Finsights Blog

Survival of the Most Adaptable: Are You Change-Ready?

CHANGE is here. The disruption couldn’t be any louder and it’s unfolding every day, almost like a storm. Billions of dollars in revenue have disappeared or will disappear for branded manufacturers between 2010 and 2020 as a result of patent expirations. Filling in for the blockbuster oral solids of yesteryear are specialty drugs, expected to represent about 50% of overall commercial plan drug spend by 2020. Yet biosimilars have the potential to drastically lower drug spend in the specialty space. Add to this the reality that these drugs will exist with a very different set of market circumstances compared to those of the past. The ACA has brought Medicaid expansion, Health Insurance Exchanges, and the fostering of new entities responsible for outcomes and coordinated care. Reimbursement is in flux as the government takes on more market share, and multiple payers weigh various price types as the basis for rates. Entities within the healthcare marketplace are responding to these changes in numerous ways, with consolidation across payers and providers as a clear standout.

And life sciences manufacturers are also having to adapt. As a result of the changing market dynamics, Managed Markets executives at pharmaceutical manufacturers must evaluate their strategies and product pipelines to determine where the major areas of change will be and how this will shape the road ahead.

Here are some essential questions to ask:

  • Will contracting with managed care be necessary? If so, what form will it take? (i.e. specialty tier rebates, risk sharing agreements, patient adherence or other quality measures)
  • What types of entities will be driving value to your patients and your organization — Accountable Care Organizations (ACO), Coordinated Care Organizations      (CCO), Integrated Health Networks (IHN), Patient Centered Medical Homes (PCMH)?
  • What are the data, functional and analytical needs to support these agreements?
  • What percentage of your business will be with the government? How will your pricing & contracting strategy affect reimbursement?
  • What processes, skill sets and technological capabilities will your operation need to have in place to properly support your answers to the above questions?

The truth is that many life sciences manufacturers are not asking these questions, or perhaps neglecting to carry out the analysis to provide the answers. The end result is uninformed investments with a high risk of only paying short-term dividends. Manufacturers are sometimes investing millions in new contract management systems without thinking about the makeup and volume of future transactional processing. Other times, they pursue costly system upgrades or trendy tools just to alleviate a few temporary pain points.

Take the time to understand what the future looks like for your organization, and make an informed decision about such investments.  Now is the time to become a change agent within your organization; align yourself properly with all the appropriate commercial leaders (Trade, Brand, Sales & Marketing, etc.) and foster collaboration to plan your company’s future success.

 

 

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