First world health and care systems went into the pandemic with big structural issues. These issues have grown significantly because of Covid, but Big Pharma has an opportunity to move before being compelled.
Fatigued health workers now expect improved pay and conditions, indebted states need to radically reduce spending yet drug costs keep increasing and the backlog in non-pandemic activity must be addressed even though countless patients will now die before being treated. That is merely the tip of the iceberg.
This is uncomfortable for big pharma. The historic business model was quite simple and highly profitable. High-value drugs sold for good prices with lengthy patent protection.
Change is afoot
The new model will need to combine increasing delivery complexity with local data on patients and populations to demonstrate public value – outcome-based payments. This transfers a host of new risks to the pharmaceutical company and demands new capabilities to price and manage them, while also increasing the number and range of commercial agreements.
We have already seen the start of outcome-based pricing, such as Novartis’ Zolgensma at ~$2m per patient to treat spinal muscular atrophy. And these moves are welcome in the context of targeting life-changing and life-ending diseases. But so far this remains very ‘narrow’ in terms of patient data and use cases and does nothing to deal with the politically-charged issues of population health outcomes, especially the widely reported discrepancies across socio-economic divides.
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