Pharmaceutical Companies' Digital Health Strategies Reach a Tipping Point
May 12, 2015 08:45
CST Updated
08:45
In the past few years, pharmaceutical companies have remained relatively quiet in the digital health space. This period has seen healthcare providers and payers make significant inroads into telemedicine, remote patient monitoring, and patient engagement applications. Most pharmaceutical companies’ digital initiatives have been progressing slowly through investments or by leveraging small innovation teams to test the waters in digital health. However, the landscape is now changing. According to most experts, consultants, and investors interviewed by MobiHealthNews,Whether driven by the mounting pressure from outcomes-based payment models or by the sluggish growth of pharmaceutical companies themselves, the industry has reached a critical tipping point, with a surge of investment in the internet healthcare sector expected in 2015.Now is the time for pharmaceutical companies to make their voices heard and shift the focus back onto themselves. VCBeat has compiled the following content based on the latest overseas news.
Official agencies hope that pharmaceutical companies can provide holistic solutions rather than just drugs.
In fact, services centered around pharmaceuticals, such as apps provided by pharmaceutical companies to patients related to their medications, have fallen out of favor within the industry. One pharmaceutical company has launched a new product along with some derivative products related to the medication, but these have not yet been adopted. In practice,These products cannot be considered innovative; companies have not developed them with the aim of addressing patient and healthcare system challenges, but rather as a means to promote pharmaceutical sales.
Barrett of Daiichi Sankyo Co., Ltd. also holds this view; his company previously communicated with ACOs and IDNs and found thatThese institutions prefer that pharmaceutical companies provide a comprehensive solution for a specific disease, rather than merely supplying a drug.Mobile applications and hardware devices can be utilized for the pharmaceutical products of any pharmaceutical company. He stated, “It would be a grave mistake to view this project merely as a tool for promoting pharmaceutical companies’ products. We need to position these tools as a bridge between pharmaceutical brands and healthcare. Only by shifting your mindset can you truly benefit from them.”
2net is a typical example of a home wireless healthcare solution developed through a collaboration between Roche, Novartis, and Qualcomm Life. Currently, the 2net platform complies with HIPAA security regulations and has obtained ISO 13485 certification, an international standard that demonstrates quality assurance for medical devices. Both the 2net platform and its hub have been registered with the U.S. Food and Drug Administration (FDA) as a Medical Device Data System (MDDS). The following chart provides a clear explanation of the 2net service model:
How Outcome-Based Payment Models Impact Pharmaceutical Companies
We envision a model where hospitals are decoupled from the payment of medical expenses to support this payment structure, but there is still a long way to go. This issue was discussed multiple times at this year’s Digital Health Summit in New York. Over the past few years, the United States has been moving in this direction, and it has become a major trend.
Greg Barrett, Vice President of Marketing and Strategy at Daiichi Sankyo Co., Ltd. in Japan, stated that the Patient Protection and Affordable Care Act, along with the initiatives undertaken by the Centers for Medicare & Medicaid Services (CMS), has positioned them as leaders in driving the healthcare system toward value-based reimbursement. (Value-based care refers to linking patient spending to medical outcomes, in contrast to the long-term over-treatment prevalent in traditional healthcare.) A few years ago, CMS had approximately 80–90 vendors participating in pilot projects scattered across various regions of the United States; today, nearly 10,000 of our current vendors are engaged in value-based reimbursement programs.
Furthermore, value-based reimbursement programs adopt the model of Accountable Care Networks and Integrated Delivery Networks, representing a higher level of decision-making authority for healthcare providers. Over the past two decades, physicians have constituted a key market for pharmaceutical companies. As prescribing decisions shift away from individual physicians, pharmaceutical companies will undergo significant transformations in their drug sales models. (Background: In the United States, a substantial number of physicians remain influenced by pharmaceutical companies; many maintain financial ties with multiple pharmaceutical firms, providing speaking or consulting services.)
Monique Levy, Deputy Director of Research at Manhattan Research, stated that “decision-making is disappearing from therapeutic care. A major problem today is that half of all prescriptions are not based on clinical presentation.”
Paul Ivans, CEO of Evolutionary Road Consulting, believes that although pharmaceutical companies are deriving less revenue from sales to physicians, the shift toward decision-support-driven sales means that these companies must define their markets based on drug efficacy and straightforward labeling.
