As marketing research budgets have grown along with the industry size, there’s been a huge loss in the ability and, maybe even the desire, of marketing researchers to spend sufficient time converting their information and new whiz bang methodologies into a story that their internal customers will understand and then be able to use. If there’s a meeting with both sales and marketing research participating, the research often comes up “quite dry” even if authoritative while sales will use a very limited number of customer related anecdotes with equal efficacy and for far less money.

In this period of turbulent growth, when the pharmaceutical and biotech industries are shaken to the basic core of their existence, it’s time to re-think not only what types of studies we do, but how we communicate the information we develop to our management.  If a new technique isn’t easily communicated, what’s the point. Regardless of how interesting the analyses. If the study results doesn’t lead to people in attendance at the meeting or in receipt of the report, providing you positive feedback afterwards, save your future money and move on.

We’re Healogix. We are a different kind of Research Company. Strategically focused, but pragmatic in purpose. We have 30+ years of history presenting information at the highest levels of companies across the industry. We know how to convert qualitative and quantitative data into simple stories that senior management will remember, re-use, and re-purpose.

If you have a business situation you want to discuss, call us. We’d like the opportunity to speak with you and to support the objectives you’re trying to achieve.

How can we expect Pharma MR to change?

• Need for being able to conduct multiple, integrated stakeholder studies that allow for seamless interpretation of findings and facilitate decision making
• Less reliance on secondary data as a reliable and predictive indicator of events to come
• Reduced MR budgets as % of sales require researchers to do fewer studies simply because they’ve done them before
• Greater emphasis on situation or problem specific research ( how do we compete against Product X) rather than broad based general studies  (let’s do a segmentation of the market)
• Higher % of smaller, qualitative studies due to rapid turnaround and high level of flexibility in implementation, specifically licensing and acquisition analyses
• More global studies as % of total research investment, and expansion of the world beyond the US and the 5 major EU countries.
• Greater need for suppliers who can truly be partners by bringing strategic perspective and real business insight, saving you time, headcount and money.

We’re Healogix. We understand the challenges the industry is facing and, as a result, we offer a broader, more flexible range of capabilities than larger suppliers. We’re less interested in how much revenue you generate for us per quarter than in having you as a happy client with whom we can partner over the longer term.

For those in marketing research, this change presents a rare opportunity. We have the potential to break away from the narrowly defined, commoditized studies of the past and use customer information to reshape and change the way management will direct the marketing and development of products in the future.

Researchers who aim to be the leaders of tomorrow will proactively change the way they do research by conducting studies that address management’s new and more complex set of needs. That doesn’t mean they do more studies, but integrated studies involving all of the relevant stakeholders. Studies that identify how to create value across the complex customer and competitive landscapes make management’s decision-making process easier and faster.

The opportunity to effect change is before us, but the moment will not last forever. Change is no longer just smart; it’s a mandate for successfully competing in the future.

Think about it.

Yet many researchers labor under the misguided notion that senior management expects perfect information that addresses all of their possible questions before they can take action. This is simply untrue. Licensing deals are often made on the basis of a few discussions with different customer groups.

In today’s fast paced and rapidly changing environment, decisions need to be made quickly. There is no doubt that a decision maker will have confidence in information gleaned from a sample of 300 customers. However, if you interview 12 customers who all say essentially the same thing, you may not have statistical confidence but you will have conviction. And pragmatically, conviction may be far more valuable than a larger sample that takes longer.
Think about it.

 Synthesis, not analysis

• Clarity of thinking
• Concise presentations
• Actionable conclusions

 In today’s increasingly challenging environment, no one has time to analyze and re-analyze data. So, in essence, you get one shot at the goal of impressing your senior management. Not that they won’t give you a second chance if you don’t succeed the first time, but, as we all know, it’s the first impression that’s the lasting impression.

 On the agency side of the industry there’s an old expression: no one ever got fired for hiring IBM. The corollary is no one ever got promoted as a result of it either. The choice is yours. Continue doing what you have been or try to elevate your contribution at a time when senior executives are looking for new ideas and insight.

 Think about it.

