Patients and Pharma no longer needs drugs. They need therapeutic systems
All systems, including healthcare require change. In a dynamic system patients and healthcare systems evolve, positive change ensures that a healthcare system continues to deliver to its purpose; providing high quality therapeutic outcomes to patients and society, sustainably over the long term, including for manufacturers.
This change need can emerge as much, or more, due to the success of a system, as its failures.
It’s important therefore to periodically take a step back, and assess whether a system is working well, or if changes are needed to re-align the system with its purpose.
Doing this for healthcare, we can see that despite huge past success, the current approach is facing a number of simultaneous challenges in delivering to its purpose. These challenges are not confined to one area of the healthcare system, but broach diverse topics; such as the access and quality of treatment patients receive, the ability of healthcare systems to manage national health effectively, and the financial sustainability of those producing new healthcare treatments.
Patient Challenges
One of the most striking challenges for patients treatment accessibility. This can be seen in both public and privatized healthcare systems – e.g. either outright rejection of a treatment for reimbursement, limits to its applicability, or as limited coverage and higher co-payments in insurance based systems. This is particularly true for innovative treatments in challenging disease areas such as oncology.
In general; patients are finding it harder to access the treatments they need.
Moreover, even those can access treatment often don’t achieve the desired benefits - for example, by struggling with adherence. In 2005 the WHO identified adherence management as that the single most beneficial and needed healthcare advance, yet, 20 years later adherence remains a challenge that has yet to be significantly addressed.
Finally, patients still mainly experience treatment as something done to them, rather than with them, with little insight into how such treatment affects their health, or not. Yet nearly all experience the negative aspects of treatment – from clinically significant side effects through to unpleasant sensations or dose delivery approaches.
Challenges for National Healthcare Systems
Many of the patient challenges are mirrored in national healthcare systems. Decades of rising treatment costs mean that national healthcare budgets are under increasing pressure, for example from aging populations, and a rise in expensive and long-running chronic disease. Many of the latest treatments are proving unaffordable for the national healthcare systems, being unjustifiable compared to therapeutic benefits which can be gained in other areas for the same cost.
The changing needs of patients are also a significant pressure on the way national systems provide healthcare; with a movement away from ‘one-size-fits-all’ treatment to stratified care, more care taking place out of traditional healthcare environments. As well as significant financial challenges, many healthcare systems are simultaneously having to deal with complex changes to the way in which they operate, and best provide care – with the two issues deeply intertwined.
Challenges for Healthcare Manufacturers
Healthcare manufacturers also face significant challenge. Primary are the increasing pressures on their financial model – predicated on enormous returns from a small number of blockbuster drugs. This challenge is a two ended, with both increasing costs and decreasing returns on the development of novel drug-based therapies. This points to an emerging cost/access challenge – with higher drug prices recouping development costs more quickly per sale, but with fewer overall sales due to limits placed on market access.
This access limitation comes about as national healthcare systems use a number of methods to manage their spend on perceived expensive drugs, such as via generic substitution, price cuts, patient population limits, reference pricing, multi-national pricing collaborations, etc. These challenges are exacerbated by the movement to biologics and C>s, with longer and more costly development times, but smaller applicable patient populations, and shorter reimbursement periods under patent protection due to fixed patent periods but growing R&D timelines.
All this means that healthcare manufacturers are increasingly struggling to make sufficient financial return on their products. This should be a significant driver of change for any healthcare manufacturer. Though the full impact of these challenges is yet to be felt, we see the beginning of a readjustment in the high-profile redundancies at a slew of high profile Pharma firms. Yet, in an industry where new products take up to several decades to develop, changes and adaptation to the new reality of healthcare must be made as soon as possible to succeed. Waiting too long means that it will be too late for many companies to adapt, and the loss of much needed new treatments for both patients and national healthcare systems.
This combination of challenges, across many actors in the healthcare system shows that there is a real need, now, for change in the way that healthcare is developed and supplied, to once again be able to deliver effective therapeutic outcomes economically and sustainably.
Diagnosing Healthcare’s Challenges
One driver of these challenges is that the disease landscape today looks very different from the one for which our healthcare system was initially built – i.e. the treatment of acute diseases, using cheap and easy to produce small molecules, with applicability to large patient populations, delivered in a clinical setting and financed largely via the huge success of a small number of blockbusters.
