eyeforpharma Philadelphia

May 2, 2016 - May 3, 2016, Philadelphia

A new pharma: Customer partnerships that prioritize patient value

The Value Game

Pharma needs to change if it is to convince payors of its overall value proposition.

As the attitudes of payors change, pharma companies will need to up their game when it comes to explaining the value they offer. Gearing their sales efforts towards convincing doctors of the need to write a prescription is no longer enough for firms which need to see the maximum return on their expensive products.

“That center of gravity is shifting away from physicians to payors,” explains Peter Hoang, Senior Vice President, Business Development & Strategy at Bellicum Pharmaceuticals. “Price compression and margin compression are going to make heavy R&D investment much more challenging.”

Gravity shift

Something has to change. Hoang, who will be speaking at eyeforpharma Philadelphia 2016 in May, sees that pharma has to strike a balance between selling and educating. Before coming to pharma, his 20 year career has spanned many industries, covering almost every sector in investment banking and venture capital,which perhaps gives him a slightly different view of things. “Given my work as an advisor to healthcare services companies and payors, my perspective is colored by seeing their historical view of pharma,” he notes. “In many ways, Big Pharma does an extremely good job of selling its products, but the focus tends to be squarely on the doctors. The education aspect is something we regularly pay lip service to, but is often secondary to our focus on driving prescription volumes.”

Currently, many of us have a sales focus which is not that different from the sales approach of a software or automotive company. That has to change – and it is changing.

This works up to a point: pharma will still have to have “mindshare when doctors write prescriptions”, but other elements are increasingly required. “Currently, many of us have a sales focus which is not that different from the sales approach of a software or automotive company,” he goes on. “That has to change – and it is changing.” The US’s Affordable Care Act has concentrated minds in the industry on total costs to the system, Hoang believes. “That is going to be magnified as people look much more closely at the overall cost of care. There is a real impetus on behalf of regulators, payors and patients to drive down costs.”

Value proposition

The big problem there is that - at present - pharma is not, he believes, set up as an industry to understand its overall value proposition. “For example, if the patient receives a very expensive therapy, whether that is a checkpoint therapy, a gene therapy or ahemopoetic stem cell transplant, is the cost worth bearing?” he asks rhetorically. “To date, payors have said ‘yes’ - but what about the other significant costs, of hospitalization, for example, or other long-term consequences which are no longer measured once people leave hospital? We don’t know how large the costs associated with people in the far end of the statistical tail is for people who need readmission – but we do know that the costs skyrocket for those patients! A therapy that appears less expensive at first may end up costing significantly more when you factor in the downstream costs of care.”

We have to redirect that traditional sales force model from a B2C doctor focus, to more of a B2B orientation to effectively engage the payors.

A good start would be to look at payors as customers rather than a threat. “At the end of the day, the physicians will continue to write the prescriptions but we have to understand that the payors will have an interventionist effect,” Hoang continues. “We must develop a corporate sales effort that is education- and research-focused. Today, the payor relationships exist at a corporate level – that means senior executives, often at the C-level, talking to other senior executives, rather than the sales force being engaged with reimbursement professionals. So, we have to redirect that traditional sales force model from a B2C doctor focus, to more of a B2B orientation to effectively engage the payors.”

Long-term costs

The question pharma is still struggling with is quantifying long-term costs associated with treatments, as well as quality of life issues. To be able to characterize the benefits of a therapy over a life, pharma will have to capture data better, allowing the industry to “better understand the true cost of the therapy”. The benefits of doing this are manifold: for a start, it will allow pharma companies to present a fuller cost argument to payors – but it would also chime with other important groups. “These issues will resonate with the public and legislators,” Hoang explains. “There is a benefit to society as a whole if patients can get back to work, supporting their families, paying taxes, and being productive members of the economy.”

So how should pharma make the most of its relationships with payors, especially when there can be pushback from insurance companies? “Insurance companies aren’t the bad guys,” Hoang insists. “I think it’s often overlooked that it is difficult for them to deny treatment – the PR overhead is enormous. I don’t think you’re going to get the same amount of pushback you’ve had historically from them. Pharma will find a receptive partner if they understand they are providing a less expensive treatment over the course of a patient life or one that enables their customer to have a longer, more productive life as a covered life.”

The case can be made in a compelling way, he insists, but at the moment that debate is only taking place at that corporate level. “By extending the efforts of our sales forces, we will be enabling our newest constituents, the payors, to make an informed judgment about what the right treatment is.”

Mindset change

Pharma is well aware that it cannot be seen as simply peddling pills: but establishing partnerships with health systems and payors will require both a change in sales approach as well as a change in strategy. “It requires a mindset change at corporate level,” he says. “But it is also a structural one: the shape of our sales forces will change. Talking to reimbursement professionals requires a very different set of skills versus talking with physicians.”

New approaches will need to be learned and new recruits found. “This is a necessary change that we, as an industry, have to make,” Hoang believes.

Peter Hoang, SVP, Business Development & Strategy,  Bellicum Pharmaceuticals will be presenting at eyeforpharma Philadelphia 2016 on the topic "Develop a partnership with health systems and payers to add value to your sales force".

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eyeforpharma Philadelphia

May 2, 2016 - May 3, 2016, Philadelphia

A new pharma: Customer partnerships that prioritize patient value