New medicines and healthcare are big business. And treating sick people has been the status quo for at least the entirety of my own life. This is the business model for nearly all healthcare & pharma. And that is not without good reason - it is straightforward and built upon urgent need and immediate effect. And consequently there is a lot of money to be made.
Especially in new drugs. So much so that we’re happy to commit 100’s of millions of dollars to deliver new ones, knowing that there is a 90% chance the whole project will fail. Hopefully it will fail before you’ve gone in for 9 figures, but as Brian Berridge discusses this month, “failing early” isn’t the most optimistic sounding strategy and it not-so-subtly hints at room for improvement. And Szczepan talks about how institutionalizing learning – especially in the age of data – will successfully land more medicines and improve the process end-to-end.
But can we think differently about the entire problem itself? Is there a completely alternative strategy? What about keeping people healthier, and for longer? Despite the utter nonsense of many internet conspiracy theories claiming that big pharma is secretly making us sick so they can get paid to fix us, it is true that the pharma industry has been offered little incentive to invest in prevention programs. And the sad part is that many healthcare providers have also had very little direct incentive either.
Let’s consider why with a couple anecdotes:
Adequate nutrition has multiple benefits for a population. Among them, we all know that it plays a role in long term Cardio outcomes. Yet if that is your specific objective, you might fear the financial return from benefits like reduced event occurrence and hospitalizations might be decades away and uncertain at best. On the other hand, annual budgets are very real. Now factor in that in the U.S. there is a very non-negligible chance that this theoretical person will have changed health insurances by the time “decades later” arrives. So, when the “return” on your investment (into, say, nutritional programs) is finally realized, the cost-savings might even flow into the pockets of your rival competitor! Plus, while better nutrition and exercise theoretically works 100% of the time for a population, simply telling someone to eat better and exercise more rarely does historically.
What about mental health, which could see much faster returns? Better health and mental health leads to better workplace productivity and reduced absenteeism. A clear return on investment! But will a typical health care payer or provider care how much you get done in the office or how often you show up? Let’s flip the question around first – who WILL care? Large employers, and unemployment and workplace insurances. But how does a corporate conglomerate or an insurance company proactively improve its customer’s health?
To solve the problem of the missing incentive for investing in proactive and preventative health, you can create a financial incentive for providers to reclaim the ROI (whether short term or long term) OR you can create an effective way for payers to invest in efficient scalable solutions directly geared towards lowering their immediate costs.
It is worth noting that this style of thinking is behind the Capitation models in healthcare (like Kaiser Permanente) where the payer and provider are the same entity – and have regained popularity themselves in recent history due to advances in health data and corresponding cost management. And this is done in a manner where any decrease in health expenditures from, say, preventative programs would have a direct return for the payer-provider.
However, for the rest of the world where the payers and providers are separate, digital health solutions offer a fast and lightweight way to invest in and offer budget-reducing healthcare without needing to buy an entire hospital network.
And in the age of digital, if done properly, an app can quantify and demonstrate the impact and value it is or isn’t having. Or even start driving a data flywheel, improving the product with increasing data. Which in turn drives adoption.
And lo and behold, we actually do see payers going increasingly into the providers space – specifically for prevention to avoid expensive hospital visits or absenteeism.
The rise of Consumer Health
And that brings us to one very important stakeholder we have forgotten to mention – and one who has incentives above and beyond decreasing costs and improving processes – patients themselves and the incentive to improve their own health!
We are observing what can only be described as a movement where individuals are taking more ownership and interest in their own health, thinking longer term, and willing to invest in order to increase their own healthspan and longevity.
Consumers are gaining agency through data & digital health. They are increasingly empowered to better manage their own health and increasingly connected to other patients with similar challenges, accelerating exchange around what works and new possibilities. As well as more open and literate around how to leverage apps and devices from experiences in other segments.
The promise of digital health has been discussed for decades – I myself have been taking part in panel discussions for at least that long – but much of the foundation and missing ingredients are now falling into place for personalized, preventative care at a scalable and affordable price point.
The missing ingredients.
Let’s lay them out:
Ability to scale: We have better data standards, and AI tools for harmonizing data
As well as federated learning and other privacy preserving ways to share and leverage that data.
Ability to personalize: Technology adoption of both AI on our device and the penetration of digital wearables enables closed-loop feedback – in a variety of modalities – to optimize digital tools and recommendations on an individual level.
Gamification: We can borrow from other more consumer oriented segments that have taken behavior modification down to an engineered science. Note that I think this would be a great future topic in itself to deep dive into!
Consumer expectations: If we can track our performance and have personalized experience for everything from learning Spanish, to running a 10k, to finding a life partner or simply getting over jetlag (which might already be counted in the health bucket!) then shouldn’t we demand the same level of rigor and results for our own physical and mental health?!
Splitting the bill
And sometimes the consumer will be willing to pay out of pocket. And sometimes they might be resentful to pay in addition the premiums they already incur. Or uncertain they want to invest the time learning or needing to use a new app.
Now we’ve come full circle as this is exactly the place where incentive such as lower premiums can be given for a patient to use a wellness, screening, or mental health app. The payer is incentivized through more cost efficient care. And that care is a result of better health outcomes for the patient.
Finally arriving solidly in the elusive paradigm where “What’s good for the patient is good for the payer!”
What does this have to do with pharma?
The same market forces that are driving demand for proactive consumer health solutions are demanding new types of solutions from pharma as well. And GLP-1 is a great example. Not only is it an asset strategically in the preventative medicine space, but I have also been part of many discussions around physician’s desire to use it as a temporary bridge towards long term sustainable lifestyle changes. The therapy itself enabling transformed diet and exercise regimes which were not possible in the prior health state, reducing the need for and dependence on the therapy itself, reducing everything from the drug cost itself, to any potential adverse effect risks, to long term health burden. And to bring it full circle, these lifestyle changes are not easy to initiate nor maintain, and digital “around the pill” solutions for a healthier lifestyle can help realize long term value for the entire intervention – a benefit for all stakeholders.
Bringing it home
With the ability to track success and see progress, it keeps the patient adhering, it keeps the physicians promoting, it keeps the payers paying, and it creates the incentive for all of us to invest in the coming wave of proactive innovation for our health.
And finally – the biggest bang for your buck
Pharma’s clinical pipeline, public screening initiatives, even our combined personal exercise routines: these are all aimed at the same goal: improving our collective health.
And all of these and more are critical pieces of the larger puzzle.
But where does a dollar spent on innovation - or improving how we innovate - have the biggest impact for patients? What about for investors? Is there a dependence on larger enabling structures yet to come, such as a more distributed healthcare model as the glue between innovative pieces?
These are questions I would love to discuss!
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