Pharma Flailing

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Pharma Flailing

MedAdNews is a trade publication covering the business of pharmaceutical marketing. It’s somewhat like Advertising Age, in that it’s focused on serving and celebrating the subsystem of communications agencies and media buyers who create the content to position and promote the feature/benefit story of prescription drug brands directly to consumers and health care professionals.

It’s big business. In 2016 alone, according to the Journal of the American Medical Association, the pharmaceutical industry as a whole invested somewhere around $30 billion on drug advertising, promotion, public relations and sales across audiences and therapeutic categories.

April is always an exciting month at MedAdNews. It’s the issue where most drug advertising agencies get profiled and submit their best “creative” in the hopes of winning a Manny Award. The Manny Awards, says the magazine, “pay tribute to the creative work of agencies serving the healthcare market, their people, and their contributions to the industry.”

The prelude to this year’s edition, beneath the headline “Another Year of Changes, Growth” sets the stage with this odd retrospective:

“In 30 years of the Manny Awards, many things — technology, medicine, and ways agencies do business — have changed. But the healthcare ad industry continues to thrive and adapt to the new demands for relevance and creativity.

Think of where you were 30 years ago. Were you already working in healthcare advertising? Were you still in college or just graduated? Or were you in high school….?

Now think about what the media world was like 30 years ago. Network television was still king. The primary places to advertise were newspapers, magazines and radio, as well as direct mail.

And the internet was not really a thing.”

The gala ceremony announcing the many Manny winners (there are 40 categories) was April 18. Which, as it turns out, coincided with the publication in JAMA of an editorial, “Lowering Cost and Increasing Access to Drugs Without Jeopardizing Innovation.”

The authors of the JAMA editorial are Robert M. Califf, MD, a former FDA Commissioner now at Duke University School of Medicine, and Andrew Slavitt, a former Acting Administrator of the Centers for Medicare and Medicaid Services. They begin their view this way:

“US drug costs have reached unacceptable and unsustainable levels. Evidence shows that “financial toxicity” arising from drug costs and other medical expenses is reducing financial security for many families, and prompting difficult choices, as patients defer or forgo therapies they cannot afford.

In stark contrast, comparable countries negotiate drug prices and use drugs more effectively. Recent data suggest that other high-income countries have an average life expectancy approximately 3 to 5 years longer than that of the United States, which ranks last among high-income countries and is losing ground compared with peer nations. Although drug prices account for only part of these trends, they nevertheless add to disparities that dominate the trajectories of US health outcomes.”

They go on to say:

“Direct-to-consumer advertising, detailing, and excessive physician payments also drive up costs. A particularly troubling issue to health professionals is the increasingly brazen use of the internet, social media, and television for marketing based on marginal or unproven benefits under the protection of current legal interpretation of First Amendment rights.

Which brings us back to one the central points of this blog: $30 billion buys a lot of awareness about disease and drugs. If only it worked to change behavior and deliver tangible business impact. (I’ve written before on “awareness” campaigns as a new category of waste in healthcare. Read more here.)

Another Market Forecast Meets a New Market Reality

Amgen reported earnings yesterday.

Aimovig is its new drug to prevent migraines. Sales were $59 million for the quarter, short of the $83 million projected and down from $95 million in the fourth quarter. As a new class, drugs to prevent migraines were forecast to yield $4 billion in annual sales by 2026 in major global markets.

Amgen cited pricing pressure from payers, and is still giving out 40% of Aimovig prescriptions for free.

The story line for Amgen is following a pattern essentially all of the pharmaceutical majors are experiencing: muted top-line growth bouncing around 2-3 percent (similar, as it happens, to the advertising holding companies Omnicom Group, Interpublic Group, and WPP), and weaker-than-exepcted sales for key drugs fighting for share in hyper-crowded markets. Price competition and profit pressure are the inevitable result, as the pharmaceutical sector tries to create negotiating leverage for insurers.

The implications here are that the technical merits of a new “drug” are table stakes in the market shift to value.

