Pharmas are from Mars, Payers are from Venus

Share this article:
As payers scrutinize the bottom-line, they are continuing to redefine what constitutes worthwhile treatment. A report by PricewaterhouseCoopers said pharmas are coming up short on convincing payers that their drugs are worth the cost.

PwC said buyers have gotten more sophisticated—and picky—when it comes to determining formulary-worthiness. Sixty of the 100 polled now demand that drugs have significant clinical benefit over what's already on their formularies. Further, the research firm said FDA and personal doctor recommendations no longer carry the same heft—instead, payers are using information culled from electronic medical records, mobile devices and insurance claims, along with the old standbys, like agency input, when determining coverage policies.

And then there's the cost/benefit equation—45% of those polled said they want clear proof that a drug will save money by lowering the cost of overall patient care, and yet less than half of manufacturers' health economic studies analyze how their drugs can reduce the total cost of care.

PwC said drugmakers also need to be cognizant of the empowered patient. PwC found that looped-in patients are looking at their healthcare holistically, which is also exerting pressure on how payers think about their drug offerings. Or, as PwC put it, this means “drug manufacturers' discounts may carry less weight in formulary design. Rather, quality and outcomes become larger considerations.”

Among the intangibles is trust. PwC found that payers don't like simply being told what drugs are good for them—which in econospeak amounts to a “transactional relationship.” Instead, insurers and hospitals want to feel like they help determine what makes the most sense for their patients—a “collaborative relationship.” PwC said drug makers need to do more than offer discounts and rebates. Instead, it requires mutual data sharing of population profiles and bringing in payers when it comes to labeling information before pipeline items hit the FDA.
Share this article:

Email Newsletters

More in News

Bayer drug gets orphan label

Bayer drug gets orphan label

The FDA designation is for an experimental, inhaled form of ciprofloxacin intended to treat a rare lung condition.

Lilly's cancer drug ramu granted gastric indication

Lilly's cancer drug ramu granted gastric indication

Ramucirumab received FDA approval today in advanced gastric cancer, a nod that could translate into $600 million in peak sales.

GSK, Novartis, Lilly play musical chairs

GSK, Novartis, Lilly play musical chairs

The three drugmakers rearranged part of the pharma universe Tuesday with a string of pipeline-altering deals.