Year in Preview:

Commercialization Trends Commercialization Strategies for Tomorrow

Trending toward patient focus and collaboration with all stakeholders. Healthcare Consumers Seek Tools and ­Services Online According to the Cybercitizen Health U.S. 2013 study from Manhattan Research:

• » 45% of online U.S. adults with a chronic condition say the Internet is essential to managing their ­disease or condition and consumers are going ­beyond seeking information to using tools and ­services to manage the day-to-day aspects of care.
• » 44% of online consumers report the Internet is ­essential for their health and medical decision-making. The study also found that online content and services influence how consumers approach health management for themselves and their dependents.

Source: Manhattan Research. For more information, visit manhattanresearch.com.

We asked more than 100 thought leaders what they predicted would be the top trends to shape the industry’s commercialization process in 2014 and beyond. While there are many factors affecting the economics of bringing a drug to market in the future, there were two that were top of mind with our experts: the enterprisewide shift to a focus on patients and more collaboration among all stakeholders. According to our experts, the commercialization process must contend with a new driver: the patient community. And although patients will share the wheel with payers and providers, they will have the biggest impact on steering its strategies along the entire commercialization spectrum. As patients become more empowered, the industry must strive to better serve them not only through the medicines it makes, but through services that smooth the road for access, from diagnosis, to therapy, to reimbursement, including tools that assist physicians in ­adequately prescribing the drug, and measures that help assure insurance reimbursement. Scott Dulitz, VP, product support and innovation, at UBC: an Express Scripts company, refers to this as the “eEnablement" of patient access services. With an increasing legislative and regulatory focus around how prescribers leverage technology to communicate with and manage patients, it will be important for pharma to develop strategies to integrate their patient support services into these new operating models. “Prescribers will expect pharma programs to plug into their electronic medical record systems to eliminate duplicate work and to speed up their patients’ access to therapy," he says. “Real-time benefit investigations, electronic prior authorization support, and online patient consent are just a few of the many new eEnabled services prescribers will expect from pharma." With the expanding role of the patient, the industry should be planning on developing programs that fulfill patient needs independent of a product “lens," says Rob Peters, senior VP, strategy at MicroMass Communications. This switch in focus will allow the industry to tell more compelling stories that satisfy the interests of diverse stakeholders and better address unarticulated drivers of patient behavior. “With opportunities expanding for patients to assume a greater role in their healthcare and new regulatory mandates coming into play, commercialization efforts must be oriented to patient needs to be successful," he says. The emergence of more empowered consumers will put more emphasis on direct-to-consumer marketing efforts, says Charlene Prounis, CEO and managing partner, Flashpoint Medica. “DTC and DTP will grow in importance as consumers take on more responsibility for their own care, from buying insurance that covers specific drugs to being responsible for adhering to medications or risk higher premiums," she says. Commercialization in the new environment will also have to move beyond disease awareness and education to actively reshape attitudes and beliefs in preparation for new products. “Influencing diverse stakeholders requires more than just raising awareness and relying on past behavior as a predictor of success," Mr. Peters says. “As therapies become more personalized and novel products become more scarce, it requires more effort for a drug to achieve success in the marketplace." According to Shankar Narayanan, VP strategy, life sciences, at Cognizant, efficacy is no longer the primary factor for getting a drug prescribed and reimbursed. Tomorrow’s commercialization strategy will need to demonstrate value to patients and payers throughout the continuum of care. Along with decreasing physician autonomy and increasing use of evidence-based medicine, the increasing focus from payers and regulators on outcomes necessitates a commercialization model that focuses on the value the drug has on patient outcomes and total costs, not simply efficacy of treatment for a given indication, Mr. Narayanan says. In response to this change, pharma must identify and determine where its product and services can add value during the patient’s treatment journey, which in turn augments the product’s value proposition. “This requires a more detailed analytical approach to determining value, melding prescription data, payer data, and data from patients together to create a more complete picture of how best to commercialize a drug," he advises. Measuring and translating value is driving a shift in commercial strategy — moving from the promotion of product features to the differentiation of asset value based on market-validated benefit, says Rich Pilnik, president of commercial solutions at Quintiles. The focus on value and the need for real-world evidence will spread across an interconnected ecosystem of stakeholders, each with varying needs and requirements, and this necessitates a collaborative effort to improve patient outcomes, enhance quality of care, and reduce cost. To meet the demand for evidence-based