 
First, let’s make a very important point. All health care systems “ration” care in some way and always have. In 1963, the then head of the UK’s National Health Service, Enoch Powell said “there is virtually no upper limit to the amount of health care an individual can consume.” That’s as true today as it was then. As a result, some sort of mechanism has to exist to allocate the scare resource of health care supply to all those who would like to consume it. That’s not a matter of political ideology, its just economics 101. We ration care in the US today using one of the most capricious and inequitable means possible-ability to pay. As cost shifting to consumers has accelerated over the past decade, we’ve seen the effects of this as year-on-year sales growth for prescription products has dropped on more or less a straight line since 2000.

 
A few weeks ago, the major consulting firm PriceWaterhouse Coopers released its own vision for the industry’s future “Pharma 2020: Marketing the Future, Which Path Will You Take?” This piece describes a world just over ten years from now in which pharmaceutical sales and marketing has been radically transformed. Most of the large sales forces that are still par for course in industry have vanished and have been replaced by smaller teams that feature members with strong medical backgrounds. The marketing skills needed to succeed also look much different in an environment where collaboration between payers and biopharmas is the norm, compounds are reimbursed on the basis of the value they bring to the market, and the concept of a pharmaceutical “brand” includes not just molecules but a suite of services designed to ensure that all the needed partnerships can function successfully. If you have not read this remarkable document, it’s available at no charge at www.pwc.com.

 
In many ways, this is the preferred world that George Poste sketched out in that talk I heard thirteen years ago. It’s a highly rational environment where evidence is king and features a health care system that is both willing and able to pay premium prices for greater demonstrated value. It features something very much akin to “comparative effectiveness review” (CER) ,which is much discussed these days in the face of the $1 billion-plus appropriation contained in the American Recovery and Reinvestment Act (ARRA) to set up such a function here in the US.

 
Many in the biopharmaceutical industry are recoiling in horror at the thought of even a quasi-governmental body passing judgment on the value of their products. The “R” word is thrown around in an attempt to reduce support for such an effort. Of course this conveniently overlooks the point I made about rationing earlier. It also overlooks a critical question, what alternatives exist to CER for making the scarce supply of health care fit the demand?

 
If you’ve been following the press coverage of the past few months, you’ve heard a lot of pundits suggest that escalating health care costs will bankrupt the US. That’s not much of an exaggeration. For example, according to the Congressional Budget Office (CBO) the Medicare program has an unfunded liability of over $30 trillion dollars between now and about 2050-that’s well over twice the annual GDP of the entire country. That means benefits have been promised to retiring baby boomers that the current tax base won’t support. If health care costs continue their historical pattern of growing 2%-2.5% faster than the overall economy, the CBO says we would need to have a marginal tax rate of 92% to close the funding gap. While Medicare may be the most visible problem in health care funding, it’s by no means the only one. The amount employers spend on health care benefits is now roughly equal to the amount they earn in profits, and continues to grow at unacceptable rates. Consumers aren’t immune either. Health care costs now reportedly product a bankruptcy about every 30 seconds in this country. Large numbers of Americans are being pursed by medical collection agencies, and many are “underinsured.” There are simply no funds available to keep feeding the accelerating costs of health care, and unfortunately, that also affects research-based biopharmaceuticals.

 
The point of this is that the evidence based, rational world contemplated by both George Poste and the more recent PWC monograph may look very threatening for those currently working in pharmaceutical sales and marketing roles, but the more important question is, compared to what?

 
It’s been obvious for some time now that we’re facing more and more restrictions on traditional pharmaceutical promotional activities. The new PhRMA code, the appellate court decision regarding data-mining laws, the “DC Safe Act” the increasing numbers of hospitals and medical groups that are limiting rep access, and the myriad of state legislative efforts underway all point in the same direction. The standard methods of selling and marketing prescription products will be less and less available to the industry in the future.

 
I’ve had the opportunity to do a lot of scenario-based strategic planning, both during my time in corporate life and as an independent consultant. This very useful approach looks at assorted alternative futures and forces you to think about how you’d be successful in a wide variety of potential environments.

