Drug, device makers: Plan perspectives matter

Drug and device makers are taking into account the health plans’ perspectives in the commercialization of their products, according to a new survey.

Drug and device makers are taking into account the health plans’ perspectives in the commercialization of their products, according to a new survey.

The survey, by KPMG, was taken during a webcast conducted recently. KPMG focused upon the 120 respondents who identified themselves as being associated with pharmaceutical, biotech or medical device companies.

Drug makers and medical device companies are finding their biggest commercial challenges coming from payers, surpassing barriers posed by regulators, declining access to healthcare providers, and the move toward specialty drugs, according to the survey.

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“Increasing payer pressure on drug pricing and utilization” was described by 47% of respondents as having the biggest effect on commercial operations. In fact, only 8% of respondents see their contracts as remaining unchanged five years from now. 

“So pricing and market access are becoming a bigger component of how commercial resources will be allocated during the next three years,” according to Peter Gilmore, a principal at KPMG Strategy. “There is a change afoot in this business and this has an impact on contracts between payers and the life sciences industry.”

Beyond payer pressures, commercial operations are affected by a restrictive regulatory environment (15%), the shift toward specialty drugs (12%), requirements for evidence-based medicine (9%), and 8% of respondents mentioning value-based care or decreasing access to healthcare providers.

Prescription drugs have been approximately 10% of healthcare spending, but that is 10% of a very large base, according to Gilmore. 

“New medicines are a big driver of spending growth,” he says. “If it were not for the specialty drugs that have hit the market, spending growth on pharmaceuticals would have been fairly low due to patent expirations and broader use of generic drugs.”   

Other survey findings include:

  • Payers are having a big impact upon drug pricing and utilization, even to a greater degree than regulation.

  • Pricing and market access is the biggest shift in allocating commercial resources. Healthcare provider detailing and wraparound services, such as disease management and patient engagement programs, were the second and third largest shifts in resources projected by 17% of respondents.

  • Healthcare provider detailing and “beyond the pill” services are becoming a more important part of allocating commercial resources.

  • Outcomes based contracting may start to gain traction in the pharma and medical device world as payers look to pay for value over volume. Outcomes-based contracts (34%) and integrated product/service offerings (33%) are expected to take hold in the pharmaceutical business, while 19% see other elements being added to pricing and contracts.

  • Resource constraints and company culture are the biggest barriers to helping drug and device makers cope with this new market. Executives found that the biggest barriers to a successful commercial transformation include resource constraints (26%), existing company culture (23%), and a lack of alignment on needed commercial model changes (17%). Additional responses cited legacy technology, inappropriate metrics or a limited sense of urgency.