value, Mr. Pilnik suggests that biopharma companies accomplish three goals: clearly identify and understand how payers define treatment value; collect the right data; and effectively communicate that value to a myriad of stakeholders. “This begins at Phase II protocol design moving into pre-launch, and requires an in-depth understanding of the stakeholder environment and treatment delivery across a variety of geographies and providers," he says. “It extends to outcomes research to support a long-term value proposition for the product." Mr. Dulitz from UBC also believes that effectiveness will count more than efficacy in the coming years. “As pharma evolves to accommodate the changing landscape, there is one trend that can significantly reshape development and commercialization efforts: the recognition that demonstrating real-world effectiveness can bring greater success than superior efficacy," he says. “Demonstrating this success goes beyond just capturing patient-reported outcomes and requires a different approach to development. As multiple stakeholders become involved in the decision-making process, pharma has to create a base of evidence that satisfies differing perspectives aligned with a common goal: better real-world outcomes and the cost savings that come along with them." The impact will be felt most when it comes to formulary inclusion and cost containment, Ms. Prounis adds. “Formulary inclusion will be led by clinical benefit and cost-effectiveness and no longer just on efficacy and safety," she says. “Just this past year, a group of oncologists at Memorial Sloan-Kettering denied access to a new VEGF — vascular endothelial growth factor — agent because it was more expensive than the current agent without any evidence that it was better to justify a higher price." Physicians also are being held to clinical algorithms using evidence-based guidelines focused on efficacy, safety, and cost. Payer engagement strategies require more investment, including new pricing strategies, innovative service models, joint-disease management programs, and the provision of additional patient services that enhance the value of the product, Ms. Prounis says. The development of ACOs is another reason life-science companies need to prove with real-world data that their particular brand or device delivers improved outcomes and/or a lower total cost of care, says Brad Sitler, principal industry consultant, SAS Center for Health Analytics and Insights. “ACOs require treatment pathways based upon outcomes data, hence health economics and outcomes research will move to center stage in the life sciences as this will take a key role in contractual negotiations and convincing providers to use and payers to reimburse," Mr. Sitler says. Collaboration and Transformation Lie Ahead The once insular industry is headed for a major shift in how it does business — from R&D to commercialization. To be successful, companies will need to collaborate, not only among internal departments and business organizations, but also with stakeholders from both inside and outside the industry. According to EY in its Progressions: Getting to 3.0 report, no single entity has everything it takes to develop new offerings in the new healthcare ecosystem. Consequently, companies must collaborate with nontraditional players to leverage the others’ strengths and existing investments. Historically, pharma had protected its intellectual property (IP). But in today’s world, it is essential for pharma companies to openly share their IP with collaborators, the report states. Pharmaceutical companies need to focus on their core strengths while partnering with others to leverage their investments. Because of this movement, cooperative commercialization and strategic alliances will take center stage in the years to come. “The need to provide solutions that span the continuum of care will require pharmaceutical companies to work in conjunction with other entities to ensure the best outcomes for patients," says Mr. Narayanan from Cognizant. From Cognizant’s perspective, there are three important goals within this collaborative venture: improving collaboration between alliance partners while providing the greatest ease of use to the patient; linking together patient interactions across multiple, disparate groups to provide a clearer picture of how alliances can drive better outcomes; and designing new data governance structures to provide access to relevant information while respecting the privacy of patients as well as abiding by applicable local privacy laws. At the marketing and sales level, the evolving commercial model can only happen if life- sciences companies adapt both their processes and their systems to respond more quickly to change and with a united approach across both organizations. “Today, many commercial systems are often stitched together and lack seamless windows between marketing, sales, and the customers, so no one group is perfectly aligned with one another in real time," says Paul Shawah, VP of commercial strategy at Veeva Systems. “As these systems — and the processes that govern them — evolve and operate seamlessly and flexibly, commercial teams will be able to adapt and react quickly to market needs even within our highly regulated industry." Additionally, with the advent of significantly more robust customer segmentation, the life-sciences industry will be empowered to adopt more flexible and comprehensive ways of allocating sales and marketing resources. Instead of each group operating separately, commercial teams will work together to optimize how they spread their budget dollars across all customer touch points, both personal and non-personal, for more precise allocation of resources to the right customer micro-segment. “The result will be improved profitability and the full