Building Value Considerations into R&D
With payers increasingly demanding a differentiated clinical and economic value story, it is never too early to start asking the right questions
With spiraling cost inflation and lagging quality indicators driving a transition to a value-based system, public and private payers are using sophisticated tools, including health technology assessment (HTA), to evaluate the benefits of medicines.
In this environment, companies must demonstrate both clinical efficacy and differentiated economic value to gain optimal payer reimbursement and ensure physician adoption. However, effectively generating data to tell these value stories will require significant planning, with work beginning early in the clinical development process.
Historically, R&D has focused on generating safety and efficacy data for regulatory approval; in today’s value-based marketplace, it must also generate data to get products reimbursed and adopted.
In addition to upfront planning during clinical development, such an extensive data package requires market insights from payers, which can be provided by the commercial side of the organization. Market access teams will often be well-positioned to gain payer perspectives on what data will be required to demonstrate a differentiated value case, insights that must be translated back into R&D through an ongoing feedback loop.
Establishing a collaborative dialogue between the commercial and R&D teams allows commercial/HEOR input into study design and ensures R&D is both asking the right research questions and evaluating the endpoints that resonate with payers. Such endpoints can include economic value and quality of life improvements.
Market and payer insights can also be used as inputs to investment and portfolio management decisions. If a product’s data fail to deliver a compelling value case, manufacturers can decide to reallocate clinical development resources to other products. This is extremely useful for products early in development or which demonstrate a mediocre safety and efficacy profile in late-stage trials. It can also help manufacturers to make more informed go/no-go product development decisions and increase R&D efficiency.
Making the value case
Pharmaceutical manufacturers will need to clearly define their economic and clinical value case to successfully position their products with payers, especially when entering a crowded marketplace.
When determining the value of a new product, payers often compare it to the existing standard of care or against a competitor product, therefore, the standard safety and efficacy data package will not be sufficient to demonstrate a product’s value case. Instead, manufacturers will need to develop data points that address payers’ unmet needs and deliver value, telling a differentiated economic and clinical value story.
Insights captured during the product development process can influence commercial strategy – from pricing a product to setting market performance expectations. R&D can identify and define patient subpopulations that respond best to the product, aiding the commercial team as it develops targeting and segmentation strategies. What’s more, clearly defining the patient will help the commercial team communicate the unmet patient needs that the product addresses as part of a compelling value story.
To create differentiated economic and clinical value, R&D must think broadly about its task – generating clinical data on safety and efficacy is the starting point, but incorporating value considerations raises a new set of ‘so what?’ questions. What difference does the product make to the total cost of care? What are the clinical impacts and the downstream implications for cost and quality of life?
In a value-based marketplace, development is not too early to start answering these questions. R&D, along with HEOR, must anticipate the features and benefits that will resonate with payers, providers and consumers, as well as frame out value-based questions and design trials to answer them. This approach enables manufacturers to avoid delays in bringing compelling product data to the market and is less costly than developing an entirely new study later in a product’s lifecycle. The earlier an economic and clinical value case is developed, the brighter the prospects for product approval, reimbursement and access.
The economic and clinical value story for a product is also a dynamic process that evolves over the lifecycle. To be successful, manufacturers must regularly update the economic and clinical value profile in response to changes in market dynamics and new competition. Each of these forces may be reason to reassess and fine-tune product positioning, and may even spark post-market studies that build the case for previously unappreciated competitive advantages.
Rita E. Numerof, PhD is Co-founder and President of Numerof & Associates, Inc. (Numerof). Numerof is a strategic management consulting firm focused on organizations in dynamic, rapidly changing industries. We bring a unique cross-disciplinary approach to a broad range of engagements designed to sharpen strategic focus, increase revenues, reduce costs, and enhance customer value. For more information, visit our website at www.nai-consulting.com.