Payer Pressures, Market Access Weigh Upon Life Sciences Strategy: KPMG Survey

47 Percent of Biotech, Pharma, Medical Device Managers Find Payer Pressures, Utilization Limits Sway Commercialization Approach

Aug 04, 2015, 09:00 ET from KPMG LLP

NEW YORK, Aug. 4, 2015 /PRNewswire/ -- Drug makers and medical device companies are finding their biggest commercial challenges coming from payers, surpassing hurdles posed by regulators, declining access to healthcare providers, and the move toward specialty drugs, according to a survey by KPMG LLP, the U.S.-based audit, tax and advisory firm.

Forty-seven percent of respondents described "increasing payer pressure on drug pricing and utilization" as having the biggest effect on commercial operations.  Only 8 percent expect no significant changes in pricing and contracting for obtaining medications over the next five years.

"Pressure is coming from every angle against the pharmaceutical industry, requiring a significant, integrated response," said Alison Little, KPMG's Advisory Life Sciences Segment Leader in the United States. "Life sciences companies face increasingly high demands from payers to prove the value of their products in terms of improved patient outcomes and lower costs.  This requires not only clinical and analytical rigor, but increased focus on account management and strategy.  This is a significant part of the commercial model for the pharma, biotech and medical device sectors, which need to evolve to compete in the future."

Beyond payer pressures, commercial operations are affected by a restrictive regulatory environment (15 percent), the shift toward specialty medicines (12 percent), requirements for evidence-based medicine (9 percent), and 8 percent of respondents mentioning value-based care or decreasing access to healthcare providers.

Shifting allocation of resources
The biggest shift in the allocation of commercial resources among life sciences companies during the next three years will be centered on "pricing and market access," 33 percent of respondents said in the survey. Healthcare provider detailing and wraparound services, such as disease management and patient engagement programs, were the second and third largest shifts in resources projected by 17 percent of respondents.

Life sciences industry members see big changes in the pricing and contracting for medications within the next five years. Outcomes-based contracts (34 percent) and integrated product/service offerings (33 percent) are expected to take hold in the pharmaceutical business, while 19 percent see other elements being added to pricing and contracts.

"These are dramatic changes in bringing drugs to market and are far removed from the blockbuster model of marketing drugs with large direct-to-consumer advertising budgets and extensive physician detailing," Little said. "Newer brand name drugs are treating much more complex medical conditions and have more stringent handling and administration requirements than those a decade ago. Pharmaceutical and biotechnology companies need to consider 'beyond the pill' services to help with patient engagement and helping them adhere to treatment."

Executives and managers found that the biggest barriers to a successful commercial transformation include resource constraints (26 percent), existing company culture (23 percent), and a lack of alignment on needed commercial model changes (17 percent), according to the survey. Additional responses cited legacy technology, inappropriate metrics or a limited sense of urgency.

Little and KPMG Strategy Principals, Bill Shew and Peter Gilmore, wrote "Change in pharma? Not optional; 10 Integrated imperatives for pharmaceutical commercial transformation" to help life sciences companies with this transition after blockbuster-driven products to a new phase of value-driven care. They hosted a webcast on the topic on June 4, when survey results were gathered from 120 respondents, who identified themselves as being associated with a pharmaceutical, biotech or medical device company.

About KPMG's Healthcare & Life Sciences Practice
KPMG is a leader in assisting organizations across the Healthcare and Life Science industry to work together in new ways to transform the business of healthcare. With more than 1,700 U.S. partners and professionals supported by a global network of independent firms in 150 countries, we offer a market leading portfolio of tools and services focused on helping our clients adapt to regulatory change; design and implement new business models; and leverage technology, data and analytics to guide them to greater performance.

KPMG LLP, the audit, tax and advisory firm (, is the U.S. member firm of KPMG International Cooperative ("KPMG International"). KPMG International's member firms have 162,000 professionals, including more than 9,000 partners, in 155 countries.


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