Building Value Based Healthcare Business Models
Pharma in Europe: New Medicine for a New World
Building Value-Based
Healthcare Business
Models
As healthcare systems begin to pay for outcomes rather than products, smart patient-centric services will play a key role in the race to capture value.
Building Value-Based Healthcare Business Models
1
The pharmaceutical and medical technology industries survived the recent financial crisis relatively unscathed, but they are being transformed nonetheless as healthcare systems switch their reimbursement model from paying for products or services to rewarding clinical and health-economics outcomes. The task the industries face—demonstrating value based on a product focus—is far from simple.
For one thing, there are inherent limitations to the value a single drug can bring to the management of complex, chronic diseases, where therapeutic success is determined not only by the molecule but by a combination of drugs, physician intervention, home assistance, and lifestyle changes.
Moreover, providing better health outcomes in exchange for fewer resources means that medications and interventions must be targeted to the right patients. However, personalized medicine has yet to significantly permeate the operating models of the pharmaceutical and medical technology industries.
But perhaps most importantly, recent value-based price negotiations have revealed a dramatic lack of trust on both sides of the table. The pharmaceutical industry has often been accused of using its marketing machinery to churn out pills that deliver high margins no matter what value they bring to patients. And the industry perceives healthcare payers’ restrictions as short-sighted penny-pinching that inhibits access to medicines and curbs innovation. In this climate, agreeing on the definition of value, let alone on the standards of evidence for value, is difficult. And indeed, even as healthcare payers push providers to show evidence of outcome, they continue to steer their spending via strict cost
Building Value-Based
Healthcare Business
Models
As healthcare systems begin to pay for outcomes rather than products, smart patient-centric services will play a key role in the race to capture value.
Building Value-Based Healthcare Business Models
1
The pharmaceutical and medical technology industries survived the recent financial crisis relatively unscathed, but they are being transformed nonetheless as healthcare systems switch their reimbursement model from paying for products or services to rewarding clinical and health-economics outcomes. The task the industries face—demonstrating value based on a product focus—is far from simple.
For one thing, there are inherent limitations to the value a single drug can bring to the management of complex, chronic diseases, where therapeutic success is determined not only by the molecule but by a combination of drugs, physician intervention, home assistance, and lifestyle changes.
Moreover, providing better health outcomes in exchange for fewer resources means that medications and interventions must be targeted to the right patients. However, personalized medicine has yet to significantly permeate the operating models of the pharmaceutical and medical technology industries.
But perhaps most importantly, recent value-based price negotiations have revealed a dramatic lack of trust on both sides of the table. The pharmaceutical industry has often been accused of using its marketing machinery to churn out pills that deliver high margins no matter what value they bring to patients. And the industry perceives healthcare payers’ restrictions as short-sighted penny-pinching that inhibits access to medicines and curbs innovation. In this climate, agreeing on the definition of value, let alone on the standards of evidence for value, is difficult. And indeed, even as healthcare payers push providers to show evidence of outcome, they continue to steer their spending via strict cost