 
To do scenario-based planning right, it’s important to first identify those factors that are both very important in terms of business impact and inherently unpredictable. These are termed “drivers.” They can then be combined in various ways to produce a set of alternative futures in which a firm might have to operate. Good scenario exercises will often use from five to ten different drivers, so the number of scenarios generated can be almost infinite. However three different archetypes for the biopharmaceutical industry almost always emerge. We’ve touched a bit on the first one already-let’s call it “The Triumph of Reason.” Evidence based medicine, widespread use of health care information technology to support real-time comparative effectiveness review, and value-based reimbursement for innovative biopharmaceuticals are its hallmarks. As noted, this environment seems deeply threatening for many in industry because it represents such a step change from where we are today. But before rejecting this one as too “dangerous,” it’s important to think about the alternatives.

 
Another option that invariably emerges is an extension of the path we’ve been on for most of the past decade. Let’s call this one “Consumer Chaos.” This environment involves acceleration of the trends toward shifting costs and decision-making authority to consumers. There’s plenty of evidence to show that average consumers very inferior decision-makers when it comes to health care. They tend to cut back on all sorts of care, both necessary and unnecessary in equal proportions. This tendency, significantly exacerbated by the poor economy, has been one of the leading contributors to the slow down in the sales growth for patented medications over the past several years. In the absence of solid data on the value of novel biopharmaceuticals that a well run CER process should yield, the problem is likely to get worse. As a result product selection decisions will increasingly default to lower cost options. Extend the trend out just a bit further and you’re faced with a world in which sixty or seventy million people are completely uninsured with many of the remainder living with very skimpy coverage. Generic utilization rates in this situation probably exceed 80% and perhaps 30%-40% of all prescriptions go unfilled. The only people who can actually afford innovative medications are probably those making six-figure incomes (roughly 20% of the US population today). The effects of such a scenario on the research-based biopharmaceutical industry are probably best described as “the death of a thousand cuts.”

 
A third option involves a backlash of major proportions, and we’ll call this one “Big Brother Arrives.” Take the numbers of un- and under-insured up a bit further, especially if that population contains a high proportion politically active Baby Boomers, those who are becoming “power users” of health care. It’s not hard to imagine an electoral mandate for the Federal government to “fix” the health care cost and access problem. This may sound far-fetched, but opinion research surveys consistently show that a majority of Americans think health care is a right, not a privilege, and that it’s primarily the Federal government’s job to make sure everyone has access to care. Once again, in the absence of an objective means to determine value, about the only choice available is to slam the care delivery system and its suppliers (including the biopharmaceutical industry) with price controls. This is probably every industry executive’s worst nightmare, and the negative ramifications for sales and profits are obvious.

 
There are some blended models that could emerge as well. One of the options I find plausible is a government run, price controlled safety-net system that would cover primary care, generic medications, basic chronic disease care and catastrophic hospitalizations. People with more money could “trade up” with their own money to better standards of care. This is much like the health care system we see today in Australia and there are elements of it emerging in parts of Europe as well. This would be two-tier system that also wouldn’t necessarily be especially attractive for many research-based firms.

 
All this seems to show a potentially fatal paradox for the biopharmaceutical industry. By fighting against the evolution of CER, something immeasurably worse might be made more likely. The only real threat of CER is to have it done badly, by people whose only interest is in reducing costs. Admittedly, that’s a very real possibility. Many believe that’s the goal of CER-like activities such as the Oregon Drug Evaluation and Review Program (DERP) that supports many state Medicaid formularies today. The answer for this concern is not to become “abominable no-men” opposing CER in any form. If that strategy succeeds something more dire becomes increasingly likely. If it fails, industry has a high probability of being excluded from the discussion about the right way to conduct such an analysis. That increases the probability of the very thing most executives would like to prevent-a badly run process. The best course of action is the accept that the way pharmaceutical products are marketed and reimbursed is going to change under just about any plausible set of circumstances one can imagine. Then it becomes a question of identifying the “least worst” option available. Most are “blunt instrument” forms of rationing without any good means to determine value. Whether that rationing is done by consumers at an individual level or by the Federal government for large swaths of the population these ugly choices. Compared to them, “rational” health care as imagined by George Poste back in 1996 or more recently the folks at PriceWaterhouse Coopers looks downright attractive.

