At the Nexus of Convergent Revolutions
Digital technologies meet cost containment in the new pharma marketing landscape, writes Bill Drummy.
Everyone has been hearing about the “Digital Revolution” for so long now that it’s become boring. How do people get bored with a revolution? People can get bored with anything, if it goes on long enough. (Did you see the last episode of Seinfeld?)
But now, twenty years (or arguably, 50 years) into the digital age, there is another revolution sweeping through our industry, one that in many ways has been enabled and accelerated by the digital revolution. I’m talking about the long-dreaded healthcare cost control revolution, now moving front and center on the pharma stage.
Most of the drivers behind this movement are well known: with healthcare costs in the US at 18% of GDP (about twice as high as other developed economies), federal and state governments are getting serious-as-a-heart-attack about bending down the cost curve. Last summer the Supreme Court rendered the implementation of “Obamacare” (aka “The Affordable Care Act”) inevitable, and last fall’s election quashed any remaining doubt. Regardless of what you think of the ACA on its merits, the movement to overturn it has been kneecapped.
Now that we all know healthcare reform is likely here to stay, it’s time to soberly consider the implications for the pharma industry, and, in particular, the implications for pharma marketing.
The convergence of the digital and cost control revolutions will cause dramatic transformations across at least three dimensions of marketing: 1) It will broaden the targets who we need to speak to; 2) It will fundamentally change the way we can most effectively reach our ‘traditional’ HCP audiences; and 3) it will alter how smart executives define and communicate the value that pharma companies deliver to the healthcare system.
Dimension 1: New Decision-makers/Influencers
Fresh data from Manhattan Research reveals the increasing importance of so- called ‘non-traditional’ audiences, i.e., audiences previously considered secondary targets by pharma marketers. These new (or newly important) audiences include nurses and physicians’ assistants, pharmacists, and managed care/accountable care organizations (ACOs).
Going in reverse order, I’ll start with those so-called “financial” buyers. As we are seeing, the impact of the ACA is extremely broad based. But one of the biggest changes for pharma will be a change to the decision-making paradigm, and consequently, to how marketers need to reach and influence the new decision-makers. Some have argued that it makes no sense to “market” to purely financial buyers; they care about rebates and nothing else. Yet when Manhattan Research surveyed financial buyers, they sought value in more than just the ‘direct’ cost discussions. Incented as they are to reduce overall costs to the system, financial buyers are interested in many of the sorts of programs pharma can create to improve outcomes and reduce long-term costs. The financial buyers said they were interested in mobile-based adherence programs, patient education, and access to service and knowledge from pharma experts.
Of course, they are most interested in lower prices for Rx and medical products, but the marketer’s job here is to broaden the discussion of cost to include a broader view of the entire financial burden of treating a disease on the healthcare system, not just the direct cost of the script. And this argument can be made, if you have the right data. Or, perhaps more to the point, if you know how to properly access and build a story around the data you already have.
For example, Brian Sweet, executive director of health alliances at AstraZeneca recently shared this account: “We showed that the removal of a branded medicine in our portfolio from the preferred-tier status actually resulted in higher overall costs, which were related to cost of office [and ER] visits as well as disease-state related costs,”
Pfizer is also conducting an initiative with Humedica to consistently tell a financial story regarding the value of medicines. According to Thomas Friedman, writing in the New York Times, “Humedica…helps health care providers analyze their electronic patient records, tracking what was done to a patient, and did they actually get better.” The interesting twist here is that the company is applying the same “big data” methods for its pharma clients like Pfizer, to help them make the argument that branded medicines can improve outcomes.
Another consequence of the drive for cost reduction (and reduction in physician fees) is that docs need to see more patients in less time to make the same dollars. As a result, many important decisions, including Rx decisions, are being delegated to nurses and physicians’ assistants. There are 2.7 million nurses in the US, and they write a lot of scripts, influence even more, and are generally more accessible than doctors. With a few exceptions, pharma companies have spent little time and budget developing quality programs and materials to help nurses and PAs help their patients. In our experience, these are always the first programs to be eliminated when budgets are (inevitably) cut. But also in our experience, marketers who resist the temptation to reflexively cut these programs are likely to find a real ROI advantage.
The third group of rising influence is pharmacists; there are 275,000 in the US, and the profession is projected to grow by 25% by 2020.
Dimension 2: New Means to Access Physicians
Perhaps this statistic will shock you: by the end of 2013, 67% of US doctors will be employees, not independent businesses.
