Payer Centricity

Maximising the value story through payer-centricity

Patient-centricity is a key focus for drug and device development. While they may not be the customers, the patients are the final end-users of the drug development, promotion and distribution processes. And if the patients don’t adhere to their treatment, or don’t persist in taking the drug or using the device, this can have a substantial impact on sales, market share, and real-world patient outcomes. While the importance of patient centricity can’t be disputed, are we neglecting the payers – the people who stump up the cash to pay for the treatments?

In 2014, Ernst and Young published an analysis of the alignment between payers and biopharma. This was based on stakeholder interviews and a survey of US payers, European payers and pharma companies, including private and public health insurers. This concluded that the two groups are not fully aligned, because they have differing views on what makes a drug worthwhile.

Because they often are constrained by capped budgets, payers typically focus on keeping immediate costs down, rather than looking at long-term value for money alongside improvements in patient outcomes. This means that they are not necessarily interested in whether or not patients take the medicines they have been prescribed, interesting pharmacokinetics, or in some of the value-added services designed by pharma to support patient compliance. That is, unless pharma companies can create and provide evidence for messages that resonate with payers, for example how the alternative pharmacokinetics can link to better compliance, ultimately leading to reduced healthcare resource use and costs.

Another point of non-alignment is the data delivered by pharma. Whereas some pharma companies still are reliant on regulatory trial data, which in some cases may just require placebo-controlled studies, payers are generally more interested in how medicines perform against the standard of care, especially when the comparator is a much cheaper alternative than the drug being trialled.

These findings suggest that development and commercialisation strategies, although restricted somewhat by regulatory requirements, may not be truly meeting payers’ needs. And being payer-centred in many ways equates to being patient-centred. So what do payers need? They need to know that pharma companies are developing the right solutions for the right patients, with the right value story behind them.

The right solution

There are two ways to succeed in market access: drive the market, or drive the market share. The product needs to be able to demonstrate sufficient innovation that tackles a key unmet need. There are few therapies that really show radical innovation. Most new products provide incremental innovation in areas such as better tolerability, better efficacy (including in certain patient subgroups), or safety. Payers tend not to pay more for blue pills over green ones, even if patients are more likely to take the latter. However, if some of the differential attributes can be connected to evidence that resonates with payers, namely costs and hard endpoints such as mortality, and if these come from studies that are designed to be valid and meet the needs and expectations of key stakeholders, then there is good chance of capitalising on incremental innovation. This can then be used to support market share in a ‘me too’ landscape.

There is therefore value in matching potential product benefits to the unmet need early on in development. Tailoring investment and development strategy around meeting unmet needs is a key investment pillar for all pharma companies. Treatments developed for small, niche populations, for example targeted biologic therapeutics, are in some cases able to achieve premium pricing, especially where the cost is balanced with a biomarker-based companion diagnostic that will help to select those patients who are most likely to benefit from the treatment. This will increase the payer’s confidence in reimbursing the drug at that price, as well as ensuring that the right patients receive the therapy.

The right value story

Payers need to know that the drugs they are paying for will be safe and effective in patients, and will provide value for money in day-to-day use. To provide this kind of information, companies need to create a clear and informative value story that provides the context of the drug within the overall treatment landscape, and underlines the therapeutic’s value with clear and compelling clinical, humanistic and economic data that resonate with payers.

It is worth highlighting that all payer value stories require a realistic product profile (it does what it says on the tin). Occasionally internal stakeholders struggle to differentiate between what can be realistically expected from a product (the scientific profile); what they hope a product will deliver (aspirational profile); and what is minimally needed for commercial success (minimal profile). At all times, understanding payer needs is essential, no matter how exciting the data. It’s important that payer value propositions are supported by the evidence required by payers, obtained using instruments and study designs that are valid and using comparators and in populations deemed acceptable. For example, patient-reported outcome measures (PRO) are required to varying degrees by many types of payers. This is especially true in areas such as oncology where a greater emphasis is being placed on using PRO endpoints as secondary endpoints to support cost-utility analysis. Therefore, carefully choosing the right PRO for the right disease area and state is a key step in getting the story straight, otherwise the company risks failure.

Find out how Valid Insight can use its expertise to help you further identify and understand unmet need and product opportunity in the context of the current and future payer environment, and help develop and optimise your payer-focused product value story. Contact us at

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Valid Insight is an award-winning pharmaceutical global market access consultancy. With a team that includes some of the world’s leading market access and pricing experts, clients across the globe turn to us for innovative pricing, market access and value communication strategies through the full product development cycle. Proud winners of the Queen’s Award for Enterprise: International Trade, we aim to offer world-class solutions that continue to drive growth for our global clients.

  • Ed Senior says:

    Thanks, very useful. I’m part of a new market access group set up by the Pharmaceutical Marketing Society (UK), further insight into pharma perceptions of payers would be most useful.

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