Healthcare and technology are white hot. Healthcare was the number one sector in the 2015 Inc. 500 list of fastest growing privately held U.S. companies. Investment is growing in all areas of this category, including big technology companies, startups, health systems, payers and a few pharmaceutical manufacturers. Technology continues to expand its reach at a record pace as well. As the two biggest “go-to” sectors in the world start to converge under the health technology umbrella, should pharma be thrilled or terrified?
If you think it’s too early to get involved, or won’t amount to much, you should be terrified. If you’re excited by the opportunities afforded, jump in, but temper your expectations to be cautiously optimistic.
Demand Grows for Better And Cheaper Solutions
The massive U.S. healthcare system faces ever-rising costs and poor service levels—all driving the demand for better and cheaper solutions to many issues and challenges. For example, new electronic health records have created potential fresh treasure troves of data hidden by a lack of standards, interoperability and challenging patient privacy regulations.
The ubiquity of technology platforms and Internet connectivity (such as Apple iOS and Android operating systems, WiFi, etc.) and the sinking costs of software and product development make it easier to bring new products and services to an audience of millions in record time. Some solution providers choose to operate within the regulatory environment, others choose to circumvent the regulations with direct-to-consumer offerings. WellnessFx is one of many companies leveraging powerful personal healthcare analytics on mobile devices with the convenience of self-coordination of care in blood testing via any local Quest Diagnostics Lab.
WellnessFx pushes the limits of self-directed healthcare consumerization, providing blood testing with no doctor visit required. According to a recent investigative report on Fox News Health, a user selects and pays for a blood test online (which range from basic heart and nutrient health to detailed diagnostics of metabolic functions and reproductive hormones), the consumer visits a local Quest Diagnostics Lab, and comprehensive reporting and actionable recommendations are provided online. Prices start at $30 for basic tests analyzing for factors including everything from blood sugar to more than $1,000 for tests examining reproductive hormones and inflammation markers. These are pure cash pay businesses; health insurance isn’t involved.
Big technology companies see a golden opportunity across healthcare, aligned with their business model. Apple sees the opportunity for more iPads, iPhones and Apple Watches, now primed with additional healthcare functionality provided by companion apps—and two of Google’s service offerings are directly tied to activity in the pharma space. Google will continue to encourage more Internet use and thereby search revenue. And with the recent corporate restructuring creating Alphabet, Google will presumably invest in moon-shot ideas for fixing healthcare via Google X, investing in areas such as AI, computational neuroscience and biotechnology innovation.
Google’s Mineable Data
Likewise, Google Search is a well-known consumer tool used to search for information across the Internet. But through its functional use by consumers, the myriad of unstructured data sources represent a mineable data source to better understand and determine intent and sentiment towards a product, service, solution or company. Sentiment analysis of unstructured search data, social media and content can deliver contextual insights regarding message and marketing “stickiness” program awareness, key questions and opportunities via keyword and phraseology search, sort and segmentation.
For pharma manufacturers, search data is highly anonymized, and while one cannot tell the difference between a healthcare practitioner and a coal miner, the data queries and resulting analysis can show very different searches for medical information, literature and industry nomenclature versus the average consumer health information query regarding a particular condition or branded product name search. Herein lies the opportunity to segment by data and glean valuable nuggets to drive development into key areas of product need.
Start-ups, by contrast, primarily laser-focus on solving specific problems in the patient journey in particular disease states. Although they specialize in addressing very segmented areas, a myriad of avenues are available to pursue in this category—from finding a doctor to scheduling doctor and lab appointments, to assisting with diagnoses, eliminating the reams of paper records, dispensing medications, reminding patients to take their meds and providing remote monitoring. Each step along the product to patient pathway represents the opportunity for a network of solutions to be addressed by technology, benefitting the consumer and provider alike.
The race for innovation and the resistance to change in the medical system results in disintermediation efforts between patients, healthcare practitioners and payers. Dr. Eric Topol, Director of the Scripps Translational Science Institute in La Jolla, CA, is a leading proponent of this convergence. In his most recent book, The Patient Will See You Now, he examines how smartphones, big data and technology are combining to move patient care directly into the hands of patients rather than physicians. For better or worse, the fact that technology developments are driving real change in the pharma world is inescapable.
Dr. Topol envisions a world where the patient is more fully in control of their own healthcare destiny and can access the tools, monitoring devices and alerts to bring issues to the attention of the physician versus a self-reporting model. For example, with a smartphone or wearable device, individuals already have the ability to track medical statistics and information including heart rhythm monitoring and personal EKGs.
At a recent healthcare conference Dr. Topol stated, “At your next annual physical, if you see your doctor walking in with a stethoscope and a reflex hammer (plessor), you should run the other way [as] you already have more tools in your pocket than your doctor has in their hands.” Sophisticated, accessible and seamlessly integrated into a patient’s lifestyle, technology can inform both the patient and the doctor, bringing the benefit of real-time knowledge, careful monitoring, and advanced tracking and record-keeping to all.