implementation of relevant customer-centric strategies," Mr. Shawah says. A commercial teams’ ability to understand, collaborate, align, and deliver will be critical to commercial success in the next three years, especially between commercial operations, sales, and marketing teams, says Curt Staab, VP, management advisor, TGaS Advisors/Sales Advisory Practice. “As pharmaceutical companies drive for efficiencies with scarce commercial resources, the need to ensure effective partnering between sales, marketing, and commercial operations is paramount," he says. TGaS has surveyed clients about the relationship among sales, marketing, and commercial operations and reports that sales and marketing is generally pleased with operations’ response to their requests, but they would appreciate more partnership-level feedback. “We typically hear, ‘I want my operations team to challenge my assumptions and inform me of other options,’’’ Mr. Staab says. “Commercial operations teams that can meet these needs will become indispensable partners in commercial success." A way to avoid pitfalls throughout the process is to ensure that all three organizational teams are communicating effectively. For example, changes in the commercialization process in the early stages of R&D can cause issues for marketing if they are not communicated properly. As the commercialization process changes and more companies outsource R&D, there is a risk in having a scientific story and data story that do not align with the brand objectives set by the marketing team. Add to that the various players — communication agencies, thought leaders, medical-science liaisons, sales reps, etc. — involved in creating and delivering that story, and the risk that the brand’s story can become misinterpreted and fractionated grows, cautions Al Topin, president, Topin & Associates. “A brand’s promotional story is driven by the quality and robustness of its scientific and clinical data," he says. “An early focus on science-based messaging and a process that bridges R&D and commercialization can help create a promotional platform that’s credible and consistent from launch and throughout the brand’s life cycle." Shifting the Targets Shifting the marketing target away from only high-decile physicians to more appropriately segmented physicians and patients is a monumental change under way that will significantly influence commercial strategies in the coming years. In fact, this shift is already happening and will be accelerated by the Affordable Care Act, says David Rear, president, Advanced Clinical Concepts. “The role of nurse practitioners and physician assistants will continue to grow in the future as we will eventually no longer focus solely on high-decile physicians when marketing brands," he says. Marketers have also begun to target patients — either directly or through advocacy groups — and their payers. “We’ve finally realized that to market brands today, we also need to reach those who use the products and those who’ll reimburse them," Mr. Rear says. “This holistic approach to commercialization will only get stronger and communication plans will need to address the differing needs of these groups." Mr. Rear notes that the methods marketers use to target their audiences are also changing. Targets need to be specific, but the consumer patient data currently available is not detailed enough. “At some point, data from electronic medical records will become available to marketers and we will use them to reach our targets," he says. “We’ll be able to purchase and mine the data and pull very specific data points, such as how patients are using the medicines and how compliance, or lack of, is affecting their condition. We can even overlay data points with any co-morbidities they may have and link these individuals to specific physician targets." Once these data become available, the conversation with providers will be very different. Mr. Rear predicts that pharma will be able to have a dialogue with physicians about their specific patient base and provide information that will help them achieve their patient goals. Mr. Shawah at Veeva Systems agrees that new strategies will include life-sciences companies striving for a much deeper understanding of the customer, leading to more robust and actionable customer segmentation. This trend will be driven by the continued advancement of cloud-based technologies that open new doors to physicians. “Today, customer segmentation incorporates basic customer demographics, decile data, and in some cases, practice environment which include factors that influence prescribers’ decision-making," Mr. Shawah says. “Going forward, there will be a greater focus on incorporating new or additional data sources into segmentation models to gain richer customer insights." One example, he says, is channel preference data. The industry will get better at capturing, interpreting, and incorporating new customer data sets, which may or may not be available today, so that this information can be used to better personalize and improve sales and marketing execution. he most significant change is that customer types have proliferated away from the sole HCP, and their needs and preferences are forcing marketers to become more creative and sophisticated in their use of data and channels, says Chris Wright, managing director at ZS Associates. “New commercial models struggle to take hold, and the old reach-and-frequency model has become incomplete for the new world, even though it will have some role in the future." The newer method of targeting includes implementing business-to-business organizations with new value propositions, coupled with a customer centric multi-channel approach to promotion at the individual level. Creating new key account management capabilities — not just roles — will also