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Volume 35, Issue 12
The eight trends brought on by “once-and-done” interventions that may transform thinking around healthcare marketing.
For decades, pharma and biotech manufacturers have strived to develop transformative healthcare solutions. In the past, critics claimed the industry could not develop a cure because it would “break the business health maintenance model.” However, as the industry stands on the precipice of a new era with a new definition of “cure” emerging, these critics may be right and wrong at the same time.
Innovators have come forward to develop curative therapies, proving that the industry is interested in moving beyond maintenance therapy. However, global stakeholders are not prepared for the emergence of curative therapies, creating new, and previously unconsidered challenges. Dated funding and reimbursement systems along with the processes that support them are already strained by traditional maintenance therapy.
This new dynamic has such far-reaching implications that the critics may be accurate in their view of how these types of innovations may push us past the tipping point and “break the system,” or as we now call it, “change the way business is done.” Ahead, we outline several trends that could substantially change the dynamics of healthcare marketing.
1. Definition of cure: In the past, an intervention could be considered a cure if a disease was stabilized and not progressing while the patient continued the treatment regimen. While these therapies are still valuable, a new definition of “cure” has emerged. Some therapies now offer a one-time course of treatment to eliminate the disease with no need for follow-up therapy. In these therapeutic areas, even the availability of these types of interventions raises the bar for all interventions. More than ever, stakeholders may increasingly think of “once- and-done” interventions for stopping, reversing, or eliminating a disease.
2. Marketing and competition: In an environment where patients have the option of a “once-and-done” curative intervention, the concept of competition is completely different. With traditional interventions, a patient may be on maintenance therapy for months or years, but at any time could switch to a new regimen. For maintenance products, pharma and biotech companies can market their products to currently-treated patients and suggest that switching may have benefits.
With a cure, a treated patient is no longer eligible for therapy because they will no longer have the disease. Assuming that the treatment rate exceeds the incidence rate, the prevalence will decrease over time and the number of patients deciding between potential interventions and/or curative options will decrease until it matches the incidence rate. In the new curative environment, much of the marketing may shift focus toward patients who have not yet selected a curative intervention and away from patients who were previously treated.
3. Medical-cost offsets: In the past, healthcare marketers would demonstrate the potential cost-offsets generated by their intervention using models and simulations. Payers often felt these offsets were theoretical and struggled to identify the true cost savings to the system. With a curative therapy, it may be much easier to quantify the cost of maintenance therapy avoided and the prevention of costs related to disease sequelae. While traditional interventions could theoretically reduce a proportion of these costs, a cure can by definition eliminate all future costs. It is important to note that this creates specific new challenges for innovators, as currently some payers (especially in the US) are looking at the cost savings from an intervention with a focus on the next 2-3 years. In the US, this attitude emerges because patients frequently move between plans and the payer may not recognize the longer-term savings from the upfront intervention cost. Payers may not yet be ready to think about spending a large amount of money in year one with large cost-offsets in every subsequent year of a patient’s life. This leads to another challenge ... affordability.
4. Budget breakers: Global payers have built budgets that anticipate annual maintenance therapies, and their full budgets are spent on today’s interventions. When thinking of this maintenance approach to healthcare, it becomes difficult to consider spending a substantial amount upfront in year one to eliminate spending on that patient in future years for a given disease. For example, European payers may not have the additional headspace in their budget to afford the curative intervention today, and US payers may not have the long-term perspective necessary to appreciate the cost offsets.
5. Long-term revenue: Historically, a new intervention could generate a revenue stream for five, 10, or 15 years or maybe even longer depending on the situation. However, if there were a rush to cure all patients and the cost were paid upfront (as opposed to amortizing or risk-sharing payments), the innovator could capture the majority of their revenue in the first few years post-launch. It is possible that rather than reaching peak sales and maintaining a flat or slowly-increasing revenue curve, revenue could begin to decrease very quickly a few years after launch. This would be true if the cure caused the prevalence to decrease rapidly. If this were the case, the number of patients initiating therapy each year would be closer to the incidence rate rather than the prevalence. It could be possible that the revenue erosion would be similar to generic entry in traditional markets, but caused by a decreasing number of eligible patients rather than reduced market share.
6. Generic entry: Will there be any patients left to be treated by generics or biosimilars years after the branded launch if the brand eradicates the disease?
7. Price management: In the US pharmaceutical market, regular single-digit price increases have become the norm. When reflecting across industries for one-time-purchase breakthrough innovations, the highest price is typically at launch. Looking at consumer technology, as an example, manufacturers decrease price regularly to capture customer with lower willingness to pay.
For example, each new model of a smart phone has a high price at launch and only the most adamant users pay this price. Later, the same smart phone is available at a lower price and appeals to a different user base.
Purchasers in the first three to six months pay the highest price, and then the price is slightly reduced, which opens a new wave of users willing to pay the new price, and so on until the market is saturated. This dynamic of decreasing price over time may fit the curative market in healthcare as well and could reshape expectations about how the intervention price evolves over time.
8. Unique payment models?: One opportunity for innovators to address the challenges associated with the trends already described, is to set up a payment schedule to space out the budget impact over time. In this scenario, the innovator would receive payments for a number of years after the patient is cured. This would better align the payment for the curative therapy with the cost savings in the healthcare system. As an additional option, the agreement could also include a performance metric where uncured or refractory/ relapsed patients would not have the future payments.
While there has been much discussion about this idea over the last few years, the details of setting up these long-term agreements has been a challenge. Are curative therapies so different that we need to rethink the global model for healthcare funding and reimbursement and how the industry operates? Perhaps.
These eight trends only begin to scratch the surface of how healthcare may evolve in the face of new curative therapies. In this era, as in previous ones, it will be the companies who drive innovation and define this future market that will emerge as leaders.
Eric M. Bachman is Director, Simon- Kucher & Partners. He can be reached at Eric.Bachman@simon-kucher.com