This is why “digital” + drug discovery = status quo: you’re reinforcing the past, and creating with the same mindset from the Industrial Age. The nature of thinking and innovation needs to fit a radically different context for strategy. The aim should be for something qualitatively different, more imaginative strategically, more systemically transformative.

Competing on outcomes begins with a new system vision, one that’s conceptualized concurrently with new science and new evidence. The end state is a “value” story defined and priced by impact at a system level.

More succinctly, there’s a difference between bringing a new drug to market, and bringing a new outcome to market. For the pharmaceutical industry, the should mean more B2B, less DTC.

But then, who wins a Manny?

/ jgs

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Another "Digital Transformation" Goes Off the Rails

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Another "Digital Transformation" Goes Off the Rails

The New York Times this week reported on another “digital transformation” going off the rails. This one happened in the $432 billion market for “smart learning and education.”

It involves Summit Learning, a fast-growing, online “personalized learning” platform from Facebook founder Mark Zuckerberg’s philanthropy. Summit Learning is now being used by around 330 schools, 2,450 teachers, and 54,230 students in 40 states and the District of Columbia, Summit claims.

The Silicon Valley-based program promotes an educational approach which uses online tools to customize education. It’s “based on collaborations with nationally acclaimed learning scientists, researchers and academics from institutions including the Harvard Center for Education Policy Research,” Summit’s website says.

Eight months ago, according to the Times, public schools near Wichita, Kansas rolled out Summit Learning. The Times piece sets the stage with this passage:

Many families in the Kansas towns, which have grappled with underfunded public schools and deteriorating test scores, initially embraced the change. Under Summit’s program, students spend much of the day on their laptops and go online for lesson plans and quizzes, which they complete at their own pace. Teachers assist students with the work, hold mentoring sessions and lead special projects. The platform is free to schools. The laptops are typically bought separately.

Then, students started coming home with headaches and hand cramps. Some said they felt more anxious. One child began having a recurrence of seizures. Another asked to bring her dad’s hunting earmuffs to class to block out classmates because work was now done largely alone.

“We’re allowing the computers to teach and the kids all looked like zombies,” said Tyson Koenig, a factory supervisor in McPherson, who visited his son’s fourth-grade class. In October, he pulled the 10-year-old out of the school.

People -- students, students interacting with teachers in a classroom setting -- were not the organizing idea in the Summit narrative; making the learning experience "digital" was. It also appears that input from the students and teachers themselves was not a factor in the experience design. The sunny end state was assumed. So then the roadmap becomes conceptualized around the mechanics of tech functionality and efficiency from life spent online.

Which is what technology wants.

The parallels to what’s unfolding across the $7 trillion system of markets defined as healthcare are uncanny. HCP burnout and administrative burden from electronic health records is now a major theme; patient-provider interaction (the human touch) is a top priority for health consumers; “digital” + drug discovery is reinforcing the status quo; and U.S. healthcare has been in crisis mode for the past 50 years, ranking last among among 11 countries for outcomes, equity and quality.

Burning Down the Schoolhouse

Durable outcomes tend to get lost in the scramble when you’re trying to survive an “education revolution” that’s going to destroy your market TODAY. Technology creates pressure to not be left behind. It sells on the quality of illusion and future vision, of life and living better imagined through the lens of “digital.”

Captured perfectly by Thomas Friedman in his opinion piece, “Revolution Hits the Universities,” in late 2013:

“Nothing has more potential to lift more people out of poverty — by providing them an affordable education to get a job or improve in the job they have. Nothing has more potential to unlock a billion more brains to solve the world’s biggest problems. And nothing has more potential to enable us to reimagine higher education than the massive open online course, or MOOC, platforms that are being developed by the likes of Stanford and the Massachusetts Institute of Technology and companies like Coursera and Udacity.”

Still….

“Home-study programs, whether delivered through mailboxes or TVs, CD-ROMS or websites, have played an important role in expanding access to education and training,” wrote Nicholas Carr in Utopia is Creepy. “But, despite a century of outsized promises, the technologies of distance learning have had little effect on traditional schooling. Colleges, in particular, still look and work pretty much as they always have. Maybe that’s because the right technology hasn’t come along yet. Or maybe it’s because classroom teaching, for all it’s flaws and inefficiencies, has strengths we either don’t grasp or are quick to dismiss.”

