Healthcare Reform raises the bar for Pharmaceutical R & D

Meeting regulatory requirements for approval of an innovative new product is challenging enough but with healthcare reform, it will be the new minimum acceptable standard.  Past marketing and sales tactics could bolster product profiles and fill data gaps if necessary, including taking products into unapproved “off-label” indications.  A more demanding, less tolerant, less accessible, and more analytical healthcare market with an intensified focus on cost containment will make traditional marketing and sales tactics inefficient, ineffective, and eventually, obsolete.

The solution to this healthcare reform driven change is for pharmaceutical R & D to step up to an even higher level of performance than companies might be anticipating.  Many pharmaceutical companies are struggling to correct diminishing R & D productivity seen over the past decade.  So what else is there besides bringing innovative new products to the market?

Healthcare reform will have these added expectations:

  1. Regulatory approval for all indications that are anticipated for product use.  With few exceptions (e.g. cancer treatments), refusing to pay for “off-label” use of prescription drugs (especially new products) will become a cost containment tool.
  2. “Comparative efficacy” means de facto clinically proven “superiority” to other treatment options.  This will require more comparative clinical trials against multiple treatment options to demonstrate definitive “best practice treatment “.  Without the data, branded prescription products will be defenseless and subject to more ready generic and therapeutic substitutions.
  3. To ensure appropriate use and to help control costs, pharmaceutical companies will be expected to provide diagnostic tools to identify the patients most likely to respond to a innovative new product, tools to determine if their products are working, and tools to help avoid side effects and adverse reactions.  Drug product oriented pharmaceutical R & D programs today are not set up to deliver these expectations and many do not have the diagnostic development expertise to even consider these possibilities. It will be interesting to see if those pharmaceutical companies that do have both drugs and diagnostics (e.g. Abbott and Roche) can make drug supporting diagnostic tool development a priority, leveraging this advantage across their business units, aligning goals and mitigating bureaucratic obstacles.
  4. The need for more sophisticated cost benefit data to support pricing strategies and reinforce product value will heighten the need for enhanced expertise and organizational commitment to generating more “real world” and higher quality pharmacoeconomic data.
  5. Credible peer-reviewed publications and peer-reviewed data presented at medical meetings will become the scientific basis for the market to evaluate the safety, efficacy, and appropriate use of products.  This will require credible transparency to company research findings and a corresponding increase in scientific integrity, expertise, and communication skills on the part of pharmaceutical researchers.    “Ghostwritten” publications and “expert” guest lecturers hired to provide product endorsements will have little impact on healthcare executives focused on reducing the cost of prescription drugs for their plan participants.

With companies focused on the challenge of discovering and developing “innovative new products”, these evolving market expectations will require new and different expertise.  More importantly, these expectations represent significant incremental costs to current R & D programs.  Affordability will have to come from dramatic improvements in R & D operational efficiency, fewer pipeline projects with narrower therapeutic areas of focus, and more cost sharing collaborations. (e.g. other pharmaceutical companies, biotechnology and diagnostic companies, academia, and government agencies).

Integrity: you can not buy these value-adding business benefits

Integrity is leverage for optimizing the value of your business. Organizational trust built on a culture embracing integrity can facilitate operational business processes, reduce the risks and complexities of organizational growth,  and enhance commercialization initiatives, including market acceptance of pricing.

Integrity and trust are essential to effective leadership.   An organization is nearly impossible to lead, regardless of size, if management is not trusted.  Perhaps an inherent survival mechanism, employees have to trust that the leaders of the organization will make good decisions, even in difficult situations, and will not compromise the well-being of the company or the employee’s personal situation.

Trusted leaders can spend more time leading and can create much more responsive companies that can  adjust quickly and take advantage of unexpected market opportunities.  They spend less time trying to convince their organization (and sometimes their own management) about what needs to be done.

