Pharmaceutical companies are re-thinking their business models by putting a stronger emphasis on the patient. This will be made possible by focusing on five strategic challenges.
In reaction to significant changes sweeping the modern global industry, several firms have rethought their business models. Realigning complex global business entities around patients is a pragmatic concept that is widely accepted in principle, but yet to be ingrained in traditional development and commercial paradigms.
A patient-centered commercial model envisions a progressive bio/pharmaceutical firm as a cluster of entrepreneurial, autonomous business units each responsible for life-long patient care in a specific therapeutic area and its co-morbidities1. The commercial mission would be to build a business on the precepts of serving the sick over a full lifetime, rather than to generate quick revenue in the short-term by addressing an immediate need for a prescription. Such a change to the commercial model would imply emphasis on:
1. Creating and accumulating intellectual property (IP) with an outside-in, market perspective—driven by patient needs, both current and foreseen.
2. IP spanning the entire patient-care continuum in each therapeutic area of interest, from prevention to evaluation, diagnosis, treatment and wellness.
3. Developing ethical, prescription products, but also OTCs, and prescription to OTC/BTC conversions—if they provided genuine relief and met significant patient need.
4. Developing IP focused not on drugs alone, but also on innovative diagnostics (e.g., biomarkers), devices, procedures, delivery and absorption techniques, and healthcare services for every relevant site of care.
5. Informing and communicating with patients on a range of options that impact their health and wellness, and presenting revenue-generating opportunities for the bio/pharmaceutical organization.
6. Less third-party regulation, and open markets worldwide for bio/pharmaceutical firms dedicated to building direct relationships with patients—the customers that matter to them most.
However, a fundamental change in pharma’s business model to ensure stronger alignment with patients will succeed only if glaring inequities in bringing products to patients are addressed. Here are five integral areas that companies must focus on in order to succeed with a patient-centric model.
1. Increasing Patient Access
Efforts to improve access to healthcare for patients will generate higher demand for pharmaceutical goods and services. Such demand will almost always result in lower costs, higher efficiencies and higher revenues. Lack of access to healthcare for a portion of a population of patients results in higher prices for healthcare goods and services to those who do have some form of access. Often, lack of access to first-line primary care leaves two undesirable options: Let the condition worsen or take a costly visit to the emergency room.
I conducted a study of moderate to severe allergy sufferers that documented direct and indirect costs incurred by patients who were uninsured or who lacked the means to visit a physician for their condition. Such patients effectively paid 75% more in direct costs for receiving treatment compared to those who had access to physicians and prescription products. In terms of indirect costs, most of these patients typically let their condition worsen until they had no option but to seek expensive, uninsured care downstream. These types of patients also showed higher levels of absenteeism and presenteeism in the workplace, suffered more co-morbidities and had higher hospitalization rates. This provides direct evidence that if they had access to first-line primary care, much of such costs would have been unnecessary, and some of what remained might have been properly channeled toward the purchase and use of prescription products.
Regardless of the type of coverage afforded to those currently without access, recent analyses indicate that increasing the number of patients with access to healthcare will invariably lead to a dramatic market expansion for the pharma industry.
2. Increasing Awareness, Diagnosis & Treatment Rates
The impact of building awareness in patient populations is widely known. Effective consumer marketing efforts can increase the flow of potential patients seeking advice and treatment, encourage patient/physician dialogue and set the stage for treatment with a product deemed appropriate for the patient. Studies have also shown the impact such consumer-directed awareness can have on increasing sales of a prescription product2.
Higher awareness for a new pharmaceutical product among physicians increases the propensity to develop knowledge about it. Physicians increase their use of the available channels of information to learn more about the product. They open the doors to sales reps, attend symposia, scan journals, sign up for relevant medical education seminars that purport to provide more information about the product. The knowledge they seek about the product is less a broad, amorphous concept and more a specific collection of information items such as data on head-to-head comparisons with the prevalent standard of care, data on response rates, adverse event profiles and actual peer reported experiences that may or may not tally with available clinical data. This information has a direct bearing on physician prescribing decisions. When executed effectively, awareness-building encourages proactive knowledge-seeking among physicians and has a direct impact on product uptake.
