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Rethinking the Risk Equation in Biopharmaceutical Medicine
Rethinking the Risk Equation in Biopharmaceutical Medicine

Rethinking the Risk Equation in Biopharmaceutical Medicine

Rethinking the Risk Equation in Biopharmaceutical Medicine

t able

O f

c O ntents

Overview

3

expectatiOns and Obstacles in HealtHcare

4

patients as a part Of tHe system

8

biOpHarma’s evOlving business mOdel

14

payers seek mOre participatiOn

20

investOr ambivalence, Optimism

24

mitigating risk: tHe need fOr new metrics

28

cOnclusiOn

33

about The New Health Report about Quintiles contact information

3

overview

The essence of healthcare arises from the tradeoffs between risk and value. Last year’s New Health Report focused on value—patients, physicians, payers and biopharmaceutical executives defined this concept in many ways. For example, only two percent of patients polled mentioned cost and outcomes when defining value as opposed to 38 percent of biopharmaceutical executives. As with value in healthcare, risk extends across the constellation of stakeholders, and each group sees risk from a unique perspective.

for a patient, risk largely entails drug safety, such as concerns over side effects, but patients must also evaluate the risk of taking one medication over another, or perhaps none at all. Healthcare professionals must weigh the risk in using new drugs versus existing ones. biopharmaceutical companies, on the other hand, must assess the risk of moving forward with one investigational

compound or another, proceeding or pausing in the chain of clinical trials, collaborating with other stakeholders or going it alone—all of this plus

a host of other concerns. for payers, the risks

involve when and why to reimburse for particular treatments, while investors seek methods of analysis to reduce their risks as they decide where to infuse capital.

The New Health Report 2012 shows, however, that today’s stakeholders often disagree—between and within groups—on what risks matter the most. this study arises from a survey of

biopharmaceutical executives; patients living with

a chronic disease in the united kingdom or the

united states; national Health service (nHs) executives in the united kingdom; managed care executives in the united states; and investors with a focus on the life sciences sector. payer and patient respondents were deliberately culled from both the united kingdom and the united states under the premise that attitudinal differences and perceptions of healthcare might reveal that an understanding of risk and benefit is not universal.

further, as the global economic crisis has produced austerity budgets throughout europe, cost-conscious payers in these countries need to make increasingly difficult coverage decisions that accurately weigh the value and risks of new treatments.

for stakeholders to make better collective decisions based on value and risk, they first need to assimilate the varying perceptions of the concept, and then take a systematic approach in order to better manage it. currently, the tools used to balance healthcare risk versus reward remain rather rudimentary, and lessons from other industries could accelerate improvements in patient outcomes. for example, making the most of the available data—from preclinical information to patient outcomes—requires new tools and sophisticated methods to interrogate the data. with more robust sources of data, healthcare players can plan the pathways to the next generation of lower-risk, higher-benefit medications that balance the needs of all stakeholders. as the results of this survey reveal, considerable evidence already suggests a new pathway. the stakeholders must function like teammates, instead of opponents, to make the most of existing opportunities. the resulting collaboration could spawn a range of improved methods for reducing and communicating the risks and benefits of biopharmaceutical medicine.

Expectations and Obstacles in Healthcare

On a fundamental level, risk is always attached to expectations. This idea lies behind the business concept of the risk-return tradeoff, which states that increasing the potential of the return raises the risk. To understand the risk-return tradeoffs in healthcare, The New Health Report 2012 asked biopharmaceutical executives, managed care executives in the United States, National Health Service executives in the U.K. and healthcare-focused investors a series of questions designed to uncover different perceptions as to what the future of healthcare might look like.

In terms of the general health of people born today, most of the respondents see longer lives ahead. For instance, the majority of biopharma executives and U.K. payers expect lifespan to reach an average of 90 years, and nearly half of U.S. payers and half of investors agree. Regarding the health of people in general, just under half of the respondents from most groups predict improvements, and a slightly higher percentage of U.K. payers agree.

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Expectations and Obstacles in Healthcare

5

Expectations and Obstacles in Healthcare 5

r estrained

O ptimism

f O r

an

uncertain

future

5 r estrained O ptimism f O r an uncertain future in terms of the capabilities

in terms of the capabilities of medicines in the future, the responses are less certain. fewer than half of the experts from biopharma and u.s. payers and even fewer of the investors expect to see cancer becoming a manageable disease in the near future, but u.k. payers are more optimistic. when asked about the likelihood of a cure for alzheimer’s over the next generation, the stakeholders answer similarly to their responses on managing cancer, although the investors rank alzheimer’s disease as more likely to be cured.

those medical milestones, however, will come at a cost. for example, less than one-fifth of u.s. payers and one-quarter of biopharma experts expect cost-effective healthcare in the united states over the next generation in comparison

to other countries. in contrast, about half of u.k. payers expect cost-effective healthcare— more than twice the amount of their american counterparts.

more than twice the amount of their american counterparts. l ess t H an O ne-fift
more than twice the amount of their american counterparts. l ess t H an O ne-fift
more than twice the amount of their american counterparts. l ess t H an O ne-fift

l ess t H an O ne-fift H O f u. s . payers and O ne- Q ua r t er

O f t He expect

Healt H care in t He uni t ed s tates Over t He ne x t

generati O n

tO Ot Her cO untries.

bi O pH arma execs cOs t- effec t i v e

in cO mparis O n

bi O pH arma execs cOs t- effec t i v e in cO mparis O

Biopharma, Payers, Investors | Percent who consider it very or somewhat likely that in the lifetime of people born today

or somewhat likely that in the lifetime of people born today BIOPHARMA PAYERS INVESTORS Life expectancy

BIOPHARMA

likely that in the lifetime of people born today BIOPHARMA PAYERS INVESTORS Life expectancy for the

PAYERS

that in the lifetime of people born today BIOPHARMA PAYERS INVESTORS Life expectancy for the average

INVESTORS

Life expectancy for the average person will be 90 years

Most cancers will become a manageable disease

A cure for Alzheimer’s will be found

The nation will become healthier overall

US / UK healthcare will be considered cost-effective compared to other developed countries

cost-effective compared to other developed countries 64% 45% 68% 50% 45% 45% 55% 37%

64%

45%

68%

50%

45%

45%

55%

37%

45%

40%

59%

51%

43%

41%

59%

47%

24%

19%

45%

N A

6

2012 | The New Health Report

6 2012 | The New Health Report

Biopharma, Payers, Investors, Patients | 2012 ; Biopharma, US Payers, Physicians, US Patients | 2011 Percent who are somewhat or very optimistic about the future of healthcare

somewhat or very optimistic about the future of healthcare BIOPHARMA US PAYERS UK PAYERS 2011 100%

BIOPHARMA

or very optimistic about the future of healthcare BIOPHARMA US PAYERS UK PAYERS 2011 100% 80%

US

PAYERS

about the future of healthcare BIOPHARMA US PAYERS UK PAYERS 2011 100% 80% 60% 40% 20%

UK

PAYERS

2011

100% 80% 60% 40% 20% 0 % 64% 63% N/A N/A 44% 54% N/A 72%
100%
80%
60%
40%
20%
0 %
64%
63%
N/A
N/A
44%
54%
N/A
72%
76%
N/A
N/A
59%
72%
N/A
N/A N/A 44% 54% N/A 72% 76% N/A N/A 59% 72% N/A INVESTORS US PHYSICIANS US

INVESTORS

44% 54% N/A 72% 76% N/A N/A 59% 72% N/A INVESTORS US PHYSICIANS US PATIENTS 2012

US

PHYSICIANS

72% 76% N/A N/A 59% 72% N/A INVESTORS US PHYSICIANS US PATIENTS 2012 QUALITY OF HEALTHCARE

US

PATIENTS

N/A N/A 59% 72% N/A INVESTORS US PHYSICIANS US PATIENTS 2012 QUALITY OF HEALTHCARE IMPROVED 10

2012

QUALITY OF HEALTHCARE IMPROVED 10 YEARS FROM NOW

QUALITY OF PRESCRIPTION MEDICINES IMPROVED 10 YEARS FROM NOW

0 % 20% 40% 60% 80% 100% 69% 68% 66% 74% N/A 49% 38% 80%
0 %
20%
40%
60%
80%
100%
69%
68%
66%
74%
N/A
49%
38%
80%
81%
93%
68%
N/A
N/A
N/A

UK

PATIENTS

N/A 49% 38% 80% 81% 93% 68% N/A N/A N/A UK PATIENTS looking more closely at

looking more closely at the elements of tomorrow’s healthcare, stakeholders were asked about their optimism or pessimism related to future healthcare quality and pharmaceuticals. in terms of the quality of healthcare a decade from now, two-thirds or more of biopharma executives, u.s. payers and u.k. payers, plus nearly three- quarters of investors express optimism, but less than half of u.k. and u.s. patients agree. in fact, fewer than 40 percent of u.k. patients claim to be optimistic about tomorrow’s quality of healthcare. the disconnect between u.k. payers (66 percent) and u.k. patients (38 percent) is striking and may indicate an underlying lack of confidence in the future direction of the nHs.

despite eight out of 10 biopharma executives being optimistic about the quality of prescription medications in 10 years, they do anticipate

challenges. foremost, these experts expect to travel a rough road with regulators from the u.s. food and drug administration (fda). a lack of capital and the increased reluctance of payers to reimburse for new medication are also serious concerns. in general, investors agree with the concerns over a changing regulatory landscape, but show less concern over financing, perhaps because investors live every day in a world of financial risk.

