Healthcare value is your key to success. Here’s how to get it right.
No one would dispute that it is mission-critical for companies to obtain FDA approval for their new therapeutics. But FDA approval does not also ensure a therapeutic’s commercial viability. To succeed commercially with broad support for utilization, it is essential that a therapeutic delivers to stakeholders, including payers, compelling and differentiating healthcare value as compared to standard of care treatments. In the absence of properly/maximally defining and proving that healthcare value—and doing so on payers’ terms—payers will take a restrictive stance and limit access to the therapeutic. The burden of proof is 100% on the sponsor/company.
At launch, clinical trials provide the only data a sponsor has to define and prove value. So it is critical that commercial and payer needs, which will almost always exceed FDA needs, are built-in from the earliest stages of clinical development.
The problem with the prevailing approach is that it only captures some of the healthcare value that can be found—and sometimes just a small fraction of it. Unfortunately, a “complacency” is clearly evident.
It’s the norm that companies get healthcare value wrong
For over a decade, payer decision-makers have been telling us that (even in 2021) that manufacturers typically present “average to poor” value propositions for their new therapeutics. And this doesn’t apply just to new companies, it’s very much a problem for big pharma and other established players as well. Further, payers aren’t the only ones recognizing this shortfall. Wall Street analysts indicate that it’s unusual for new products to generate revenues that reach—let alone exceed—their expectations. They indicate the results are typically disappointing, and they point the finger at payer difficulties.
Why are companies routinely getting healthcare value wrong?
If the norm is that payers’ needs are not being met by companies bringing new therapeutics for coverage and access decisions, why is nearly everyone still following an approach that so consistently fails?
The problem with the prevailing approach is that it only captures some of the healthcare value that can be found—and sometimes just a small fraction of it. Unfortunately, a “complacency” is clearly evident. Company leaders believe that if they state their commitment to developing therapeutic healthcare value and hire dedicated staff, the problem is all but solved. But with companies in reality effectively operating on automatic pilot and botching the development, investors end up taking unnecessary losses, and more than a few good drugs never reach the patients who need them.
Company leadership almost never understands what’s actually happening in their internal healthcare value development process. They typically promote the centrality of their commitment to bringing healthcare value to stakeholders and genuinely believe they’re appropriately and maximally developing it. Most companies hire highly credentialed staff who are charged with securing the best possible healthcare value and payer results. But because of a plethora of legacy policies and processes and new constructs which fail to address these problems, the results continue usually to disappoint. There’s a tremendous disconnect between what companies have convinced themselves they are doing and what they’re actually doing.
How healthcare value development should instead be approached
Getting it right requires different thinking: a much broader, integrated approach that engages many more inputs and is initiated at the start. The true process of value identification is an art that requires creativity, flexibility, and an examination of the matter simultaneously from multiple vantage points throughout clinical development. This is distinctively different from the rigid, siloed, and post hoc process that is currently followed and basically focuses on “adding up” the clinical value that can be identified based on the results of already completed trials. Healthcare value determination is much more than this “accounting process” which misses very significant potential value that could and should have been identified before the trials were executed and then tested within the clinical development process.
Getting it right doesn’t cost more, it’s about working smarter
The best news in all of this, however, is that doing it right need not be more costly. It doesn’t require that the company raise more capital or spend more money. It is about using existing resources better by working smarter.