Which is the conclusion reached by a Pennsylvania junior high school last week. The school board decided to pull the plug on Summit Learning after less than a year.

“At this point there is declining interest, we couldn’t sustain it with the staff, and our other class sizes are rising,” said District Superintendent Michael Vuckovich. “And we weren’t offering a program with the fidelity it should have had, so I made the recommendation … and we decided to end it.

“This did not fail because of teachers. Not at all. The teachers we have are amazing and we’re proud of the work they do. They put their heart and soul into making it work, but it was a difficult decision and it wasn’t made lightly.”

The move restores all students in the junior high to traditional learning from teachers’ lectures and textbook lessons.

(Massive) Failure Rates from Digitally-Led Visions

The real-world experience that unfolds from going digital reflects the larger story of magic and loss most have when it comes to buying the Silicon Valley line: “platforms” and artificial intelligence will revolutionize and render obsolete everything in its wake.

The digitization of the global economy has had many effects on businesses, markets and global enterprises, but few are more significant than the overwhelming desire to undergo some form of transformation and achieve some sort of technological Eden. Companies and industries are under tremendous, albeit misleading, pressure to undergo this process lest they be left in the past. But digital transformation failure rates have become a major problem: a whopping 84% of companies fail to achieve digital transformation.

That’s close to $1 trillion in waste and investments misaligned or not meeting objectives.

Poor strategy is expensive. Regardless of industry, the essential design point is this: you organize technology around people, not people around technology. Most "digital transformations” get the story backward.

/ jgs

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Overload and Boredom as Points of Innovation in Health Care

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Overload and Boredom as Points of Innovation in Health Care

"Awareness" campaigns are a new category of waste in health care.

Most of us accept administrative complexity, inefficient workflows, obsolete care standards and ample fraud as root cause for around $1 trillion in waste floating throughout the current system(s).

In a Harvard Business Review piece not long ago, a group of authors spanning government, economics, entrepreneurship and strategy consulting got together “to assess what we already know we can save in our system and where policymakers, entrepreneurs, investors, and health care leaders need to focus their attention.”

They categorized the interventions into the different strategies put forth by various experts and political agendas, and analyzed their total potential savings. They then reviewed four strategies: keeping the current health care system’s trajectory as is; comprehensive demand-side reform; aggressive supply-side reform; and a combination of demand-side and supply-side reform.

They had two key findings:

  • The political rhetoric about demand-side versus supply-side as a better option is ill-founded; both have roughly the same effect on total spending.

  • Even if the United States implemented all the approaches whose effectiveness has been measured, only 40% of the estimated $1 trillion of wasteful spending would be addressed, leaving a significant opportunity for innovation in all areas of health care.

Naturally, their effort took the existing system as the thing to fix. Energy and attention was focused on finding problems that fit the math, of imbuing stability into traditional economic theory and casting the arc of healthcare in a form that is amenable to mathematical and deductive methods. Missing, of course, was the human dimension.

When Information Turns to Noise

Welcome to April in America.

You’re no doubt aware this is Autism Awareness Month and Foot Health Awareness Month. April also includes Sexually Transmitted Infections Awareness Month, Oral, Head and Neck Cancer Awareness Week, Infant Immunization Week, Hemophilia Day, Women’s Eye Health and Safety Month...

I'm still catching up on all the calls to action from March’s days of awareness.

Too many organizations concentrate on raising awareness about an issue — such as the danger of eating disorders or high blood pressure in African Americans (see here for Humana’s awareness campaign, “More Healthy Days” Barbershop and Beauty Parlor Tour, launched this week to raise awareness of stroke risk and diabetes in African Americans — without knowing how to translate that awareness into action, by getting people to change their behavior or act on their beliefs.

In Stop Raising Awareness Already, Ann Christiano, who holds the Frank Karel Chair in Public Interest Communications at the University of Florida College of Journalism and Communications, and Annie Neimand, a PhD candidate in the University of Florida Department of Sociology, Criminology and Law, write on the need to adopt a more considered approach to designing public health communications that actually change behavior.