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Expectations and Obstacles in Healthcare

7

Expectations and Obstacles in Healthcare 7 Biopharma | Which is the biggest challenge f a c

Biopharma | Which is the biggest challenge facing your company?

f a c i n g y o u r c o m p a n

29% More difficult FDA approval process More difficult FDA approval process

12%Increased requests for more data

Increased requests for more data

19%Increased payer reluctance to cover new medications

Increased payer reluctance to cover new medications

10%Global economic

Global economic

downturn

20% Lack of funding / capital Lack of funding / capital

9% Other Other

economic downturn 20% Lack of funding / capital 9% Other a lack O f capital and
economic downturn 20% Lack of funding / capital 9% Other a lack O f capital and
economic downturn 20% Lack of funding / capital 9% Other a lack O f capital and
economic downturn 20% Lack of funding / capital 9% Other a lack O f capital and

a lack O f capital and t H e in cre a sed relu c ta n ce O f payers tO reimb ur se fO r new medicati O ns a re seri O us cO ncerns.

reimb ur se fO r new medicati O ns a re seri O us cO ncerns.
reimb ur se fO r new medicati O ns a re seri O us cO ncerns.

Invest or s

fO r new medicati O ns a re seri O us cO ncerns. Invest or s

Sums may not add to 100% or be equal to components due to rounding

Patients as a Part of the System

One could argue that patients take on the most risk in healthcare because their quality of life hangs in the balance. Consequently, they stand to gain the most from understanding their own health. Yet when asked to rate their overall health, three-quarters of U.S. patients consider their health good to excellent which seems unlikely in a country where more than two-thirds of the population is overweight or obese. By comparison, only about 50 percent of U.K. patients give themselves similar assessments. In short, U.S. patients see themselves as healthy—probably healthier than they are—and U.K. patients are likely providing somewhat more accurate self-evaluations.

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Patients as a Part of the System

9

given that the population of patients in this survey all suffer from a chronic disease, no surprise comes from their overwhelming response to being adequately informed about the benefits of taking their medicines. more than 90 percent of both u.k. and u.s. patients feel they know the benefits of taking their medication—an expected result from respondents in which two-thirds take at least three prescription medications, and more than a quarter of them take more than five (data not shown).

some variations among the patients start to appear when examining their beliefs about the risks behind those prescriptions. although both patient groups show this drop in confidence when moving from understanding the benefits of a medication to assessing its side effects, the data do reveal differences between the two cohorts.

the data do reveal differences between the two cohorts. Patients | Percent who feel adequately informed

Patients |

Percent who feel adequately

informed about US PATIENTS UK PATIENTS The benefits of taking your medication
informed about
US
PATIENTS
UK
PATIENTS
The benefits of taking your medication
UK PATIENTS The benefits of taking your medication 94% 92% Side effects 69% 86% Potential risks
UK PATIENTS The benefits of taking your medication 94% 92% Side effects 69% 86% Potential risks

94%

92%

Side effects

benefits of taking your medication 94% 92% Side effects 69% 86% Potential risks of taking it
benefits of taking your medication 94% 92% Side effects 69% 86% Potential risks of taking it

69%

86%

Potential risks of taking it

64%
64%
64%

64%

84%

How the drug works in your body

55%
55%
55%

55%

71%

How it compares to existing medication

51%
51%
51%

51%

66%

body 55% 71% How it compares to existing medication 51% 66% u. s . pat ien
body 55% 71% How it compares to existing medication 51% 66% u. s . pat ien
body 55% 71% How it compares to existing medication 51% 66% u. s . pat ien
body 55% 71% How it compares to existing medication 51% 66% u. s . pat ien

u. s . pat ien t s a ppe a r fa r m O re cO nfident t H an u.k . patients w Hen it cO me s tO infO rmati O n ab O u t side effects.

w Hen it cO me s tO infO rmati O n ab O u t side

for instance, u.s. patients appear far more confident than u.k. patients when it comes to information about side effects, 86 to 69 percent, respectively. likewise, u.s. patients exhibit a similar offset when it comes to knowing about a drug’s potential risk (84 percent), when compared with the u.k. patients (64 percent).

direct-to-consumer advertising in the united states may partly explain these differences, as patients are bombarded with lengthy disclaimers about potential side effects and safety concerns. another explanation may be the litigious nature of the united states, where physicians are more apt to discuss the side effects and not just the benefits of medications. in any case, these data reveal an opportunity for biopharmaceutical companies to better communicate the risk-benefit tradeoffs of medicines in terms meaningful to patients.

in the u.s and the u.k., patients give the biopharmaceutical industry little credit for making medications safe and effective. both patient populations believe that physicians do the best job of that, followed by patient-advocacy groups. in addition, fewer than half of the patients feel like the biopharmaceutical industry does a good job of making new medications available as

does a good job of making new medications available as Invest or s Sums may not

Invest or s

good job of making new medications available as Invest or s Sums may not add to

Sums may not add to 100% or be equal to components due to rounding

1 0

2012 | The New Health Report

quickly as possible. given that getting new drugs on the market provides the income that feeds biopharma, the industry seems unlikely to halt or slow down drug development for anything

other than risk or benefit concerns. notably, both groups of patients realize the role of regulators

in the timing of medicines reaching the market.

a misunderstanding of the process is clearly

evident, however, as more than 60 percent of

u.s. patients credit physicians with making drugs available as soon as possible, and more than

a third of patients in the u.s. and the u.k. feel

patient advocacy groups have significant bearing on drug development.

despite both patient populations showing a lack of faith in the biopharmaceutical industry’s ability to ensure safe and effective drugs, patients want the industry to work even faster. nearly 90 percent of u.k. patients think that it takes too

long to get new drugs to patients. some of the negative responses from u.k. patients, however, might have been heightened by media coverage which regularly highlights instances in which the nHs has declined to fund a new medication. although the majority of u.s. patients seems to think that no one—except physicians—does a very good job of getting drugs on the market as fast as possible, only 69 percent of those patients say that the process takes too long, which is nearly 20 percent fewer than u.k. patients.

perhaps most interesting of all, a high percentage of both patient populations express an interest in taking more risk with medications. more than 70 percent of u.s. patients and four out of five u.k. patients believe it should be their right to take a high-risk medication if they hope for some improvement in their health. in other words, these responses indicate that many patients want

words, these responses indicate that many patients want Patients | Group does an excellent/ good job

Patients | Group does an excellent/ good job of…

US PATIENTS UK PATIENTS MAKING SURE MEDICATIONS ARE SAFE AND EFFECTIVE MAKING SURE NEW DRUGS
US
PATIENTS
UK
PATIENTS
MAKING SURE MEDICATIONS ARE
SAFE AND EFFECTIVE
MAKING SURE NEW DRUGS ARE AVAILABLE
TO PUBLIC AS QUICKLY AS POSSIBLE
80%
60%
40%
20%
0 %
0 %
20%
40%
60%
80%
DOCTORS
PATIENT ADVOCACY
GROUPS
PHARMACEUTICAL
COMPANIES
REGULATORY
AUTHORITIES
HEALTH INSURANCE
PROVIDERS

Patients as a Part of the System

1 1

Patients as a Part of the System 1 1 Patients | Do you agree or disagree

Patients | Do you agree or disagree that

US PATIENTS UK PATIENTS % who agree The process of getting new drugs to patients
US
PATIENTS
UK
PATIENTS
% who agree
The process of getting new drugs to patients
takes too long.
69%
69%

69%

69%

88%

We take too long to make drugs available, which costs lives by forcing people to go without potentially beneficial therapies.

71%
71%

71%

71%

87%

Patients should be able to choose to take potentially risky medication even if it is not approved for use if they feel it is their only chance to improve their health.

they feel it is their only chance to improve their health. 72% 81% In this country,
they feel it is their only chance to improve their health. 72% 81% In this country,
they feel it is their only chance to improve their health. 72% 81% In this country,
they feel it is their only chance to improve their health. 72% 81% In this country,

72%

81%

In this country, we are too quick to approve new prescription medications without understanding all of the possible safety issues.