About the author: Kim D. Slocum is the President of KDS Consulting, LLC. He is a 35+ year veteran of health care and spent over 30 years in the biopharmaceutical industry. He is a frequent speaker and author on issues related to the future of health care. His first book “Consumer Directed Health Care-A 360 Degree View” was published in July 2008 by CRC Press. He can be reached at kdsconsulting@verizon.net.

The information needs of doing so are daunting. Harris describes a framework for developing the value proposition before the drug enters clinical trials.

Employers, desirous of reducing their spiraling health care costs, are placing more of the financial burden on the consumer. In addition, an ever smaller group of payers now wield enormous power over manufacturers of products, with many readily available alternatives and a pragmatic shift to “acceptable treatment outcomes”. This installment will explore the new approach to marketing required by this shift, and the consequences of failing to adjust to the new reality.

Consumer-driven Health Care (CDHC) has been touted for several years as the coming watershed that will change the pharmaceutical business. There are several signs that CDHC is finally upon us: Wal-Mart, the world’s biggest retailer, recently announced that it was testing (then rolling out to 14 more states) a program whereby generic prescriptions would be filled for the discount rate of $4. Target followed with a similar program, and Medco (the giant pharmaceutical benefits manager) has announced its own low-cost generic drug plan.

These are but the most visible outward signs. The Kaiser Family Foundation has been studying employer-sponsored health benefits for years, and recently reported its finding that the difference between first- and third-tier drugs is growing dramatically. In 2006, the co-pay difference between a generic and a third-tier drug (non-preferred on the formulary) is $27. This takes the decision out of the realm of a mere inconvenience and places the consumer’s decision squarely into the realm of “do I buy this (branded) drug and forgo X (mortgage payment, credit card bill, etc.), or go with a generic alternative that is almost as good…”

Another vivid example of CDHC is presented by a small company called BidRX, who have created a Priceline-like competitive auction to reduce drug and medical device costs to the consumer. Transparency across not only drug alternatives but also pharmacy delivery options makes a powerful demonstration of where this trend is going — and it doesn’t look good if one takes the historical position occupied by big pharma.

Since the goal of CDHC is to halt, or at least slow, the rising cost of healthcare, it is crucial that drug companies learn to work with this movement instead of being squarely in its sights as the target. This involves taking a patient-centric view of the perceived value of branded drugs versus the lower-cost alternatives, working with payers to provide the appropriate education and incentives to motivate appropriate use of the drugs to achieve superior outcomes (and funding necessary studies to prove those outcomes with payers), and equipping prescribers with the tools they need to be able to articulate the case for branded drugs to their patients. These are non-trivial changes to the traditional business model, and in fact highlight the need for a “whole new playbook” if pharmaceutical marketers are to continue to thrive in the industry’s next 20 years.

Pharma marketers can no longer establish theoretical targets in the early days of Target Product Profile development. “Working with whatever comes out of trials”, which has long been the marketer’s lot in life, forces marketing to try and overcome product deficiencies with greater application of field sales force pressure, DTC advertising, and in some cases, additional trials aimed specifically at achieving claims that weren’t part of the original trials. These tactics are extremely expensive, and add risk to the already-daunting financial challenge facing most new drugs.

Forward-thinking firms have decided “enough is enough”, and are changing the way they prepare for clinical trials by adding more commercial planning up front — in some cases organizing themselves differently, with commercial insight staff inserted into the clinical R&D department. This commercial input involves forward planning (or “reverse engineering”?) the product’s label from a marketplace perspective, by studying the drivers of product value that will cause physicians to prescribe this drug; the drivers that will cause a patient to take and pay for the drug in light of the co-pay associated with that drug versus generic or formulary-preferred alternatives; and the drivers that will cause payers to give the drug preferred formulary status.

When these commercial inputs are used to inform the clinical development plan, thereby ensuring that all efforts are coordinated toward delivering a label that the market is ready to accept, the result is an increased likelihood of uptake and an improvement in the launch plan’s effectiveness in delivering commercial success.