Their perspective:

For those working on a cause they care about, the first instinct is often to make sure that as many people as possible are aware of the problem. When we care about an issue or a cause, it’s natural to want others to care as much as we do. Because, we reason, surely if people knew that you’re more likely to die in an accident if you don’t wear a seat belt, they’d wear their seat belt. And if people only knew that using condoms is critical to preventing the spread of disease, then they would use one every time.

That instinct is described by communication theory as the Information Deficit Model. The term was introduced in the 1980s to describe a widely held belief about science communication—that much of the public’s skepticism about science and new technology was rooted, quite simply, in a lack of knowledge. And that if the public only knew more, they would be more likely to embrace scientific information.

That perspective persists, not just in the scientific community but also in the world of nonprofits, marketing, and public relations. Public relations texts frequently cite awareness, attitude, and action objectives. Marketing students learn that awareness precedes action. And many of the foremost public relations and advertising agencies still report results to clients in the form of impressions—the number of people who were exposed to the message.

Do any of these campaigns work?

The data, naturally, is all over the place. There’s certainly no shortage of “awareness” campaigns around the things that either cause, can or should be done to control diabetes and obesity, for example, but worldwide obesity has nearly tripled since 1975, according to WHO. In 2016, more than 1.9 billion adults, 18 years and older, were overweight. Of these over 650 million were obese.

Bad Versus Good Redundancy

Without significance, variety is not the spice of life.

Says sociologist Orrin E. Klapp in Overload and Boredom, Essays on the Quality of Life in the Information Society:

“Bad redundancy is a lack of information which, when degraded, cheats in some way. It filters out some needed parts of a message while repeating too much that is not needed. It fails to serve continuity. It does not reinforce identity. It defeats resonance.”

Reframing: the gospel of healthcare “transformation” needs new words.

Strategy and innovation should happen at a system level, and include a new kind of communications and creativity. Solving for banality and boredom is as elemental to sustain engagement and health outcomes as all things "digital" and cloud.

Alas, though, the allure of the gadgets is hard to resist. We tend to confuse technology for innovation, and healthcare for technology. It’s costing the world (and investors) trillions.

As Jefferson Airplane’s Grace Slick sang in White Rabbit, “logic and proportion have fallen sloppy dead.”

/ jgs

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Healthcare's 'Our Value is to be Valuable' Problem

Healthcare's 'Our Value is to be Valuable' Problem

The gospel of innovation in healthcare needs new words.

A $4 trillion system of markets is stuck in a loop in time, kinetically trapped in “crisis” mode for the past 50 years because the taxonomy used to frame “transformation” and “disruptive” conversations rarely moves past “patients are at the center of everything we do.”

The whole is on autopilot, only this time it’s being guided by the promise of algorithms to deliver the sunny end state: patient empowerment and technology as the future of healthcare. It’s a very functional vision. What seems to be missing, in simple terms, is thoughtful action and active thinking around outcomes as the basis for market strategy.

Which is to say most of the pieces in the economic system defined as healthcare have been working with the same set of ideas to create and compete in the same way: a variation of ‘'my patient centricity is better than your patient centricity’. Ultimately, and unsurprisingly, we’re getting the same result: a “burning platform” from spending about 18 percent of GDP on healthcare.

Except the output doesn’t match the input.

"With health care, we have the best in the world — doctors, hospitals, pharma, you name it — but we also have some of the worst outcomes," Jaime Dimon, CEO of JP Morgan, said in an interview with CNBC at the World Economic Forum in Davos, Switzerland, earlier this year. "Obesity, wellness programs that could work better, the opioid problem, 40 million uninsured. So you know, to me, you look at the whole issue and what should we do about it."

It’s a competitive issue for the United States, Dimon adds, saying "that is a huge impediment to American business over the next 50 years.”

Which makes Defining Value—The Foundation Of Outcomes-Based Risk-Sharing Agreements published in Health Affairs this week a compelling and insightful perspective. The path to health system innovation has almost almost nothing to do with the infinite means and functional capabilities of new technologies added to obsolete operating models, but everything to do with aligning perspectives on shared marketspace.