31%
31%
31%

31%

50%

understanding all of the possible safety issues. 31% 50% medicines faster rather than safer, if they

medicines faster rather than safer, if they must choose. nonetheless, half of u.s. patients also feel that medications get approved too quickly without balancing safety. taken together, the responses from u.s. patients highlight some disconnected thinking regarding risk: they want and expect medications quickly, but aren’t fully aware of the trade-offs involved.

simply thinking about risk often differs from acting on it. instead of wondering how patients respond when faced with the risks related to prescription pharmaceuticals, their behaviors provide a much clearer picture. to get at those behaviors, patients were asked if they ever turned down or stopped taking a medication because of safety or side-effect concerns. roughly speaking,

because of safety or side-effect concerns. roughly speaking, m O re t H an 70 percent
because of safety or side-effect concerns. roughly speaking, m O re t H an 70 percent
because of safety or side-effect concerns. roughly speaking, m O re t H an 70 percent

m O re t H an 70 percent O f

u. s . pat ien t s

90 percent O f u.k . pat ien t s

believe it sH O uld be t Heir rigH t tO take a Hi gH - risk medicati O n if t Hey H O pe fO r sO me imprOv emen t in t Heir Healt H.

a nd ne a rly

pe fO r sO me imprOv emen t in t Heir Healt H. a nd ne

only about one-third of u.k. patients said that they had, compared to half of u.s. patients. so even if most u.s. patients want the right to take a risky medicine if they choose to, at least half of them might forego the drug for fears related to safety or side effects. again, the safety- and side effect–laden advertising in the united states —and the related litigious environment—might cause some of this difference between the patient populations.

to explore how patients approach assessing risk and value, they were presented with several

assessing risk and value, they were presented with several Patients | Have you ever…. US PATIENTS

Patients | Have you ever….

US PATIENTS % answering yes
US
PATIENTS
% answering yes

UK

PATIENTS

Turned down a medication that your doctor has prescribed because of concerns about safety or side effects.

27%
27%
27%

27%

51%

Stopped taking a medication before checking with your doctor because of side effect or safety concerns.

35%
35%
35%

35%

46%

doctor because of side effect or safety concerns. 35% 46% Invest or s Sums may not
doctor because of side effect or safety concerns. 35% 46% Invest or s Sums may not

Invest or s

of side effect or safety concerns. 35% 46% Invest or s Sums may not add to

Sums may not add to 100% or be equal to components due to rounding

1 2

2012 | The New Health Report

1 2 2012 | The New Health Report Patients | If there were a new medication

Patients | If there were a new medication that was available that could reduce the symptoms you currently have and improve your day-to- day life, but had an increased risk of a serious event like a heart attack, how interested would you be in it?

US PATIENTS UK PATIENTS 20% 21% 20% Very/Somewhat Interested Not sure Not very/Not at all
US
PATIENTS
UK
PATIENTS
20%
21%
20%
Very/Somewhat Interested
Not sure
Not very/Not at all interested
29%
60%
50%
Not sure Not very/Not at all interested 29% 60% 50% hypothetical scenarios with varying degrees of

hypothetical scenarios with varying degrees of both benefit and risk. in circumstances in which a cancer drug could extend a person’s life by a decade, the patients considered two side-effect risks, one related to nausea (a 15 or 75 percent risk) and another related to heart attack (a 5 or 50 percent risk). across all of these scenarios, u.k. patients express far more willingness to accept the risks for the potential 10-year return. even when facing a 50 percent risk of a heart attack, nearly 80 percent of u.k. patients still want the treatment, but less than half of u.s. patients do.

u.k. patients continue to show less aversion to risk than u.s. patients when presented with chronic pain–based scenarios, but in almost all cases patients in both countries were less willing to accept an increased risk for a lesser benefit.

while nearly six out of 10 u.s. patients and nine out of 10 u.k. patients would be interested in a drug that reduced chronic pain to a manageable level with a 15 percent risk of nausea, the number of patients interested in the same drug with a 50 percent risk of heart attack drops precipitously among both groups (26 percent for u.s. patients, 40 percent for u.k. patients).

percent for u.s. patients, 40 percent for u.k. patients). Patients | If there were a new

Patients | If there were a new medication that was available that could improve your condition so much that you would live longer, but had an increased risk of a serious event like a heart attack for some, how interested would you be in it?

US PATIENTS UK PATIENTS 26% 20% 20% Very/Somewhat Interested Not sure Not very/Not at all
US
PATIENTS
UK
PATIENTS
26%
20%
20%
Very/Somewhat Interested
Not sure
Not very/Not at all interested
33%
54%
47%
Not sure Not very/Not at all interested 33% 54% 47% these findings have several implications for

these findings have several implications for the biopharmaceutical industry. as with other stakeholders, patients go through a process of assessing risk versus benefit by weighing factors of varying importance to them. as shown above, patient tolerance for risk is dependent upon the perceived value of a medication relative to its safety profile, although it appears that many patients struggle with assessing risk based on the probability of an adverse event. this underscores the industry’s imperative to better communicate

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Patients as a Part of the System

1 3

Patients as a Part of the System 1 3

We tested a series of 12 scenarios around a hypothetical new medication, which included a condition (cancer or chronic pain), a benefit (extended life or better QOL) and a risk (safety or side effect). Each patient indicated how interested he/she would be in the new medication.

how interested he/she would be in the new medication. US PATIENTS UK PATIENTS % who are

US

PATIENTS

he/she would be in the new medication. US PATIENTS UK PATIENTS % who are interested CANCER

UK

PATIENTS

% who are interested

CANCER

/

EXTEND

LIFE

10

YEARS

CHRONIC

PAIN

K C A T T A 77% T R A E H F O K
K
C
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77%
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the value and risks of new medications in terms that are meaningful to patients. further, coupled with increasing payer scrutiny for demonstrable proof of a new product’s superiority versus existing therapies, the biopharmaceutical industry must strive to develop more sensitive measures that incorporate patient-important outcomes into clinical development.

patient-important outcomes into clinical development. Invest or s Sums may not add to 100% or be

Invest or s

outcomes into clinical development. Invest or s Sums may not add to 100% or be equal

Sums may not add to 100% or be equal to components due to rounding

Biopharma’s Evolving Business Model

While patients provide clear but disparate answers about accepting risk, biopharmaceutical executives paint a much more clouded picture. Asked to assess the level of risk their company must take when exploring new opportunities, the group as a whole could not agree. Roughly equal amounts of them respond that they should reduce their risk, keep the same risk or take on more risk. Although these data seem to suggest confusion, the lack of a homogenous perception of risk may be partly explained by various companies’ current location on the risk tolerance spectrum. Those with stronger pipelines and less patent exposure may have less of an appetite for risk than those who are facing such challenges.

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Biopharma’s Evolving Business Model

1 5

Biopharma’s Evolving Business Model 1 5 Biopharma successful in the future, will it need to |

Biopharma

successful in the future, will it need to

| For your company to be

BIOPHARMA

EXECUTIVES

it need to | For your company to be BIOPHARMA EXECUTIVES 38% Reduce risk profile 36%

38% Reduce risk profile

36% Take on more risk

27% Maintain existing risk profile

36% Take on more risk 27% Maintain existing risk profile biopharmaceutical executives agree, however, that regulators

biopharmaceutical executives agree, however, that regulators should accept more risk. when asked to indicate which stakeholders should take on more risk in the healthcare industry, 65 percent of biopharma execs say government regulators in the u.s. or the u.k. nearly 60 percent of the

executives also believe that payers should accept more risk.

perhaps surprisingly, half of the biopharmaceutical executives point the risk finger at their own industry. taken collectively with the previous indication that only 36 percent of the executives

previous indication that only 36 percent of the executives t Hirty-six percent O f b i
previous indication that only 36 percent of the executives t Hirty-six percent O f b i
previous indication that only 36 percent of the executives t Hirty-six percent O f b i

t Hirty-six percent O f b i O pH a rm a e x ec u t i v e s feel t Heir cO mpany sH O ul d take O n m O re risk. t His finding underscO res t He lack O f agreement wit Hin t He bi O pH a rm aceu t i c a l industry O n its rO l e in risk and w Here tO transfer it.

l industry O n its rO l e in risk and w Here tO transfer it.
l industry O n its rO l e in risk and w Here tO transfer it.