Increasing diagnosis rates among the disease-prevalent population for chronic diseases is a vital, yet underachieved element for the success of a patient-centered commercial model. Even if the focus is only on three of the most prevalent chronic diseases such as hypertension, hypercholesterolemia or diabetes, the fact remains that between a quarter to a third of those afflicted are unaware of their condition and thus do not obtain a diagnosis, much less any treatment.
A study published in the American Journal of Medicine indicates that the rate of clinical diagnosis among those with chronic kidney disease was 26.5%, suggesting that three quarters of patients with chronic kidney disease are undiagnosed3. Not counting the at-risk population —which can also benefit from disease prevention commercial activities—the inherent potential in tapping the prevalent, undiagnosed population through branded and unbranded marketing cannot be overstated. Aiming to increase awareness and improve diagnosis rates among such populations is a worthy commercial goal, not to mention the prospects of significant sales for a pharmaceutical product that can avail itself of the considerable lifetime value inherent in the chronic nature of the condition.
Treatment rates are another under-recognized lever of succeeding with a patient-centric commercial model. Even within the U.S., the world’s largest market for bio/pharmaceuticals, treatment rates for a wide variety of conditions are less than desirable, suggesting untapped revenue potential. Only a third of the patients diagnosed with Alzheimer’s receive any treatment. Only one out of five HCV infected patients receive treatment. Similarly, less than half the patients diagnosed with multiple sclerosis, rheumatoid arthritis or anxiety receive any treatment. Treatment rates for patients outside the U.S. are far lower across a wide variety of diseases. Even the burgeoning promise of growth in emerging markets is tempered by the inability of patients to receive treatment due to reasons such as lack of access, low affordability, limited physician choices and the de facto preference for generic products.
3. Increasing Adherence
Perhaps the most important challenge to implementing a patient-centered commercial model at the center of a viable business is ensuring treatment adherence. The value of treatment adherence to wellbeing in a chronic condition and concurrent assurance of a stream of revenue as a result is a win-win proposition. And yet, it is estimated that as much as 75% of patients do not take their medications as prescribed. One out of every two patients with chronic conditions fails to comply with the prescribed treatment. Four out of five HCV patients are non-compliant. Only a third of Alzheimer’s patients comply with the prescribed treatment. Compliance rates for rheumatoid arthritis, multiple sclerosis or anxiety are 50% or less. Less than 2% of diabetic patients follow treatment protocols such as checking fasting glucose levels and taking medication according to the prescribed regimen. The revenue implications of improving adherence are manifold. For example, it is estimated that:
• Plugging the adherence gap will result in a 36% increase in the number of prescriptions per drug per year, equating to a revenue estimate of $177B4. • Improving adherence will result in an average of three less visits to healthcare professionals by those who are non-adherent, resulting in a per patient cost reduction of $2,000 per year compared to those who take their medications as directed5.
• Increasing adherence in the U.S. could lead to a 10% reduction in hospital visits and 23% decrease in Long Term Care (LTC) admissions6.
4. Point Of Care Communication
An important and often under-recognized element of a patient-centric commercial model is the domino effect that the impact of patient/physician interaction has on patient behavior, outcomes and product prescribing at the site of care. A patient-centered commercial model would rely on encouraging the right kind and frequency of patient-physician interaction as a critical stepping stone to generating prescriptions, revenue and profits. In a research study I executed on behalf of a pharmaceutical product indicated to treat multiple sclerosis, it was found that:
• Patient-physician interactions were the most important drivers of treatment selection. Rather than make a treatment decision in isolation, physicians and patients who discussed the pros and cons of specific treatment options tended to make clear, informed choices perceived to be in the best interests of the patient.
• While providers focused more on the comparative treatment efficacies of competing treatment options, patients evaluated available medications on side effects such as the incidence of influenza, needle size and whether it produced inconvenient injection site reactions. As such, treatment options that had favorable adverse event profiles had a much better chance of being prescribed as a result of meaningful patient-physician interactions.
