Addressing the Value Challenge in the Evolving Pharma Marketplace

1. Managed Markets Advertising
Addressing the Value Challenge in the
Evolving Pharma Marketplace
Jim Mittler, PhD, Medical Director

2. The Value Challenge report from Economist Intelligence Unit
• Released February 6, 2012
• Second in a series of 4
pharma reports
• Global survey of 399
industry executives to better
understand the nature of the
“value challenge” in pharma
http://www.managementthinking.eiu.com/value-challenge.html.

3. The “value challenge” in pharma
• It’s no longer enough to bring safe and effective drugs to market; new
products must provide superior outcomes to existing medications
• Companies must demonstrate added value if higher costs are to be garnered
for new therapies
• There is a range of stakeholders with different perceptions of value
– Pharma companies
– Physicians
– Patients
– Commercial payers
– Government payers
– Regulatory agencies
http://www.managementthinking.eiu.com/value-challenge.html.

4. Managed markets expertise is increasingly important
• The value challenge is a long-term issue and a leading concern for the drug
industry
• Pharma companies lack confidence in the ability to respond to the value
challenge
• There’s a shift of power in market influence from pharma to payers
http://www.managementthinking.eiu.com/value-challenge.html.

5. Divergent perceptions on the value of a new drug
Which of these factors have the greatest influence on how your organization
currently assesses the value of a new drug?
Biopharmaceutical Biopharmaceutical Generic Health Government Regulatory
company services provider pharmaceutical insurance payer agency
company company
Degree of improved efficacy over existing
63% 50% 44% 31% 26% 36%
products
Total patient outcomes 41% 39% 29% 34% 26% 29%
Whether it addresses an unmet medical need 54% 36% 27% 15% 39% 32%
Potential number of patients who could use
23% 31% 54% 33% 10% 25%
the drug
Cost compared with competing products 14% 8% 37% 38% 29% 21%
Improved longevity of patient 14% 11% 20% 31% 36% 44%
Improved quality of life of patient 25% 31% 34% 65% 52% 52%
50% and over 40% to 49% 30% to 39% 20% to 29% 20% to 29% Source: Economist Intelligence Unit Survey, September 2011.
• A significant gap in the definition of value exists between payers and industry,
which will continue in the future
• Fundamentally different business objectives drive this; however, payers
are becoming increasing more influential and pharma needs to adjust
http://www.managementthinking.eiu.com/value-challenge.html.

6. The lack of a clear definition of value is a significant
challenge
What are the biggest barriers to your company’s efforts to demonstrate the value of
its products? (% respondents)
Different stakeholders define value differently
56%
Value considerations differ for different conditions being treated
36% Understanding of
The same stakeholders in different geographies define value differently value differs the
33%
most according to
stakeholder, type
Inability to obtain or failure to generate data related to value during trials of medical
26% condition, and
geography
Lack to understanding of what stakeholders are seeking
18%
Source: Economist Intelligence Unit survey, September 2011.
http://www.managementthinking.eiu.com/value-challenge.html.

7. The balance of power is shifting to payers
In your opinion, how has the influence of the following stakeholders on the type and
price of products brought to market changed in the biopharmaceutical market in the
past 3 years? (% respondents)
Who has gained influence according to:
Biopharmaceutical Companies Other
Traditional biopharmaceutical companies -24
13
Specialty biopharmaceutical companies 38
37
Traditional
Generics manufacturers
30
39
pharma
42 companies see
Payers/insurance companies 32
33
themselves as
Government department/agencies charged with healthcare spending 17
losing influence
54
Regulators of formulary access 15 over the market
43
Regulators of drug approval 26 to commercial
19
Patients/patient advocacy groups 12 and government
General practitioners
-32
21 payers
5
Specialized doctors 40
19
Institutional healthcare providers 36
-40 -20 0 20 40 60
*Percentage show the difference between the positive and negative responses for each group. For example, 41% of respondents from
biopharmaceutical companies say their segment has lost influence and only 17% say it has gained influence, for a net negative 24%.
Source: Economist Intelligence Unit survey, September2011.
http://www.managementthinking.eiu.com/value-challenge.html.

8. Managed markets strategy can better meet the value
challenge
Regarding its go-to-market strategy, which of the following has your organization
done in the last 3 years to better demonstrate value to the market? (% respondents)
Value Leaders Rest of Survey
Shared more information on new products with 64
medical professionals 41
55
Published different or more complete data on product efficacy
28
Gathered more extensive information on efficacy of drug 45 Traditional sales
once it reaches market 25
channels are
Share more information on new products with 42
patient/patient groups 24 giving way to
Shifted go-to-market strategies from doctors to 42 health economic
payers (public or private) 22
information
33
Publish data on the overall cost of treatment for a patient
rather than just the pharmaceutical cost 26
targeted to the
Increased efforts to encourage patient compliance in order to 33 payer audience
enhance effectiveness of product 25
27
Shifted resources from traditional sales channels towards
20
making efficacy/value information better known to the market
12
Changed metrics of commercial performance (eg, put greater
emphasis on patient trust in company) 14
6
My company has not made significant changes to better 25
demonstrate value in the marketplace
0 20 40 60 80
Source: Economist Intelligence Unit survey, September2011.
http://www.managementthinking.eiu.com/value-challenge.html.

9. Three-part aim: What looks good to payers in the evolving
marketplace
Better health outcomes
for patients
“A general concept
that translates across
all conditions and care
Value Better health of settings.”
proposition populations - Dr. Shari Ling, MD
Deputy Chief Medical
Officer, Centers for Medicare
and Medicaid Services
Lower costs through
healthcare quality
improvement
http://www.managementthinking.eiu.com/value-challenge.html.