become increasingly important, Mr. Wright says. These and many other trends will be shaping the commercialization strategies of the future. For more information on what trends will be influencing the commercialization landscape, visit our digital edition for bonus material regarding the shift in financial risk, digital communications trends, the impact of big data, and the move to more specialty drugs. “As patients assume a greater role in their healthcare and ­regulatory mandates increase, commercialization efforts must be oriented to patient needs. " rob peters / MicroMass Communications “ACOs require treatment pathways based upon outcomes data; this will play a key role in contractual ­negotiations and convincing providers to use ­certain medicines and payers to reimburse them. " Brad Sitler SAS Center for Health Analytics and Insights “Pharma is recognizing that ­demonstrating real-world effectiveness can bring greater success than superior efficacy. " Scott Dulitz / UBC: An Express Scripts Company “The emergence of ­empowered consumers will put more ­emphasis on ­direct-to-consumer marketing efforts. " Charlene Prounis / Flashpoint Medica “A commercial teams’ ability to ­collaborate and deliver will be ­critical to commercial success, especially ­between commercial operations, sales, and marketing teams. " Curt Staab / TGaS Advisors/Sales Advisory “Communication is key; as more companies outsource R&D there is an increased risk of having a ­scientific story that is not aligned with the marketing team’s brand objectives. " Al Topin / Topin & Associates FDA Clarifications Pave Way for Lower-risk Apps Mobile apps could potentially ­transform healthcare as they create an extension to the traditional ­healthcare setting, says Mark Rinehart, chief technology officer, at MicroMass Communications. “With these apps, doctors will be able to diagnose ­patients with potentially life-threatening conditions. In addition, these apps will help ­consumers manage their own health and wellness, ­promote healthy lifestyles, and gain access to useful ­information when and where they need it," he says. In its final guidance for developers of mobile ­medical applications, the FDA stated it will exercise ­enforcement discretion for mobile apps that do not pose any significant risks to consumers. What this means is that the FDA has recognized there may be some mobile apps that meet the definition of a medical device, but because they pose a lower risk to ­consumers, they will not enforce requirements for these types of lower-risk apps under the Federal Drug & ­Cosmetic Act. Through its tailored policy, the FDA has enabled greater innovation while protecting patients. With these new clarifications, developers of lower-risk apps can focus on what their apps do best: change patient health behaviors. The key to changing patient behavior is designing apps from the ground up with the main goal of changing specific behaviors from bad to good, using a marriage of mobile technology and the theories and techniques of behavior modification. ­Critical to this is to design the app for people’s real lives. Integrated Value Chains According to PwC, by 2020, pharmaceutical, payer, and provider value chains will be intertwined: » Payers, providers, and pharma will collaborate on epidemiological studies. » Pharma will collaborate with payers and providers to determine which of the medicines in its pipeline really add value and can thus ­command the premium prices it needs to ­maximize its return on investment. » Payers, in consultation with the medical ­profession, will issue clinical guidelines and they will give providers incentives to prevent and manage disease, as distinct from treating it. They will also shift to outcomes-based pricing. » Pharma’s focus will shift to the development of cures and healthcare packages for more ­effectively helping ­patients comply with their medical regimens and manage the diseases from which they suffer. Source: PwC. For more information, visit pwc.com “With more robust ­customer ­segmentation, the industry can adopt more flexible and ­comprehensive ways of allocating sales and marketing resources. " Paul Shawah / Veeva Systems “Pharma companies need to ­provide solutions that span the continuum of care and partner with other companies to ensure the best outcomes for ­patients. " Shankar Narayanan / Cognizant use your QR?CODE?READER or go to bit.ly/PV1113-Comercialization Evolving Landscape Impacts The Industry’s Business Strategies On the heels of most other business sectors, the pharmaceutical industry is beginning to use big data to obtain critical consumer insights. According to a McKinsey & Company report The ‘Big Data’ revolution in healthcare: Accelerating Value and Innovation, researchers have started to mine data to determine what treatments are most effective for particular conditions, identify patterns related to drug side effects or hospital readmissions, and gain other important information that help patients and reduce costs. McKinsey says that its recent evaluation of the marketplace discovered more than 200 businesses that have been created since 2010 that are developing innovative tools to make better use of available healthcare information. However, before these efforts can be successful, the healthcare system must undergo some fundamental changes. For instance, the old levers for capturing value, such as unit-price discounts based on contracting and negotiating leverage, do not take full advantage of the insights that big data provides and thus need to be supplemented or replaced with other measures. Payers and providers will also need to develop proactive strategies to successfully take advantage of the insights from big data. The increase in big data volume and accessibility will affect all stakeholders in the healthcare