Biopharma

improve pharmaceutical agents and public health?

| Which group(s) need to take or accept more risk to

BIOPHARMA 100% 80% 60% 40% 20% 0 % The FDA Health insurance Pharmaceutical Investors Physicians
BIOPHARMA
100%
80%
60%
40%
20%
0 %
The FDA
Health insurance
Pharmaceutical
Investors
Physicians
companies
companies

1 6

2012 | The New Health Report

feel their company should take on more risk, this finding underscores the lack of agreement within the biopharmaceutical industry on its role in risk and where to transfer it.

for the industry to be successful in transferring or mitigating risk, it is helpful to determine where in the development process biopharma execs perceive the most risk.

asked to estimate the risk across the drug development and clinical testing cycle, 55 percent of biopharma respondents understandably say that phase iii testing poses the largest risk. at both the early and post-marketing stages, the executives see relatively small risks. the focus on phase iii as the highest risk makes perfect sense, given the high cost of this stage of testing, as well as the overall investment of resources and time that are on the line at this point.

confidence among biopharma execs to accurately assess the risk/opportunity ratio at the various development phases raises some questions, however. Overall, the executives show high confidence in their ability to assess risk across the drug creation cycle. the surprise comes in the trend—indicating higher confidence in their ability

to assess risk versus opportunity at earlier stages

and progressively less as the process moves forward. it would seem intuitive that biopharma companies would have more data to assess risk over time as they gather more evidence and a better understanding of the drug. but a lack of

confidence in the underlying data used for phase

iii risk assessment is an acknowledgement that

the level of risk is higher. that only 62 percent

of biopharma execs feel they have adequate

information to assess risk at phase iii is likely a reflection of the increasing stakes at this stage from a financial and reputational perspective. nonetheless, with nearly four out of 10 execs saying they don’t have enough information, the need for more robust sources of data becomes very clear.

if the biopharmaceutical industry applied a wider, more encompassing lens to gathering data and then relied on more sophisticated tools and techniques to unearth the true insights embedded

in the data, it could start along a path toward

better decisions about risk-value tradeoffs. for example, better endpoints at early development stages could make phase iii results more confirmatory, and thereby less prone to risk.

results more confirmatory, and thereby less prone to risk. Biopharma | At what stage(s) of the

Biopharma | At what stage(s) of the drug development process do you see the greatest risks?

the drug development process do you see the greatest risks? BIOPHARMA Biopharma | Percent who feel

BIOPHARMA

Biopharma | Percent who feel they have necessary data to accurately assess risk vs. opportunity

for new products

to accurately assess risk vs. opportunity for new products BIOPHARMA PRECLINICAL PHASE I PHASE II PHASE

BIOPHARMA

PRECLINICAL

PHASE I

PHASE II

PHASE III

POST

TESTING

TESTING

TESTING

APPROVAL

III POST TESTING TESTING TESTING APPROVAL BIOPHARMA 11% 77% 15% 77% 31% 69% 55% 62% 16%

BIOPHARMA

POST TESTING TESTING TESTING APPROVAL BIOPHARMA 11% 77% 15% 77% 31% 69% 55% 62% 16% 61%

11%

77%

TESTING TESTING TESTING APPROVAL BIOPHARMA 11% 77% 15% 77% 31% 69% 55% 62% 16% 61%

15%

77%

TESTING TESTING APPROVAL BIOPHARMA 11% 77% 15% 77% 31% 69% 55% 62% 16% 61% www.quintiles.com/newhealthreport

31%

69%

TESTING TESTING APPROVAL BIOPHARMA 11% 77% 15% 77% 31% 69% 55% 62% 16% 61% www.quintiles.com/newhealthreport

55%

62%

16% 61%
16%
61%

Biopharma’s Evolving Business Model

1 7

Biopharma’s Evolving Business Model 1 7

r isk-s H aring agreements between drug c O m p a n i e s

drive earlier interacti O n s

between

and

payers

mig H t tw O

als O

t H e

stake H O lders.

between and payers mig H t tw O als O t H e stake H O

in addition to incorporating better sources of data into clinical development to alleviate some of the risk along the development lifecycle, risk- sharing agreements between biopharmaceutical companies and payer organizations hold potential as well. in fact, 60 percent of biopharma execs expect to see more risk- and cost-sharing agreements with payers in the next five years.

cost-sharing agreements with payers in the next five years. Biopharma | Do you think risk- and/or

Biopharma | Do you think risk- and/or cost-sharing agreements with payers will become more common in the next five years?

60%

payers will become more common in the next five years? 60% YES further benefits—beyond the obvious

YES

will become more common in the next five years? 60% YES further benefits—beyond the obvious reduction

further benefits—beyond the obvious reduction of risk for the biopharmaceutical industry— should come from such sharing. respondents see enhanced patient population targeting as the top potential benefit of such agreements, as data collected by payers could help biopharmaceutical companies improve their ability to personalize prescriptions to a population that would benefit more than others. likewise, the executives believe that such agreements would improve access to drugs and accelerate time to market. such risk- sharing agreements between drug companies and payers might also drive earlier interactions

between the two stakeholders, which could fuel faster, broader access to new drugs. the collaborations could also enhance outcomes data, according to 60 percent of the executives.

getting these stakeholders to interact throughout the process could lead to other benefits. for example, more than half of them believe that such risk-sharing would increase sales and nearly half expect such risk-sharing to improve patient adherence.

half expect such risk-sharing to improve patient adherence. if t He bi O pH a rm
half expect such risk-sharing to improve patient adherence. if t He bi O pH a rm
half expect such risk-sharing to improve patient adherence. if t He bi O pH a rm

if t He bi O pH a rm aceu t i c a l ind us t ry a ppl ied a w id er , m O re encO mpa ssin g l ens tO gat Herin g data a nd t Hen relied O n m O re s O pHisticated tO O l s a nd tecHni Q ues tO uneart H t He true insigH ts embed -

ded in

start alO ng a pat H tOwa rd

better decisi O ns ab O u t risk-value tradeO ffs.

t He data, it cO ul d

O ns ab O u t risk-value tradeO ffs. t He data, it cO ul d
O ns ab O u t risk-value tradeO ffs. t He data, it cO ul d

Invest or s

u t risk-value tradeO ffs. t He data, it cO ul d Invest or s Sums

Sums may not add to 100% or be equal to components due to rounding

1 8

2012 | The New Health Report

despite the numerous perceived benefits of risk-sharing agreements with payers, biophar- maceutical executives appear hesitant to actually put them into practice. when asked about potential issues that could cause problems, most of the executives indicate trouble from all of them. at the top, 71 percent of the biopharmaceutical executives say that the agreements will eat up too much in administrative costs. the executives do indeed expect improved outcomes data from such

executives do indeed expect improved outcomes data from such Biopharma | agreements would mean significant/slight

Biopharma |

agreements would mean significant/slight improvements in

Percent saying risk-sharing

improvements in Percent saying risk-sharing BIOPHARMA Enhanced patient population targeting 70%

BIOPHARMA

Enhanced patient population targeting

risk-sharing BIOPHARMA Enhanced patient population targeting 70% Increased patient access to drugs that otherwise would

70%

Increased patient access to drugs that otherwise would not make it to market

access to drugs that otherwise would not make it to market 65% Drugs available to patients

65%

Drugs available to patients more quickly

it to market 65% Drugs available to patients more quickly 63% Improved outcomes data 60% Increased

63%

Improved outcomes data

to patients more quickly 63% Improved outcomes data 60% Increased sales for manufacturers Shorter timeline to

60%

Increased sales for manufacturers

Improved outcomes data 60% Increased sales for manufacturers Shorter timeline to market for manufacturer 53% 52%

Shorter timeline to market for manufacturer

manufacturers Shorter timeline to market for manufacturer 53% 52% Improved adherence 47% agreements, yet claim that

53%

52%

Improved adherence

to market for manufacturer 53% 52% Improved adherence 47% agreements, yet claim that understanding clinical versus

47%

to market for manufacturer 53% 52% Improved adherence 47% agreements, yet claim that understanding clinical versus

agreements, yet claim that understanding clinical versus real-world outcomes could be another obstacle exacerbated by risk-sharing agreements with payers. the list goes on, and the executives

agreements with payers. the list goes on, and the executives b i O pH a rm
agreements with payers. the list goes on, and the executives b i O pH a rm
agreements with payers. the list goes on, and the executives b i O pH a rm

b i O pH a rm a e x ec u t i v e s ackn Owledge t He p Otential value O f develO ping risk-sH a rin g agreements wit H pay er s , but t Hen cHeck O ff virtually every reasO n t H at precludes sucH fO rward m Ot i O n.

every reasO n t H at precludes sucH fO rward m Ot i O n. paint

paint a picture in which such agreements look far off at best and maybe unlikely at all.

as an overview of the opinions that the biopharmaceutical executives express, they appear to see the need for changes in how they handle risk, but they see no way forward. in fact, they still perceive regulators as the bottleneck, while appearing unable to agree on whether the pharmaceutical industry itself should accept more or less risk. in addition, the executives indicate— across a variety of metrics—the potential value of developing risk-sharing agreements with payers, but then check off virtually every reason that precludes such forward motion.