We must pay close attention to IDNs and ACOs and their future objectives, as they prioritize outcomes, quality, and cost reduction. If medications and ancillary services improve patient health and even reduce readmission rates by 2 percentage points, they will not be concerned about a $10 increase in drug costs, given that this modest rise leads to a $15,000–$20,000 reduction in hospitalization costs. This represents a significant transformation.
Because this transformation has significantly impacted healthcare providers, they expect all stakeholders to participate in the process. Being outcome-oriented means that pharmaceutical companies may develop a drug claiming to improve patient recovery rates and reduce incidence rates; however, they must take concrete actions to deliver on these claims. If they fail to do so, they will not generate profits.
What Opportunities Does Medication Adherence Bring?
Medication adherence refers to the extent to which patients continue to follow their prescribed treatment regimens even when faced with events that conflict with their therapy. The benefits of this definition for pharmaceutical companies are self-evident: ensuring that patients take their prescribed medications helps the healthcare system save nearly $290 billion, which also translates into increased sales for pharmaceutical firms. Dr. Eric Topol, a cardiologist at Scripps Health and a proponent of digital health, believes that pharmaceutical companies have largely missed the opportunities presented by medication adherence.
“Medication Adherence Is One of the Biggest Growth Opportunities for Pharmaceutical Companies, because half of all prescriptions are not strictly adhered to by patients; either the medication dosage fails to meet requirements, or patients do not take the medication at all. The question now is whether technology can bring about change in this regard. Currently, only a small fraction of research findings are optimistic. Studies on GlowCaps and several other earlier initiatives were limited in scale, and pharmaceutical companies did not exhibit the same level of interest in digitalization and drug-tracking technologies as they do today. However, it is precisely these studies with the potential to drive change that need to be further advanced.”
Numerous studies on medication adherence are currently underway, ranging from pilot projects by Boehringer Ingelheim and other companies focused on patient adherence technologies, to the collaboration between Novartis and Proteus Digital Health, and the non-branded Care4Today mobile platform for health and medication management. Valencia has communicated with several pharmaceutical companies that provide health guidance programs centered around medications. He stated, “If high-value drugs are not taken by patients as prescribed, it represents a significant waste.”Insurers are paying close attention to this; if they can ensure that patients adhere to their prescribed medication regimens, insurance companies will receive compensation to a certain extent.“In the future, such medications will become available; patients will receive a prescription and the medication, along with a dedicated app.”
He added that, over time, these apps will become more intelligent and integrate into medication adherence strategies, improving patients’ medication-taking behaviors and their compliance with medical advice based on individual habits and behaviors.
Of course, there are also differing viewpoints. Gupta from the Boston Consulting Group believes that the industry places excessive emphasis on medication adherence, while overlooking another factor with greater potential to reshape the industry landscape: “Currently, pharmaceutical companies are investing significant efforts in improving medication adherence. If you can encourage patients to take their medications on time and help them comply with medical advice, thereby enabling the operational model to function effectively, your business model becomes clearly defined. This is where many pharmaceutical companies are currently focusing their attention. However, from an industry perspective, I believe that clinical trials and patient engagement will exert a more substantial impact on the sector, particularly in the field of chronic diseases. At present, many drugs have not yet been included in the FDA’s approval catalog, but they can be utilized in testing to monitor patients. The FDA has now relaxed regulations regarding certain trials that it previously hoped to conduct but which pharmaceutical companies were unable to fully undertake.”
Gupta believes that digital monitoring technologies can give rise to a new category of clinical trials, particularly for diseases like Alzheimer’s, where disease progression cannot be adequately measured through traditional drug trials. Beyond pharmaceutical trials, we will focus on projects such as Sanofi’s VERRKO study, which evaluates not a drug but the device itself. The clinical trials I refer to encompass both the drug itself and the surrounding algorithms, with the aim of demonstrating that clinical trials integrated with digital technologies yield superior outcomes compared to conventional drug trials alone. This success signifies that clinical trials are no longer merely scientific experiments but also serve as catalysts for evolving industry business models. Valencia also indicates that pharmaceutical companies collaborating with Qualcomm Life are increasingly focusing on the field of clinical trials.