arena. “As more data become available, customers will know more about drugs and their clinical impact," says Nancy McGee, managing director at Manatt Health Solutions. “As a result, there will be an increase in the investment needed to help explain and interpret what the data mean and how they can support better decisions." A healthcare model that is emerging from the benefits of the availability and interoperability of big data is the integrated health system, such as Kaiser Permanente, that is evolving to assume more risk, establish new reimbursement models that are linked to improving outcomes and quality, while reducing costs. “Integrated health systems have emerged as new powerful influencers, as they integrate and determine how care is delivered to large patient populations, and the impact on the life-sciences value chain and commercial model is profound," says Dave Escalante, senior VP, OneKey & Marketing, Cegedim Relationship Management. “However, opportunities to use big data and gain valuable insights exist today, and they are helping life-sciences companies develop new strategies to win in the marketplace." The value of data is not held in the vast amount captured but in how it can be analyzed to effectively move brands. “I believe marketers will evolve to look at data from a customer-centric perspective and find effective ways to use this new knowledge in commercialization," says David Rear, president at Advanced Clinical Concepts. “Also data will come from everywhere. Today, marketers can grab data about patients online, in digital forms, and even in tracking devices such as Nike bands. However, this can also present a challenge, as there is so much data available that brand marketers may not know how to best vet the data or make use of the information to launch brands." Affordable Care Act Influences Pricing and Launching Trends The Affordable Care Act (ACA) appeared at first to be a boon for the industry, as its policies — increases in number of insured, increased government subsidies, and overall improved access to healthcare — opened up a larger market to drug access. However, experts say the long-term effect of the law on healthcare will also create challenges. Global management consulting firm Oliver Wyman says the long-range impact on the industry could be as much as 20% of U.S. revenue. It may take several years for the act’s full impact to be realized, but experts say pharma needs to address these ongoing changes today. With uncertainties around the Affordable Care Act, an increasing number of blockbusters going generic, fewer differentiated primary care brands, and an overall malaise with the economy, payers and patients will continue to put pricing and reimbursement pressure on the system, says Gerry Melillo, president, sales services at PDI. This will manifest itself in several areas: more cost-effective generics available at the lowest co-pay; more undifferentiated brands being pushed to the highest copay position, not covered, and/or more prior authorization requirements that will bog down providers; and increased pressure to restrict the recent proliferation of co-pay card discounts and vouchers. The ACA will also force the industry to actively share financial risk with payers and providers, which will spur a renewed emphasis on creating risk-based contracts that benefit all parties, says Brad Sitler, principal industry consultant, SAS Center for Health Analytics and Insights. “As these entities take on significant new financial risk due to the Affordable Care Act, the industry gets another crack at its previous attempts for risk-based contracting," he says. The industry has little choice, according to Chris Wright, managing director, at ZS Associates. “It needs to adapt the cost model or face extinction," he says. “Even as the patent cliff is not quite done, we find that new launches have become much less effective now than in the past." Mr. Wright says launches were about 50% bigger in the first half of the past decade compared with the latter half, pressured by more aggressive payer controls." To counter these payer pressures, organizations need to become much more agile and efficient. Large, older companies will do this gradually, but newer entrants without legacy will adapt faster, Mr. Wright says. Planning for uncertainty around healthcare reform — aggregated payment systems (bundles, etc), integrated delivery structures (accountable care organizations, etc.), and quality-based incentives (pay for performance) — serves to redistribute financial risk back toward the provider, Mr. Sweeney adds. “As such, providers will begin to take a greater part in market access decisions," he says. “They will begin to think about value in a way they have avoided before. For example, we expect shifts responding to payers’ inability/reluctance to manage oncology. We also expect to see more push-back through the use of pathways from payer-provider partnerships and eventually from providers unilaterally, as seen with Memorial Sloan-Kettering earlier this year." In many non-U.S. markets, payers are increasingly interested in a broader picture of product benefits beyond survival and quality of life: wider societal benefit, productivity, unmet need, and other factors will play a greater role in determining access, he says. Pricing opportunities will become more limited, as consolidation of purchasing and increasingly direct government exposure to drug costs combine with budgetary pressures. These forces will drive demands for biopharma to demonstrate value early and over the lifecycle, according to Mr. Sweeney. “Payers will seek to deploy resources ever more efficiently, “ he says. “This backdrop also raises the bar for new agents — even in previously low-barrier disease — and provides fertile ground for growth of biosimilars and