Part I: Beyond the Pill Solutions: Reinventing the Pharmaceutical Business Model

Mack Institute Co-director George Day opens the workshop.

Guest post by Prashant Nikam (WG’11), Global Marketing Lead, Mozobil and Legacy Brands at Sanofi Oncology

Over the past year, I have been working with Professor George Day on researching a topic that is very dear to me: “Beyond the Pill Solutions” (BTPS) and what they mean for the pharmaceutical industry. In January 2014 we reached an important milestone for our project: a Mack Institute-organized workshop entitled “How Far Beyond the Pill?: Innovating the Pharma Commercial Model.” The workshop provided an opportunity to share our initial thinking around the business model innovation with thought leaders from the healthcare industry, academics, and practitioners from other industries. Overall, we wanted to understand what BTPS would look like and what conditions would successfully drive these innovations in the healthcare industry.

The healthcare industry is evolving rapidly, but despite growing investment in R&D, pharmaceutical companies are discovering fewer innovative drugs. Payers/regulators are increasingly scrutinizing the value of pharmaceutical products, and stakeholders are demanding to pay for performance rather than just reimbursing for drugs. Additionally, physicians and patients are constantly demanding high-quality new information from the pharmaceutical industry.

In addition to all these market pressures, the pharmaceutical industry continues to experience some of the lowest levels of public trust, second only to the tobacco and oil industries. These pressures are forcing the industry to re-evaluate its current business model and execute on innovative models to respond to the changing market dynamics.

A recent survey of pharmaceutical executives by Booz and Company found that 68% of the respondents believe that the current pharmaceutical model is broken and needs significant repair. There is little consensus, however, on how to evolve the business model both from an operational and structural perspective.

The pharmaceutical industry has a golden opportunity to play a bigger role in improving patient outcomes.

In the past, the primary focus of the pharmaceutical industry has always been delivering medicines to the patients. Complimentary products and services associated with the medicines—such as tools to educate patients, services to increase access to drugs, and innovations to enhance patient adherence—have always been secondary to the core. Moreover, seldom have these products/services ever been monetized or geared towards creating value across the patient care continuum.

On the flip side, in the post-Affordable Care Act (ACA) environment, the pharmaceutical industry has a golden opportunity to play a bigger role in improving patient outcomes and enhancing the efficiency of healthcare delivery. Embracing the BTPS as a part of its evolving business model could be the right step in that direction. So what does BTPS really mean? Here is my take on the definition: It is an integrated set of products and services that work across the continuum of care by engaging patients/caregivers/providers to deliver superior health and care delivery outcomes at a reduced cost.

In Part II, Nikam discusses examples of potential BTPS, and the changes that would need to occur for successful implementation.

Author’s Disclaimer: The views and opinions expressed in this post are personal and do not necessarily reflect the official policy or position of my employer, Sanofi.