The Vale Problem in is a Constant in the Pharmaceutical Industry
My first client call when I started my second spin in consultancy went like this:
We have a value dossier. It does a great job at linking our data to an exhaustive list of value messages [pause]. But we don’t have a story to tell.
I thought this was a bit weird and probably unusual. Six months down the road, it turns out it was a pre-recorded message that would keep repeating itself over and over.So far, I refrained from replying “Well, it’s easy. You just have to define what is the value that your product is offering, signed The Value Guru” (I have recently read a Market Access ‘how-to’ guide that included a ‘step#27 – define value’, sandwiched between ‘step#26 – know your audience’ and ‘step#28 – price right’). Unfortunately, I have learned the hard way that defining the value of a pharmaceutical innovation is not as easy as “Bob’s your uncle”. I have been trying for almost twenty years to come up with the perfect definition of the “value of pharmaceuticals”, with limited success. At least with time I have gained a better understanding of why I keep failing so miserably in my quest. Here are the 3 main reasons why I believe that defining the value of their innovative products is the ultimate challenge for pharma leaders in 2017.
1) Value is not Universally Defined
Ask 10 of your colleagues to write down their definition of “value”, and compare the answers. Chances are, the results will be heterogeneous. Still, everybody will be right. Being a Value Consultant is a bit like being a Quidditch Head Coach or a Community Manager @Kodak. It sounds cool, but it doesn’t belong in the real world. At best, “value” is a concept that will trigger different sentiments across various members of your audience. Some will understand it in monetary terms, others – more utilitarian – will believe it means usefulness, and others – more romantic – will see it as a list of qualitative attributes of a product. Multiply all the possible definitions of value by the numbers of customer groups you are dealing with – from patients to payers to prescribers – times the number of geographies you operate in, and cluster that at personal and collective level. “Headache” is the word.
2) Value is in Constant Motion
In a brilliantly titled article in Forbes – Anti-PCSK9 Drugs: An Ingenious Solution For A Problem That’s Mostly Already Solved – David Grainger summarized well the challenge that PCSK9 makers are facing. Their discovery constitutes one of the most amazing scientific success stories spanning across disciplines such as biology, genetics, and translational medicine. A story that, however, took almost 15 years to unfold. And that was no lingering. Surely when these drug candidates were selected, the companies’ internal models would forecast never-seen-before risk reductions in cardiovascular morbimortality. Fifteen years later, outcomes studies disappoint with modest reductions in morbidity and no reduction in mortality, despite tens of thousands of patients being studied. During these 15 years, regulatory requirements for the approval of lipid-lowering agents have remained identical. But payers’ requirements? Well, they have multiplied like foam cells in an atherosclerotic patient. Oh, and to make things better, the American College of Cardiology and the American Heart Association have published a joint value assessment framework. And that was impossible to forecast 15 years ago.
3) Value is what Customers Really Want
Customers care about the value they will get out of your product. It is true in healthcare like it is true in any other market. They do not actually care about molecular biology, genomics, big data analytics, or market research. Or at best they care about them as means to an end. That end being… to create value for them. It is so sad that the industry is becoming so skillful at things that its customers do not actually demand. That’s what puts this tremendous amount of pressure on pharma companies, wanting to solve the value equation, but being so clumsy at it.
Striving to make the Concept of Pharmaceutical Value less of a Strange Thing
As pharma companies progress their assets through the decision points of their clinical development program, defining what will be the value of the resulting product has become a bit like catching the Demogorgon in Stranger Things – pardon my geekish reference. It is a not well-defined entity living in a parallel world which keeps morphing and evolving in the upside down while most people in the normal world seem to deny its very existence. If you’re not into sci-fi, the elephant in the room might be easier to visualize.
Related Content From Inbeeo
Learn more about Inbeeo’s approach to Defining Value or our Tools to achieve a value based price for healthcare technologies using MCDA
Four Definitions of Value-Based Pricing and Counting – What is Value-Based Pricing? It’s pricing based on value! Or is it? Inbeeo defines what it is once and for all.
Why I Prefer a Value-Based Healthcare Mayhem over the Status Quo – A look at why Value Based Healthcare is the fay forwards