high-cost generics." The Impact of the Digital Age With the proliferation of physicians and patients who use digital tools to access and track healthcare information, digital channels continue to rise in importance for pharma. Several industry reports say understanding the needs of digital patients and their physicians is crucial to enabling them to achieve better healthcare outcomes. According to a Quintiles white paper, “Harnessing the Power of the Digital Patient," the digital world is dramatically shaping healthcare. Today is the age of the digital patient — with the patient at the center of the networked environment — and patients are actively seeking information about their health without the constraint of geographical boundaries or physician intermediaries. The key to success is to put the patient at the center of the healthcare and communication network and establish relationships to make it easier for them to participate in their own healthcare. Our experts say marketing operations must be integrated to be successful, however. “Digital media mustn’t be compartmentalized," says Cinda Orr, president and CEO of Scorr Marketing. “Marketing is still and always will be the art of building a better confluence of interactions to fulfill a holistic buying process. Digital media is only one tool of this influence and works best when interwoven with others." That being said, Ms. Orr acknowledges that digital media is increasingly serving as the basis of marketing plans. Many organizations are pooling their assets to form really talented, digitally oriented marketing teams to the extent that there’s a looming sense that other media, and even salesforces, are becoming outmoded. “The average B2B customer moves almost 60% of the way through the buying decision-making process before engaging a sales representative," she says. “That’s huge, and it reinforces the need for distinctive brands with informative content to conciliate inbound traffic — which, by and large, flows in via the Web. But there still has to be a trigger for customers to seek out specific brands early in the buying process or pursue a buying option later in the process. Interest must be piqued and exploited." According to Manhattan Research ePharma Physician feedback, tablets are providing a substantial boost to details, however, risk-averse firms may be limiting their opportunities to engage with healthcare professionals by concentrating digital investment in product sites and other properties they own. One key takeaway from the study showed that physicians expect a wow factor from tablet presentations. Manufacturers have gotten up to speed quickly on tablets, outfitting salesforces with the devices, mostly iPads, and stocking them with content. However, that content often fails to impress physicians, and the “sales dance" is frequently clumsy. Tablets clearly enhance details, lengthening rep visits and piquing physician interest in follow-ups, and 54% of ePharma Physicians agree they make meetings more valuable. “Multi-channel and digital resources are increasingly important in actively communicating with healthcare professionals," says Rich Pilnik, president of commercial solutions at Quintiles. “The use of digital assets to improve the frequency of coverage, extend geographic reach, and access key stakeholders outside of high density population areas needs ongoing refinement and enhancement. To optimize effectiveness, the communication mix needs to vary according to the product’s therapeutic profile, stage in lifecycle, target patient population, and the health system in which the product is being prescribed." Physicians also need to be reached on digital channels apart from details on tablets, and correctly targeting them is crucial in the digital multi-channeled world. “Given limited access to many physicians, it becomes critical to engage physicians with targeted messaging," says Charlene Prounis, CEO and managing partner of Flashpoint Medica. “Media takes on more importance than ever before because the landscape is so fragmented." Big data, pricing, and digitalization of healthcare will influence pharma business models of tomorrow. “Given the limited access to many physicians, it will become critical to use ­targeted messaging. " CHARLENE PROUNIS Flashpoint Medica “As more data become ­available, customers will know more about drugs and their clinical impact. " Nancy McGee / Manatt Health Solutions On the heels of most other business sectors, the pharmaceutical industry is beginning to use big data to obtain critical consumer insights. According to a McKinsey & Company report The ‘Big Data’ revolution in healthcare: Accelerating Value and Innovation, researchers have started to mine data to determine what treatments are most effective for particular conditions, identify patterns related to drug side effects or hospital readmissions, and gain other important information that help patients and reduce costs. McKinsey says that its recent evaluation of the marketplace discovered more than 200 businesses that have been created since 2010 that are developing innovative tools to make better use of available healthcare information. However, before these efforts can be successful, the healthcare system must undergo some fundamental changes. For instance, the old levers for capturing value, such as unit-price discounts based on contracting and negotiating leverage, do not take full advantage of the insights that big data provides and thus need to be supplemented or replaced with other measures. Payers and providers will also need to develop proactive strategies to successfully take advantage of the insights from big data. The increase in big data volume and accessibility will affect all stakeholders in the healthcare arena. “As more data become available, customers will know more about