• Physicians tended to discuss treatment options requested by patients specifically. The content of the patient-physician interaction focused on treatment options of perceived importance to patients. Provided the physician was convinced of the value of prescribing a particular product, more often than not patient requests for a product were granted. The longer a requested brand was discussed as part of a patient-physician interaction, the higher the chances were of it being prescribed.
Such insights were then used to develop marketing programs that encouraged patient/provider interactions that drove product adoption.
5. Cost To Patient
Obviously, lower out-of-pocket costs for a medical product (prescription or OTC) increases the possibility that a patient will purchase it. The success of a patient-centered commercial model, however, doesn’t hinge on the self-defeating strategy of price as low as can be, but on one that maximizes patient access so that sufficiently high volumes are realized for profit goals to be met.
I have repeatedly found in studies of patient behavior at the pharmacy that when faced with higher than expected out-of-pocket costs, patients opt to initiate dialogue with their prescribing physician much more so than outright rejecting the product purchase. Patients need rationale to buy into the value provided by the product even at high cost. Physicians need information to resolve the patient-physician dialogue in favor of the marketer’s product, especially something that establishes the product’s holistic value proposition rather than one which focuses on its efficacy, safety or convenience alone. In the case of products offered under insurance, insurers look for rational arguments and, where necessary, economic incentives that balance the need for lower patient cost burden with profit expectations.
It is not uncommon for pharma marketers to devise commercial strategies that establish patient centricity by sustaining a dynamic whereby payers are incentivized to increase access to the product at a lower price with few or no restrictions. In this way, physicians are convinced the product has differentiated value and is easy to access and patients believe the product is relatively inexpensive, valuable and worth purchasing at the price incurred.
Re-envisioning business models with the patient at the nexus is a noble goal for a modern bio/pharmaceutical enterprise. Challenges need to be recognized and tackled effectively for this to become reality. The results of devising creative strategies for overcoming such challenges can be a win-win, positively impacting company revenue and growth while effectively serving the needs of the sick—the reason why our industry exists.
1. Rethinking Commercial Strategy – A Patient-Centered Commercial Model, Sanjay K. Rao, v16, No.3, 206-223, Journal of Commercial Biotechnology.
2. The impact of direct-to-consumer advertising on prescription drug spending, Kaiser Family Foundation, June 2003.
3. Chronic Kidney Disease Prevalence & Rate of Diagnosis, Ryan TP, Sloand JA, Winters PC, Corsetti JP, Fisher SG, American Journal of Medicine, 2007 Nov;120(11): 981-6.
4. Reviving the primary care market, IMS, Special Pharma Strategy Supplement, July 17, 2008, IMS.
5. Medication Compliance Adherence Persistence Digest, 2003, American Pharmacists Association.
6. Roner, Lisa, The Real Cost of Patient Non-Adherence, Eye for Pharma. July 10, 2008.
Managing Adherence: The Commercial Opportunity
Non-adherence is largely driven by factors that can be managed through more effective marketing and access strategies. And a viable commercial strategy for increasing adherence should be constructed with patient interests at the focal point. With that said, here is a look at some of the key reasons behind non-adherence.
Knowledge & Relationships
• Poor relationship between patient and provider
• Lack of adequate information and/or sharing (patient, provider, pharmacist)
• Perceived regimen complexity
• Lack of insight into disease/stigma
• Patient believes doc lacks compassion
• Lack of quality time between physician/patient
• Inadequate follow up or discharge planning
• Cognitive Disorders
• Disease is asymptomatic
• Lack of adequate (or no) health insurance
• High co-pays/co-insurance
• Lack of appropriate benefit design
• Frequent office visits
• Frequent travel to physician office/pharmacy
• Adverse effects of taking drug, including side effects
• Complex/strict dosing schedule
• Inconvenient administration
• Perceived lack of efficacy
• Perceived lack of safety