Is pharma fit for the future?

pharmafile | May 3, 2006 | Feature | Sales and Marketing |   

It's getting personal. While the pharma industry continues to debate the end of the blockbuster model, hardly a single clinician, biomedical researcher or expert in the pharmaceutical or diagnostic industry would argue that the future will bring better and more targeted drugs for specific patient populations.

Further developments in genomics and proteomics, and better understanding of cellular pathways have opened the door for new diagnostic tools and specialised therapies. The question is not whether we will see targeted treatments – and ultimately personalised medicines – but when these will be available and commercially feasible.

Without a doubt, the often highly political debate about drug approval, reimbursement, and healthcare funding would be conducted quite differently if a new drug produced a clearly defined health outcome with higher certainty.

The advent of personalised medicine is generally expected to result in better health outcomes. However, industry leaders argue that the biotech and diagnostic industry stands to benefit more from personalised medicine than the pharmaceutical industry does, at least initially. Concerns are high that adopting a pharmacogenomic model for drug development and marketing might lead to fewer commercial opportunities within the pharmaceutical business community.

Nevertheless, according to a report on molecular diagnostics published by Cambridge Healthtech Advisors in 2005, several economic incentives for collaboration suggest that even "niche-buster" drugs could be profitable. In fact, they may be the only profitable route in the future as the blockbuster pipeline continues to flatten.

Unfortunately, we do not have time to spare as we wait for the results of pharmacogenomics and personalised medicine. Socio-demographic developments and economic constraints are already squeezing healthcare spending, ahead of a biotechnological, pharmaceutical and diagnostic research lab being able to generate treatments that are beyond question for financing.

The healthcare system in the UK has begun to shift to payment by results already. The objective of this shift is to drive better performance and get a better return on investment for the billions of pounds which are spent on the nations health through its hospitals.

Drug prices are under scrutiny as well. In most developed economies, independent from the existing models of healthcare systems, for instance tax-based, solidarity-funded, employer- or consumer-driven, funding of the increasing healthcare demand is stretching with current models.

As the collapse of traditional healthcare systems becomes predictable, reforming the funding and forging better collaboration between the healthcare players is becoming a priority.

Fundamental changes in financing shape future

The rules for financing medical therapies, pharmaceutical drugs and medical products represent the basic framework of any national healthcare system. According to Capgemini's Global research report Vision and Reality, 2005, new research reveals that fundamental changes to the financing structures of healthcare over the next few years are inevitable, as rising healthcare costs and quality issues become major concerns across the developed world.

Nearly 85% of key healthcare stakeholders from Europe and the US believe that sources to finance healthcare, such as tax premiums and public/private funding, will change, while 88% anticipate amendments to current healthcare payment schemes.

According to the study, these changes will primarily impact the individual patient directly. Many Europeans now already pay over $300 out-of-pocket per year for their healthcare, while in the US direct payments are well over $700. More than half of those surveyed (69%) believe that patient out-of-pocket payments will increase by up to 25%. The growing financing burden will be realised through increases in supplementary coverage and co-payments by the patient, which will result in shifting a larger portion of the cost of healthcare directly to the patient.

At the same time, 89% of survey respondents believe that basic health coverage for all is an important component of a stable healthcare infrastructure in the future. This basic coverage will almost certainly be financed through a combination of the existing systems in place today, which are managed by payers and the government.

With these changes in the financing structure come changes in decision-making authority. Each of the healthcare stakeholders, e.g. payers, regulators, providers, patients, will seek to play a more active role in healthcare financing and decision making. One example of this relates to the influence of various stakeholders over future prescribing decisions. The study results indicate that payers and the government will be significantly more influential than pharmaceutical companies, and that patient groups are expected to be increasingly influential over prescribing decisions in the future. And pharmaceutical companies are more extreme than any other stakeholder group in their anticipation of this increasing influence of patients, payers and the government.

As the decision-making structure changes, health outcomes will become increasingly more important to maintaining a stable healthcare infrastructure. Health outcomes – broadly defined as those programs that measure the value of the healthcare provided to individual patients and populations – consider both the benefits, including health and quality of life and the costs over an extended period of time, to gain a more complete picture of the success of healthcare provided.

Examples in today's world would include disease management programmes, evidence-based medicine, chronic care management and others. There is a widely held belief that chronic care management (77% of survey respondents), cost/benefit analyses (80% of respondents) and evidence-based medicine (87% of respondents) are all important to maintaining a stable healthcare infrastructure in the future.

All healthcare stakeholders must collaborate  

Healthcare costs are rising and dissatisfaction with the healthcare system is increasing. Patients, physicians, industry, employers, health plan managers, and hospital managers all said in the survey that the healthcare system requires 'radical change.' Today's policymakers are searching for ways to slow down the growth without reducing access to necessary healthcare services or creating undue burdens for providers. In some instances, they are revisiting past strategies; in others, they are exploring new approaches that seem to hold promise.