Healthcare’s success with addressing this ‘old’ model, however, as well as other global societal trends, has caused another to emerge, characterized by:
Rapidly aging populations
Chronic non-communicable disease as the dominant disease challenge
Complex, costly, biologics and C>s with smaller target patient populations as the dominant pharmaceutical solution
Increasing sophistication and complexity both in terms of market expectations, and innovative solutions
Novel drugs as an expensive way of improving health outcomes, due to their high and increasing cost development
A smaller pool of un- or under-treated ‘common’ diseases, and so ever more stratified, even ‘personalised’ treatments, applicable to a smaller group of target patients with the scale benefits of ‘blockbuster’ drugs becoming increasingly rare
These challenges together create a new healthcare reality – with the blockbuster model increasingly unsustainable, and national healthcare systems struggling to afford new complex, difficult to develop and narrowly focused treatments.
The need for healthcare is to move from the ‘old’ model, to a new one – that more adequately balances and addresses the new needs of patients, national healthcare systems, and healthcare manufacturers, to continue provide improved therapeutic outcomes sustainably over the long term.
Enter Value Based Reimbursement
These challenges are driving more national healthcare systems to performance based reimbursement models, where therapies must explicitly demonstrate the value delivered to individual patients.
This is more than a simple ‘measurement’ challenge. Neither is it purely a cost-cutting exercise. Value based reimbursement reflects the need for healthcare systems to increase the demonstrable value delivered to patients per dollar spent, and making sure less is wasted on ineffective treatment.
It therefore fundamentally changes what is important, in reimbursement terms. Whereas fee-for-service led to reimbursement for simply supplying therapy to patient, VBR instead reimburses explicit valuable outcomes. Leading to:
De-emphasis of disease management, and increased emphasis on prediction and prevention, and avoidance of later costly exacerbations
Explicit recognition of patient stratification through low cost and effective companion diagnostics
Reward for consideration of how a therapy interacts with/operates within a health system - e.g. does it result in a net increase in costs due to administration?
A focus beyond only what a therapy does, but how it does it. Can it be delivered more effectively, for lower cost? Can it be made safer, and with fewer side effects?
Whilst the Mode of Action of a drug will always be the central factors in producing therapeutic value for patients, VBR forces us to think holistically about how a particular therapy operates in the context of the wider healthcare environment.
Importantly, the focus here must not be simple cost transfer – direct financial savings translating proportionally to reimbursement ($X thousand is saved, so some large fraction of $X thousand is reimbursed). Such approaches don’t truly reflect the value received by the patient, or healthcare system, only the direct cost savings and ignoring indirect effects.
The new focus: 4D Therapeutic Systems
But if linking reimbursement to future cost savings isn’t the answer, what is? There are two main points to consider:
The reimbursable value for patients is now recognised in a different way - less narrowly focused on the core safety and efficacy of a particular therapy (e.g. a drug), and instead looking more broadly, with a focus on provable real value delivered to individuals and the cost saving to national healthcare budgets.
Sitting behind this is a continued fall in the efficiency of the drug development process. Whilst drugs remain at the core of treatment, they are also an expensive way to realise therapeutic value
Whilst drugs will always have a significant healthcare role, VBR also asks us to look beyond them. To be effective, drugs must be paired with diagnostics; not only to ‘prove’ the patient value delivered but to understand whether a patient will respond to a specific therapy, or is at risk of exacerbations.
Simultaneously, delivery devices become crucial, with significant value for patients in using innovative devices to deliver drugs with greater precision, using a lower volume, to reduce not only costs, but also side effects. For biologics, a drug's the clinical effectiveness is increasingly sensitive to how and where it is delivered, yet this is largely ignored as a way to improve therapy. Devices are also hugely valuable tools in reducing common use failures which lead to, for example, under/over dosing, as well as improving the patient experience of treatment.
All of this means healthcare must move beyond the drug as the only element in a therapy, and instead to look to ‘4D’ therapeutic systems – that incorporate drug, device, diagnostic and digital elements. Importantly, these elements don’t operate in isolation, but are designed co-creatively to operate together as a complete system, with the additional value realised in one domain maximised and built on in the others. Key here is that much of the additional patient value created is achieved via devices and software; elements which are hugely more cost effective to design and develop in comparison to drugs.
