DIGITAL PRESCRIPTION
FOR U.S.A. PHARMA COMPANIES
FOR U.S.A. PHARMA COMPANIES
Pharmaceutical and medical-device companies have been slow to adopt digitization. Here are five reasons they should get moving.
The
US healthcare industry is
undergoing a major transformation as healthcare reform encourages
consumers to play a far more active decision-making role. Yet despite
this traditionally business-to-business industry moving quickly to a
business-to-consumer model, companies have been slow to join the
digital movement. Unlike successful B2C companies in other
industries—which offer mobile solutions, provide personalized
product recommendations, and empower customer-service agents with a
360-degree view of the customer—most healthcare providers and
payors are lagging, as are pharmaceutical companies and
medical-device manufacturers. That’s problematic when customers are
increasingly expecting a better, more personalized experience from
companies taking advantage of the host of digital tools and analytics
at their disposal.
Healthcare
is not immune to this reality.
The sudden increase in the individual
market1through
the creation of exchanges and growth in Medicare Advantage2 has
forced US payors to adopt some of these digital tools, while the
growing cost burden for healthcare absorbed by consumers inspires
many would-be patients to jump on the web or social networks to
conduct research. So why, with a few exceptions, are pharmaceutical
and device companies taking a “wait and watch” approach?
Government agencies, payors, disease advocates, and disrupters are
launching digital solutions that threaten product sales and take
advantage of the opportunity to respond to patient needs. This role
should be a natural extension for pharmaceutical and medical-device
companies, and we have identified five compelling reasons they must
get moving before it is too late.
1. Patient behavior is changing
As
with many other industries, consumers in the healthcare sector are
becoming more informed, empowered, and demanding. The vast majority
of connected patients are using an array of digital tools to take
control of their health and the healthcare services they access and
buy: more than 70 percent of patients who are online in the United
States use the Internet to find healthcare information, and more than
40 percent of people who diagnosed their condition through online
research had it confirmed by a physician.3Patients
arm themselves with information about product safety and efficacy
gleaned from websites and online communities such as PatientsLikeMe,
pore over cost and quality indicators from healthcare start-ups such
as Castlight Health or HealthGrades, and comparison shop using
information synthesized by their insurance providers.
The
more that healthcare data becomes digitally accessible, the more
patients will use it to weigh—and potentially reject—expensive
healthcare treatments. This is particularly true in the United
States, where patients pay a greater percentage of the cost of their
drug therapies (25 percent is not unusual) than they do for other
healthcare expenses such as inpatient services. Not surprisingly,
these consumers are demanding more information so they can apply the
same cost-benefit analysis and research techniques they use to
purchase cars or phones when they purchase healthcare; they are also
making more informed, rational choices about where they put their
money. Data and information about insurance plans, pharmaceutical
products, and manufacturers are discussed in a variety of virtual
forums. If companies do not join the digital dialogue and influence
the conversation, they will lose an opportunity to shape it, and they
may be put on the defensive trying to refute the statements made by
those that do take part.
2. Government agencies are moving surprisingly quickly
As
patient and consumer demand for information grows, the government is
beginning to supply healthcare data either directly, through the
release of information, or indirectly, by providing incentives for
collection and aggregation of relevant clinical data. A recent
McKinsey Global Institute report4 found
that healthcare is one of seven sectors that could generate billions
of dollars of value per year as companies use open
data—machine-readable information made available to others, often
free of charge—to develop new products and improve the efficiency
and effectiveness of operations.
Government
health agencies, from national health services in Asia and Europe to
government organizations in the United States, are already harnessing
the power of big data to figure out what’s working and what isn’t
and encouraging others to do the same. The Health Data Initiative
launched in 2010 by the US Department of Health & Human Services
(HHS) was one of the first and is still among the most prominent
examples. In June 2011, former HHS chief technology officer Todd Park
described an ambition to make HHS the “NOAA of health data.”5 It
appears that his vision is becoming reality, as HHS reported that
more than 1,000 data sets were available on healthdata.gov at the end
of 2013,6 and
the agency’s catalog continues to expand.