One major change will be the role played by patients. Instead of being the passive recipients of judgments and treatments handed out by the medical community, increasingly consumers will be actively involved in managing their own healthcare. They will demand a better quality of life, better care, personalised treatment, convenience, choice and value for money.

The priorities of healthcare payers will alter, too. Although cost-containment will remain a major consideration, payers will increasingly look for an overall improvement in medical outcomes. Payers will only pay for treatments that provide demonstrable evidence of an improvement – this is partly because an overall improvement in outcomes may ultimately save money.

Hospitals are challenged to adopt a holistic management approach to meet their financial requirements and improve patient care, recognising that individual departments can no longer be allowed to operate as separate, isolated entities. Today's provider structures will change radically so that completely new supply networks will develop. The observance of defined quality standards will be supervised over Total Quality Processes as well as controlling and risk management systems. All providers have to accept – driven also by payers – the rules of evidence-based medicine.

Evidence-based medicine will also have a two-fold impact on the pharmaceutical industry. First, it will enable medicine makers to further substantiate the value of the therapy or identify additional benefits such as improvements in quality of life and cost effectiveness. Second, it will draw clear distinctions between the best therapy and less effective medications in the same therapeutic class. Together, evidence-based medicine and an electronic medical record will ultimately improve the quality of care and outcomes.

However, the move to health outcome driven systems will not be easy, as profound changes will be required in terms of infrastructure and behaviour from the regulator, providers and consumers alike. More needs to be done in terms of providing accurate information as well as providing the necessary incentives to all stakeholders.

In particular, electronic medical records combined with e-prescribing are likely to be a key element in the successful implementation of the health outcome focused healthcare systems. Electronic medical record systems are penetrating fast in Europe, and have already been implemented in 90% of primary care practices in Norway, Sweden and Denmark. In the UK, it is expected that online records of the country's 60 million citizens will be available by 2010.

Increased role of industry

Public debate about cost containment seems to indicate that innovative pharmaceutical products have become unaffordable to today's healthcare systems. This is underlined by the fact that treatment outcomes often remain uncertain. Pressures have built on the pharmaceutical industry with increasing demands from payers for proof of efficacy and cost-effectiveness as well as regulators demanding proof of safety. Faced by the challenge of inflating costs and decreased productivity of basic healthcare research, networks formed by biotechs, private and public research units have proven most innovative and best suited for biological pathways research and technological innovation.

Pathways analysis can be utilised to assess novel theranostics and pharmacogenomic research strategies and applications in discovery. They also play an important role in improving the understanding of diseases, toxicology prediction and in validating therapeutic targets.

The emerging field of theranostics in which the developing technologies and capabilities of the diagnostic sector are increasingly applied, offers opportunities to move towards health outcomes. The first gene-based tests entered the market about 20 years ago in 1985 when Gen-Probe marketed a test for Legionnaire's disease, but early technologies were labour-intensive and had long turnaround times.

The development and widespread use of the polymerase chain reaction (PCR) in the late 1980s facilitated the development of more rapid testing and a broader range of applications. According to an article published in Nature in June 2005, most of the tests developed in the 1980s and early 1990s targeted infectious diseases, and tests for HIV, Hepatitis C and Human Papilloma Virus (HPV) remain in strong demand today. Molecular tests that diagnose and predict cancers are poised to become more profitable targets. Cardiovascular disease has become another major target as rates of heart disease increase.

In the last few years, the completion of the Human Genome Project and therefore the rapid increase in human genomic and genetic information, improved technologies for sample preparation, target amplification and detection, have led to the development of new patented tests and the successful utilisation and high margins of novel molecular diagnostic techniques in patient management and in drug discovery and development.

Conclusion

A focused approach on health outcomes provides opportunities for the pharmaceutical and biotech industry to work in partnership with providers, patients and payers. If the industry takes a more proactive approach towards collaboration, it will help move away from the position of supplier of commodities and products, towards a true partnership based on mutual gain, with the patient at the centre of attention. The pharmaceutical industry needs to demonstrate its products, help patients manage their condition better, and reduce the need for consultations with a healthcare professional.

Products that benefit patients and help hospitals and GP practices realise efficiency savings will be promoted. Regulators and payers will be open to innovative approaches to the funding and delivery of better healthcare.

The industry has a role to play in structuring the new healthcare model because it has both the expertise and the resources to contribute. Embracing health outcomes may help the industry to rectify its negative image. As well as focusing development efforts on diagnosis and prevention, pharmaceutical companies must recognise that they and their products do not stand in isolation from the rest of the healthcare system.

The inevitable shift towards disease management and extensive health promotion programmes points towards a more integrated model of care where positive changes in a patient's lifestyle, fitness, diet and other treatments are integrated with the use of pharmaceuticals to optimise health outcomes while minimising overall cost.