Changes in healthcare affect the life sciences sector and vice versa, as the two are inextricably intertwined. These changes require those in industry to think in new ways, and react swiftly and efficiently to the evolving environment.
Value-based Healthcare Leads Pharma Companies to Value-Based Pricing
The drive in healthcare to improve patient outcomes and lower costs has created a shift to value-based care and is in turn driving a movement toward evaluating value (price for the amount of benefit) in the pricing of drugs on the part of pharmaceutical companies and their end using constituents (clinicians and patients). A balance must be struck between the high costs of developing a new drug to treat a life-threatening cancer or chronic conditions and the simple reality of what patients can afford to pay. The difference in that cost is traditionally borne by insurance companies – and medical insurance is, of course, an industry that is in a state of upheaval at the moment, with a significant emphasis being placed on cost savings. Another factor? Generic competition. In the area of cholesterol reduction, for example, the older class of medications, statins, are largely available as inexpensive generic products that work on the majority of patients. To convince patients and insurance companies to pay more for the newer, more expensive drugs to treat the condition requires that life sciences companies be able to demonstrate a compelling benefit in terms of efficacy, safety, or both.
Over time Comparative Effectiveness Research (CER) will certainly weigh in on the impact of costs as a potential harm of the choice not to adhere to treatment. When we can aggregate and compare outcomes, interventions and cost data we begin to derive more insights into the value of the therapy or treatment.
Non-traditional Companies Drive Competition and Improve Value
This increased focus on lower costs, combined with the enormous potential for revenue in the pharmaceutical sector as the population ages, has given rise to an interesting phenomenon: the introduction of companies from other industries into the life sciences sphere. In general, these new entrants want to bring their capabilities or technical expertise into the life sciences arena in the hopes that what they know and do well, can also translate into life sciences. For example, smartphone giant Samsung has expanded into pharmaceuticals, with a goal of creating lower-cost options for existing therapies. Like generic versions of popular prescription medicines, these “biosimilars” are replicas of more complex drugs like Enbrel (made by Pfizer), an injectable treatment for a group of autoimmune disorders that includes rheumatoid arthritis. Currently, Samsung’s biosimilar version of Enbrel is being marketed in Europe, and the company is looking to release a biosimilar version of the drug Remicade (Johnson & Johnson), an infused medicine used in more serious cases of the autoimmune disorders treated with Enbrel, in the U.S. Samsung sees arthritis as an area where mobile devices afford an opportunity to unite treatment and tracking, which serves to underscore the importance of efficient data synchronization and integration.
Faster Time to Market Improves Value for New Therapies
Further impact from changes in the healthcare industry is the drive to speed time to market by the pharmaceutical manufacturers. The push for faster approval times brings life-saving therapies to patients faster. In recent years, the FDA has put four programs in place for this purpose – Accelerated Approval, Priority Review, Fast Track, and Breakthrough Therapy – depending on the category of medication under consideration.
Another benefit, however, is economic. Drug manufacturers can charge less when it costs them less to get a drug approved, and with the current research and development (R & D) costs for a single drug – including those that are found to be ineffective – at over $2.5 billion, that extra savings is crucial. According to the Pharmaceutical Research and Manufacturers of America (PhRMA), the United States’ biopharmaceutical industry makes substantial contributions to the national economy, creating more than 850,000 high-level jobs and supporting an additional 4.4 million jobs indirectly and across fields. However, a combination of factors, including the high cost of R & D already alluded to, the rate of failures of prospective products (like the Alzheimer’s drug for which late-stage clinical trials were recently halted after disappointing results), and decreased venture capital investments, have driven fears that that U.S.-based drug discovery could slow, stop, or move to other nations, potentially hurting a significant segment of the U.S. economy. In response to these pressures, the United States Congress, the FDA, and the drug industry as a whole have endeavored to foster an environment more conducive to the development of innovative, safe, and effective new compounds in the U.S.