4D therapeutic systems maximise the value achieved by a single drug development stream, and produce significant additional value, at a more marginal additional cost – directly addressing the value delivered/$ spent focus of VBR.
Adapting for 4D Therapeutic System Development
As discussed above, the effective development of 4D therapeutic systems isn’t only a technical challenge, but a strategic, cultural and process related one.
The development approaches and cultures in each of the required domains – drug, device, diagnostics, and digital – are highly diverse. Yet, not only do these domains need to work together effectively, they need to do so co-creatively. A 4D therapeutic system approach doesn’t simply combine each domain into one interoperable system, but from the beginning designs it as one holistic unit
A new need emerges around deep external partnership. The full extent of capability needed to develop 4D systems often doesn’t exist within a single organisation. Primarily because innovation requires both an explorative capability in the early stages (to create the novel, useful product concept), and exploitative capability in the late stages.
Large organisations such as corporate pharma are hugely efficient at exploitation, as their longevity and scale leads to a focus on existing products, a sophisticated but rigid structure, and deep optimization of processes. These qualities make them poor explorers however, with exploration needing the flexibility, agility, and creativity typicall found in startups and SMEs.
Secondarily, all organisations tend to have a specific domain capabilities – so operate primarily either within e.g. the pharmaceutical market, or the medical device market, or the diagnostics market. Whilst the largest organisations do sometimes have the capability to bridge two or even three of the ‘4D’ disciplines, all four are ultimately needed, and this domain expertise is either limited, or not easily accessed, sitting typically in separate ‘siloed’ department.
4D therapeutic systems therefore demand Innovation Capable Partnerships (ICPs), to effectively bring together the broad range of capabilities needed to develop such systems, to bridge the explore/exploit gap, and simultaneously building the previously discussed co-creative development capability.
An ICP approach seeks to identify and engage the capabilities needed for a 4D therapeutic system (as identified e.g. from the needs outlined in the Target Product Profile (TPP)) and engage those capabilities as active partners in the development. This is a multi-way co-creative relationship, in contrast to the one-way supplier or acquisition relationships. This capability led and co-creative partnership focused approach, in contrast to internal, external or acquisition-based approaches, allows true 4D therapeutic systems to be effectively developed.
The effective development of 4D therapeutic systems then needs not only new innovative products, but a new way of developing them – it is, in fact, largely an organizational psychology challenge – with diverse multi-domain teams, co-creative working, and innovation capable partnering on the areas that sit beyond the boundary of the organisation. These changes, beyond the technology itself, are the reason that a first mover in 4D therapeutic systems is likely to have a long-term advantage in the space. Whilst technologies can be replicated, the right changes to a development culture and approach to re-align around 4D therapeutic systems are much harder to realise, and so act as a barrier against rapid follow on from competing organisations.
Thinking beyond drugs for VBR
In summary, the nature and complexity of the drivers behind VBR mean that a new approach to therapeutic value is needed – not only realised via a drug, but by the holistic and synergistic operation of drug, device, diagnostic, and digital elements acting together. This is a broader definition of value. Such systems attract higher reimbursement by provably delivering better outcomes for individual patients, and integrating more economically and cost-effectively with national healthcare systems.
The development of these new systems in turn must occur within a new culture, using a new approach to the ideation and realisation of innovative therapeutic systems, with teams working co-creatively across domains, with an innovation focused process, and actively incorporating Innovation Capable Partners to fill in inevitable capability gaps.
Whilst there are few of these systems under development currently, this is more a reflection of their ‘newness’ and perceived risk when compared to existing therapy approaches. Early successes are likely to lead to significantly increased interest and demand in the systems, due to both push and pull drivers. Key is to be able to enter the space early, as the time and complexity associated with making the cultural changes necessary to effectively develop 4D therapy systems act as a significant barrier to entry – a huge advantage to first moves, and big disadvantage to those that delay.
Healthcare developers should therefore be seeking to understand the broader value that patients need delivered and define what a 4D therapeutic system in their market must achieve alongside the strategic fit to their existing product base. They should also seek out suitable ICPs to fill any capability gaps they have either in the 4D domains, or across the Ideation-Research-Development-Commercialisation innovation journey. This should in turn sit alongside the development of a co-creative development culture internally, and a process that leads to adoption both internally, and on the market.
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