The pharmaceutical industry forfeits more than half-a-trillion dollars to medication nonadherence every year, representing 37 percent of pharma’s total global potential annual revenue. Can you name any other industry with a revenue-loss problem of this size not being actively addressed by the C-suite?
Pharma’s primary response to nonadherence to date—rates of adherence are under 50 percent for most chronic diseases—has been to implement pilot programs at the individual product level. Such programs range from simple text reminders to pharmacist-led interventions to more robust and multidimensional digital programs.
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Copay cards are, of course, the most traditional and widespread efforts to address nonadherence, but these programs are of limited utility. Cost is only one barrier to adherence. Further, there is good evidence that cost reduction in its extreme—giving away medication for free—makes a disappointingly small dent in the problem.
This cautious, brand-by-brand pilot approach offers only short-term improvements limited in reach and scope. And when brand managers, the current owners of adherence programs, leave for new positions or promotions, these programs are often dissolved prematurely before having the chance to reach their true potential.
As a pharma leader, you have four options to increase revenue. You can raise prices, develop new drugs or attempt to gain new indications for existing drugs, get doctors to write more scripts, or increase utilization by improving adherence.
Raising prices, while the easiest path to improved bottom lines, also carries the greatest potential for backlash, as we have recently seen for drug companies both big and small. New drug development programs require time and R&D investments—the average new drug costs nearly $2.6 billion to get to market. And more than half of all U.S. physicians place restrictions on visits from pharmaceutical sales representatives.
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Pharmaceutical companies know that they have a business responsibility to their shareholders and employees to stabilize or increase revenue, and also an ethical responsibility to patients and the healthcare system as a whole to develop effective drugs and deliver better health outcomes. Adherence programs, when done right and with C-suite sponsorship and scale, have the capacity to deliver on all of these key pillars of performance: more and higher margin revenue for pharma, better patient outcomes as a result of more effective drug therapy, and lower costs to the healthcare system—the pharmaceutical triple aim.
The positive public relations that could result from implementing adherence programs (which is not the case for other forms of revenue-enhancement, such as price increases) could doubtless be beneficial. Adherent patients cost the healthcare system less money overall, even when factoring in the cost of extra utilization. This is the good-news story waiting for pharma to claim.
The pharmaceutical industry employs chief executive officers, chief financial officers, chief revenue officers and chief talent officers. Each of these senior leaders holds responsibility for critical portions of the company’s business. But pharma has yet to employ a chief adherence officer, someone singularly tasked with going after pharma’s half-a-trillion-dollar revenue opportunity.
Forward-thinking pharmaceutical companies should consider creating this senior role, with appropriate budget and P&L responsibilities, with the express purpose of recapturing this nascent revenue source. Strategic, corporate-wide, patient engagement initiatives to improve adherence will deliver scalable revenue growth and improve patient outcomes across brands and portfolios, with the added bonus of a positive public relations narrative.
Nonadherence has long been known to cause negative clinical outcomes and increases in health utilization and expenditure. We think it’s time for adherence to become a positive resource for company growth as well, spearheaded by a chief adherence officer with the directive to dramatically move the utilization needle toward greater adherence.
Photo: Bigstock
Tom Kottler is co-founder and Chief Executive Officer of HealthPrize Technologies, which helps the world’s leading life science companies enhance revenue and improve clinical outcomes through its proprietary gamification approach and patented digital health technology. Kottler has led multiple high-growth organizations during his career, including Advanced BioHealing, which was acquired by Shire for $750 million, and MedAptus, an innovative healthcare IT company based in Boston, Mass.
Katrina Firlik, MD, is co-founder and Chief Medical Officer of HealthPrize Technologies. Prior to founding HealthPrize, Firlik was a neurosurgeon in private practice in Greenwich, Connecticut, and on the clinical faculty at Yale University School of Medicine. She is also the author of Another Day in the Frontal Lobe, published by Random House.
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