10Minutes on drug value

July 2013
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Drug value

At a glance

Pharmaceutical companies stand ready to be tested in a world where a drug’s success is more closely tied to its performance. The challenges mount with competition from generics and growing pressure to reduce costs. Now, insurers and integrated providers are driven by models that reward health outcomes and cost savings. For success, drug makers are exploring real-world evidence, new payment models, and the right partnerships.

For pharmaceutical companies, a product’s success used to hinge on measures such as FDA approval, clinician preference, and patent protection. But as the heath sector undergoes significant transformation, how a drug is valued—and its makers compensated—is changing rapidly. The new criteria? Real-world performance.

Today insurers and healthcare providers expect new, and often more expensive, drugs to demonstrate benefit over existing treat­ments. They prefer therapies that help reduce the total cost of care, meet unmet medical needs, reduce unnecessary procedures, or improve the quality of life. Meeting these new expectations requires significant changes in how medicines are researched, marketed, manufactured, and priced. Pharmaceutical makers must look to new partnerships and payment approaches, among other strategies, to cement their place in the new health ecosystem.

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