www.quintiles.com/newhealthreport

Biopharma’s Evolving Business Model

1 9

Biopharma’s Evolving Business Model 1 9 Biopharma | Percent saying these are somewhat/significant problems with

Biopharma | Percent saying these are somewhat/significant problems with risk-sharing agreements

somewhat/significant problems with risk-sharing agreements BIOPHARMA Administration costs too high 71% Difficult to

BIOPHARMA

Administration costs too high

agreements BIOPHARMA Administration costs too high 71% Difficult to pre-assess what outcomes will result in

71%

Difficult to pre-assess what outcomes will result in real-world use of agent, rather than clinical trials

in real-world use of agent, rather than clinical trials 69% Difficult to agree on definition of

69%

Difficult to agree on definition of success with payers / manufacturers

agree on definition of success with payers / manufacturers 68% Regulatory risk 63% Information produced might

68%

Regulatory risk

of success with payers / manufacturers 68% Regulatory risk 63% Information produced might be useful to

63%

Information produced might be useful to competitors

risk 63% Information produced might be useful to competitors 63% Difficult to accurately measure success in

63%

Difficult to accurately measure success in a performance-based risk-sharing agreement

success in a performance-based risk-sharing agreement 60% Have to shift post-marketing resources from enhancing

60%

Have to shift post-marketing resources from enhancing the product to proving the product

resources from enhancing the product to proving the product 54% Invest or s Sums may not

54%

from enhancing the product to proving the product 54% Invest or s Sums may not add
from enhancing the product to proving the product 54% Invest or s Sums may not add

Invest or s

enhancing the product to proving the product 54% Invest or s Sums may not add to

Sums may not add to 100% or be equal to components due to rounding

Payers Seek More Participation

In healthcare, organizations providing coverage most likely perform some of the most focused analysis of risk. For this study, the payers consist of managed care executives in the United States (U.S. payers) and National Health Service executives in the U.K. (U.K. payers). In assessing their own allocation of risk versus opportunity, the majority of payers—nearly two-thirds—express confidence that they get the balance about right. Despite the vast differences that distinguish the single-payer system in the United Kingdom and the multi-payer system in the United States, the two payer groups take very similar views on their organizations’ current handling of risk.

When it comes to other stakeholders, however, payers want them taking on more risk to improve pharmaceutical agents and public health. Both U.K. and U.S. payers—68 and 77 percent, respectively—want the biopharmaceutical industry to accept more risk, and more than half of both groups also feel that regulators should shoulder more risk. Perhaps surprisingly, particularly given the payers’ claims of effective risk balancing, nearly half of U.S. payers and 39 percent of U.K. payers reply that their own groups also need to accept a higher level of risk to benefit public health. Unlike U.S. payers, half of U.K. payers feel that investors must risk more, as well. Overall, the payers favor spreading risk across a wide section of healthcare stakeholders.

www.quintiles.com/newhealthreport

Payers Seek More Participation

21

Payers Seek More Participation 21 Payers | Which comes closest to your feeling about how your

Payers | Which comes closest to your feeling about how your organization balances risks and opportunities?

US PAYERS UK PAYERS 11% We need to reduce risk by taking a more conservative
US
PAYERS
UK
PAYERS
11%
We need to reduce risk by taking
a more conservative approach
23%
27%
We need to take more risks to
capture more opportunities
18%
63%
We do a good job balancing
risks and opportunities
59%
We do a good job balancing risks and opportunities 59% in addition to a strong preference

in addition to a strong preference for spreading risk among multiple stakeholders, payers also seek increasing involvement in the entire lifecycle of a medicine. as a step toward this, the payers in this survey—70 percent of the u.k. payers and 79 percent of u.s. payers—expect more risk- and

cost-sharing agreements between themselves and the biopharmaceutical industry over the next five years. in parallel with that evolution, the payers want more interaction across the drug- development cycle.

portions of the payers already indicate some participation in drug development. among u.k. payers, for example, one-quarter or less of them indicate taking part in preclinical and phase i testing. for phases ii and iii, the percentages increase, rising to 52 percent for the latter. for post-marketing surveillance, 59 percent of u.k. payers claim some level of involvement. so out of those five stages of drug development, the majority of u.k. payers only participate toward the end. a similar trend appears in the responses from u.s. payers, although with slightly higher involvement at the preclinical stage, and then less involvement at the other stages in comparison with u.k. payers. for instance, only 31 percent of u.s. payers—21 percentage points fewer than

31 percent of u.s. payers—21 percentage points fewer than Payers | Which group(s) need to take

Payers | Which group(s) need to take or accept more risk to improve pharmaceutical agents and public health?

US PAYERS UK PAYERS 100% 80% 60% 40% 20% 0 % The FDA; Pharmaceutical Investors
US
PAYERS
UK
PAYERS
100%
80%
60%
40%
20%
0 %
The FDA;
Pharmaceutical
Investors
Physicians
Patients
UK: Government
regulators
Health insurance
companies;
UK: Primary Care
Trusts and other
providers
companies

2 2

2012 | The New Health Report

the u.k. ones—claim to participate in phase iii

testing. given the general consensus that phase

iii carries the highest risk of all, payers clearly

desire more involvement at that stage of drug development.

in fact, this survey finds that payers want

more involvement at every stage. in a general comparison of the responses for current versus

desired involvement, the numbers nearly double

in many instances. for preclinical testing, for

instance, only 18 percent of u.k. payers claim current involvement, but 43 percent—nearly two and a half times as many—say that they should be

involved. as expected, both groups of payers also show strong interest in gaining more involvement

in phase iii testing.

the lack of involvement by payers in drug development indicates that the biopharmaceutical industry does not interact effectively with its customers—who are increasingly the payers, more so than physicians and patients—about the products that it should be making.

if the payers’ predicted increase in risk-sharing agreements does arise in the next five years, these stakeholders also expect significant returns— particularly for patients. as a group, the payers believe that risk-sharing between themselves and the biopharmaceutical industry will give patients quicker access to drugs. interestingly, u.k payers respond more strongly on these points than u.s. payers. indeed, such risk-sharing should return higher benefits in a single-payer system, where a

return higher benefits in a single-payer system, where a Payers | How involved is your organization

Payers | How involved is your organization / how involved should it be at the following stages of drug development?

T S N I E T I E G S A H P P H
T
S
N
I
E
T
I
E
G
S
A
H
P
P
H
A
S
48%
E
L
I
A
I
C
I
ET
N
S
I
T
L
25%
I
C
N
43%
E
G
36%
R
P
64%
US
PAYERS
UK
PAYERS
IS
INVOLVED
IS
INVOLVED
SHOULD
BE
SHOULD
BE
INVOLVED
INVOLVED
P
18%
H
A
L
S
A
E
76%
V
I
O
II
R
T
P
52%
E
P
S
A
T
I
T
N
S
G
O
P
70%
42%
P
O
G
S
N
T
I
59%
T
A
S
P
61%
E
P
T
R
O
II
I
V
E
A
S
L
A
H
84%
P
31%
P
R
G
E
N
C
I
L
T
I
S
N
TE
I
C
I
A
I
L
E
48%
S
A
H
P
23%
P
H
A
S
G
E
I
E
T
I
N
T
S
45%
27%
44%
24%

Payers Seek More Participation

23

coordinated attack on disease might be easier to orchestrate than in the u.s. multi-payer system. somewhat oddly, and like the biopharmaceutical executives surveyed, about half of payers expect such risk-sharing agreements to improve patient adherence, although such a connection does not seem immediately obvious. moreover, few strategies can boast making significant improvements in adherence, which is notoriously low.

similar to the biopharmaceutical executives, the payers convey many concerns that must be addressed to implement such risk-sharing agreements. Of significant interest, these responses indicate the different level of control

these responses indicate the different level of control Payers | Percent saying risk-sharing agreements would mean

Payers | Percent saying risk-sharing agreements would mean significant/slight improvements in

agreements would mean significant/slight improvements in US PAYERS UK PAYERS Increased patient access to drugs that

US

PAYERS

would mean significant/slight improvements in US PAYERS UK PAYERS Increased patient access to drugs that otherwise

UK

PAYERS

Increased patient access to drugs that otherwise would not make it to market

68% 89% Drugs available to patients more quickly 59% 93% Improved outcomes data 69% 61%
68%
89%
Drugs available to patients more quickly
59%
93%
Improved outcomes data
69%
61%
Increased sales for manufacturers
61%
75%
Shorter timeline to market for manufacturer
61%
77%

Real-world validation of pharmaceutical risk/benefit

77% Real-world validation of pharmaceutical risk/benefit 69% 70% Improved adherence 44% 59% that might be possible
77% Real-world validation of pharmaceutical risk/benefit 69% 70% Improved adherence 44% 59% that might be possible

