The first of the boomers started turning 65 in 2011. This post-world war population surge has, like a tsunami, generated disruptive demographic age shifts that have affected the structure of our society at each and every life stage they’ve entered. And now that Boomers are turning 65 they will place unprecedented demands on the delivery of healthcare and aging-related services. More than a sheer quantity challenge requiring scale, this is a unique set of seniors that will demand more transformative approaches to healthcare delivery.
The numbers alone are daunting with a shift in dependency ratio—or the number of people 65 and older to every 100 people of traditional working ages—is projected to climb rapidly from 22 in 2010 to 35 in 2030. This isn’t just a larger number of seniors with similar healthcare attitudes and behaviors as the generation preceding. The boomer generation differs from their parents, as they are more proactive and less likely to accept the “grow old gracefully” mindset. They seek and engage with all forms of health services to maintain the highest quality of life. This increasing demand will test the limits of the government services financing this shift.
Implication #1: Need to better understand and deliver treatments for this new group.
Demand from the largest demographic surge in American history is compelling pharmaceutical manufactures to rapidly develop new and innovative treatments. While the usual suspects (cardiovascular disease and cancer) will see increases, other conditions will surge such as Alzheimer’s disease and COPD along with heavy OTC use to battle the aches and pains of aging actively. Pharma will have to develop innovative treatments that fit into the unique needs of this segment.
In the age of big data, connected devices and social media there are new opportunities to leverage digital platforms to better understand and serve the needs of this aging segment (Figure 1). This will not just help to understand how drugs perform in specific age cohorts and comorbid states, but also what service functionality helps patients maximize healthy outcomes. It isn’t just who has the best brand, but who offers the most personalized brand experience to achieve best outcome.
Addressing the unique needs of the boomers will require more tailored digital experiences designed around the unique conditions and needs of this demographic. All too often this demo is dissed as non-digital, which will be a major miscalculation as adoption rates move exponentially.
Implication #2: Digital strategies must be tailored to this demographic.
Given the inevitability of the changes discussed, there is one key, fundamental shift in our thinking that needs to take place in order for us to fully realize the impact this aging population will have. Far from the Luddite mentality typically associated with seniors, Boomers are active online.
A recent Pew International report demonstrates this trend telling us the “use of social networks by people 50 and older grew 88% in the past year, and the number of users over 65 doubled.” Further, as discussed, they are living longer, healthier lives with greater connectivity and interaction both on- and off-line. The ripples are already spreading and will change the way we think about the role pharmaceutical companies will play in their lives.
So, where is our strategic starting point? As strategists we need to build from the foundation up. Understanding that this group expects more than a pill to maintain a long healthy life will be fundamental. They will look to multiple sources of information before making health decisions. And for them in particular, health takes on an increasingly important role in their everyday lives.
According to the Centers for Disease Control, approximately 80% of people 65 and over are living with at least one chronic condition and 50% are living with at least two. This means that these individuals need an ongoing and evolving stream of info to maintain their health as they progress with chronic conditions. And while the usual suspects—smartphones, tablets and the like—will play important roles, it’s not simply these devices alone. This group will become accustomed to an increasingly ubiquitous connectivity between device, message, delivery and drug, changing the expectation of what critical information means and how it’s invisibly woven into the experience.
Implication #3: Pharma is no longer just in drug development; it will need to be tech too.
In order to maximize the petabytes of information created, pharmaceutical companies and device manufacturers will need to increasingly work together to bring solutions to the hands (and bodies) of older patients. Together, they will need to adopt a mantra of Passive Self Diagnosis or PSD. PSD works by eliminating or reducing the amount of self-reported information about a disease state. The key is to create a passive closed-loop system between person, device, and doctor so that biometric data is passed between body, device, and doctor without interruption. Raw data. For this aging demographic this becomes very important because, while they are increasingly technological enthusiasts, they are also subject to conditions that make interacting with technology, especially small portable technology, more difficult. Ocular degeneration, diminished motor and mental coordination, degraded auditory abilities, among other conditions, all make interacting with technology more challenging.
The more we can make the technology do the work, the more accurate and helpful the information transmitted will be. When pharmaceutical companies truly start thinking beyond the next pill and partner with technology companies to create fully integrated passive systems, the entire healthcare continuum will benefit.
Implication #4: Pharma must support access as boomers shift from private to government insurance.
The huge Boomer market segment is moving away from private insurance to government and will need help accessing the innovative new treatments they will demand to maximize quality of life. Circumstances require a realignment of focus from what is traditionally pharma’s comfort zone of reimbursement. The public and private sectors have to become better bedfellows in order to ensure patients receive essential medications without alienating stakeholders in the process.
The Affordable Care Act is set to further reduce Medicare Part D “donut hole” patient co-payment and co-insurance responsibilities with the intended purpose of increasing seniors’ ability to afford both branded and generic products. This process will lower the amount of co-payment and co-insurance obligation from 50% in 2012 to the pre-“donut hole” level of 25% in 2020 for branded and generic products. Although financial obligation for patients is reduced with the narrowing of the “donut hole,” the reduction will be gradual and consumers will still face meaningful financial pressure for the near-term as co-payment requirements gently decrease from year to year throughout the period, potentially in the thousands of dollars. Even when the donut hole is closed, consumers will be responsible for covering a significant portion of their drug costs. Patients will still owe 5% on their medications after reaching Catastrophic Coverage levels beyond $4,700.
There will be an increase in the dual-pressure situation of increased demand in care and costly innovation of that care. Improving targeting for older patients, such as creating biopharmaceuticals with increased genomic specificity, will ultimately cost patients more; and rising prices for better drugs will drive additional people to spend more. More efficacious healthcare will lead to longer lives, but will also increase demand for services and products. Longer lives lead to a greater financial exposure to chronic diseases, which will cost more for payer systems and patients. Also, it’s important to remember that a large portion of Boomer wealth accrued in their lifetimes was destroyed in 2008 and 2009 and many are entering their retirements before their portfolios have been able to recover.
Realignment towards Medicare will reduce the focus of previously developed tactics to support patient out-of-pocket costs such as co-pay savings cards, which are not permitted for use by Medicare patients. Pharma will need to consider how to work with Medicare to put programs in place to keep patients from becoming non-compliant or resorting to the old school practice of pill splitting, a prospect that will not sit well with the demanding and savvy Boomers.
Not only should healthcare services be applied more intelligently with greater support, innovation should be applied to cost savings programs and enabling our most vulnerable seniors to obtain the medications they will require as this population grows dramatically for the next decade. Developing these solutions will take an open mind from pharma and consistent engagement with CMS.
Implication #5: Personalized experiences will require social, contextual and personalized product development and marketing strategies
The implications of an aging population are both challenges and opportunities to drive further innovation in delivering truly personalized medicine (Figure 2). How pharma develops innovative new products, implements personalized marketing platforms and supports access to innovative products and services will shape the future of healthcare for not just this next generation of boomers but for the X and Y generations following. This will require new thinking and new structure inside and out.