) at PwC US. Physicians, health insurers and patients now want to know how well a drug will work and affect total medical costs. Yet an HRI survey of health plan executives finds the information currently provided by the biopharmaceutical industry no longer suffices.
As the basis for payment shifts to improved patient outcomes, health organizations are looking for more robust evidence of clinical and economic comparative effectiveness. Drug makers that have faced challenges with formulary acceptance or reimbursement levels should speed their efforts to create and reliably demonstrate better outcomes for patients, says PwC.
The report entitled Unleashing value: The changing payment landscape for the US pharmaceutical industry looks at how health insurers view evidence of drug effectiveness, contracting strategies and relationships with pharmaceutical companies. A nationwide survey of 100 U.S. health insurers and pharmaceutical benefits managers, conducted by HRI, found:
“Pharmaceutical and life sciences companies are now collaborating with payers and providers to achieve better patient outcomes and bend the healthcare cost curve. Those that can effectively demonstrate value in non-traditional ways have an opportunity to gain market share in a very competitive market for prescription drugs,” said Douglas Strang, PwC US pharmaceutical and life sciences advisory co-leader. “Meeting new expectations of value in healthcare affects how drugs will be researched, marketed, manufactured and priced in the future, and first movers will have an advantage.”
According to the report, brand-name drug makers are fighting for a shrinking share of premium real estate on prescription drug formularies as generic drug competition and medical costs continue to rise. A shift in consumer and prescriber drug preferences could hurt revenues for pharmaceutical and life sciences companies in the U.S. that don’t accelerate efforts to prove value and build trust with doctors, hospitals and health plans.
HRI identifies five major forces dramatically altering pharmaceutical revenue models, and its report explores potential paths for drug manufacturers to unleash value, improve clinical and economic evidence of comparative effectiveness, and build trust with other health organizations.
“As the U.S. health system undergoes significant change regardless of legislative or legal actions, a new definition of value is emerging, one that places patients and their desired outcomes at the center of the universe,” said Karla Anderson, partner, PwC pharmaceutical and life sciences advisory services group. “Leading pharmaceutical companies are increasing their alignment with the rest of the 'four P’s' in healthcare -- providers, payers and patients. They are creating new expectations across their organizations to re-orient their definition of value for each of these groups.”
The HRI report outlines steps that pharmaceutical and life sciences companies are taking to create new value. Some are focusing on developing the next innovative drug, independently. Some are collaborating with health plans, purchasers, medical device makers and others. Data-sharing agreements are being sought to gain access to clinical information needed to demonstrate and improve outcomes. Half of pharmaceutical executives in a recent HRI survey about clinical informatics said they expect to enter into a new strategic alliance or joint venture in the next 12 months to better gather and analyze outcomes data.
A copy of the full report, Unleashing value: The changing payment landscape for the US pharmaceutical industry, is available at www.pwc.com/us/pharmavalue.
About the Research
PwC’s Health Research Institute commissioned a telephone survey in early 2012 of 100 insurance company managers, directors and executives. In addition, research for the report included 20 in-depth interviews with thought leaders and executives in hospitals, health plans, pharmaceutical/life science companies, patient groups, and industry organizations.
About PwC Health Research Institute (HRI)
PwC's Health Research Institute provides new intelligence, perspectives, and analysis on trends affecting health-related industries. The Health Research Institute helps executive decision makers navigate change through primary research and collaborative exchange. Our views are shaped by a network of professionals with executive and day-to-day experience in the health industry. HRI research is not sponsored by businesses, government, or other institutions.
About PwC’s Health Industries Group
PwC’s Health Industries Group (www.pwc.com/us/healthindustries) is a leading advisor to public and private organizations across the health industries, including healthcare providers, pharmaceuticals, health and life sciences, payers, employers, academic institutions and non-health organizations with significant presence in the health market. Follow PwC Health Industries at http://twitter.com/PwCHealth.
About the PwC Network
PwC firms help organizations and individuals create the value they’re looking for. We’re a network of firms in 158 countries with close to 169,000 people who are committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com.
© 2012 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. PwC refers to the US member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
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