Outcomes are the keystone concept to converge perspectives.

It’s the story at a system level that becomes the locus for innovation and creativity. It’s about making novel linkages and new combinations to form the “foundational partnerships around which we can help bring the health system—or, at least, our part of it—into alignment,” say the authors (Susan Shiff, Senior Vice President and head of the Center for Observational and Real World (CORE) for Merck; and Curt Medeiros, President of Optum Life Sciences).

“No matter our roles in the health care system, we are all striving for the same result: high-quality, high-value patient care. Yet, in a complex, constantly evolving system with so many players, making value-based care a reality is challenging. New ways of thinking and operating are required to bring a value-based system to fruition.”

Value innovation flows from a different mindset. This has less to do with using “digital” to personalize promotion and push the technical merits of a product in isolation from its environment, than it does mastering and marketing system level change.

“Our work is not remotely close to done,” concluded Medeiros and Shiff. “But we’re closing in on the first—and, perhaps, most important—goal: mutual understanding.”

Which can only come from new words to think new thoughts.

/ jgs

If the "Primary Endpoint" in Alzheimer's is Outcomes, Think Biogen + Spotify

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If the "Primary Endpoint" in Alzheimer's is Outcomes, Think Biogen + Spotify

Biogen joins the long list of pharmaceutical companies that have tried but failed to develop successful treatments for Alzheimer’s.

The decision to stop the trials was based on an interim analysis conducted by an independent monitoring committee. This analysis concluded that the potential new drug, aducanumab, was unlikely to benefit Alzheimer’s patients compared to placebo when the trials completed, Biogen and Eisai said.

“This disappointing news confirms the complexity of treating Alzheimer’s disease and the need to further advance knowledge in neuroscience,” Biogen CEO Michel Vounatsos said in a statement.

As of this writing, Biogen has lost $18 billion in market value, on pace for its worst day since August 2008. The stock is tanking because the drug was expected to be a blockbuster. Expectations had been high for aducanumab as Goldman Sachs analysts had projected at one time that sales of the drug could reach $12 billion.

The news is another body blow to an industry that bounds market strategy only within the context of "drug."

Health happens at a system level. If the primary endpoint in an Alzheimer's study is outcomes -- improving cognition, say, or reducing agitation -- vs. technical merits of drug in isolation from its eviornment (e.g., reduction of amyloid accumulated in the brain), what would a Biogen + Spotify combination look like as a path to new science to get there?

Glen Campbell went public with his Alzheimer's diagnosis and allowed his journey to be documented in the film "I'll Be Me." He died Aug. 8, 2017. “Continuing to engage with music helped him plateau," his wife, Kim Campbell, says. "Music really kept him content. We would use it to soothe him when he got agitated." There is also a published body of evidence that supports the link.

Recombination is the real source of value innovation in healthcare. Everything is a remix.

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Government Calling Out the Drug Industry for Being Too Conservative?

Government Calling Out the Drug Industry for Being Too Conservative?

On his way out the door, outgoing FDA Commissioner Scott Gottlieb writes a memo issuing a challenge to pharma: be more innovative. More specifically, he calls out the subsystem of CROs and other vendors to design new business models that are compatible with disruptive thinking.

He writes:

Efforts to streamline medical product development based on advancing science can be frustrated by legacy business models that discourage collaboration and data sharing, and the adoption of disruptive technologies that make clinical research more effective. Without a more agile clinical research enterprise capable of testing more therapies or combinations of therapies against an expanding array of targets more efficiently and at lower total cost, important therapeutic opportunities may be delayed or discarded because we can’t afford to run trials needed to validate them.

“Unfortunately, we’ve seen a continued reluctance to adopt innovative approaches,” he noted. New forms of collaboration are part of this story.

New research paradigms are needed to break down barriers between real world data and clinical research, so that evidence can be shared rapidly to improve both domains across a learning health care system. In some cases, the business model adopted by the clinical trial establishment just isn’t compatible with the kind of positive but disruptive changes that certain innovations can enable.

