NEW YORK--(BUSINESS WIRE)--Pharmaceutical companies need to look “beyond the pill” and find new ways to drive value in the healthcare system. That was the conclusion of healthcare leaders including executives from six of the world’s top 20 pharmaceutical companies, gathered this month in collaboration with the Oliver Wyman Health Innovation Center to explore the drug industry’s changing role.
“Healthcare payers and providers are increasingly focused on value—on creating better outcomes with lower costs,” says Jerry Cacciotti, a partner at Oliver Wyman and one of the organizers of the event. “But it hasn’t been clear how pharma fits into new value-based structures. We wanted to get forward-looking pharma leaders together with innovators from other parts of healthcare to look for new ways to work together.”
Accessing the value of “pill plus” solutions is critical. Oliver Wyman research released at the gathering showed that pharma is currently heavily investing its R&D dollars in niche cancers and rare disease drugs for complex diseases. “The problem,” says Cacciotti, “is that the industry would need to bring 1,500 drugs like that to market in the next 15 years to sustain even 5 percent growth. That’s five times the rate we’ve been launching new therapies—it just won’t happen.” Instead, he says, pharma companies need to find ways to coordinate with value-based healthcare across the whole spectrum of diseases.
The group, which included representatives from Amgen, Pfizer, and Novartis, among others, analyzed disease areas such as congestive heart failure and rheumatoid arthritis, looking for opportunities for pharma to share in the financial risk of treatment (through guarantees and other mechanisms), combat the most expensive aspects of the disease (such as repeated hospitalizations), and to enable efficient, effective treatment at the physician level (by addressing burdens of side effects, compliance issues, and behavioral and social challenges). Oliver Wyman estimates that pharma companies can derive as much as 50 percent more value with each molecule launched by accessing the additional value streams. “That goes a long way toward solving the revenue gap,” says Cacciotti.
“We had physician practices telling us they wanted someone to take the burden of a disease like multiple sclerosis off their hands,” he adds. “That is possible, though we’re going to have to solve many problems of regulation, business design, and reimbursement.”
The group plans to meet again in 2014 to begin addressing legal and regulatory issues related to potential new pharma business designs.
About Oliver Wyman
Oliver Wyman is a global leader in management consulting. With offices in 50+ cities across 25 countries, Oliver Wyman combines deep industry knowledge with specialized expertise in strategy, operations, risk management, and organization transformation. The firm's 3,000 professionals help clients optimize their business, improve their operations and risk profile, and accelerate their organizational performance to seize the most attractive opportunities. Oliver Wyman is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE:MMC). For more information, visit www.oliverwyman.com. Follow Oliver Wyman on Twitter @OliverWyman.
About the Oliver Wyman Health Innovation Center
Oliver Wyman has recently launched a Healthcare Innovation Center (OWHIC) dedicated to promoting positive change in healthcare. OWHIC will champion innovation by disseminating proven innovations; envisioning market-based solutions to today’s and tomorrow’s challenges; and establishing a cross-industry community of thought-leaders to share and shape ideas.
OWHIC is an integral component of Oliver Wyman’s Health & Life Sciences practice, which serves clients in the pharmaceutical, biotechnology, medical devices, provider, and payer sectors with strategic, operational, and organizational advice. Deep healthcare knowledge and capabilities allow the practice to deliver fact-based solutions.
For more information on OWHIC, visit www.oliverwyman.com/healthinnovationcenter.
