Transparency, data-based pharmacy decisions, incentivizing patient behavior, and outcomes-based payments will reshape the environment for marketing pharmaceutical drugs in and beyond 2012. Two reports published this week, from Express ScriptsMedco and PwC, explain these forces, which will severely challenge Pharma’s mood of market ennui.

Express-Scripts Medco’s report on 9 Leading Trends in Rx Plan Management presents findings from a survey of 318 pharmacy benefit decision makers in public and private sector organizations. About one-half of the respondents represented smaller organizations with fewer than 5,000 employees; about 20% represented jumbo companies with over 25,000 workers. The survey was conducted in the fourth quarter of 2011.

The 9 trends shaking up the pharma landscape are:

  1. Balancing cost with case, investing in members’ making better health decisions
  2. Using online and mobile tools and apps, revisiting “new media.” 84% of plan sponsors plan to use online and mobile apps to help members make more cost-effective health decisions.
  3. Assessing health reform’s impact on the business and future coverage options: 38% of sponsors plan to move away from defined benefit, and 33% plan to use a health insurance exchange
  4. Reassessing retiree Rx benefits
  5. Looking at how consumer-directed health plans can encourage member self-reliance: the largest employers who are self-insured are attracted to CDHPs
  6. Continuing to grow mail order
  7. Mitigating specialty drugs’ high costs, as illustrated in the second chart. Preferred and step-therapy rules will dominate this strategy, coupled with utilization management, days’ supply rules, and requiring preferred pharmacies
  8. Addressing how coupons drive demand for branded Rx, threatening generic utilization and increasing costs: 65% of plan sponsors believe coupons used by members to get lower prices on branded drugs increase the plan’s costs
  9. Embracing data-driven pharmacy care.
Wellness programs are proliferating health plans to bolster healthy behaviors. Financial incentives that motivate consumer behavior change will grow; while “carrots,” financial incentives, have worked better than penalties for influencing behavior, some plan sponsors effectively use sticks — notably, labor unions, who are twice as likely as nonprofits and public sector sponsors to use disincentives.

Unleashing value: the changing payment landscape for the US pharmaceutical industry from PwCs Health Research Institute. PwC identifies five forces “dramatically” changing pharma’s revenue model:

  1. The growth of biologics (specialty drugs) that will drive up the cost of care and challenge concepts of value in health care
  2. Payors moving away from volume-based payment models toward outcomes-based payment, as the chart illustrates
  3. Providers and payors demanding more data about drug efficacy
  4. A concerted effort to improve adherence to therapies, recognizing that patients who don’t take meds properly cause plans to “lose money”
  5. Increased transparency of health information to empower payments to make better decisions about therapeutics.
There are many barriers to liberating value from therapies in the current environment: comprehensive data isn’t liquid or available; negotiations are complex between payor, plan and pharma; and new contracting methods are, well, new and don’t have track records or evidence to demonstrate whether they work well. This has been the case with CDHPs, where many patients covered by these plans have  postponed filling prescriptions or resorted to splitting pills in order to preserve their health savings account balances for future use.
Ultimately, both reports see a future where outcomes will be the basis of payment.
Health Populi’s Hot Points:  To get to this Nirvana, patients must be at the center of the health ecosystem. We’re on a journey there, and many incentives and work flows must aligned toward that objective which will require several meta-movements: a spirit of trust (which PwC calls out) must (magically) emerge between pharma, providers, plans and patients; data must be liberated from claims, mobile platforms, electronic health records, and social media (representing patient voices), consolidated, analyzed and fed back to physicians and patients; and patients must play more engaged roles in their own care. The evidence has yet to be gathered, however, as to whether consumer-directed health plans will motivate this alignment, and how medical homes and accountable care will help to get stakeholders on the same page.