Driver 2: Value for money

PharmaFutures discussions concluded that the manner in which the industry responds to demands for more evidence-based reimbursement will be an important determinant of future success. Payers in all markets face significant pressures caused by ceilings in budgetary allocation to healthcare, growing demand for medicines for an aging population, the increase in chronic diseases requiring long-term treatment and increasing healthcare costs, including pharmaceuticals. Consequently, payers everywhere – private and public – are seeking to understand better the drivers of healthcare expenditure and to implement reforms to contain them as far as possible.

This trend towards evidence-based reimbursement is particularly strong in Europe. PharmaFutures discussed the importance of using new pharmacoeconomic metrics to establish a broad definition of value and not solely to cut costs.

Investors in the PharmaFutures project expressed interest in understanding industry’s attitude to risk-sharing with payers and other collaborative ventures that prove value for money including the integration of business models for delivery of services such as medical devices to guarantee cost reductions or the guarantee of clinical benefit, thus reducing waste. They acknowledged the difficulties in defining ‘value’ as perspectives of different stakeholders vary considerably. Consequently, they were keen to understand how companies are applying lessons of past risk- and cost-sharing initiatives.

Investors in the project argued that it is possible to eliminate the risk discount for successful efforts to show society that the industry is able to deliver profit at lower prices. Investors in the project expressed a willingness to consider an adaptation to a current business model in which bottom line growth is achieved by increased sales, even if margins are somewhat lower.

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Comments

Innovation remains core to our success, ensuring we research and develop new medicines and vaccines which address unmet medical needs. The Shared Value report outlines how all stakeholders including industry, investors, governments and regulators can play their part in ensuring the appropriate balance between value for money and delivering fair rewards for innovation can be achieved.

Simon Jose, GSK