By Rob Rebak, Chairman and CEO, QualityHealth
A few years ago, I wrote an article called “Marketers, Pay for Performance, not Promises.” My premise was as follows: In a zero-waste world, where brand managers are held accountable for delivering results, marketers should only pay for marketing services based on the results they deliver. Much of DTC marketing however had not, at that time, been performance-based. Marketers expected results and planned to have results, but paid whether or not that happened. A lot has changed since then. In my experience, marketers are now holding their marketing to far more rigorous financial terms than before, and benefiting from this disciplined approach through better predictability, smarter spending and higher ROIs.
But before we have even had the chance to settle into this new way of doing marketing, the market has begun to up the ante on marketing services even further, expanding DTC accountability beyond financial performance to clinical outcomes. The change facing pharma is fairly fundamental. Where you now succeed by (efficiently and accountably) getting consumers to request—and doctors to prescribe—your medication more often, tomorrow you are likely to be better off if you are able to have fewer but better aligned and better faring patients taking your medication. In this paradigm, a marketer’s job changes to include finding the right patients, successfully starting them on the right products for their specific clinical/behavioral profile, enrolling them in the right drug and lifestyle programs, and substantiating compelling outcomes claims.
How Outcomes-Based Trends Will Fundamentally Change the Economics of Pharma
Here’s what’s happened over the past twelve months:
Healthcare costs have continued to rise faster than inflation
With the election, the Affordable Care Act has been given a more certain future
Health reformists are committed to creating sustainable cost control impact by making systemic changes to the health system that are aimed at improving the overall health of the population
In other words, Better Outcomes = Better Cost Control
With these changes, patient outcomes (both clinical differentiation and financial advantage) are emerging as the new pivotal metric across the healthcare ecosystem. As government and private payors are incentivized to promote better outcomes, it only follows that the rest of the healthcare supply chain will soon be called on to align around this metric. This has already started to translate into outcomes-based pricing and contracting for pharmaceutical products. 16% of payors currently have outcomes-based contracting arrangements with pharmaceutical companies and one-third expect to support them within three years[1].
The concept of patient outcomes has been around since the 1990s. What’s different now? According to a May 2012 PricewaterhouseCoopers report, “Unleashing Value: The changing payment landscape for the US pharmaceutical industry”, the five new forces fueling this shift to outcomes-based pricing are:
Shift in payor preference for outcomes-based payment to change prescribing patterns
Higher need to justify price increases (mostly driven by growth in high-priced biologics)
Higher availability of real-world drug effectiveness data
Greater awareness of the correlation between properly prescribed drug use and contained medical costs
A more informed and self-directed consumer base, able to make better drug decisions
Evolution of the Structure and Incentives of DTC Relationships Towards Outcomes-Based Marketing
Better outcomes, or in other words, making a difference in people’s health, has always been our mission. But under these newer reimbursement models, where pharmaceutical companies are compensated based on patient outcomes, DTC marketing is going to be turned on its head. Marketers are going to have to move their focus from generating high volumes of new patients based on indication to generating positive clinical results for individual patients. The only way for marketers to take on this accountability without losing their shirt (or sanity) is by transferring some of that risk to their marketing suppliers. Imagine contracting with your creative agencies, digital ad buys, or social media programs based on the patient outcomes they will drive. This is nothing short of a paradigm shift.
Under the outcomes-based scenario, marketers will need to engage in long-term relationships with marketing partners who can help cultivate an ongoing dialogue with their consumers over time, helping the brand discern which combinations of products, communications, incentives, and support prove most effective in influencing holistic consumer behavior changes. No longer can the marketing partner get an anonymous pile of patients new-on-script and declare victory. They need to both find and continue to re-engage a consistent population to manage the context in which their products are being used in order to maximize the value they can claim to have delivered into the healthcare system.
Outcomes-Based Marketing: How it is Different from What We Do Today
Outcomes-based marketing is a form of performance-based marketing, where clinical outcomes are the key indicator of performance. This approach will be fundamentally different from what we see practiced as traditional DTC. See Figure 1 for the key differences.
