The pharma industry is buzzing with beyond the pill*, integrated care and patient-centricity initiatives. It might be ‘the latest thing’, but when is it a critical part of business?
How far does Pharma need to go ‘beyond the pill’, into integrated care?”.
With a working definition of integrated care for pharma as “doing more than just providing a drug and leaving the healthcare system to use it effectively”, there are clearly cases where pharma companies don’t ‘need’ integrated care. If the HC system can use your product in roughly the way intended and deliver the expected benefits and outcomes, then why exert yourself beyond your traditional value network?
This was business as usual, looking back at blockbusters like Zantac®, Losec®, Zocor®, Lovenox® or Lipitor®.
With less straightforward drugs, e.g. those with complex dosing or with inhaled or parenteral administration, pharma companies have taken steps into the solution chain that count as the beginnings of integrated care, such as inventing better delivery devices, training and supporting HCPs and patients on how to optimise drug dosages, running adherence programs. The minimum is to ensure the drug can actually be taken, the next steps are in taking it correctly, stepping incrementally towards delivering outcomes and not just products.
At the most advanced end of integrated care (so-called level 3 solutions), example companies (but not big pharma directly) have carved out whole solution chains of service, technology, and drugs that deliver a specific outcome, for example Fresenius with dialysis, Hygieia with insulin management in diabetes, Vree with readmission prevention.
Most efforts are reactive and drug-centric (close to the the pill!)
So where and when do pharma companies need to get involved? From a pharma point of view, the visible examples where an integrated care approach becomes a necessity to succeed are reactive and are drug-centric, i.e.
To fix a shortcoming with a product that prevents it from being effectively used. E.g. products with complex administration or dosing that form a barrier to being used, products with schedules or side effects that lead to non-adherence, disadvantage versus a competitor, etc.
To fix a shortcoming with the healthcare system that prevents a product being effectively used, e.g. clinical inertia, perverse incentives, capacity constraints, or missing capabilities.
Pharma does play, and needs to continue to do so, in these more restricted cases of integrated care, e.g. nurse support programs, patient support programs, adherence and dosing programs. The integrated care offers in these cases are clearly linked with pharma’s day to day business [sell more of drug x] and current value networks.
Pharma will continue to ‘need’ these types of limited integrated care. It is ‘going beyond the pill’, but the value model is still about extracting money from the ‘pill’, and the additional services or products are to help the patient or HC system to make better use of the ‘pill’.
When to be proactive and patient-centric?
The broader promise of integrated care is that it will be patient-centric and drug/technology agnostic, that it will bring ‘solutions’ that deliver most or all the parts of care need to achieve a desired outcome. This means ‘level 3’ solutions, like those from Fresenius, Hygieia or Vree. Such cases undoubtedly also address shortcomings with drugs or with the healthcare system but, importantly, they are not constrained by a drug-centric view.
To be successful here, innovators needs their unique services, products or capabilities to be important to the integrated offer so that the company can extract value. Moving beyond the business model of extracting value mainly from pharmaceuticals is proving difficult. I suggest that this is not a capabilities issue, i.e. pharma companies are capable to do it (painful though it might be). Rather, they choose not to follow this route for very rational reasons based on current business models and current customers that are not aligned with those in integrated care.
Integrated care is a ‘disruptive innovation’
Integrated care is very different. It’s about extracting money from outcomes of the overall system, not from product transactions. In early development stages the prices, volumes and margins are uncertain, and probably don’t look as good as existing pharma business. It can’t be forecast accurately because the markets don’t yet exist. Also, integrated care disrupts the relationships with the HCPs who are still pharma’s core customer group. In short, from a pharma point of view, Integrated Care looks more like a disruptive innovation than a sustaining innovation.
As described in “the Innovators’s dilemma” by Clayton Christensen, disruptive innovations are not picked up, especially by well-run companies, because they are not for the current customers and do not fit with the company’s established value networks and modus operandi. This is the root of the challenge for pharma if it is to engage with fully patient-focused drug-agnostic integrated care.
So when does pharma ‘need’ to do this type of integrated care? The answer is when its business is in danger of being supplanted in the future by disruptive innovations. There are many ripe areas in chronic diseases and in complex expensive end-stage care where this could happen. In such areas, pharma does need to move from the shallows into deeper water. Many are trying. What it takes to be successful, we will look at in the second part of this article.
*For ‘pill’, please generally read ‘drug’.
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