This is part-two to my blog post on my interview with Adrian Chernoff where I asked him how big pharma should think about innovating in the digital space. Click here to read the first part: 3 Reason Why Big Pharma Can’t Charge A Premium for Drug+ Digital?
Having worked for one of the largest and most innovative pharmaceutical manufacturers, Adrian has some very strong points of view regarding how these firm should digitally innovate. In short, he feels that pharmaceutical companies should partner with digital health companies to deliver combined therapies rather than do this kind of work in-house.
Big Pharma Will Never Be Digital Natives
What he meant here was that, digital engagement requires talents and abilities that pharma companies currently don’t have, and likely will never have. For the past five years or so, many pharma companies have created apps as digital educational and support tools, but of the pharma-only digital solutions few could be viewed as a success. The companies that are the most successful at consumer and patient engagement have been digital natives that develop digital platform and have gathered millions of engaged users to their platforms.
Lack of Trust Among Consumers for Big Pharma
He pointed to recent Harris Poll on trust that indicate that only 9% of consumers trust pharma companies to put patients before profits. This is clearly a paradox, since patients are trusting pharmaceutical companies with their lives whenever they take a medication. The sad reality, is that they don’t trust these companies to do what’s right when it comes to their business model, and consumers and patients fear that the pharma companies profit motive may lead them to cut corners or push pills that may not be in the patient’s best interest. For that reason, pharma companies have begun to explore third-party digital health platforms that they can partner with to deliver greater digital value beyond the pill and molecule.
Must Have Aligned Incentives On Selling More Drugs
Since the pharma companies are not going to be paid more by the payers for adding digital value (see my previous blog post), the partnership between the pharma companies and the digital health platform firms must be aligned to sell more drugs. This means that the digital health companies who partner with pharma companies should be paid a fee, commission or royalty based upon the volume of drugs sold, referrals provided, improvement in health outcomes, decrease in healthcare costs, patient engagement, etc. through their digital health platforms.
Focus on Risk-based Models That Deliver Measurable Value
In a competitive market with many different drugs addressing the same medical condition, payers are going to start imposing the same discipline and restriction on drugs that they have done with medical devices – limit their reimbursement to fewer products that can demonstrate improved outcomes and provide objective, measurable evidence of their efficacy. This means, that in the future, those pharma companies that can’t deliver the digital engagement, outcomes and efficacy data to payers and providers will not be included in the formulary. We are already seeing this happen in the United Kingdom through their NICE programs that only pay for outcomes and performance. This will continue to push the pharma companies to demonstrate how they: 1) add more value, 2) decrease healthcare costs, and 3) earn a margin on the healthcare cost savings they deliver to the health systems.
Start with Consumers before Providers to Get Adoption
Consumers are the most willing to experiment and try new things that could improve their health and wellbeing, as long as the provider of these new solutions are believable and can support their claims. Consumers vote with their feet and their wallets – if the digital offerings don’t work, then the consumers will abandon them. For this reason, the digital health engagement and therapeutic platforms that have gotten the greatest traction among patients are not those that were developed with the physician, nurse, or insurer in mind. They were developed with the patient and consumer in mind. The paradox is that by delivering health value to the consumer and patient first and foremost, they can then begin to attract the interest and application of the more conservative and change resistant parts of the healthcare ecosystem to transform the practice of medicine as well.
Digital Marketing before Physician Focused Sales Force
Pharmaceutical sales reps have shown, over time, that they can only rep and detail about two drugs per sales rep. Early efforts to get them to also focus on digital innovation have been disappointing. Part of the reason is that it can be tough to educate these sales professionals on these new products, how they work, and why they are effective. But the bigger problem is that the physicians that these reps sell to are very skeptical of the value of digital health in general, and often are looking for reason NOT to try something new like a digital therapy. So both the messenger (sales rep) and the receiver (physician) make the sales process tough. For this reason, digital therapies must initially focus on digital media and marketing to reach the patient and consumer directly, much as direct-to-consumer advertising has done over the past decade with drugs. The huge difference is, that direct-to-consumer digital marketing of digital health platforms delivers much greater value to all involved (patient, consumer, payer, provider) than advertising could ever hope to achieve.
So the bottom line … look at the emerging pattern of partnerships among big pharma where they are partnering with digital health companies to engage patients and providers in delivering total solutions to patients.
Chris Wasden is the co-author of Solving for Why, and Tension: The Energy of Innovation. Since the launch of the iPhone, he has been a digital health thought leader at PwC and the Executive Director of digital health innovation center at the University of Utah. He now heads the pharma team at Happify, the leading digital mental health engagement and therapeutic platform.