Non-adherence: pharma’s final financial frontier

• Non-adherence costs the global pharmaceutical industry $637 billion a year, according to a report by Capgemini and HealthPrize Technologies.

• As previous routes to profit, such as price hikes and influencing clinicians, start to close, tackling non-adherence is fast becoming pharma’s final financial frontier.

• Digital health could hold the key to helping patients build healthy habits and behaviours, boosting revenue while improving outcomes.

No other industry would tolerate avoidable annual losses of $637 billion, but that’s exactly what pharma is doing by not investing in adherence. Now is the time to start recovering that revenue, according to a new report published by Credit Suisse. pharmaphorum spoke to Tom Kottler of HealthPrize Technologies about this issue and what actions to take.

The Credit Suisse report, ‘What if patients actually took their drugs: Assessing an underappreciated opportunity’, published in March 2018, asks a simple question and returns some shocking answers.

Up to 30% of prescriptions are never filled and as many as 50% of people with long-term conditions stop taking their medications within the first year.

While the industry knows non-adherence is a big issue, it may not realise that the costs run into the hundreds of billions. The industry is largely unaware of the huge financial cost, the report argues, highlighting a ‘thorough analysis’ by Capgemini and digital health company HealthPrize Technologies. It found the industry loses $637 billion every year to medication non-adherence.

Pharma’s final financial frontier

Tom Kottler, CEO and co-founder of HealthPrize, says he has been surprised by the industry’s apparent ignorance of the figures.

When his company first started looking into the issue, the common assumption was that non-adherence cost the industry $30 billion a year. HealthPrize’s first analysis with Capgemini, in 2012, found the figure to be closer to $600 billion and this latest investigation shows that the problem has escalated.

“There is no other industry in the world that, if it had a $637 billion annual last-mile problem, would not be throwing everything it had at recovering as much of that lost revenue as possible. This is a major business challenge,” he states, arguing that it needs to be tackled at a corporate, rather than brand, level.

Until now, adherence has not been seen as a priority largely because there has been no need with the blockbuster model. But times are changing, and with them the routes to profit.

“When pharma lived and died on primary care blockbuster drugs, you could create new patients with churn. It’s easy to continue to make money that way, but when working in a specialised world, every fill matters,” Kottler expands.

You could raise prices once, maybe twice, a year, and you never missed your numbers when you had all those levers to pull. In the new world, pharma finds itself with pressure on price increases.

The other traditional lever, of influencing clinicians to write more prescriptions, is also increasingly immobile.

“In the US something like 50% of all doctors are now employees of a larger institution that sets the rules; many are not even allowed to see a pharma rep,” Kottler explains, adding that with the option of marketing directly to the doctor removed, other ways to influence decisions are needed.

Changing the business model

Tackling non-adherence, then, will improve outcomes while offering a new revenue stream.

“This is a new world and new thinking is required if pharma is to continue. A research note from Credit Suisse in 2017 calculated that 100% of EPS [earnings per share] increase in the top pharma companies in 2016 were the result of price increases. That’s not a sustainable business model.

“Pharmaceutical company management does not talk about adherence as an earnings-per-share or strategic issue. But in the world of accountable and value-based care, once you have created a drug, the main way to get a better outcome is by getting patients to take it.”

The Credit Suisse report assesses the financial implications of modestly improved patient adherence on pharma companies and examines drugs for chronic conditions specifically, categorising them as ‘life-threatening’, ‘generally symptomatic’ and ‘generally asymptomatic’. Acknowledging that it has taken a necessarily broad view, the report suggests that increased adherence could increase global revenues between 2020 and 2026 by 2-10% (life-threatening); 4-20% (symptomatic) and 6-30% (asymptomatic).

It drills down further into the positive impact improved adherence could have on seven big pharma companies: AbbVie; Amgen; Bristol-Myers Squibb; Johnson& Johnson; Eli Lilly; Merck & Co, and Pfizer, suggesting higher adherence discounted cash flow (DCF) value improvements of between 6.5% and 14.6% if improving adherence rates extend to 2026. So, this issue is not an insignificant one – for companies, patients and healthcare systems.

Solving the problem

The literature is full of studies about what makes people stop taking their medications, and the consensus is it’s complicated and multifaceted.

“The fact that it’s complicated doesn’t mean we shouldn’t try,” Kottler states.

“It’s no more complicated than developing a chemical that’s going to treat a disease within the world’s most complicated system, the human body.”

Reasons for medication non-adherence are often grouped into behavioural, clinical and financial factors. But HealthPrize, which provides branded patient support digital platforms for pharma, believes the problem can be boiled down to one thing: human nature.

“For a long time, we focused on adherence as a problem of cost and forgetfulness, but it’s really neither. You can reduce the cost to zero, as has been done in many places in Europe, but they still have the same rates of non-adherence as the US.

You can’t remind someone to take a medication they have chosen not to purchase. You choose not to take your medication for psychological reasons. It comes down to the negative psychology of taking a medication. It reminds you you’re getting older, of your disease and of your own mortality.

There is also an incorrect assumption that if someone is told to do something for the good of their health they will do it, but, Kottler points out, how does that account for the billions of people who smoke?

Mobile support

“The answer is engaging people frequently and ubiquitously at the moment they are making decisions,” he adds.

“If you really want to affect behaviour, you have to be there, either physically or in some other fashion, over time. You need to be there to help them create the habits that will eventually become behaviours.”

While humans aren’t very good at being told what to do by each other, it appears we are happy to be guided by our mobile phones.

Kottler says what makes digital patient engagement so alluring is its propensity to affect human behaviour.

“Our acceptance of push notifications and texts that we will take notice of can help prompt people to do what they need to do consistently, until they adopt that habit, and it becomes a behaviour,” he explains.

Digital health has the capacity to be that ubiquitous system that provides you with the nudges, information, education, community and support that you need, when you need it, to make the right decision and to stay on track. That’s the beauty of it.

That’s not to say it will work for everyone, of course, but he agrees with the Credit Suisse report that urges pharma to take the bull by the horns when it comes to non-adherence.

High-value returns

“This is an industry that is losing $637 billion a year on products it’s already brought to market. If they can recoup just a small percentage of that money it will be a massive win for pharmaceutical company shareholders and the patients they are in business to serve,” he impresses.

On top of that, it comes without clinical, technical or regulatory risk: every dollar pharma gets from tackling non-adherence to medication is the highest-margin dollar they can generate.

About the interviewee

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