69%

70%

Improved adherence

44%
44%

44%

44%

59%

risk/benefit 69% 70% Improved adherence 44% 59% that might be possible in a single- versus a

that might be possible in a single- versus a multi- payer system. for example, u.k. payers express less concern over related administration costs and the related parties’ ability to agree on successful outcomes. so although both groups of payers seek more involvement in the drug development process, neither shows high confidence that risk-sharing agreements can be developed in the current climate.

agreements can be developed in the current climate. Payers | Percent saying these are somewhat/significant

Payers | Percent saying these are somewhat/significant problems with risk-sharing agreements

US PAYERS UK Administration costs too high
US
PAYERS
UK
Administration costs too high

PAYERS

59%
59%
59%

59%

72%

Difficult to pre-assess what outcomes will result in real- world use of agent, rather than clinical trials

in real- world use of agent, rather than clinical trials 64% 59% Difficult to agree on
in real- world use of agent, rather than clinical trials 64% 59% Difficult to agree on
in real- world use of agent, rather than clinical trials 64% 59% Difficult to agree on
in real- world use of agent, rather than clinical trials 64% 59% Difficult to agree on

64%

59%

Difficult to agree on definition of success with payers / manufacturers

59%
59%
59%

59%

75%

Difficult to accurately measure success in a performance-based, risk-sharing agreement

success in a performance-based, risk-sharing agreement 61% 64% Have to shift post-marketing resources from
success in a performance-based, risk-sharing agreement 61% 64% Have to shift post-marketing resources from

61%

64%

Have to shift post-marketing resources from enhancing the product to proving the product

resources from enhancing the product to proving the product 50% 56% Invest or s Sums may
resources from enhancing the product to proving the product 50% 56% Invest or s Sums may
resources from enhancing the product to proving the product 50% 56% Invest or s Sums may
resources from enhancing the product to proving the product 50% 56% Invest or s Sums may

50%

56%

from enhancing the product to proving the product 50% 56% Invest or s Sums may not
from enhancing the product to proving the product 50% 56% Invest or s Sums may not

Invest or s

the product to proving the product 50% 56% Invest or s Sums may not add to

Sums may not add to 100% or be equal to components due to rounding

Investor Ambivalence, Optimism

The healthcare-focused investors surveyed for this report rate the biopharmaceutical industry as high-risk. In fact, 94 percent of the investors see more risk in placing capital in the biopharmaceutical industry than in other sectors. Moreover, almost none of the investors—only 6 percent—rate the biopharmaceutical industry as less risky for investing than other areas. Consequently, this high-risk expectation forms one of the strongest examples of consensus in the results of this year’s survey.

www.quintiles.com/newhealthreport

Investor Ambivalence, Optimism

2 5

Investor Ambivalence, Optimism 2 5

s eventy t H ree percent O f invest O rs feel O ptimis -

tic

ab O ut

t H e

pr O spects

f O r

investments

in

t H e

b i O p H armaceutical industry.

f O r investments in t H e b i O p H armaceutical industry. Investors

Investors

biopharmaceutical sector represent greater or less risk than other sectors?

| Does investment in the

INVESTORS

risk than other sectors? | Does investment in the INVESTORS 44% Significantly greater risk 50% Slightly

44% Significantly greater risk 50% Slightly greater risk

6%

Less risk

greater risk 50% Slightly greater risk 6% Less risk despite the high risk of investing in

despite the high risk of investing in the biopharmaceutical industry, 73 percent of investors feel optimistic about the prospects for investments in this area. One-third of investors even expect to invest more in this industry over the next three to five years, and only 17 percent intend to invest less. still, even more of the

17 percent intend to invest less. still, even more of the Only six percent O f
17 percent intend to invest less. still, even more of the Only six percent O f
17 percent intend to invest less. still, even more of the Only six percent O f

Only six percent O f inves- tO rs rate t He bi O pH arma- ceu t i c a l ind us t ry a s l e ss risky fO r investing t H a n Ot Her sectO rs.

ry a s l e ss risky fO r investing t H a n Ot Her

investors—65 percent—expect to increase their investments in biotechnology specifically, and only 13 percent expect to invest less in that field.

given that investors see high risk in investing in the biopharmaceutical market as it is, one would imagine that could keep them from suggesting that the drug industry should take on any more risk. in fact, 47 percent of the investors feel that the biopharmaceutical industry does a good job of balancing risk with rewards. among those who disagree, however, most of them—37 percent— believe that the drug industry should take on additional risk. with investors always interested in spreading the risk and feeling that they already take big risks to invest in this industry, some of them naturally want to see the drug industry raising its risk bar, too.

want to see the drug industry raising its risk bar, too. Investors | Are you pessimistic

Investors | Are you pessimistic or optimistic about the investment prospects in the biopharmaceutical industry in the next 5 years?

INVESTORS

biopharmaceutical industry in the next 5 years? INVESTORS 73% Optimistic 27% Pessimistic Invest or s Sums

73% Optimistic

27% Pessimistic

the next 5 years? INVESTORS 73% Optimistic 27% Pessimistic Invest or s Sums may not add
the next 5 years? INVESTORS 73% Optimistic 27% Pessimistic Invest or s Sums may not add

Invest or s

INVESTORS 73% Optimistic 27% Pessimistic Invest or s Sums may not add to 100% or be

Sums may not add to 100% or be equal to components due to rounding

2 6

2012 | The New Health Report

2 6 2012 | The New Health Report Investors | in specific sectors in the next

Investors |

in specific sectors in the next three to five years

Increasing / decreasing investment

next three to five years Increasing / decreasing investment INCREASE STAY THE SAME DECREASE 17% 50%

INCREASE

to five years Increasing / decreasing investment INCREASE STAY THE SAME DECREASE 17% 50% 33% 13%

STAY

THE

SAME

Increasing / decreasing investment INCREASE STAY THE SAME DECREASE 17% 50% 33% 13% 22% 65%

DECREASE

17%

50%

33%

13%

22%

65%

PHARMACEUTICAL

COMPANIES

BIOTECHNOLOGY

COMPANIES

22% 65% PHARMACEUTICAL COMPANIES BIOTECHNOLOGY COMPANIES when it comes to risk- and cost-sharing between biopharma

when it comes to risk- and cost-sharing between biopharma and payers, investors display ambivalence. Only 42 percent of them expect such agreements to be common in five years. likewise, investors stand largely divided on the potential benefits of such agreements for themselves and for patients.

benefits of such agreements for themselves and for patients. Investors | Do you think risk/cost-sharing agreements

Investors | Do you think risk/cost-sharing agreements between biopharmaceutical companies and payers will become more common in the next five years?

INVESTORS

will become more common in the next five years? INVESTORS 42% Yes 58% No Investors |

42% Yes

58% No

common in the next five years? INVESTORS 42% Yes 58% No Investors | Which statement comes

Investors | Which statement comes closest to your feeling about how the biopharmaceutical industry balances risks and opportunities?

INVESTORS’ VIEW OF BIOPHARMA INDUSTRY
INVESTORS’
VIEW
OF
BIOPHARMA
INDUSTRY

16%

37%

47%

They need to reduce risk by taking a more conservative approach

They need to take more risks to capture more opportunities

They do a good job balancing risks and opportunities

risks to capture more opportunities They do a good job balancing risks and opportunities www.quintiles.com/newhealthreport

www.quintiles.com/newhealthreport

Investor Ambivalence, Optimism

2 7

Investor Ambivalence, Optimism 2 7

Investors |

agreements between biopharma and managed care for firms like yours?

What are the implications of risk-sharing

firms like yours? What are the implications of risk-sharing AGREE NEITHER DISAGREE 9%   25% 45%

AGREE

like yours? What are the implications of risk-sharing AGREE NEITHER DISAGREE 9%   25% 45% 53%

NEITHER

What are the implications of risk-sharing AGREE NEITHER DISAGREE 9%   25% 45% 53% 46% 22%

DISAGREE

9%

 

25%

45%

53%

46%

22%

These agreements will generally mean less return on our investment.

We will invest less in this sector if these agreements become more common.

14%

49%

37%

These agreements will mean more access to the market for new drugs.

will mean more access to the market for new drugs. i nvest O rs are rat

i nvest O rs are rat H er indifferent wit H regards t O risk- and c O st-s H aring agreements between bi O p H a r - maceutical c O mpanies and paying O rganizati O ns.

H a r - maceutical c O mpanies and paying O rganizati O ns. Invest or
H a r - maceutical c O mpanies and paying O rganizati O ns. Invest or

Invest or s

c O mpanies and paying O rganizati O ns. Invest or s Sums may not add

Sums may not add to 100% or be equal to components due to rounding

Mitigating Risk: The Need for New Metrics

Although biopharmaceutical executives and payers from the U.S. and the U.K. expect more risk-sharing ahead, such agreements could come in many forms. The form itself, however, will determine the likelihood of success from such arrangements. Despite that fact, biopharmaceutical executives and payers express different views on the most likely risk-sharing plans.