Similarly, organizational size and rate of growth  can be limited by the lack of organizational commitment to integrity.  The extent to which management and employees trust each other to do the right thing, regardless of the circumstances, is a critical success factor for growth.  Simply put, you can manage a larger organization of people  you can trust compared to an organization of people you can’t trust.

An organization that supports and promotes a culture of integrity will also function more efficiently, spending more time exploiting opportunities rather than managing disciplinary situations, dealing with regulatory or legal issues,  or administering corrective actions.  Personal and corporate integrity  enhance the capacity for organizational growth.

As previously suggested, integrity is also at the heart of efficient commercialization practices. Pharmaceutical companies that establish trust with healthcare providers and patients will find a more receptive audience for their product information and new product introductions. Unfortunately, litigation and accompanying negative publicity highlighting past pharmaceutical company missteps in sales and marketing have compromised public trust and will make product promotion and new product launches in the evolving new healthcare market more challenging than it otherwise might have been.

Healthcare reform will bring with it a heightened but reasonable expectation for personal and corporate integrity. To succeed in the evolving new healthcare market, it is critical for pharmaceutical companies to strategically make a demonstrable renewed commitment to personal and corporate integrity, even under difficult and sometimes  financially damaging circumstances.

Perhaps a disappointing commentary on the current state of the industry but, those companies that successfully execute against this single objective (establish a reputation for integrity and being trusted) will create a valuable competitive advantage in the evolving new healthcare market.   They will find their organizations easier to lead and manage, they will increase their operational capacity for growth, and most importantly, their product information and new products will find a more receptive market.  It is the responsibility of corporate executives to set a clear organizational expectation for integrity, to provide visible examples by their decisions and actions, and to ensure unwavering compliance.

The foundation for future success

If people don’t trust you or believe what you have to say,  it is hard for them to buy from you, regardless of how good your product might be.   This can be true for an individual, a company, or even an industry.

Trust is a fundamental, but mostly unspoken,  requirement for success in the healthcare market.   And, when commercializing prescription drugs, trust takes on an even greater level of importance because physicians (and their patients) are relying on the treatment to have the expected beneficial effects without putting patient safety or lives  at risk.

Integrity is the foundation for pharmaceutical company success in the future because it is the basis for establishing trust.  Integrity, as demonstrated consistently through our words, decisions, and actions can build trust over time.  In the pharmaceutical industry and in the healthcare market there is the added expectation for moral and ethical integrity to do what is best for the patient.

A breach of integrity can destroy a solid base of trust that has built up over years.  Unfortunately, as the pharmaceutical industry has experienced, it is often more difficult, and takes longer, to repair the consequences of a single breach of integrity than to establish the trust in the first place.

So what are the benefits a pharmaceutical company can reap if they make  integrity a cultural expectation and priority?   Some are less obvious than you might think.    So, what do you think they are?  Stay tuned.  Answer in the the next post.

You can not succeed without this…

Without this…. pharmaceutical companies can not succeed in the evolving new healthcare market.

What if you have a breakthrough “blockbuster” new treatment with an acceptable safety profile and few alternative therapies on the market but…

…nobody seems to be buying or prescribing your new treatment or certainly not at the rate you expected.

Why isn’t the market jumping on this new development?  Shouldn’t every patient who has the disease be at least considered for the new treatment?

How many more clinical studies do you need?  How many more patients can you possibly enroll in clinical trials to make your case?  How much more commercial effort will it take to get doctors to prescribe, formularies to consider, or patients to ask for it? How much more money will you spend trying to convince people you have a valuable treatment their patients need?

The answers are not in the product profile.  Your R & D was done to perfection. The answer is not just more clinical studies with more patients. It is not how you are selling or marketing it.  Your price is just fine and not a barrier. You don’t just need more money for advertising and promotion.  You don’t have the wrong contacts in the managed markets.

So what’s missing?  This is worth taking some time to think about…. What do you think?

Answer in next blog.    Stay tuned.