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Is Digitalization Causing or Enabling the Blurring of Industry Boundaries Across Health Sciences?

Is Apple a technology company or a retailer?    Is Facebook a media company if it doesn’t produce any content?    Is Uber a transportation company if it doesn’t own any vehicles?   What came first, the chicken or the egg?

As we ponder these questions, the Digital Age continues to evolve and so does the traditional boundaries of industries.   Long held beliefs are increasingly becoming outdated as organizations leverage digital technologies to disrupt traditional markets with superior solutions that transform a service or product in ways that could not have been previously possible.    Nowhere has that transformation been more apparent, or needed, than in Health Sciences.

In 2015, SAP launched one of its most successful industry solutions, Advanced Track & Trace for Pharmaceuticals (ATTP).   This product was developed in collaboration with 13 bio-pharmaceutical companies and wholesalers who were responding to the global serialization legislation that was enacted in markets around the world including Turkey, China, United States and South Korea, to name a few; who sought to prevent counterfeiting of drugs and protect the global pharmaceutical supply chain.   This legislation required that bio-pharmaceuticals attach a unique identifier to every saleable unit of drugs that was produced to ensure that regulatory agencies, as well as other members of the pharmaceutical value chain, could easily authenticate the product by scanning the serial number.

Although the intent was to ensure the safety and security of the drug supply chain, it became clear that the “digitalization” of the bio-pharmaceutical supply chain would have a variety of other benefits.   Intercompany messaging for financial processes like chargebacks and rebates could now be automated to ensure that a serial number was only processed once and, consequently, save hundreds of millions of Euros.    Organizations who are moving material across jurisdictional boundaries, commonly referred to as parallel trade, could be identified and monitored when they or their business partners attempt to return material that they never purchased.  It’s clear that digitalization can dramatically impact an industry process or strategy in intended and unintended ways.

Further, digitalization represents a unique opportunity to leverage technology to transform a process, drug, device or solution from an efficacy, cost and outcome perspective.   At no time in our history have we seen advances in medical technology combined with dramatic changes in the care continuum, now available, to transform the patient experience.

From the scientific perspective, new genomic products like Novaritis’ Kymriah™ leverage the recent advances in the human genome to develop an individualized therapy that reprograms a patient’s own T-cells with a chimeric antigen receptor (CAR) that provides the ability to bind and eliminate cancerous cells.    This remarkable solution uses the body’s own defense mechanisms; T-cells, to fight the cancer with minimal side effects and tremendous efficacy.

Conversely, innovations like Kymriah™ require radically different supply chain strategies to support the therapeutic process.   Kymriah™ patients have their blood extracted, treated with an antigen in a manufacturing process and returned to them within a three week period or risk losing the efficacy of the treatment.      This “make to order” manufacturing process is not just personalized, but is using the primary raw material, the patient’s own blood, to develop a therapy that is radically different from the days of the blockbuster, “make to stock” manufacturing process that the industry was founded upon.

Further, these new classes of genomic, personalized products have very high price points and are not sold in traditional buy and sell transactions.    Payers, private or public, are requiring greater guarantees of a positive health outcomes given the expense required for the new and innovative therapies.    Outcome based reimbursement scenarios are rapidly evolving and organizations are collaborating across the value chain to enable the strategy.   These agreements are multi-faceted across a variety of scenarios.

For example, an initial starting point for many products would have the manufacturers leverage an actuarial view of a patient population that would identify those who would be most pre-disposed to a positive outcome from the therapy.    Merck’s Keytruda® product requires a diagnostic test that measures the levels of a patient’s PD-L1 protein levels as well as any abnormalities with specific genes.   One aspect of an agreement would require that any patient must meet the qualifying PD-L1 protein and genetic criteria, as that will significantly increase the likehood of a positive outcome.

Also, other components of the outcome-based agreements could be structured to provide incentives, rather than all or nothing scenarios, for positive outcomes.   Typically, a payer would pay a baseline amount for the therapy and, for example, a manufacturer would provide a rebate; a lesser amount for positive health outcomes and a larger amount for lower health outcomes, back to the payer based on the results of the therapy.   This shared risk on the outcome provides the payer with a high degree of confidence that the therapy will provide an improved outcome that, ultimately, will have a positive business case relative to the long term cost of care.

Lastly, the nature of the data to determine the outcomes is rapidly evolving in its accuracy, specificity and adherence to patient privacy.    Real world evidence (RWE)– patient data captured on an electronic medical record system, historically, was not readily available to the health sciences value chain.   This is changing rapidly as the ontologies and technology to accurately decipher the structured and unstructured data is rapidly improving as is the ability to ensure patient privacy.    Consequently, the level of detail now available to determine the health outcomes at an individual patient level, at scale, is not only enabling outcome-based agreements, but is providing a much more detailed view of a patient from the manufacturer’s perspective.   RWE will be instrumental in its ability to enable a more real-time view for a researcher but also accelerate the ability to disrupt traditional processes in areas such as clinical trials, outcome-based reimbursements and post market surveillance.

As providers, physicians, payers and producers all try to provide the best healthcare experience at the lowest cost, digitalization will remain a critical enabler.    Traditional boundaries will continue to be redefined as new capabilities, whether technological or therapeutic, will require organizations, governments, physicians and patients to take new approaches and strategies to old problems.   This should accelerate the pace of change improving the health outcomes but should also help streamline the processes to support the health systems that will simultaneously reduce the cost of care.  For more information about how you can unlock new business value with digital technology, click here.

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