Monitoring devices may only be in a first- or second-generation development stage, but it is easy to extrapolate toward Dr. Topol’s vision of personal health monitoring self-sufficiency. The market for personal wearables is growing quickly, with rapidly evolving products from companies such as Apple, Microsoft, Google Fit, Jawbone, Fitbit, and Garmin all bringing a variety of options to the table.
“Future Thinking” Required
Technology companies can be great partners or significant threats to pharma companies and other healthcare parties that are resistant to change and do not demonstrate adaptability and future thinking. In 2014, Novartis partnered with Google on its “smart lens” technology for future ocular medical uses. Together, Google and Alcon, Novartis’ eye care division, are working on developing transformational solutions as an extension of their existing leadership position in contact lenses and intraocular lenses.
“We are looking forward to working with Google to bring together their advanced technology and our extensive knowledge of biology to meet unmet medical needs,” says Novartis CEO Joseph Jimenez. “This is a key step for us to go beyond the confines of traditional disease management, starting with the eye.”
Adds Sergey Brin, Co-Founder, Google, “Our dream is to use the latest technology in the miniaturization of electronics to help improve the quality of life for millions of people. We are very excited to work with Novartis to make this dream come true.”
The excitement of digital convergence and monitoring also brings potential disruptive competition and risk to pharma. Imagine a future state in which technology monitoring and alerting solutions help to solve chronic health conditions through lifestyle changes and device or software usage. It’s not so far-fetched. Already, patients with diabetes or Crohn’s disease wean themselves from medication through diet and lifestyle change. Naturally, some disease states will require a particular medication level, but the patient’s health and overall wellness can still be greatly improved using medical monitoring technology.
The real partnership potential: “Beyond the pill” solutions that improve adherence and outcomes. A few years ago, payers would have been skeptical about this type of claimed benefit or outcomes-based contracting. Today, national plans are much more open to creative solutions (e.g., risk-share contract arrangements) that have the potential to hold the manufacturer accountable for cost efficiency claims through verification of patient outcomes, ultimately to lower overall medical costs.
Payers Demand Deeper Discounts
Payers are aggressively pressuring manufacturers for deeper discounts and rebates in exchange for formulary access, especially in competitive categories. Despite most manufacturers remaining reluctant to pursue risk outcomes-based share contracts for various reasons, an opportunity to improve net revenues through reduced rebate payments to payers or by reducing reimbursement hurdles (e.g., step edits, prior authorizations, co-pays) exists. A few successful instances will no doubt accelerate both payer interest and manufacturer efforts to find “beyond the pill” solutions.
In the last few years, pharmaceutical manufacturers have been notably absent at mobile and digital health conferences. It appears that only patients, physicians and health systems saw the potential for using smartphones and wearables to assist with remote diagnosis and ongoing monitoring of patients.
But lately, more evidence shows pharmaceutical manufacturers engaging in mobile and digital health solutions to improve patient outcomes. Manufacturers like Teva and Novartis are launching patient- and provider-focused apps in the competitive multiple sclerosis category.
The combination of aggressive pricing pressures for payer access, the rapid pace of wearable technology development, and payers’ receptivity to creative solutions for cost savings will motivate manufacturers to move “beyond the pill” for total health solutions. Even more examples of this activity are predicted for the 2015-2020 time period.
Forward-looking pharmaceutical industry leaders are getting involved, creating partnerships with technology companies and testing “beyond-the-pill” solutions, especially those with the potential to improve engagement, adherence and outcomes for chronic conditions. Given the cost and time of conducting trials, if a program is tested in conjunction with a manufacturer’s therapy and demonstrates improved outcomes, it creates a differentiation that is not easily replicated, and could result in better payer contracting and higher physician adoption.
Just as Apple created an ecosystem with the a host of compatible products and services, such as the iPod and iTunes, opportunities for manufacturers exist to combine diagnosis, monitoring and adherence technology solutions with their medications.
A good starting point: Take a patient journey for a given disease state and ask a series of questions such as:
- How could this be improved with the use of technology?
- Where could you increase patient convenience and reduce time to diagnosis with remote diagnosis tools?
- How can a patient’s health be monitored to predict undesirable outcomes and alert healthcare professionals?
- How could you improve engagement and thereby ongoing adherence through informative games, social pressure and other motivating factors?
- How could you measure, test and package these interventions into an outcome-improving system?
Pressures for change are so powerful, the opportunities so large and the investments so widespread that there is no end in sight to the positive changes technology may bring to healthcare. Along the way, there will be plenty of failures and a few spectacular successes. It is the potential for these successes that both drives the process and keeps expectations high.
The Apple App Store opened only seven years ago, in 2008. Did anyone have any idea then what could be done with smartphones now? The term “wearable” only entered popular lexicon in the last three years. Who can predict what is coming next? People hoping for the status quo are likely in for some big surprises.
Any pharmaceutical manufacturer not actively investigating opportunities runs the risk of missing potentially differentiating partnership opportunities or will fall victim to disruptive innovations. As Abraham Lincoln said, “The best way to predict your future is to create it.” Said in the words of a more recent source, John Legend cautions, “The future started yesterday, and we’re already late.”