The healthcare revolution – pharma creates its own future

The pharmaceutical industry faces a deepening crisis of trust greater than anything we have seen before – requiring the industry to re-evaluate how it works with healthcare systems, says Jonathan Dancer.

We sometimes think we are having a bad time with market access in the UK market, but the perspectives of others from around Europe might just cheer us up – on the other hand, they might not.

The brand managers from around Europe were sitting in a huddle at the company booth waiting for the delegates to come out of the last session. Kate said: “You were lucky – at least once you get a go-ahead from the Government, you’re in. We have to put up with another load of regional barriers and committees.”

“You think you have it tough?” Gerhardt threw back. “At least you get to choose a price. We have to negotiate based on whatever comparator is permitted, and if we don’t agree, we have to withdraw the product.” There was a brief pause and then with perfect timing, Enrique looked up dolefully. “Luxury! We used to dream of having a comparator.”

Like in the Monty Python sketch, our feelings magnify when we hear how challenging other people’s markets are and we cannot wait to pour out our own woes.

Over the past decade, the so called Fourth Hurdle has morphed into a complex web that realistically resembles less a hurdle and more an assault course. The UK perspective alone sees dozens of bodies, sometimes working against each other, set up to contain the cost of medicines, to maximise value for money and to manage affordability. Some aim to strengthen the evidence base, some provide back-office commissioning support, some co-ordinate research or control the budget – and yet others focus on procurement, medicines optimisation or framework development. Some networks even establish their own list of ‘discouraged’ medicines.1

There are many different models across Europe, each one specific to its own nation and originally devised in isolation. It is certain that if we look at the UK system, we can see some rigorous elements, yet if we took the most challenging components from the systems in each market and combined them, the resulting construct would be far worse than anything one single market currently faces.

It is my belief, with much consolidation of approach almost inevitable, that only by engaging successfully with our health systems across Europe and helping to shape them collaboratively, can we prevent the morphogenesis of a beast far more terrifying and detrimental to patients, innovation in our industry and healthcare in general than anything we have seen to date.

“The industry faces a deepening crisis of trust that is greater than anything we have seen to date”

If you talk to the so-called payers, it becomes clear that many of them simply do not trust the industry. Some will cite what they perceive to be breaches of trust, and others will have simply absorbed negative perceptions from others. The industry certainly has some vocal critics, who are not always just or fair, but we must concede that some critics do have good points to make, and that it is worth taking heed. It is not just in the lay press that the Industry has detractors.

The industry faces a deepening crisis of trust that I believe is greater than anything we have seen to date. The transparency of information available on the web, the speed of dissemination of any new comment or view and the scepticism of some sections of the public who’ve been brought up to mistrust governments and industries alike, all make for a potent cocktail.

I asked a German payer why when he calculated the benefit of a medicine the system did not allow for savings in peripheral costs to be considered. His reply was that as the creators of the system did not believe the economic models produced by the industry, all such models and data were disregarded in the calculation.

This is in stark contrast to most markets that fully accept pharmacoeconomics, or some of the Nordics, where not only peripheral costs but also societal costs are considered to be relevant in calculating the benefit of a medicine.

A payer from the Netherlands lamented that – having agreed with companies that they could launch their products on condition that they demonstrated their claims through a real world registry – found that when they had not done so after a couple of years, it was difficult to remove the product from the market. If she took the same view as German payers, she would have no such qualms!

So what is it that the industry needs to do to partner in the healthcare revolution that is taking place? I believe that there are four main components:

1. Focus on societal objectives

2. Create value through innovation

3. Be a trusted partner

4. Contribute our expertise freely.

“Companies have broadened their mission from purely maximising shareholder value to embracing the greater good of society”

Societal objectives

Companies from all industries have broadened their mission from one that purely maximises shareholder value to one that embraces the greater good of society, taking account of wider societal issues in generating their returns, even extending to the so-called triple bottom line (3BL or TBL) – social, ecological and financial.

Many companies have sought to create a positive impact on society through corporate social responsibility programmes. There are those, however, who interpret these as fig leaves for corporate greed. Professor Tom Watson, an authority on corporate responsibility, believes that some of these initiatives have drifted from their original purpose. “It’s becoming another form of ‘green-washing’ where a patina of social engagement is wrapped around product and service marketing,” he says.2

As there is an additional responsibility imposed by its duties to human health, it is important for our industry to be ultra-diligent in design and implementation of any social programme, and indeed there are many shining examples, dating back to Merck and ivermectin to patient-access schemes in the developing world in areas such as HIV.3 There is still more to do, but industry must partner with society in these and other areas, if it is to be seen to have pure motives.

Value through innovation

The innovation potential of any industry depends on its ability to invest, which in turn depends on the creation of sufficient profits in the first place. However, this virtuous circle can easily be broken if sufficient innovation does not happen to drive the cycle. It is only when innovations satisfy an unmet need that they can be of value and, of course the perception of value is a highly subjective measure. There can be a variance between the things that society values compared with payers, which of course is a frequent source of debate in the press.

“It is clear that different nations take radically different views of what constitutes value”

For certain, if you are in the business of pharmaceutical product development, prospective value must be estimated over a very long timescale. Unless you fully understand the likely outcome measures, target study populations, endpoints and clinical settings by the time of launch, you may well end up with a product the customer either does not value, or cannot afford. It is clear that different nations take radically different views of what constitutes value, and we also have to take heed of these similarities and differences as we seek to create and exchange value with customers.

Trusted partner

All of this requires trust and investment of time, working with the right stakeholders at very early stages of clinical development. For understandable reasons, co-creating your phase II and III study design with payers can feel a step too far for pharma but is, I believe, something we need to embrace if we are to move forward. As regulatory and payer organisations converge, we will be forced to collaborate, which will surely be a less than optimal outcome for everyone than if we initiate the collaboration ourselves.

Contribute freely

We should be the ones who understand most clearly how our medicines will work best, and for that knowledge to come to bear, once again we need to collaborate freely with those who deliver healthcare to help create the right environment for the delivery of superlative patient care. This must entail free and unfettered contribution of our expertise to those tasked with designing or redesigning service systems. We should expect nothing back from our contribution, other than optimised care for the patients for whom we ultimately work. After all, the same society that pays our bills is composed of the patients who need our services in the first place.

As Mike Robbins, the motivational speaker says,4 “We have been taught that trust must be earned, when in fact it is something that we must grant to others.” He quotes Albert Einstein: “The most important decision we make is whether we believe we live in a friendly or hostile universe.” Robbins chooses ‘friendly’; how about us?


1. PrescQIPP Drop List, NHS.

2. ‘CSR checklist proposed by UK academic at public lecture’, Macquarie University

3. ‘The life and times of ivermectin – a success story’, Nature Reviews Microbiology, December 2004

4. ‘Trust is granted, not earned’, Huffington Post blog, 21 June 2010


redbow consulting group

About the author:

Jonathan Dancer is managing director of specialist healthcare strategy consultancy Redbow Consulting Group

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