Which only underscores the why for a whole new innovation agenda in healthcare, the kind of systemic vision for transformation framed most recently by Kevin Schulman, Professor of Medicine at Stanford University, and Barak Richman, Professor at Duke Law School, in the New England Journal of Medicine earlier this year: “Toward an Effective Innovation Agenda.”

If you have government asking for disruption from industry, then you know we really have entered a whole new era.

Quoting Hunter S. Thompson: “When the going gets weird, the weird turn pro.”

Recidivism as an Outcomes Measure

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Recidivism as an Outcomes Measure

Competing on outcomes happens at a system level. Increasingly, it’s becoming a ‘winner-take-all’ game.

In the RFPs for Netflix subscription models to pay for hepatitis C drugs, states of Washington and Louisana are both looking for the winning bid to include support and education for their prison populations.

Which opens space for value innovation in “correctional health care.” This is a subsystem of markets comprised of outsourced, for-profit contracts for about 70 percent of prison care in the United States. The two largest providers of prison health — CorizonHealth and Wellpath — are responsible for the care of about 400,000 people on a day-to-day basis.

Can Gilead Sciences, AbbVie or Merck apply what they know about discharge planning to reduce rates of reincarceration? Can that social impact be used as an outcome measure to differentiate beyond drug price?

PhRMA was once a heroic industry, doing miracles with science. With some strategic imagination, and a re-allocation of resources and mindset, it still can be.

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On Innovation Stagnation in Healthcare

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On Innovation Stagnation in Healthcare

Recent techno-enthusiasm aside (e.g., #HIMSS19), we're living in a time of innovation stagnation.

If you step back and take a broad view, nothing much is really "transforming" healthcare’s systemic performance declines. We're distracted by the theater of the latest "useful" feature, but digital + drug discovery = status quo.

Pilotitis dominates and provides cover.

We're funneling our creativity into areas that produce niche impacts. So a tech start-up has a greater prospect of riches if it creates a new social networking app than if it launches a new model for, say, mass transit.

Peter Thiel, co-founder of PayPal, believes the greatest threat to growth in America is a culture that embraces conformity. He says: “I worry that the conformity problem is worse today than it was in the ‘50s. Our culture does not want change; it does not want progress.”

Writing in Health Affairs this month, Alfred B. Engelberg attributes the cause of high drug prices to a shortfall in innovation at a system level. The path forward is a new market where competition is based on outcomes. He says:

“The price of a drug should reflect its value. If a new drug lacks a meaningful clinical advantage it is not entitled to a higher price than the existing medicine. If it does offer a clinical advantage, the value of that advantage can be quantified. Value-based pricing is the core principle employed by other developed countries in negotiating drug prices and is the reason why their per capita drug spending is so much lower.”

Innovation begets disruption, and disruption requires pivoting to a new set of norms and institutional frameworks.

For the pharmaceutical industry -- and the entire subsystem of vendors, services, agencies and advisors who are paid to guide and operationalize its plans -- this means developing a new market positioned on health system value, not technical merits of "drug" in isolation from its environment.

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Who Transforms the Transformers?

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Who Transforms the Transformers?

Continuing a thread on innovation stagnation in healthcare, New England Journal of Medicine today published a call for a whole new approach (“Toward an Effective Innovation Agenda”).

Authors Kevin Schulman of Stanford University School of Medicine and Barak Richman of Duke University School of Law, ask:

  • “Why have well-intended efforts to adopt digital technologies had so little systemic impact as compared with those in other industries?”

  • “Why have investments in digital technologies largely failed to lead to meaningful improvements along the axes of health care’s quadruple aim?”

Somewhere around $1 trillion is being spent (misspent?) on digital technologies sold with a promise to “optimize” or “disrupt” healthcare, yet outcomes from the system as a whole remain essentially untouched. Care patterns and unsustainable cost trajectories haven’t changed in the past 20 years. We are in the 50th year of an official “crisis.” Around 90 percent of “digital transformations” fail.

We need new words to think new thoughts. Healthcare isn’t technology; technology isn’t innovation.

It’s about the outcomes, stupid.

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