In a healthcare world that’s focussed on outcomes rather than treatments, innovation is whatever can help achieve those outcomes cost-effectively. Most cash-strapped payers would rather fork out for a technology shown to improve the often sub-50% compliance rates for existing treatments than pay for a new, more expensive drug that may offer only incremental benefit (assuming it’s taken appropriately).
That means drug firms’ next round of innovation lies beyond the pill (or injection). The future will be about treatment, service and support that challenge and extend the traditional definition of innovation.
There’s nothing lesser about advances in usability and compliance, rather than science: Apple didn’t invent anything fundamentally new in its iPhone but it did create an irresistible user-interface and unrivalled touch-screen technology. Indeed, novel delivery and formulations of established treatments have long been part of pharma’s remit: Denmark’s Novo Nordisk is currently launching Tresiba, an ultra-long-acting form of insulin, in Europe almost fifty years after the hormone was first sequenced (the drug got held up in the US by the FDA).
New Thinking
But the outcomes revolution goes beyond drug formulation and calls for drug firms to embrace a new way of thinking: Different expertise, broader relationships with payers and a wider notion of value.
Thus a handful of companies have begun to re-position themselves as providers of ‘health solutions’ rather than just drugs or devices. Endo Pharmaceuticals – renamed Endo Health Solutions last May – made a splash with its shift to provide a ‘continuum of care’ in pelvic health, including IT solutions, urology services and generics. French drugs giant Sanofi is trying something similar in diabetes, building out beyond its Lantus insulin product to include an iPhone-compatible blood glucose monitor, iBGStar, which comes with an electronic log-book to record blood sugar results and allows users to share this data with their doctor. Merck and Johnson & Johnson are also among those experimenting with new, non-drug focussed business units and activities.
New Partners
One of the consequences of the outcomes revolution in healthcare has been the emergence of healthcare IT – and with it, a whole new sector’s worth of potential partners for pharma. Both established technology giants such as Google or Microsoft, as well as start-ups like Proteus Digital Health (developing pills that can signal wirelessly to doctors from within the gut) or health app developer Fitbit are trying to help improve health systems through monitoring, data and messaging.
Drug firms won’t easily or immediately monetise beyond-the-pill innovation: Investors remain obsessed with pills and pipelines. That must change, as reimbursement hurdles continue to rise and as ‘associated services’ gradually become more critical to drugs’ commercial success. The world will always need new medicines but above all, it needs better ways of using and assessing the ones it’s got.
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of The Economist Intelligence Unit Limited (EIU) or any other member of The Economist Group. The Economist Group (including the EIU) cannot accept any responsibility or liability for reliance by any person on this article or any of the information, opinions or conclusions set out in the article.
