Today, the patents on blockbuster drugs are expiring, and as customers reach for generic drugs, pharma companies look for innovation funding. | | |
| |  | Carolyn
Buck Luce |
| | Global pharmaceutical sector
leader, Ernst & Young |
As people around the world live longer, new questions about treatment, prevention and who will pay for rising health care costs abound. Carolyn Buck Luce, our global pharmaceutical leader explains.
Focus on prevention
The combination of longer lives, increasing susceptibility to diseases and increased standards of living leads to higher health care costs.
One way to drive down those costs is for patients and the health care industry to shift their focus from treatment to prevention.
"Super consumers" of health care
In the US, the Medicare Modernization Act of 2003 increased the reimbursements the Government pays to pharmaceutical companies from 30% to 40%.
This growing burden means that soon the US will start having conversations similar to those already taking place in Europe, where most countries have a national health care system. There, the debate is about how much the government will pay for "health," and how to define the health outcomes that are worth paying for.
Beyond the difficult questions at the end of life, the cost of health care has driven both families and health systems to become "super consumers" and to demand more information about the benefits of competing drugs.
Who pays for innovation?
In the past, pharmaceutical companies paid for innovation because they knew the cost of drugs they produced would pay for themselves.
Today, the patents on blockbuster drugs are expiring, and as customers reach for generic drugs, pharma companies look for innovation funding.
They ask themselves:
- Will the payer reimburse us?
- Is this drug sufficiently better than others that are already in the market?
- Is it worthwhile to develop a drug that enhances the quality of someone's life — especially if the patient may not live much longer?
Pharma 3.0
All of these changes the pharmaceutical industry faces, from a shift to preventative medicine to questions about funding innovation, signal a new era we call Pharma 3.0.
Learn more about how your company can respond to this new dynamic in our report Progressions 2011: Pharma 3.0.