The
hope is that greater “data liquidity” will both enable more
collaborative research among academics and inspire healthcare
innovation. Greater access to data is already driving changes in care
protocols, allowing the benchmarking of physicians, aiding the
identification of clinical best practices, informing the adjustment
of benefits and reimbursement structures, and resulting in actual
behavioral change. At the federal level in the United States, for
example, the recent release by the Centers for Medicare &
Medicaid Services of Medicare reimbursements to providers put some
physicians on the defensive to explain billing perceived as
excessive, and the organization also proposed rescinding the
prohibition against releasing prescriber, pharmacy, and plan
identifiers related to Medicare Part D payments.
In
another example, the new openFDA application-programming-interface
initiative for drug-adverse events allows researchers to synthesize,
interrogate, and generate insights from a decade (2004–13) of
adverse-event reports—an effort that is almost certain to stir
conversation. And at the US state level, Arkansas and Tennessee are
examining treatment protocols and zeroing in on the relatively small
number of care episodes that comprise the majority of medical costs.
The states’ shared goal is cutting waste and revising reimbursement
policies to encourage high-quality and efficient care.
These
efforts mean that providers and manufacturers of drugs and devices
only control a small fraction of the data relevant to their work or
products. If healthcare follows the path of other consumer-oriented
sectors that compete on data analytics, such as high tech and
retailing, winners and losers will be determined in part by who makes
the best use of the data available and the strongest case for change.
Government agencies across the globe are leading the way, and
entrepreneurs are taking advantage of government’s interest in
facilitating data exchange. However, pharmaceutical and
medical-device companies are on the sidelines, leaving others to
dictate how information related to their products is used.
3. Trial data is necessary but no longer sufficient
Pharmaceutical
companies have used data generated from long-running randomized
controlled trials as the gold standard to demonstrate the efficacy
and safety of products and gain regulatory approval or formulary
listings. Yet many of their customers—payors, increasingly
providers, and even patients—are looking for real-world evidence.
Both access to and quality of real-world data are increasing
exponentially, spanning everything from patient electronic health
records to social platforms, healthcare claims, demographic trends,
and genomic insights.
The
difference in emphasis by certain stakeholders creates pressure on
pharmaceutical companies to respond. As data integration and analyses
take precedence over data ownership or sponsorship, competitive
advantage will rest with those organizations that innovatively use
multiple data sources to uncover true insights. Meeting long-standing
requirements regarding clinical-trial data continues to be necessary
for approval, but it is no longer enough for other stakeholders when
more and more targeted and timely data are available. Consider this:
Thomson Reuters found that the number of observational research
studies tripled from roughly 80,000 between 1990 to 2000 to more than
263,000 in the following decade from 2001 through 2011.7
There
is a concerted effort to facilitate collaboration by making more
real-world data available at a fairly low cost. Initiatives such as
PCORnet, a distributed research network, were launched to advance
researchers’ ability to conduct comparative-effectiveness and
clinical-outcomes research more efficiently. Aggregating data across
“networks of networks” dramatically reduces the cost of
observational studies and more quickly generates insights about
patient care. Innovative methods enable randomization using
real-world data to improve the quality of findings.
Pharmaceutical
companies can’t discount observational data because such data
already affect product pricing and reimbursement levels. European
markets are using real-world evidence to limit reimbursements on new
drugs to the competitor’s level until real-world evidence is
provided to demonstrate that the new therapy is better. The
International Society for Pharmacoeconomics and Outcomes Research
reported in 2007 that countries were using reference pricing for new
treatments assessed to add little incremental medical value, and
real-world data was part of that effectiveness assessment.8 In
short, pharmaceutical companies need a data strategy that reflects
the shift in how data are shared and analyzed, as well as a plan to
manage all types of data that affect product sales, pricing, and
reimbursement.
