The pharma industry faces a barrage of challenges, including patent expirations, growing costs and complexities of drug development, the impact of precision medicine and genomics, potential price controls in US markets, and, perhaps most importantly, the rise of value-based purchasing agreements which link drug payments to value-based upon defined patient outcomes. Value-based payment models such as bundled payments, accountable care, and pay-for-performance are causing seismic shifts across the healthcare landscape and pharmaceutical manufacturers are not immune. New risk sharing arrangements for drug purchasing and other rapidly evolving market conditions are driving the industry to embrace digital health solutions as one of the key strategies needed to successfully compete in a transformed environment. Today, the drug business is no longer just about selling drugs. Pharmaceutical companies increasingly need to wrap a complete digital experience around the products they sell. Consequently, almost every major pharma/biotech company has formed a digital health strategy program.
The goal is to develop a whole ecosystem around various disease states, offering a range of solutions and services to patients, payers, and providers that are designed to improve patient outcomes, enhance patient engagement, and collect data to enhance product development. The pharma industry understands it needs to provide value on many dimensions in concert with the move to value-based reimbursement. Pharma companies need to extend the value proposition of their products and clearly demonstrate how these products can save lives and improve cost efficiencies for the healthcare system. Pharma companies need to develop products and solutions that focus on prevention, supporting self-care at home, driving behavior modification and compliance, and other areas of growing importance.
Patient compliance is one of the thorniest issues in healthcare, and pharma has long been concerned with solving this dilemma. Patients need to take the full course of medication as prescribed in order to optimize their potential for the best possible outcome. Value-based reimbursement is simply not feasible or sustainable unless payers, providers, and pharma can work collectively and proactively to improve patient compliance with treatment protocols, especially medications. Digital health technologies are quite simply essential to accomplishing this goal, and this is the key reason pharma will become more proactive in getting patients to adopt consumer-facing solutions like mobile apps that provide content and wearables that track fitness and wellness as well as clinical-grade wearables and sensors that can track medication adherence, vital signs, and collect other biometric data.
The pharma/digital health focus is not entirely new but it is taking a new direction. For at least the past decade, pharma’s primary interest in digital technologies has centered mostly on marketing efforts. Going forward, pharma’s need to develop a deep expertise in digital health is seen as increasingly essential for business viability. Digital health companies should be cognizant of how the increasing role of the pharma/biotech sector will potentially influence the direction of the broader health IT market.
About the author: Nancy has extensive experience conducting strategic healthcare market research for leading global management consultancies, healthcare corporations, and provider organizations. In her current role as Principal Analyst for Frost & Sullivan’s Connected Health practice, Nancy focuses on U.S. healthcare reform and the digital transformation of healthcare, including clinical and financial IT solutions used by healthcare payers, providers and consumers.