A more concerted effort by pharmaceutical companies to drive medication adherence could help improve outcomes, lower overall healthcare spending and also help pharma's sales growth and margin profile.
That's the finding of a recent Credit Suisse report, which posits that pharma would do well to look at strategies in use in other industries, including retail.
Tom Kottler, CEO of digital patient engagement outfit HealthPrize, said the issue is primarily one of culture, and that pharmaceutical companies should make adherence a priority at the corporate level.
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"Most of what's done today that's called adherence is typically done at a brand, tactical level," said Kottler. "You have limited budgets, a limited view of how to engage patients. What's interesting to us is that there's no chief adherence officer at any pharmaceutical company. If this were any other business and they had a $637 billion last-mile problem, they'd be throwing a lot more money at this trying to recoup revenue."
As many as 30 percent of prescriptions are never filled, according to the Credit Suisse report. For patients with chronic diseases, as many as 50 percent or more of them stop taking their medications within the first year, with the first 1-3 months being the most vulnerable time for a patient to discontinue therapy. And there are a number of reasons why.
The most common is behavioral. According to Express Scripts, 69 percent of nonadherence is a result of behavioral issues like simple forgetfulness and procrastination, leading to patients missing one or more doses before they remember to fill the prescription and/or take the medication. Taking medications as prescribed may also involve lifestyle changes including the need for certain diets or levels of exercise, which can make adherence difficult.
There are financial reasons, of course -- medications cost money, and patients don't always have it -- and clinical reasons, including pharmacotherapy regimens that may be complex and confusing. Whatever the combination of reasons, it has a direct effect on pharma's revenue. The more medicines patients use consistently, the bigger a profit a drugmaker will turn.
"For respiratory conditions, for example, adherence is very low," said Kottler. "The average refill rate is a couple of fills per patient per script. If you get a patient from refilling twice to refilling four times, you're generating twice the amount of money per patient. It shows the lifts in revenue as well as the lifts in earnings per share. If you look at the seven companies the (Credit Suisse) report analyzed, adherence generated as high as 30 percent earning per share on an annual basis. So the numbers are quite significant."
That 30 percent earning per share was based on Credit Suisse projections of what would happen if various pharmaceutical companies addressed adherence head-on. Eli Lilly and Company boasted the 30 percent, but other companies, such as AbbVie, also showed the potential for significant revenue growth; the latter showed potential to increase earning per share by 17.2 percent. Merck and Company showed the lowest potential at 3.2 percent.
Credit Suisse advanced a likely reason for the discrepancy: Adherence programs likely have more of an impact on drugs for asymptomatic conditions, so companies that are highly leveraged to those sorts of conditions -- such as Eli Lilly with diabetes -- tend to show more potential upside.
Either way, it's the behavioral component that pharma should address, more so than the cost component, said Kottler. Reducing the cost of medications all the way to zero would increase adherence, he said, but only by a nominal amount. One need look no further than most European countries, in which there are no copays but many of the same issues surrounding adherence.
"It's principally a problem of human psychology and lack of education," said Kottler. "A lot of people don't know why they should stay on their drugs and what the benefit is. You can't move the bar very far without addressing the underlying psychology."
Educating patients is an important component of any adherence-minded strategy, but Kottler said that because healthcare can sometimes take itself seriously, the industry doesn't think it can engage people the same way retail. Overcoming that mindset, and borrowing outreach strategies from the retail sector, is a good place to start.
The sooner the better. According to Credit Suisse, pretty much all of the earnings growth that was seen by pharmaceutical companies in 2016 was due to drug price increases. With the scrutiny on drug pricing continuing to ramp up, that level of price growth isn't sustainable. And developing new drugs remains challenging and expensive.
"Pharma's being forced into a business model they're not choosing for themselves, which is value-based care," said Kottler. "I think people are going to be uncomfortable paying for expensive products without proof that, in the real world, they work. Whether pharma wants to go there or not, they're going to have to go there. Part of that will be intervening with patients so they can stay on therapy. What you can change is what you do around the drug so you can get them to stay on therapy and get better outcomes.
"One of the interesting things for pharma is that even patients with serious illnesses don't take their medication," he said. "Cancer patients don't take their medications. It's not just a problem in primary care. It's a problem across every single indication, and as soon as we realize this is a problem of human psychology, the better off we'll be."
While asserting support for the pharmaceutical industry and acknowledging their role in delivering products that improve health, Kottler said pharma is an insular business -- one that's facing structural challenges that requires them to think differently, something they've historically not been great at. The industry is capable of change, he said, but it will likely be slow.