drugs and their clinical impact," says Nancy McGee, managing director at Manatt Health Solutions. “As a result, there will be an increase in the investment needed to help explain and interpret what the data mean and how they can support better decisions." A healthcare model that is emerging from the benefits of the availability and interoperability of big data is the integrated health system, such as Kaiser Permanente, that is evolving to assume more risk, establish new reimbursement models that are linked to improving outcomes and quality, while reducing costs. “Integrated health systems have emerged as new powerful influencers, as they integrate and determine how care is delivered to large patient populations, and the impact on the life-sciences value chain and commercial model is profound," says Dave Escalante, senior VP, OneKey & Marketing, Cegedim Relationship Management. “However, opportunities to use big data and gain valuable insights exist today, and they are helping life-sciences companies develop new strategies to win in the marketplace." The value of data is not held in the vast amount captured but in how it can be analyzed to effectively move brands. “I believe marketers will evolve to look at data from a customer-centric perspective and find effective ways to use this new knowledge in commercialization," says David Rear, president at Advanced Clinical Concepts. “Also data will come from everywhere. Today, marketers can grab data about patients online, in digital forms, and even in tracking devices such as Nike bands. However, this can also present a challenge, as there is so much data available that brand marketers may not know how to best vet the data or make use of the information to launch brands." Affordable Care Act Influences Pricing and Launching Trends The Affordable Care Act (ACA) appeared at first to be a boon for the industry, as its policies — increases in number of insured, increased government subsidies, and overall improved access to healthcare — opened up a larger market to drug access. However, experts say the long-term effect of the law on healthcare will also create challenges. Global management consulting firm Oliver Wyman says the long-range impact on the industry could be as much as 20% of U.S. revenue. It may take several years for the act’s full impact to be realized, but experts say pharma needs to address these ongoing changes today. With uncertainties around the Affordable Care Act, an increasing number of blockbusters going generic, fewer differentiated primary care brands, and an overall malaise with the economy, payers and patients will continue to put pricing and reimbursement pressure on the system, says Gerry Melillo, president, sales services at PDI. This will manifest itself in several areas: more cost-effective generics available at the lowest co-pay; more undifferentiated brands being pushed to the highest copay position, not covered, and/or more prior authorization requirements that will bog down providers; and increased pressure to restrict the recent proliferation of co-pay card discounts and vouchers. The ACA will also force the industry to actively share financial risk with payers and providers, which will spur a renewed emphasis on creating risk-based contracts that benefit all parties, says Brad Sitler, principal industry consultant, SAS Center for Health Analytics and Insights. “As these entities take on significant new financial risk due to the Affordable Care Act, the industry gets another crack at its previous attempts for risk-based contracting," he says. The industry has little choice, according to Chris Wright, managing director, at ZS Associates. “It needs to adapt the cost model or face extinction," he says. “Even as the patent cliff is not quite done, we find that new launches have become much less effective now than in the past." Mr. Wright says launches were about 50% bigger in the first half of the past decade compared with the latter half, pressured by more aggressive payer controls." To counter these payer pressures, organizations need to become much more agile and efficient. Large, older companies will do this gradually, but newer entrants without legacy will adapt faster, Mr. Wright says. Planning for uncertainty around healthcare reform — aggregated payment systems (bundles, etc), integrated delivery structures (accountable care organizations, etc.), and quality-based incentives (pay for performance) — serves to redistribute financial risk back toward the provider, Mr. Sweeney adds. “As such, providers will begin to take a greater part in market access decisions," he says. “They will begin to think about value in a way they have avoided before. For example, we expect shifts responding to payers’ inability/reluctance to manage oncology. We also expect to see more push-back through the use of pathways from payer-provider partnerships and eventually from providers unilaterally, as seen with Memorial Sloan-Kettering earlier this year." In many non-U.S. markets, payers are increasingly interested in a broader picture of product benefits beyond survival and quality of life: wider societal benefit, productivity, unmet need, and other factors will play a greater role in determining access, he says. Pricing opportunities will become more limited, as consolidation of purchasing and increasingly direct government exposure to drug costs combine with budgetary pressures. These forces will drive demands for biopharma to demonstrate value early and over the lifecycle, according to Mr. Sweeney. “Payers will seek to deploy resources ever more efficiently, “ he says. “This backdrop also raises the bar for new agents — even in previously low-barrier disease — and provides fertile ground for growth of biosimilars and high-cost generics." The Impact of the Digital Age With the proliferation