Win-Win-Win Value Creation
Under outcomes-based scenarios, marketers will be able to parlay their knowledge about specific disease states and patient behaviors to create a win-win-win situation:
Patients receive more appropriate care
Payors and providers better manage treatment costs
Pharmaceutical products gain formulary placement
So, for example, a diabetes brand marketer’s job will change as follows: Rather than focusing on getting more of diabetes patients to use their brand, their new job will be about getting the right patients on their brand and using it more appropriately, in conjunction with the right lifestyle changes to deliver positive outcomes. So they target only those patients who meet the right clinical and behavioral profile. They identify those diabetes patients who are, say, at risk for diabetic nephropathy due to certain risk factors and lifestyle choices. They understand the different local / regional trends. They work with regional diabetes teaching centers and employer groups to create targeted education and lifestyle change programs specifically targeted to these populations. They cooperate with local healthcare organizations and geo-targeted media partners to distribute these programs. The patients show clinical improvement; the payors see reduced costs, and the pharma company sees an increase in prescribed volume. Diabetes brands are doing versions of this today – but the change is that proving they have driven results will determine whether or not they get paid.
Four Critical Success Factors for Outcome-Based Marketing
In contrast to traditional DTC, outcomes-based marketers will have to:
a) Start with a far narrower aperture, to target and convert only the right (i.e., better qualified) consumers
b) Deliver effective, all-rounded, end-to-end patient programs to ensure that patients fill their prescriptions, take them as directed, and stay on medications as long as medically needed
c) Measure, adhere to and be governed this new performance metric in marketing: real-world clinical benefit data
d) Embrace a new business model, with marketing supplier contracts executed on the basis of how well consumers do on drug
Figure 2
What Marketers Can Do Today
Transformation is—and especially so in healthcare—an evolutionary process. So no doubt, mass adoption of outcomes-based marketing is a few years away. But as more pharmaceutical product contracts get written based on outcomes, the pressure on marketers will increase to efficiently, and with as little risk as possible, deliver on outcomes.
So what can you do now? Three things: Partner, Pilot, and Prepare
A) Partner—While there aren’t any marketing suppliers or vendors that I know of who are currently delivering against outcomes as the primary metric, there are several who are beginning to develop competencies to be able to do so in the future. Revisit your partner network to make sure they are investing in developing the right skill sets to help you gain early experience and set you up for the future.
What to Look For in Marketing Partners
B) Pilot—Begin to experiment with your targeting and programming to establish baselines and gain learning.
a. Learn about your targets:
Who is most likely to do well on your brand?
Who is most likely to take your brand as prescribed?
How do different segments behave differently?
What drives, motivates, or hinders behavior?
b. Learn about how to best and most efficiently drive positive outcomes:
What clinical outcomes are you achieving today?
How well are your current compliance and adherence programs working?
Which messages, assets, tools, and incentives work with the different segments?
Which channels work best within your financial requirements?
How do social, mobile, gaming, and other new media impact results?
c. Learn about the right way to measure outcomes:
What’s the right metric to measure outcomes for your brand?
What data sources do you need to understand to get a holistic picture?
When should you measure?
How often should you measure?
C) Prepare—Start laying the groundwork for your support structure. Strengthen your strategic relationships with your medical and consumer insights team. Become familiar with your brand’s clinical data, and start to understand your bulls-eye patient profile. Begin building the right relationships with health economics, payor relationships, pricing, and market access groups. Understand what they do and how they work. And revisit your marketing plan with the payor perspective in mind: What, if anything, should you change in order to better set up your brand for the future?
Figure 3: Narrower Targets
In Conclusion
The trend towards an outcomes-based philosophy is here, and will continue to strengthen its foothold across stakeholders in healthcare. Our goal as marketers should be to continue to drive initiatives forward until the industry reaches a tipping point. Will you be ready?
Discover More About the Future of Pharma Marketing
Join QualityHealth, and top marketing innovators in the industry, in San Francisco, July 29-31, at Digital Pharma West (view the brochure or register for the event) and in Philadelphia, October 21-24, at Digital Pharma East (request more information or register for the event).
About QualityHealth
QualityHealth is the leading patient identification and engagement platform for the healthcare industry, serving the life science, consumer products and health and wellness sectors. By precisely matching patients with highly relevant education and offers at large scale, QualityHealth enables health industry clients to achieve superior engagement results at a lower cost while delivering meaningful value to healthcare consumers. For more information, please visit www.QHperform.com.
[1] PWC Report: “Unleashing Value: The Changing Payment Landscape for the US Pharmaceutical Industry,” May 2012