Pharmaceutical companies, already coping with the patent cliff and the pressures of a changing healthcare system, face another major challenge that threatens reimbursement and value capture. This is the potential disruption from real world evidence (RWE) as a factor in evaluating new drugs. The emergence of health technology assessment practices around the world today makes it still more difficult to achieve attractive reimbursement value for newly launched pharmaceutical products.
In combination, these developments are likely to accelerate the transition toward an outcomes-based paradigm in major healthcare markets. The sober reality could be a continuously declining return on each dollar invested in R&D.
To escape this vicious circle, a fundamental overhaul of the prevailing pharmaceutical R&D model is required. Two trends point the way to a solution. First, healthcare reimbursals are increasingly linked to the demonstration of evidence on real world outcomes during tests of the impact of new drugs. Second, there is a trend toward measuring the impact on different patient subgroups, and varying payments accordingly.
Pharmaceutical companies need to put into practice an integrated evidence development model that seamlessly brings together randomized controlled trials and RWE-based approaches, enabling an adaptive licensing paradigm along the full life cycle of each new drug. This new R&D model would achieve a reliable proof of concept and a good safety profile for all new pharmaceuticals. It would also establish protocols based on evidence generation from use of the drug in the market: collecting clinical effectiveness data rather than generating additional clinical efficacy information in randomized controlled trials. This would immediately reduce cycle time by about five years and required R&D investment per product by about 60 percent.
In a recent survey of pharmaceutical industry leaders, respondents said they clearly see the benefits of this approach and agree on accelerating it. In particular, pragmatic trial arms represent one underutilized opportunity. But despite the clearly perceived benefits and manageable hurdles, this type of model is rarely put into practice. The reasons have more to do with management than any other factor. Sixty percent of the respondents said they lack direction from senior management and do not have meaningful metrics to guide the required behavioral change. In other words, pharmaceutical companies have a great deal of leverage for change, if they are willing to use it.
New technological possibilities — putting data from integrated and adaptive evidence into the hands of many new classes of users — have turned proficiency with RWE into a make-or-break condition for the pharmaceutical industry. Most industry leaders see the benefits of an RWE-based model, but are waiting for direction from senior management. If pharmaceutical companies fail to build an effective RWE-based capabilities system, they are at risk of quickly losing control over the value communication around their own drugs, as other stakeholders such as payors, data analytics companies, and academia are currently enhancing their own capabilities. In consequence, this might potentially even lead to a significant decline in use and reimbursement.
How can pharmaceutical companies mitigate this risk and build the required capabilities system? We suggest two distinct possible approaches. A top-down approach has the advantage of developing proper momentum quickly, but it typically comes with a high risk of subsequent failure due to insufficient buy-in at the country level, where the real work to build and deliver the required capabilities needs to occur. The bottom-up approach leverages pilot countries and typically starts more slowly, but it ensures effective engagement and buy-in from key people in every geography.
© 2019 - Fri Nov 15 12:45:27 UTC 2019 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.