The US pharmaceutical sector is on the cusp of significant change that will transform traditional business models and the ecosystems that companies, customers and regulators operate in. Faced with heightened attention from both the public and government, pricing is under pressure. The Trump administration recently proposed a plan to implement an International Pricing Index (IPI) for Medicare Part B products. Senator Bernie Sanders is advocating an International Reference Pricing (IRP) approach similar to Canada’s. Increasing calls for transparency on drugs pricing and healthcare costs are likely to precipitate a shift from a cost-per-service-used model to a value-driven, outcome-based model.
Drug manufacturers are therefore being compelled to adopt a sound and rigorous approach to fair market value that will help drive growth, improve operational efficiency and manage compliance risk. With Amazon gaining healthcare distributor licenses in at least a dozen states, new competitors are entering the already complex ecosystem of drug makers, healthcare providers, insurers and distributors. There has been a wave of integrations between pharmacy benefit managers (PBMs) and major insurers.
Healthcare providers are joining forces in not-for-profit initiatives with the aim of making essential generic medicines more widely available and more affordable. Meanwhile, some campaigners are calling for more drastic action, such as “Medicare for all,” which would eliminate the role of the PBM and result in a single-payer system. Digital transformation is accelerating “beyond the pill” strategies, with pharmaceutical companies providing technology-enabled services such as remote health monitoring sensors, telehealth services and chronic disease management to engage directly with patients and develop new holistic, connected solutions.
All of these trends are sending shock waves through the pharmaceutical industry. As it evolves, so will the nature of the legal, compliance and fraud risks that companies face. This FT Roundtable will bring together legal executives, chief compliance officers and other senior executives to discuss how to adjust to these changes, manage the risks and achieve profitable growth.