Patient adherence continues to have a tremendous impact on the pharmaceutical industry and healthcare in general. The ongoing intrusion into the market of generics combined with expiring patents and a lean pipeline of new drugs already present pharmaceutical companies with a staggering revenue gap. It’s a chasm that grows even wider when patients don’t adhere to their medication plans.
How severe is this gap? A recent study by Capgemini1 attributes a $188 billion revenue gap to patient non-adherence, but identifies a global opportunity for an 18-fold increase with patient adherence programs in place.
However, digital delivery systems are creating an inflection point for the pharmaceutical industry today as provider organizations capitalize on the technology now available—including mobile—and integrate it within their systems to improve patient outcomes while reducing costs.
Improving this “Collaborative IQ” approach to our healthcare system is imperative to the success of the healthcare reforms that our economy must achieve to be successful. Collaborative IQ—a term first coined by former President George W. Bush’s Secretary for Health and Human Services, Gov. Mike Leavitt—is ideally designed to bring together the resources necessary to take a comprehensive approach to addressing patient adherence, improving outcomes and reducing costs.
Benefits are also derived from all of the data that these technologies are generating for pharmaceutical companies, many of whom are suffering from a lack of new products in the pipeline. But a business model predicated on rolling out new patented medications on a regular basis is a recipe for disaster. The missed opportunity in the pharmaceutical industry has been in supporting patients already taking a company’s drug.
The Cost Benefit of Adherence
Patient adherence is as important, if not more so, as the launch of a new product. The cost for pharmaceutical companies to acquire a new patient is 62% more than what it costs to support and maintain an existing patient relationship.2 A Congressional Budget Office report found that a 1% increase in the number of prescriptions filled by Medicare beneficiaries would cause Medicare spending of medical services to fall 0.2%, which would equate to $1.7 billion.3
That’s some solid savings. As you can see, instead of focusing only on patient acquisition through new products, pharmaceutical companies are better served by strengthening the product lifecycle. How should they do it? By building the strongest possible relationships with their existing patient customers, physicians and other stakeholders.
The pharmaceutical industry is taking note. There is now more of a focus on adherence throughout the lifecycle of the product as drugs go through the development process. This helps pharmaceutical companies to better understand what the adherence challenges will be and how to best address them.
The stakes are high. Pharmaceutical companies have become masters at marketing to and segmenting their target healthcare professional customers. Now, with the switch from fee for service to an outcomes-based system, the patient has become the center of the healthcare universe.
With the Affordable Care Act requiring more performance measures and nearly 31 million patients entering a system projected to be short 90,000 physicians by 2020,4 treatment adherence will only become more vital—not just for pharmaceutical companies, but for patients, providers and payers alike.
But there is also a tragic human cost. For instance, approximately 125,000 deaths per year in the United States can be attributed to non-adherence, according to the National Pharmaceutical Council.5 Roughly half of the two billion prescriptions filled each year in the U.S. are not taken correctly.6 The adherence rates are even worse for the elderly and those with multiple chronic conditions. It is estimated that as many as 25% of all prescriptions filled are not picked up by patients from the pharmacy.7
The New England Health Institute also estimates that unnecessary medical costs resulting from patients not taking their medication as prescribed—such as those related to ER visits, hospitalizations and extra tests—cost the healthcare system in the U.S. $290 billion annually.8
The New Challenges of Adherence Under the ACA
As a smaller number of providers are asked to offer better care for a larger number of people, it will be critical for pharmaceutical companies to work even more closely and seamlessly with healthcare professionals. Encouraging patients to take their medication as prescribed is no easy task and calls for a multi-layered effort, with EHRs also playing a critical role.
But that’s not the only challenge. New healthcare legislation, which focuses on incentive-based programs aimed at improving compliance, wellness and prevention, is leading the market to address several reforms aimed at impacting adherence.
