A Report of the Mack Institute’s January 13, 2014 Workshop
Organized by George Day (The Wharton School), Larry Huston (4iNNO), and Prashant Nikam (Sanofi)
The pharmaceutical industry’s legacy commercial model of face-to-face detailing is deeply troubled. Product differences are shrinking, access to physicians is being limited and power is shifting to payers and providers. Most pharmaceutical executives agree the model is broken. But how will it be repaired, when public trust in the industry is at an all-time low?
The preferred response is to look “beyond the pill” to offer integrated customer solutions. To better understand such a dramatic business model innovation the Mack Institute for Innovation Management conducted wide-ranging interviews with 27 experts from stakeholders in the healthcare system, while also applying lessons from best practices in other industries and countries. The results were shared in a workshop on January 13, 2014. Forty participants heard from thought-leaders, and then discussed the most critical issues.
Moving from pushing pills to enabling solutions will be a difficult journey requiring an evolution through three levels: Level One solutions offer bundles of therapies and information; Level Two solutions include level one plus payments contingent on outcomes; Level Three solutions are integrated co-created solutions designed to improve patient outcomes at lower costs. Each level should span the patient pathway from diagnosis to treatment to follow-up care.
The consensus in the workshop was that most pharmaceutical companies would struggle to be able to profitably offer level two solutions. The headwinds include limited experience with collaborations, a pervasive “inside-out” orientation, a high margin mind-set with fewer incentives to offer solutions than payers or providers and a pervasive distrust of their motives.
Some workshop participants remained hopeful: many small scale experiments were underway. (“you have to do something to learn something”), and because the untapped opportunity is so large and the first mover to will see large rewards (so long as they become the protagonist for the patient). Some providers are willing to partner with the right company on level three solutions because pharma could bring deep patient insights from data analytics and personalized medicine, and a highly efficient distribution system. But if the pharmaceutical companies fail to be the protagonist for the patient, someone else surely will.
The Mack Institute will continue to engage fully with this critical issue by providing an objective forum for further dialogue among participants, bringing relevant insights from disruptive innovations outside the industry, and analyzing both successful and failed experiments in moving “beyond the pill.”