PwC’s Kelly Barnes examines how the US pharmaceutical sector is having to rethink its relationship with consumers, experimenting with new and innovative pricing models, and adopting a more holistic view of the patients using their medicines.
American consumers want more than just lower prices from pharmaceutical companies
US Consumers are demanding change from the pharmaceutical sector, and it looks like they are going to get it. Stories about families caravanning to Canada to buy insulin are making headlines, as are articles and editorials about drug companies raising prices. State and federal lawmakers have heard from their constituents, and they, and the Trump administration, are considering once-unthinkable remedies – forming price-setting panels, tying the prices of Medicare Part B drugs to prices set overseas, re-engineering Medicare Part D, among other legislative and regulatory changes. Congressional hearings on drug prices are being held in Washington, DC almost every week.
But American consumers want more than just lower prices from pharmaceutical companies. Our research has shown consistently that they want the health industry to be more convenient, more transparent, more digitized, more integrated into their lives. In short, they want the health industry – pharma included – to behave more like the rest of the economy, oriented around them, competing for their attention and dollars.
The truth is, in this burgeoning New Health Economy, every healthcare organization and company is going to have to rethink its relationship with consumers. The way we pay for care is changing, moving toward paying for value and not volume. The industry is developing new ways of delivering care, fueled by a torrent of data. New players are entering the market.
Healthcare providers and payers have started to transform themselves. The pharmaceutical sector is beginning to do the same. Many pharma executives told PwC’s Health Research Institute (HRI) earlier this year that they are experimenting with mortgage-based models, value-based contracts, volume pricing, indication-specific pricing and other ways of pricing their products. In 2017, just 25 percent of US pharmaceutical executives surveyed by HRI said they had participated in a value-based contract. In 2019, 57 percent of pharmaceutical executives surveyed by HRI said they had.
To truly embrace the New Health Economy, pharmaceutical companies in the USA should take a more holistic view of the consumer
Some innovators are gaining traction by offering consumers transparent pricing. Many pharmaceutical companies are developing digital therapeutics and companion diagnostics. The FDA has approved some new digital therapeutics, such as mobile applications for substance abuse, fertility and birth control, according to a report by HRI. More digital therapeutics for diabetes, central nervous system disorders, behavioural health and other conditions—some meant to complement active drugs —are anticipated to enter the market this year.
This is progress, to be sure. But to truly embrace the New Health Economy, pharmaceutical companies in the USA should take a more holistic view of the consumer. This means more sophisticated collection and analysis of data, and a more complete understanding of people’s lives beyond the disease, condition or symptom. This could mean addressing, or at least understanding, the social determinants of health that could be affecting their ability to adhere to their drug regimen, and could have an impact on outcomes. It could mean redesigning clinical trials to take advantage of new data collection methods, digital tools and enrollment strategies.
Consider, for example, the “all you can treat” contracts underway in states such as Louisiana for hepatitis C treatments. Under the Louisiana model, the state will pay a pharmaceutical company one price for all of the treatment it can use over a set period of time. Imagine these subscription models also including campaigns to prevent new infections along with efforts to ensure adherence, aided by digital tools.
This sort of consumer-centred approach would require data and data analytics, digital tools, social determinants capabilities, leading-edge risk and compliance operations, new partnerships with providers, community organizations and more.
To be sure, pharma has a lot to celebrate – exciting new therapies and cures, a drop in the US mortality rates from many types of cancer, FDA approvals for treatments for diseases and conditions that haven’t seen progress in years. In 2018 alone, the FDA approved 59 novel new drugs; 34 were indicated for rare diseases, according to a recent report on drug pricing by HRI. It’s an exciting time for pharma, and for patients benefiting from these new therapies and the hope and relief they bring.
But the sector will have to do more to serve consumers, whose expectations are expanding. They want pharmaceutical companies to provide them with more than safe and effective medicines. They want companies to help them get and stay well, in the broadest sense, and to do this as seamlessly, conveniently and affordably as possible. To do this, pharmaceutical companies should rethink their business model, the capabilities they need to have and the role of the consumer in their commercial strategy.
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