Value to Outcomes 2.0
White Paper
Mar 09, 2018

As we enter a new era of value and outcomes-based healthcare, exercising “systems thinking” — accounting for political, economic, social and technological factors — will be critical to our collective success in improving population health.

As the former FDA chief, Dr. Andrew von Eschenbach, said of the biopharma industry, “We were trained to play golf. The game has switched to basketball.” Now more than ever, industry players must team up with other healthcare stakeholders if they want to improve system performance and optimize patient outcomes. Biopharma companies who do will be amply rewarded for their innovation and contribution to healthcare system value and outcomes.

Accelerating growth in healthcare spending growth drives demand for pricing transparency

After years of slow increases, growth in healthcare spending is accelerating. In December 2015, the CMS reported that U.S. healthcare spending had reached $3 trillion in 2014, a 5.3% rise on 2013. Forecasts suggest average spending growth of 5.8% per year between 2014 and 2024. This growth reflects the Affordable Care Act’s coverage expansions, faster economic growth, and population aging. The health share of U.S. gross domestic product is projected to rise from 17.4 percent in 2013 to 19.6 percent in 2024.

Hospitals are feeling pressure as state policymakers, insurers and healthcare technology companies such as Castlight Health set up databases and mechanisms to allow employers and patients to compare prices. Although responsible for a smaller proportion of overall healthcare costs than hospitalization and physician services, prescription drug spending is a focus of attention due to their relative pricing transparency. High-price, high-innovation specialty products will continue to garner special attention, such as the recent Congressional hearing on the pricing of Gilead’s Sovaldi. A study suggests that cancer therapies are not as cost-effective as they used to be, but the question remains: how do we fairly evaluate the remarkable improvement in overall survival and benefit-risk profile of these new breakthrough agents?

 

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