Among the biopharmaceutical executives, nearly three-quarters of them support agreements in which patient adherence determines future discounts to the manufacturer. They also show similar support of agreements in which some aspect of patient outcome serves as the goal. The biopharma execs show less enthusiasm for some other possible forms of risk-sharing, including population-based performance guarantees. As the numbers show, however, this group spreads its interests across a collection of approaches to risk-sharing.

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A Need for New Metrics

2 9

in comparison, the payers display equally

widespread opinions. both groups of payers prefer agreements based on coverage with evidence development (ced), which depends on how well

a drug performs against a specific outcome, and

the population-based performance approach, in which in drug must meet some long-term benefit to merit coverage. more than biopharmaceutical executives or u.s. payers, u.k. payers provide the most aligned opinion, with 95 percent of them supporting the ced-based option. notably, this option ties for first among u.s. payers and ranks

second with the biopharmaceutical executives. so despite the support of a variety of options in risk-sharing agreements, these data indicate that these three groups of stakeholders could possibly agree on how to get started with this transition.

if the biopharmaceutical industry and payer

organizations could agree on a way forward, that might generate a variety of risk-sharing agreements. two key interests, especially from the patient perspective, involve getting new therapies to the market faster and making those therapies

more effective. with regard to speed-to-market, half of biopharmaceutical executives feel that risk- sharing agreements will decrease that time, but that expectation drops to 43 and 32 percent for u.s. and u.k. payers, respectively. in terms of risk- sharing agreements increasing the innovative and effective aspects of new therapies, nearly three- quarters of u.k. payers show optimism there, and a majority of the respondents from u.s. payers and biopharma agree.

when considering a range of other ways to decrease the time-to-market for new therapies, none generates a strong consensus among the stakeholders. even with the most agreed-upon concept—pre-competitive collaborations among biopharma companies—it only gains favor from about half of most of the groups, and even less from u.k. payers. Overall, the options generate widely disparate responses and the lack of majority support.

to enhance the innovation of new drugs, however, the stakeholders display some level of agreement.

however, the stakeholders display some level of agreement. Biopharma, Payers | Percent who support specific types
Biopharma, Payers | Percent who support specific types of risk-sharing plans BIOPHARMA US PAYERS UK
Biopharma, Payers
|
Percent who support specific types of risk-sharing plans
BIOPHARMA
US
PAYERS
UK
PAYERS
95%
100%
84%
84% 89%
80%
73% 77%
69%
69%
66%
67%
59%
60% 68% 61%
59% 64%
56%
60%
40%
30%
20%
0 %
Adherence-
Coverage with
Individual performace
based deals
Evidence
Discounts to managed
care plans for better
formulary placement
Contracting to provide
copay offsets
Population-
guarantees
based performance
Development (CED)
guarantee

3 0

2012 | The New Health Report

upwards of three-quarters of biopharmaceutical executives and payers, plus 61 percent of investors, hold hope for pre-competitive collaborations among biopharmaceutical companies. nonetheless, other responses (data not shown) in this survey indicate that 69 percent of biopharmaceutical executives support pre- competitive alliances, but only 37 percent of them claim that their company currently participates in them. Overall, the responses suggest that some biopharma executives believe that pre- competitive alliances might extend—or at least not shorten—the time that it takes to bring a new drug to market, but the alliances could increase the innovative aspects of new drugs. although that could create a more precise approach than today’s often scattershot strategy, a majority of these executives also indicate that creating such alliances must overcome a series of problems, including defining the boundary between pre-competitive and proprietary data and protecting intellectual property. so these alliances might appeal to the executives more in theory than in practice.

to manage risk effectively, stakeholders need reliable ways to measure it. that is, the healthcare industry needs powerful tools to estimate the risk/benefit tradeoffs generated by a new drug. the results from this survey show that the biopharmaceutical industry and payers in the u.k. and the u.s. apply a variety of tools to address this problem. for example, most of them look at patient-reported outcome measures and minimum clinical efficacy, and about half use quality-adjusted life years. for each of these metrics, though, the stakeholders only rate these tools as more or less mediocre in assessing the risk-benefit profile of a new drug. for example, nearly three-quarters of u.k. payers rely on

for example, nearly three-quarters of u.k. payers rely on Biopharma, Payers following will decrease time-to-market

Biopharma, Payers

following will decrease time-to-market for new therapies

|

Percent who feel the

time-to-market for new therapies | Percent who feel the BIOPHARMA US PAYERS UK PAYERS Risk-sharing agreements

BIOPHARMA

USfor new therapies | Percent who feel the BIOPHARMA PAYERS UK PAYERS Risk-sharing agreements between biopharma

PAYERS

UKfor new therapies | Percent who feel the BIOPHARMA US PAYERS PAYERS Risk-sharing agreements between biopharma

PAYERS

Risk-sharing agreements between biopharma and payers/managed care

32% 43%
32% 43%
32% 43%
32% 43%
32% 43%

32%

32% 43%

43%

32% 43%

52%

Pre-competitive collaborations among biopharma companies

41% 50%
41% 50%
41% 50%
41% 50%
41% 50%

41%

50%

41% 50%
41% 50%

57%

Direct government participation in drug development

50% 57% Direct government participation in drug development 31% 41% 41% Outcomes research from quasi-governmental bodies

31%

57% Direct government participation in drug development 31% 41% 41% Outcomes research from quasi-governmental bodies
57% Direct government participation in drug development 31% 41% 41% Outcomes research from quasi-governmental bodies

41%

41%

Outcomes research from quasi-governmental bodies governing real-world research practices such as PCORI/NICE

governing real-world research practices such as PCORI/NICE 28% 32% 72% Managed care / payer input in

28%

real-world research practices such as PCORI/NICE 28% 32% 72% Managed care / payer input in drug

32%

real-world research practices such as PCORI/NICE 28% 32% 72% Managed care / payer input in drug

72%

Managed care / payer input in drug development

28% 32% 72% Managed care / payer input in drug development 25% 41% 43% Biopharma, Payers

25%

32% 72% Managed care / payer input in drug development 25% 41% 43% Biopharma, Payers following

41%

72% Managed care / payer input in drug development 25% 41% 43% Biopharma, Payers following will

43%

Managed care / payer input in drug development 25% 41% 43% Biopharma, Payers following will mean

Biopharma, Payers

following will mean getting more innovative and effective therapies to market

|

Percent who feel the

and effective therapies to market | Percent who feel the BIOPHARMA US PAYERS UK PAYERS Risk-sharing

BIOPHARMA

UStherapies to market | Percent who feel the BIOPHARMA PAYERS UK PAYERS Risk-sharing agreements between biopharma

PAYERS

UKto market | Percent who feel the BIOPHARMA US PAYERS PAYERS Risk-sharing agreements between biopharma and

PAYERS

Risk-sharing agreements between biopharma and payers/managed care

agreements between biopharma and payers/managed care 55% 63% 73% Pre-competitive collaborations among biopharma

55%

agreements between biopharma and payers/managed care 55% 63% 73% Pre-competitive collaborations among biopharma

63%

agreements between biopharma and payers/managed care 55% 63% 73% Pre-competitive collaborations among biopharma companies

73%

Pre-competitive collaborations among biopharma companies

73% Pre-competitive collaborations among biopharma companies 75% 72% 73% Direct government participation in drug

75%

Pre-competitive collaborations among biopharma companies 75% 72% 73% Direct government participation in drug development
Pre-competitive collaborations among biopharma companies 75% 72% 73% Direct government participation in drug development

72%

73%

Direct government participation in drug development 32% 29% 36%
Direct government participation in drug development
32%
29%
36%

Outcomes research from quasi-governmental bodies governing real-world research practices such as PCORI/NICE

27% 44%
27% 44%
27% 44%

27%

27% 44%
27% 44%
27% 44%

44%

27% 44%

55%

Managed care / payer input in drug development

31%
31%
31%

31%

31%
31%

60%

57%

as PCORI/NICE 27% 44% 55% Managed care / payer input in drug development 31% 60% 57%

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A Need for New Metrics

3 1

patient-reported outcome measures, but only

a bit more than half of them judge this as an

but only a bit more than half of them judge this as an Biopharma, Payers |

Biopharma, Payers | Do you currently use the following types of data?