Of the four programs mentioned above, the most recent is the Breakthrough Therapy designation, created by Congress 2012 through the Food and Drug Administration Safety and Innovation Act (FDASIA). Breakthrough Therapy designation can be sought when a pharmaceutical company is developing a therapy that is “intended alone or in combination with one or more other drugs to treat a serious or life threatening disease or condition AND preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.” All requests for breakthrough therapy designation are reviewed within 60 days of receipt, and FDA will either grant or deny the request. If a drug is designated as breakthrough therapy, FDA will expedite the development and review of such drug. Manufacturers of new drug and biologic products have been quick to embrace the Breakthrough Therapy designation: as of November 2016, the FDA reported having received 464 requests for the designation, and had approved 51 products. The Breakthrough Therapy designation is a key example of one of the recent reforms meant to harmonize the current innovation ecosystem, making it a friendlier place for life sciences companies, but also adding to the overall value of therapies.
Increased Outsourcing = Improved Efficiency and Added Value
In the healthcare system, one area that is often not considered is outsourcing and the improved organizational efficiencies it provides. However, Life Sciences companies increasingly see the value outsourcing brings to their business outcomes by allowing them to share the load and lowering their costs via partners. The goal is to improve efficiency and maximize their investments in time, money, and personnel, as well as innovation. The pharmaceutical outsourcing industry has experienced a shift from the more traditional models to forming strategic partnerships, often with contract research organizations (CROs) or contract manufacturing organizations (CMOs) and even off-loading marketing, advertising and even sales functions.
This contributes to cost savings as well as increased productivity in clinical development, research, operations and sales. Further partnering opportunities with additional entities to improve IT operations and enhance the communications, collaboration and data exchange with outsourcing partners in addition to research, clinical trial and manufacturing improvements can also yield benefits. A new shift towards strategic IT partners, especially cloud-based platforms, that can help with the influx and increase in data coming from internal and external sources and the need to harmonize, standardize and cleanse this data from traditional and non-traditional sources is another area that can add value and reduce costs to the organization. The ability to streamline data manipulation can also have an impact on driving insights from these sources that would otherwise have remained in silos.
The Rise of Personalized Medicine and Individualized Value
In 2003 the Human Genome Project was completed by the U.S. Department of Energy and the National Institutes of Health in partnership with international entities. Its goals were to sequence the 3 billion units of DNA that go into making a human genome, as well as to identify all of the genes located in this vast amount of data. Amazingly, the project was completed 2 years ahead of schedule and under budget as well. One of the early hopes of the genomic project was to identify specific genes that caused common diseases. Scientists now believe the answer is more complex, with many diseases developing as the result of multiple genes interacting. Nevertheless, the information garnered from the genome project has the potential to transform healthcare. Many believe that genome-based medicine, often called personalized medicine, is the future of healthcare—the next logical step in a world in which more is known about human genetics, disease, and wellness than ever before. Most people have heard of genetic tests to determine their risk for developing (or passing on) breast cancer or the degenerative Huntington’s disease. Another rapidly increasing use of personalized medicine, or genomic medicine, is tailoring drug therapy in patients with certain conditions. Medications for clinical depression, for example, are known to have completely different efficacy and side effect profiles from one patient to another, based on that patient’s individual genetic makeup. Thanks to the work of the Human Genome Project, what used to be science fiction can now be accomplished with a simple cheek swab. As the young-but growing field of personalized medicine continues to evolve, more uses will be found for this almost dizzying amount of information – and companies will have an ever-greater need to store and harmonize the genetic data of thousands of patients. Personalized medicine is about making the treatment as individualized as the disease. In order for personalized medicine to be used effectively by healthcare providers and their patients, the miracle of genetic findings must be translated into precise diagnostic tests and targeted therapies.
Healthcare and life sciences intersect at almost every juncture. It’s vital to remember that change in one field likely means change in the other as well. But the goal of increasing the value for the patient and their outcomes, is the driving force behind the new healthcare economy.
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