4. Care is evolving
Healthcare
is moving from a focus on addressing point-in-time issues toward
coordinated, continuous health management. The need to provide
ongoing management of chronic diseases and to predict and prevent
severe episodes and events offers new opportunities and places new
communication demands on every member of the healthcare team,
including pharmaceutical companies. Sensor technology, such as that
produced by Proteus Digital Health, allows continuous collection of
physiological data (for example, electroencephalograph,
electrocardiogram, movement, heart rate, and glucose levels), which
could vastly improve disease management by providing real-time status
reports that can alert providers to impending patient problems. When
scaled broadly, these innovations also may reduce the need for many
courses of treatment. Pharmaceutical companies need to be at the
forefront of developing “beyond the pill” services that deliver
value to patients and evolve from a mind-set that measures success
based largely on the number of prescriptions written.
Some
innovators already are combining technology-enabled monitoring and
insight to deliver new solutions to patients. Propeller Health
inserted GPS technology in inhalers to identify environmental
triggers that caused asthma sufferers to use their device, thus
allowing consumers to head off severe attacks. Similarly, a
pharmaceutical company that made a pain medication equipped patients
with Jawbone devices to continuously capture patient mobility. This
showed that patients experienced greater relief that allowed them to
increase their movement, even if they did not report lower pain
scores. The evidence was used to convince payors to relist the pain
medication on formularies.
Not
all wraparound services rely on new technology. Telemedicine outreach
and coaching efforts by nurses at one of the largest government
hospital systems in the United States dramatically reduced the risk
of complications from conditions such as diabetes.
Whether
low or high tech, patient services aimed at preventing acute episodes
or supporting compliance deliver significant benefits to patients.
Pharmaceutical companies that remain fixated solely on prescription
volume, rather than on sustaining relationships between a brand and
patients, risk ceding the role of trusted provider to others. For
industry participants to thrive in the digital era, they must build a
broader menu of service offerings instead of merely using technology
solutions to increase prescriptions.
5. Competition is faster and fiercer
Technology
cycles are getting shorter and the cost of experimentation cheaper.
The run-up to the passage of the Health Information Technology for
Economic and Clinical Health Act in 2009 and Affordable Care Act in
2010 saw significant investment in companies developing systems,
solutions, or applications to support electronic health records. From
2010 to the end of 2013, seed and Series A–stage healthcare
investments continued to grow, multiplying fivefold in the United
States in that time. In the first half of 2014, investors spent $2.3
billion, with more than 140 digital companies each raising more than
$2 million,9 as
the investment focus shifted from providers of
electronic-health-records solutions to developers of
consumer-oriented applications, makers of wearable health technology,
and health data and analytics. There are thousands of
healthcare-related apps available from the US Apple App Store, but
only a fraction are patient facing with genuine health content,
according to a new study from the IMS Institute for Healthcare
Informatics. The recent announcement of the Apple Watch and the
company’s release of its HealthKit developer tool are likely to
increase the variety of functions and number of health-related apps
that are available.
Google
Glass is the most high-profile wearable being tested for numerous
healthcare applications—for example, surgeons are using it to
facilitate and record operations, office physicians are reducing
interruptions in patient engagement by retrieving and sending
information to electronic medical records through the device, and
emergency-medicine physicians are getting specialist consults by
transmitting video or images taken by Glass. Beyond
Google, Intel acquired BASIS Science, MC10 raised a $41.9 million
investment, and Proteus raised $183.4 million to develop its line of
sensor-based products. Services or applications that facilitate
consumer communication with doctors such as Doctor on Demand and
HealthTap+ also secured financing.
These
new entrants to the healthcare sector have different ways of thinking
about solving healthcare problems and using proven agile iterative
techniques to bring products to market rapidly and in iterations as
improvements are made. Pharmaceutical companies need to recognize the
value and impact of these disrupters and learn from them.
Digitally
enabled healthcare is here, and most pharmaceutical companies aren’t
ready. Despite access to unprecedented data and technologies that can
be used to drive better health outcomes by influencing customer
behavior, few are truly exploring digital-engagement models. The
opportunity to learn more about consumers and develop better, more
targeted products and services far outweighs the threat digitization
presents companies—for now. Unless incumbent pharmaceutical
companies move quickly, innovative competitors may grab a greater
share of benefits and stronger customer loyalty.
About the authors
Sastry
Chilukuri and Rena
Rosenberg are
principals in McKinsey’s New Jersey office, where Steve
Van Kuiken is
a director.
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