BIOPHARMAPAYERS % answering yes Patient Reported 56% 60% 71% Outcome (PROs) Minimum Clinical    

BIOPHARMA
BIOPHARMA
BIOPHARMA

PAYERSBIOPHARMA % answering yes Patient Reported 56% 60% 71% Outcome (PROs) Minimum Clinical      

PAYERS

% answering yes

Patient Reported

56%

60%

71%

Outcome (PROs)

Minimum Clinical

     

Efficacy (MCE)

53%

44%

NA

Quality Adjusted Life Years (QALYs)

47%

44%

66%

Number Needed to Treat (NNT)

41%

31%

46%

Clinical Utility

29%

24%

21%

Index (CUI)

Number Needed to Harm (NNH)

17%

20%

21%

Disability Adjusted Life Years (DALYs)

12%

19%

16%

Proprietary

22%

31%

11%

instruments

excellent or good tool for measuring risk. in other

cases, the stakeholders give high marks to some

tools that they use infrequently. for instance,

nearly three-quarters of u.s. payers believe

that minimum clinical efficacy measures risk

effectively, but only 44 percent of them use this

tool. to some extent, these responses indicate

that stakeholders use some of their least

favorite methods and forego some of the more

effective ones.

these data illustrate one of the problems with

most risk-based tools: that they fail to recognize

the underlying predispositions toward value and

therefore make it extremely difficult to understand

the tradeoffs involved in such equations.

without considering the values attached to the

risk—which can sway the perception of the risk/

benefit proposition—stakeholders are unable to

assign the proper weight to different values that

influence perception of risk.

to different values that influence perception of risk. Biopharma, Payers | How well do the following

Biopharma, Payers | How well do the following types of data do in accurately assessing a biopharmaceutical product’s risk/benefit profile?

BIOPHARMA Patient Reported Outcome (PROs) Excellent Good Minimum Clinical Efficacy (MCE) N/A US PAYERS Excellent
BIOPHARMA
Patient Reported Outcome (PROs)
Excellent
Good
Minimum Clinical Efficacy (MCE)
N/A
US
PAYERS
Excellent
Quality Adjusted Life Years (QALYs)
Good
Number Needed to Treat (NNT)
UK
PAYERS
Excellent
Good
Clinical Utility Index (CUI)
Number Needed to Harm (NNH)
Disability Adjusted Life Years (DALYs)
Proprietary instruments
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%

3 2

2012 | The New Health Report

in the context of assessing risk and benefit, one area that warrants further examination is comparative effectiveness research (cer). as payers and quasi-governmental agencies in the u.s. rush to embrace cer, some clarity as to the utility and construct of cer can be gleaned by looking at the perception among u.k payers as to the benefits produced by health technology assessments (Hta)—a different yet related form of product appraisal.

u.k. payers seem unimpressed by the overall performance of Hta on a number of different measures. less than a third of them feel that Hta initiatives perform very or extremely well on improving patient outcomes, and less than a quarter feel that Hta does a good job of ensuring that the right patient population receives the right medication. these findings contrast sharply with

the right medication. these findings contrast sharply with Payers | Percent who believe current CER /

Payers | Percent who believe current CER / HTA initiatives are doing extremely / very well on

CER / HTA initiatives are doing extremely / very well on US PAYERS UK PAYERS Improving

US

PAYERS

HTA initiatives are doing extremely / very well on US PAYERS UK PAYERS Improving patient outcomes

UK

PAYERS

Improving patient outcomes / improving effectiveness

32%
32%
32%

32%

56%

Ensuring the right patient population receives the right medication

23%
23%
23%

23%

Improving patient safety

receives the right medication 23% Improving patient safety 44% 43% 51% Controlling cost for members in
receives the right medication 23% Improving patient safety 44% 43% 51% Controlling cost for members in

44%

43%

51%

Controlling cost for members in your plan

5%
5%
5%

5%

40%

44% 43% 51% Controlling cost for members in your plan 5% 40% the perception of cer

the perception of cer among u.s. payers, the majority of whom say that cer performs well on both measures.

given that the u.k. has more than 10 years experience in putting Hta into practice, u.k. payer skepticism as to their utility should be seen as a learning opportunity for u.s.-based organizations looking to conduct cer initiatives. critical to the future application of cer is the data and methodology employed in the research. cer methods should not only address technical aspects of study design, subject selection, analytic techniques, and process and outcome measurement, but also address such weighty issues as ethical, humanistic and feasibility considerations related to real-world research.

www.quintiles.com/newhealthreport

3 3

Conclusion

Given risk’s fundamental place in healthcare—from patients’ well-being to biopharmaceutical companies’ financial security—the interconnected stakeholders know surprisingly little about how to measure and manage it. Overall, each group of stakeholders desires more control over the risks that they face and prefers to reduce their own risk by transferring it to others whenever possible. These perceptions may arise from a law of nature of sorts—protect yourself. But risk in healthcare involves us all. As such, the risks must be balanced so that each stakeholder accepts a fair share, and the members of the healthcare system must find ways to accurately measure and communicate risk and benefit to each other.

3 4

2012 | The New Health Report

much of the data analyzed in this report reveals the need for deeper knowledge of the inherent risks in healthcare and medicine. for example, some of the patient responses indicate a lack of understanding of how the drug development process actually works. likewise, the comparison of patients from the u.k. and the u.s. shows a need for better education about balancing risk and benefit. at the same time, biopharmaceutical executives report little confidence in many of the tools that they use to evaluate the risk/benefit balance of a drug in development.

in today’s world of data and informatics,

computation should improve risk assessment

and management, but access to robust sources

of data to feed the model is severely lacking.

instead, no one stands behind a confident

consensus regarding how to measure risk, how

to reduce it, how to manage it or how to weigh

the tradeoffs. without that confidence in the data

which underpins assessments, a more effective

system to enhance health around the world cannot

be built.

to address this challenge, the biopharmaceutical

industry must develop new approaches—and do

that as soon as possible. the results of this survey

indicate that the biopharmaceutical industry

can act now in several ways: collaborating

early with payers on new compounds under

development; striking pre-competitive alliances

among industry competitors to enhance the

innovative characteristics of new compounds; and

developing risk-sharing agreements to enhance

patient-population targeting.

if the biopharmaceutical industry fails to adapt to

the changing landscape of risk in healthcare, other

stakeholders—perhaps the paying organizations,

well-versed as they are in measuring and working

with risk—will move ahead on their own, and

the responses from both u.k. and u.s. payers

about their interests in earlier involvement in drug

development presages that possibility.

the ultimate goal revolves around reducing risk

for everyone. to enhance the health of patients—

while keeping the biopharmaceutical industry and

investors financially healthy and payers balancing

their inputs and outlays—healthcare must

accurately assess the value of and risks behind

a promising compound as soon as possible and

then track that balance across the entire drug

development cycle. Only then can the world make

the most of modern medical capabilities.

www.quintiles.com/newhealthreport

3 5

about the new health report

The New Health Report is based on surveys of biopharmaceutical executives, managed care executives in the u.s., national Health service executives in the u.k., patients living with chronic disease in both the u.s. and the u.k., and investors who focus on the healthcare sectors. each survey was conducted by richard day research of evanston, illinois, u.s.a., a market probe company, on behalf of Quintiles. richard day research was responsible for all survey design, data analysis and data reporting.

data for this survey were collected between January 8 and march 14, 2012. screened and included in the sample were 102 biopharmaceutical executives at the director level or above, 75 managed care executives in the united states at the director level or above, 72 national Health service executives (director or above) in the u.k., 509 u.s. and 500 u.k. adults ages 18+ diagnosed with a chronic health condition who are receiving treatment, and 100 investment professionals (vice president and above) employed in private equity firms, investment banks, or venture capital firms that focus on the healthcare/biopharma sector.

professionals were recruited via postal mail, telephone, fax and e-mail and completed the survey in a self-administered online questionnaire. patient interviews were conducted via landline and cellular telephone.

with pure probability samples of these sizes, one could say with 95 percent probability that the results have a sampling error of +/– 10 percentage points for biopharmaceutical executives and investors, +/– 11 percentage points for managed care executives, +/– 4 percentage points for u.s. and u.k. patients.

about quintiles

Quintiles is the only fully integrated biopharmaceutical services company offering clinical, commercial, consulting and capital solutions worldwide. Our network of more than 25,000 professionals in 60 countries has an eye on the future while delivering results today with an unwavering commitment to patients, safety and ethics. Quintiles helps biopharmaceutical companies develop and commercialize products to improve and lengthen patients’ lives while demonstrating value to stakeholders. visit www.quintiles.com for more information and www.quintiles.com/news for additional company news.

contact info

for media inquiries:

mari mansfield, Media Relations, Quintiles +1 919 998 2639 mari.mansfield@quintiles.com

for all other inquiries:

adam istas, Corporate Communications, Quintiles +1 708 948 7070 adam.istas@quintiles.com

clinical | commercial | consulting | capital copyright © 2012 Quintiles. 01.15.14-052012

clinical | commercial | consulting | capital

copyright © 2012 Quintiles. 01.15.14-052012