of physicians and patients who use digital tools to access and track healthcare information, digital channels continue to rise in importance for pharma. Several industry reports say understanding the needs of digital patients and their physicians is crucial to enabling them to achieve better healthcare outcomes. According to a Quintiles white paper, “Harnessing the Power of the Digital Patient," the digital world is dramatically shaping healthcare. Today is the age of the digital patient — with the patient at the center of the networked environment — and patients are actively seeking information about their health without the constraint of geographical boundaries or physician intermediaries. The key to success is to put the patient at the center of the healthcare and communication network and establish relationships to make it easier for them to participate in their own healthcare. Our experts say marketing operations must be integrated to be successful, however. “Digital media mustn’t be compartmentalized," says Cinda Orr, president and CEO of Scorr Marketing. “Marketing is still and always will be the art of building a better confluence of interactions to fulfill a holistic buying process. Digital media is only one tool of this influence and works best when interwoven with others." That being said, Ms. Orr acknowledges that digital media is increasingly serving as the basis of marketing plans. Many organizations are pooling their assets to form really talented, digitally oriented marketing teams to the extent that there’s a looming sense that other media, and even salesforces, are becoming outmoded. “The average B2B customer moves almost 60% of the way through the buying decision-making process before engaging a sales representative," she says. “That’s huge, and it reinforces the need for distinctive brands with informative content to conciliate inbound traffic — which, by and large, flows in via the Web. But there still has to be a trigger for customers to seek out specific brands early in the buying process or pursue a buying option later in the process. Interest must be piqued and exploited." According to Manhattan Research ePharma Physician feedback, tablets are providing a substantial boost to details, however, risk-averse firms may be limiting their opportunities to engage with healthcare professionals by concentrating digital investment in product sites and other properties they own. One key takeaway from the study showed that physicians expect a wow factor from tablet presentations. Manufacturers have gotten up to speed quickly on tablets, outfitting salesforces with the devices, mostly iPads, and stocking them with content. However, that content often fails to impress physicians, and the “sales dance" is frequently clumsy. Tablets clearly enhance details, lengthening rep visits and piquing physician interest in follow-ups, and 54% of ePharma Physicians agree they make meetings more valuable. “Multi-channel and digital resources are increasingly important in actively communicating with healthcare professionals," says Rich Pilnik, president of commercial solutions at Quintiles. “The use of digital assets to improve the frequency of coverage, extend geographic reach, and access key stakeholders outside of high density population areas needs ongoing refinement and enhancement. To optimize effectiveness, the communication mix needs to vary according to the product’s therapeutic profile, stage in lifecycle, target patient population, and the health system in which the product is being prescribed." Physicians also need to be reached on digital channels apart from details on tablets, and correctly targeting them is crucial in the digital multi-channeled world. “Given limited access to many physicians, it becomes critical to engage physicians with targeted messaging," says Charlene Prounis, CEO and managing partner of Flashpoint Medica. “Media takes on more importance than ever before because the landscape is so fragmented." McKinsey Identifies Examples Of Value Pathways From Big Data Many players have recognized that t ey are more likely to capture value from big data by developing innovative partnerships and ­aligning their goals with organizations that have traditionally been their competitors. Many of these pioneering partnerships are still in the early stages, but they will lead to the release of significant additional value when properly ­executed. Consider the following examples, all of which relate to the new value pathways: » Payers and Providers: Blue Shield of ­California, in partnership with Nant Health, is advancing care delivery and improving outcomes by developing an integrated technology system that will allow doctors, hospitals, and health plans to deliver ­evidence-based care that is more ­coordinated and personalized. This will drive performance improvement in a ­number of areas, including prevention and care coordination, and thus will promote the right care pathway. » Pharma and Payers: In 2011, AstraZeneca ­established a four-year partnership with WellPoint’s data/analytic subsidiary ­HealthCore to conduct real-world studies to ­determine the most effective and ­economical treatments for chronic illnesses and other common diseases. AstraZeneca will use the HealthCore data, together with its own ­clinical-trial data, to guide decisions on where to invest its research and ­development dollars. The company is also in talks with payers about providing ­coverage for drugs already on the market, again using the HealthCore data as ­evidence. Source: McKinsey & Company. For more information, visit mckinsey.com. “Marketing is still and always will be the art of building a better ­confluence of ­interactions to ­fulfill a holistic buying process. " cinda orr / Scorr Marketing

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