A Review of Internet Healthcare Events Involving Pharmaceutical Giants in 2014
As internet healthcare gains momentum worldwide, an increasing number of traditional pharmaceutical giants are leveraging various technological means to explore new ways of serving physicians and patients. So, what specific actions did these industry leaders take in 2014? VCBeat has summarized the moves made by major traditional pharmaceutical companies in 2014. (Click to view the full-size image)
(Compiled by Xing Zhaopeng; Edited by Li Jie)
Official agencies hope that pharmaceutical companies can provide holistic solutions rather than just drugs.
In fact, services centered around pharmaceuticals, such as apps provided by pharmaceutical companies to patients related to their medications, have fallen out of favor within the industry. One pharmaceutical company has launched a new product along with some derivative products related to the medication, but these have not yet been adopted. In practice,These products cannot be considered innovative; companies have not developed them with the aim of addressing patient and healthcare system challenges, but rather as a means to promote pharmaceutical sales.
Barrett of Daiichi Sankyo Co., Ltd. also holds this view; his company previously communicated with ACOs and IDNs and found thatThese institutions prefer that pharmaceutical companies provide a comprehensive solution for a specific disease, rather than merely supplying a drug.Mobile applications and hardware devices can be utilized for the pharmaceutical products of any pharmaceutical company. He stated, “It would be a grave mistake to view this project merely as a tool for promoting pharmaceutical companies’ products. We need to position these tools as a bridge between pharmaceutical brands and healthcare. Only by shifting your mindset can you truly benefit from them.”
2net is a typical example of a home wireless healthcare solution developed through a collaboration between Roche, Novartis, and Qualcomm Life. Currently, the 2net platform complies with HIPAA security regulations and has obtained ISO 13485 certification, an international standard that demonstrates quality assurance for medical devices. Both the 2net platform and its hub have been registered with the U.S. Food and Drug Administration (FDA) as a Medical Device Data System (MDDS). The following chart provides a clear explanation of the 2net service model:
How Outcome-Based Payment Models Impact Pharmaceutical Companies
We envision a model where hospitals are decoupled from the payment of medical expenses to support this payment structure, but there is still a long way to go. This issue was discussed multiple times at this year’s Digital Health Summit in New York. Over the past few years, the United States has been moving in this direction, and it has become a major trend.
Greg Barrett, Vice President of Marketing and Strategy at Daiichi Sankyo Co., Ltd. in Japan, stated that the Patient Protection and Affordable Care Act, along with the initiatives undertaken by the Centers for Medicare & Medicaid Services (CMS), has positioned them as leaders in driving the healthcare system toward value-based reimbursement. (Value-based care refers to linking patient spending to medical outcomes, in contrast to the long-term over-treatment prevalent in traditional healthcare.) A few years ago, CMS had approximately 80–90 vendors participating in pilot projects scattered across various regions of the United States; today, nearly 10,000 of our current vendors are engaged in value-based reimbursement programs.
Furthermore, value-based reimbursement programs adopt the model of Accountable Care Networks and Integrated Delivery Networks, representing a higher level of decision-making authority for healthcare providers. Over the past two decades, physicians have constituted a key market for pharmaceutical companies. As prescribing decisions shift away from individual physicians, pharmaceutical companies will undergo significant transformations in their drug sales models. (Background: In the United States, a substantial number of physicians remain influenced by pharmaceutical companies; many maintain financial ties with multiple pharmaceutical firms, providing speaking or consulting services.)
Monique Levy, Deputy Director of Research at Manhattan Research, stated that “decision-making is disappearing from therapeutic care. A major problem today is that half of all prescriptions are not based on clinical presentation.”
Paul Ivans, CEO of Evolutionary Road Consulting, believes that although pharmaceutical companies are deriving less revenue from sales to physicians, the shift toward decision-support-driven sales means that these companies must define their markets based on drug efficacy and straightforward labeling.
We must pay close attention to IDNs and ACOs and their future objectives, as they prioritize outcomes, quality, and cost reduction. If medications and ancillary services improve patient health and even reduce readmission rates by 2 percentage points, they will not be concerned about a $10 increase in drug costs, given that this modest rise leads to a $15,000–$20,000 reduction in hospitalization costs. This represents a significant transformation.