Across the healthcare spectrum—from pharmaceutical companies to payers to providers and down to the patient—the new reality means that everyone is motivated to remove financial barriers that discourage filling prescriptions. Healthcare providers are looking to take advantage of government incentives to better monitor and proactively treat patients with chronic conditions, and also to offer additional support to patients with a high-risk level for non-adherence.
The challenge is that traditionally, the pharmaceutical industry has taken a broad-brush approach to connecting with healthcare professionals. This created a very fragmented market, one with the vast majority of practices consisting of groups of three or less. But that is quickly and dramatically changing with the ongoing consolidation within the provider space.
But now the emergence of Accountable Care Organizations (ACOs), integrated delivery networks, managed care organizations in metropolitan areas, and the integration of hospitals with solo or small practices, means that pharmaceutical companies need to take steps to bring value to the healthcare universe through a more organized, integrated, partner-focused structure. And the best way to do that is by increasing all of the stakeholders’ Collaborative IQ.
None of the key stakeholders—pharmaceutical companies, payers, providers or patients—can afford to say adherence isn’t their problem anymore. With the transformation of healthcare taking place under the Affordable Care Act, all of the stakeholders must recognize that collaborating with each other—the Collaborative IQ approach—provides the best road to maximizing the value of their services and minimizing the costs.
Using Digital to Increase Adherence
This is no easy task. However, by integrating new communications and predictive analytics technologies, the stakeholders can achieve even more efficient access to physicians—the greatest influencers on patient adherence. These integrated technologies also enable pharmaceutical companies to interact and support medication adherence in simple, targeted ways, bringing value to healthcare professionals and their patients far beyond the pill through a different service model.
These digital advances include:
- Patient information gathered seamlessly at the point of care through EHR programs and mobile platforms, including patient education, treatment guidelines, patient websites or support lines, closed-loop patient-physician communication, patient feedback and surveys, and refill reminders;
- Discount eCoupons and vouchers integrated with e-prescribing (eRx) technologies for immediate medication cost savings at the moment the physician prescribes the medication;
- Medication samples accessed online or through a mobile eSampling resource, which helps healthcare professionals to get patients started on brand-name medications right away;
- Predictive analytics based on behavioral science that better identify patients who are more at risk for non-adherence.
Non-adherence has an impact on patient health first and foremost, but it also impacts the cost structures for insurers and employers. The move away from fee for service to an outcomes-based incentive system under healthcare reform means non-adherence will also have a significant impact on healthcare professionals’ careers and earnings.
The pharmaceutical industry is not immune to the scourge of non-adherence in the U.S. today. But pharmaceutical companies and all of the stakeholders in our healthcare system can pay more attention to adherence by taking a Collaborative IQ approach to integrating the latest advances in digital delivery services to improve patient outcomes—while also minding that revenue gap as well.
1. Forrissier, Thomas, Ferlik, Katrina, MD, “Estimated Annual Pharmaceutical Revenue Loss Due to Medication Non-Adherence.” Capgemini, 2012.
2. Swingley, Pamela, “How to Profit from the mHealth Revolution.” MobilePRM.com, 2011.
3. Taylor, Lynne, “More Rx Drug Use Cuts Medicare Costs, says US CBO.” Pharma Times, 2012.
4. Mann, Sarah, “Addressing the Physician Shortage under Reform.” Association of American Colleges, 2011.
5. Wertheimer, Albert I., PhD, MBA, Santella, Thomas M., “Medication Compliance Research: Still So Far to Go.” The Journal of Applied Research, Vol. 3, Issue 3, 2005.
6. Brown, Marie T., MD, Bussell, Jennifer K., MD, “Medication Adherence: WHO Cares?” Mayo Clinic Proceedings, 2011 April.
7. Aitken, Murray, Valkova, Silvia, et al., “Avoidable Costs in U.S. Healthcare.” IMS Institute for Healthcare Informatics, Report, June 2013
8. NEHI Research Brief, “Thinking Outside the Pillbox: A System-wide Approach to Improving Patient Medication Adherence for Chronic Disease.” New England Health Institute, 2009.