Pharma Reform

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).

mike@pharmareform.com