Because this transformation has significantly impacted healthcare providers, they expect all stakeholders to participate in the process. Being outcome-oriented means that pharmaceutical companies may develop a drug claiming to improve patient recovery rates and reduce incidence rates; however, they must take concrete actions to deliver on these claims. If they fail to do so, they will not generate profits.
What Opportunities Does Medication Adherence Bring?
Medication adherence refers to the extent to which patients continue to follow their prescribed treatment regimens even when faced with events that conflict with their therapy. The benefits of this definition for pharmaceutical companies are self-evident: ensuring that patients take their prescribed medications helps the healthcare system save nearly $290 billion, which also translates into increased sales for pharmaceutical firms. Dr. Eric Topol, a cardiologist at Scripps Health and a proponent of digital health, believes that pharmaceutical companies have largely missed the opportunities presented by medication adherence.
“Medication Adherence Is One of the Biggest Growth Opportunities for Pharmaceutical Companies, because half of all prescriptions are not strictly adhered to by patients; either the medication dosage fails to meet requirements, or patients do not take the medication at all. The question now is whether technology can bring about change in this regard. Currently, only a small fraction of research findings are optimistic. Studies on GlowCaps and several other earlier initiatives were limited in scale, and pharmaceutical companies did not exhibit the same level of interest in digitalization and drug-tracking technologies as they do today. However, it is precisely these studies with the potential to drive change that need to be further advanced.”
Numerous studies on medication adherence are currently underway, ranging from pilot projects by Boehringer Ingelheim and other companies focused on patient adherence technologies, to the collaboration between Novartis and Proteus Digital Health, and the non-branded Care4Today mobile platform for health and medication management. Valencia has communicated with several pharmaceutical companies that provide health guidance programs centered around medications. He stated, “If high-value drugs are not taken by patients as prescribed, it represents a significant waste.”Insurers are paying close attention to this; if they can ensure that patients adhere to their prescribed medication regimens, insurance companies will receive compensation to a certain extent.“In the future, such medications will become available; patients will receive a prescription and the medication, along with a dedicated app.”
He added that, over time, these apps will become more intelligent and integrate into medication adherence strategies, improving patients’ medication-taking behaviors and their compliance with medical advice based on individual habits and behaviors.
Of course, there are also differing viewpoints. Gupta from the Boston Consulting Group believes that the industry places excessive emphasis on medication adherence, while overlooking another factor with greater potential to reshape the industry landscape: “Currently, pharmaceutical companies are investing significant efforts in improving medication adherence. If you can encourage patients to take their medications on time and help them comply with medical advice, thereby enabling the operational model to function effectively, your business model becomes clearly defined. This is where many pharmaceutical companies are currently focusing their attention. However, from an industry perspective, I believe that clinical trials and patient engagement will exert a more substantial impact on the sector, particularly in the field of chronic diseases. At present, many drugs have not yet been included in the FDA’s approval catalog, but they can be utilized in testing to monitor patients. The FDA has now relaxed regulations regarding certain trials that it previously hoped to conduct but which pharmaceutical companies were unable to fully undertake.”
Gupta believes that digital monitoring technologies can give rise to a new category of clinical trials, particularly for diseases like Alzheimer’s, where disease progression cannot be adequately measured through traditional drug trials. Beyond pharmaceutical trials, we will focus on projects such as Sanofi’s VERRKO study, which evaluates not a drug but the device itself. The clinical trials I refer to encompass both the drug itself and the surrounding algorithms, with the aim of demonstrating that clinical trials integrated with digital technologies yield superior outcomes compared to conventional drug trials alone. This success signifies that clinical trials are no longer merely scientific experiments but also serve as catalysts for evolving industry business models. Valencia also indicates that pharmaceutical companies collaborating with Qualcomm Life are increasingly focusing on the field of clinical trials.
A Review of Internet Healthcare Events Involving Pharmaceutical Giants in 2014
As internet healthcare gains momentum worldwide, an increasing number of traditional pharmaceutical giants are leveraging various technological means to explore new ways of serving physicians and patients. So, what specific actions did these industry leaders take in 2014? VCBeat has summarized the moves made by major traditional pharmaceutical companies in 2014. (Click to view the full-size image)
(Compiled by Xing Zhaopeng; Edited by Li Jie)