Payers and providers: challenges for 2007 and beyond

Abstract

As we move into 2007 it is clear that there are significant challenges for healthcare payers and providers, along with the pharmaceutical and biotech industry. Are these challenges any different to those faced in the recent past? It could be argued that they are not. Payers have always had to make hard choices over what they fund, providers have always had to contain costs, and suppliers have always had to sell the value of their products and services.

However what is very different today is the intensity of these cost pressures. International gross domestic product growth is very low, thereby limiting the national funding available for healthcare. The cost of healthcare provision is set to grow dramatically due to an aging population. A large number of new screening and diagnostic technology, new treatment modalities and health maintenance systems are all competing for the same limited healthcare dollars. In addition, pharmaceutical and biotech companies are finding it extremely demanding to manage the tremendous growth in the costs involved in meeting the expectations of regulators, while at the same time facing market access barriers thatfocus on limiting price and market adoption. Health-related information availability has led to the public expecting, often demanding, access to the latest and best available technology. It is fair to say that the politicians need to address the willingness-to-pay versus the available funding.

There are urgent market issues that have to be addressed by the pharmaceutical and biotech industries. Communication issues are part of the equation for determining future success. A significant number of senior payers have stated that they really need, and want to have, new drugs that will deliver health gain that is clinically meaningful, and feel aggrieved when they are seen as being anti-innovation and short sighted.They maintain that much of the evidence of the value of new drugs they see is not relevant to their situation, and is almost always supported by statistical significance and not clinical significance.This indicates that there is a mismatch between what companies are producing and what is needed. Unfortunately the industry clinico-economic publications do not seem to be enough on their own.The National hurdles of pricing and reimbursement, and health technology assessments now seem to be augmented by the need for local publications and dossiers to address the requirements of formulary and purchasing groups.

Industries, therefore, need to empower their drug development teams to produce evidence for the products that show clinical significance.This means a shift in thinking. It becomes critical to ensure the teams fully understand the healthcare environment.Team goals need to address the issues of the payers and providers by developing products that meet clear requirements of very specific populations, and do not approximately address the needs of large, often ill-defined populations. Having the customer perspective built into the development strategy ensures that value creation becomes the driver for data collection.This challenge, however, is not simple; clearly defining'customer'needs and what would be clinically significant for treatment populations can produce a very large list of well-described unmet or poorly met clinical situations.

These new communication challenges mean that the industry now needs to broaden their pre-, peri- and post-launch communication plans to produce documents that are written in a way that relates to the specific needs of the key payers, using their data and addressing their goals. In addition, key providers are saying they need specific documentation showing the clinical benefits of the new product against their comparator(s).This refocusing of the historical communication strategy and the increased complexity and costs may not be welcomed, but will assist the industry by providing them with the opportunity of supplying the data that the providers say they need for gaining rapid formulary listing. Key payers and providers will, however, have to play their part and offer rapid market acceptance and market adoption to products that meet their defined needs.