Unquestionably, doctors will lose a degree of influence as decision-making shifts to their employers, hospital pharmacy and therapeutics (P&T) committees and pharmacy heads. Doctors will still be highly influential, of course, particularly for difficult-to-treat conditions where novel compounds can truly improve outcomes. But crucially, the techniques for effectively reaching these doctors are going to be radically different very soon. The big story here is the rapid growth of EHRs. Today, 70% of doctor’s offices use EHRs
Old-fashioned HCP ads on Medscape won't work (if they ever did). Instead, pharma will need to offer tools to help the doctor with patient management and treatment algorithms. It is obviously in their interest for pharma to help patients properly take their medications. But beyond basic compliance, doctors have expressed a willingness to "prescribe" patient education materials or apps produced by pharma, delivered in proper context at the moment of care through EHRs. This is particularly true if these materials are of significantly higher quality than materials available otherwise.
This is a key point: pharma will always attract suspicion about ulterior motives whenever it tries to help. So it’s crucial that the assets the industry deploys be created with unique functionality and elegance, and built on a foundation of unimpeachable credibility. If pharma does meet the challenge in this way, doctors say they are open to engagement. According to Manhattan Research, 67% of docs are receptive to receiving pharma content in context through EHRs, and 51% said they want patient education, too.
Of course, sales reps will still play a role, but they will need to offer higher value – more service with less promotion – in order to be perceived as truly indispensable to physicians. (And not just as outmoded delivery vehicles for samples.) They will need to bring the full power of their organization’s knowledge into the room by means of a tablet app that dives deeper into a brand’s clinical story than a re-purposed visual aid ever could.
Dimension 3: New Ways to Deliver Value
Historically, the pharma-industry model was pretty straightforward: pharma provided the patented medicines, doctors prescribed them, and insurance companies paid for them. The industry had no incentive to lower costs. In fact, a key assumption of companies’ growth models was the ability to take regular price increases, without enhancing the medicine at all. It wasn’t “new and improved,” it was just the same but more expensive.
With a few exceptions, this is no longer a sustainable game for the industry. Pharma now needs to care about the overall cost of disease to the system, and of the treatment of disease. Increasingly, if you can’t actually show an impact on reduction of long-term costs, payers will stop paying. Or at the very least stop paying so much.
So the fundamental value proposition the industry offers has to change. Pharma now has to prove not “merely” that the medicine is safe and effective, but that the medicine also reduces the cost of treatment to the entire healthcare system.
Sanofi’s Dennis Urbaniak, who is VP of their US Diabetes business, recently made the argument succinctly:
“Life science leadership needs to shift from marketing brands to measuring and promoting outcomes as measured by clinical improvements, improved social and economic returns, and increased patient satisfaction.
We have leapt fully (albeit reluctantly) into the brave new world of “outcomes.” And if this sounds like a very different business than the one you entered even a short time ago, well, this ain’t called a revolution for nuthin’.
The old truism remains, however, and offers some solace. On the other side of change is opportunity, and the opportunity here is to think like the stewards of responsible healthcare we must become. Not because we are noble, but because we are shrewd. How can these products, when combined with the right education, measurement and support, really improve patient outcomes? How can we prove to the people paying the bills that this product is in fact a better long-term solution -- better for the patient and more responsible for the healthcare ecosystem?
In some cases, there may not be positive answers to those questions; your product just may not be justifiable. But in many others, there are, in fact, exemplary answers. Your product actually will improve the patients’ health at a lower cost than say, a long hospital stay, a diabetic complication, a second heart attack, or a cancer recurrence.
If one of those superior outcomes can be convincingly connected to your product, you need to get very good at using data (particularly triangulated outcomes data) to make your case, and not just to payers, but also to increasingly cost-aware HCPs and patients struggling with high co-pays. Using big data analytics to your advantage, you can more precisely target the right patients and right doctors (using geo-targeting, behavioral targeting and retargeting techniques) who can advocate for the appropriateness and superiority of a certain medication.
At the same time, you need to think “beyond the pill” (and beyond the pharma marketing status quo in virtually all regards) to how the pharma company can deliver greater overall value to the patient and the healthcare system. One example is to create sophisticated tools to improve adherence and help patients track their progress and share that data with their doctors and even with other patients.
In these ways, pharma marketing becomes the art and science of making a value argument to all financially-sensitive decision-makers and decision-influencers, so that they can become well-informed, committed advocates for the best treatment.
Even if you have turned your key audience members into engaged advocates, it still won't be easy to influence formulary decisions. But without their support, you will be almost entirely at the mercy of the purely rebate-minded buyer.
All of these approaches are relatively new and potentially challenging to brand managers (engaging with active patient communities, really?) But marketers need to get comfortable with new approaches, or at least come to terms with being perpetually uncomfortable, and keep moving forward.
Because when one is caught between two revolutions, the status quo is the most dangerous place to be.
Bill Drummy is CEO & Founder, Heartbeat Ideas and Heartbeat West.
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