Pharma marketing: Demonstrating economic and clinical value
Rita E. Numerof explains why comparative effectiveness research and favorable cost/benefit impacts are becoming increasingly essential to success
By on Mar 25, 2012As if election year fireworks weren’t enough, the US Supreme Court is preparing to rule on reversing all or parts of the healthcare reform legislation passed in 2010. Despite the rhetoric, we don’t expect to see a return to the status quo ante, because the fundamental problems in healthcare have not gone away. We believe pharmaceutical companies must stay focused on the fundamental drivers of healthcare reform:
· Runaway spending on healthcare
· Lack of evidence to support what treatments work best
· Skepticism among stakeholders in the integrity and soundness of the industry
The US has already hit the ceiling on healthcare spending. According to the National Health Expenditures report (NHEA), in 2005, total healthcare spending was 15.7% of GDP, or over $1.98 trillion. For 2012, total projected spending is $2.85 trillion, or 17.2% of GDP, nearly twice the rate of most other developed economies.
Shifting power relationships
One reason healthcare spending is so high is the lack of evidence to support which treatments work best and mechanisms to enforce adherence to treatment guidelines. The US is a laggard in this arena. Other developed countries—including Britain, Canada, Germany, Australia, France and the Netherlands—have all established infrastructures to perform the same general purpose and for the same reason: They couldn’t afford not to. Rapidly ageing populations, coupled with rapid advances in technology and aggressive commercialization by manufacturers, made continued ad-hoc decision-making by providers economically untenable.
Finally, key stakeholders—investors, regulators, payers, physicians, patients, politicians, and the public—remain deeply skeptical of proposed solutions and of each other. However, power relationships among stakeholders are shifting, and this skepticism only complicates what are already very complex negotiations.
Given the fundamental problems that continue to drive the demand for healthcare reform, we believe successful companies are stepping up their ability to demonstrate comparative effectiveness through CER and favorable cost/benefit impacts for specific health outcomes for clearly segmented populations. Put another way, successful companies are demonstrating economic and clinical value (ECV) for their products, from concept to post-marketing.
Comparative effectiveness research
Comparative effectiveness research (CER) is any research intended to determine the relative effectiveness of two or more treatments for a specific disease state within a given population. CER is conducted through four main types of research:
· Database review: Retrospective research conducted on outcomes data held in existing databases.
· Meta-analysis: Retrospective review and statistical “combination” of the results of previously conducted clinical trials.
· Prospective database creation: A data collection plan specifically designed to track outcomes for patients having undergone one of several treatments under study.
· Head-to-head randomized, controlled trials: The gold standard of comparative research, featuring random assignment of patients to precisely the treatments under question.
CER has already been funded, is already moving forward, and promises to reshape the face of healthcare delivery. US Federal funding of CER was accelerated significantly by the American Recovery and Reinvestment Act of 2009 (ARRA), which allocated $1.1 billion for CER projects. ARRA created the Federal Coordinating Council for Comparative Effectiveness Research, whose express purpose was to foster advancement of CER to support better health decision-making.
It is clear that the supply of CER data, and the quality of that data, will be improved going forward. Successful companies will anticipate demand for effectiveness data from multiple stakeholders and will bolster their value proposition by incorporating cost and economic impact data into a cohesive economic and clinical value (ECV) case. (For more on CER, see Pharma marketing and comparative effectiveness research, Why Comparative Effectiveness Research is a market opportunity, How to build value through comparative effectiveness research and Health data and comparative effectiveness.)
Incorporating ECV into R&D
ECV gets to the heart of the R&D process, from identifying unmet needs and justifying research efforts to post-approval marketing.
As a simplified example, consider the annual flu shot. Clinically, research has been conducted to show its effectiveness at preventing illness. However, flu vaccine manufacturers should also be touting the economic impact of getting vaccinated. A recent study conducted by the University of Pittsburgh found that “for each employee vaccinated an employer can save $63 to $95 per person. Vaccinating an entire 150-person company, for example, could yield savings of between $9,450 and $14,250.”
The idea that it makes sense to be vaccinated rather than risk illness is not new; but quantifying the economic and clinical value of the vaccination versus alternatives is a relatively different way of thinking about treatment.
ECV and CER as core business strategies
Understanding a drug’s potential value based on economic and clinical research is more than just a really good idea. Reviews of new treatments will have to be supported by both comparative effectiveness and cost effectiveness data. On October 7, 2011, the FDA and CMS jointly announced their intent to institute a process for cooperation and concurrent review of medical products. The proposed approach would give CMS the go-ahead to begin considering a request for national coverage determination (NCD) before the FDA has completed its review of the product’s safety and effectiveness.
CMS and the FDA believe that a cooperative and collaborative parallel review will provide them with an opportunity to inform sponsors much sooner about clinical study designs that could provide data to address both FDA and CMS questions (i.e. economic and clinical value).
Given the possibility (or reality) that CMS’ reimbursement concerns will become an element in the FDA’s determination of the product’s safety and market clearance, and that implementation of the shared information activities undoubtedly will have unexpected and unintended consequences, industry leaders should proactively be preparing for the potential implications. Economic and clinical value data will be increasingly important for both regulatory approval and coverage decisions.
Whatever decision is made in the courts about the future of ARRA, the budgetary concerns of CMS will drive steps to limit expenditures. Increasing scrutiny of reimbursement in terms of value will be one of those steps. We expect that stakeholders across the spectrum (payers, providers, physicians, and patients) will increasingly respond to data that support both effectiveness and a positive economic value case. The implication for any pharmaceutical company is clear: ECV and CER have to be embedded in core business strategies.
Rita E. Numerof is president of Numerof & Associates, Inc.
For more from Rita E. Numerof, see Pharma marketing: Strategic approaches to market segmentation and Pharma marketing and market research.
For more on marketing, join the sector's other key players at SFE USA on June 12-14 in Somerset, NJ, and 6th Annual Sales & Marketing Excellence Latam Congress on June 28-29 in Miami.
For exclusive business insights, download eyeforpharma’s Pharma Emerging Markets Report 2011-12, Pharma e-Marketing Strategy and Pharma Key Account Management Report 2011-12.
For all the latest business analysis and insight for the pharma industry, sign up to eyeforpharma’s newsletters and follow us on Twitter.