There is no question that the ability to create compelling value propositions for both new and existing brands is a critical capability for biopharma companies today—and going forward. For many reasons, however, most companies are still at the early stages of establishing this capability.
Historically, value proposition creation generally begins with an assessment of current market conditions through an evaluation of unmet clinical need, competitive assessment, clinical evidence, and net price. More recently, economic benefit has become a key variable in the determination of value to key stakeholders who bear financial risk in both the public and private payer space as well as the organized customer. The ability to develop strong value proposition criteria that address economic-buyer specific needs is one of the most significant challenges facing pharmaceutical companies today. This effort often begins when clinical development programs have already been initiated or largely completed. In an increasingly competitive and financially constrained environment, pharmaceutical companies need to understand the drivers of choice for the economic buyer for inclusion into the value proposition criteria.
1. Engage early in the development process.
As companies chart their course in identifying new compounds, it is imperative that input from countries and key stakeholders is incorporated into the clinical development plan as early as possible. Creation of a preliminary value proposition that not only highlights the clinical value but also demonstrates the economic benefit informs a clinical development plan that reflects how value is perceived by the payer. As economic pressures increase, payers expect the profile of a product will include evidence of the clinical and cost benefits in targeted patient populations. The capability to differentiate in a meaningful way to the payer from both an economic and clinical perspective will assure clear differentiation and significant benefit.
For many companies, the process for developing a strong payer value proposition is not well defined. Value proposition development should begin as early as Phase I so that Phase II, and most importantly, pivotal Phase III studies can be designed to generate the clinical and health economic data needed to support a strong payer value proposition at product launch. The TGaS Future Issues in Managed Markets Landscape found that nearly 60% of pharmaceutical companies surveyed do not begin payer value proposition development prior to Phase IIB or III of the development cycle. This severely limits the payer voice in value proposition incorporation into the clinical development program. Often, companies do not actively engage or incorporate input from their market access teams into the value proposition development until the pre-launch phase.
2. Ensure a culture of collaboration and alignment.
To optimize the payer value proposition development process, it is vital that pharmaceutical companies create and gain alignment on a value proposition roadmap with clear goals, objectives, and success measures. Too often, cross-functional development teams remain siloed, and respective objectives for R&D and Commercial team members are often not aligned.
For R&D teams, success is often measured in product approvals. For commercial team members, success is measured by achieving a differentiated product that the market wants. These conflicting interests can be mitigated with strong executive leadership, well-defined cross function performance goals, and collaboration and communication between R&D and commercial teams early in the process. Effective cross-functional teams have a senior leader who is accountable for the team’s performance and who intercedes and resolves conflicts so that teams achieve their objectives and goals.
Incorporating customer input into the process is essential to strong value proposition development. Most companies do, in fact, begin conducting market research and soliciting customer input early in the product development process and at specifically defined touch points through regulatory approval as part of the initial value proposition development.
Commercial teams use a variety of research, analysis, and insight generation during value proposition development. Payer/customer advisory boards provide the most in-depth assessment of the value proposition, along with other market research methods such as qualitative and quantitative research. How the teams incorporate these external insights and adapt to customers’ changing value perceptions is a challenge that can be overcome through good leadership and clear communication within the teams and across the organization.
3. Establish clearly defined roles and responsibilities.
Value proposition development oftentimes lives between functional siloes with no clearly defined roles and responsibilities of the team members. During the clinical development process most companies do have representation from both the commercial and the R&D stakeholders within their organization. Multiple functions from global and regional marketing and market access as well as clinical, HEOR, and medical participate and provide input into value proposition development. Nonetheless, TGaS research has found that even within the most sophisticated organizations, there is no singularly defined individual or group responsible solely for payer value proposition development. In fact, only one-third of pharmaceutical companies have an individual or group specifically responsible for value proposition development that includes an economic perspective.
While it is clear that cross-functional teams have representation from key stakeholders within the organization, this can also create a lack of focus and clarity on the unique perspective of the economic buyer. Value proposition development during the developmental phase can be singularly focused on clinical features and benefits to gain market approval. Marketing focuses on the end user with only a cursory nod to economic value. Creation of a value proposition team solely focused on payers as a subset of the broader development team will allow organizations to embrace the needs of these economic-focused buyers as organizations look to incorporate both clinical and economic-derived evidence that will support formulary, pricing, and contracting strategies at launch.
Because economic considerations are a significant driving force in the determination of product value, training and onboarding of the key factors that create compelling value propositions for the economic buyer are of critical importance.
Aligning payers’ needs with a strong value proposition that demonstrates both clinical and economic value positions a product for optimal formulary position and pricing options. Yet only 15% of pharmaceutical companies in the TGaS survey have formalized onboarding and training programs designed specifically for value proposition development. Nearly half of those surveyed have some training, but it is limited in scope.
4. Articulate principles and create a roadmap for success.
This five-step roadmap is designed to create a strong platform to prepare for launch and customer engagement:
Step 1: Start early to create the value proposition, during pre-clinical if possible, by examining the market landscape and developing a target product profile.
Step 2: Ideally, create a value proposition development team early in the sequence to inform Phase I studies testing the safety profile of the compound.
Step 3: Once the compound is cleared for Phase I, the value proposition development process can be initiated and approved by leadership and will inform the Phase II/III clinical plan.
Step 4: As each data point is achieved, assess the value proposition against the clinical performance of the product to ensure the value proposition aligns with the product in Phase III.
Step 5: Develop a specific HEOR plan within the Phase III cycle, ensuring that HEOR studies address the economic and clinical needs of payers.
In today’s complex life sciences environment the key levers in creating compelling payer value propositions are organizational culture, strategy, process, and talent.
Sidebar: Borrowing From The Ancient Greeks
Sponsorship by management (Commercial and Research)
Ownership by an individual or dedicated team
Common objectives for all team participants
Rigorous adherence to a well-defined process
Accountability for decisions, especially at senior levels
Timing of value proposition development initiation before Phase II
Input from customers and countries early in the process
Commitment by individuals at every level