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Pharma Leaders are challenged to show demonstrable outcomes for investments in Digital Health

Digital Health Investments

Insight by: Debbie Lin

The big challenge:  Leaders in Pharma and Biotech are being challenged to tie digital health partnerships and investments to measurable outcomes and key metrics that can demonstrate success to the business and forecast a return on investment.  Demonstrating outcomes that drive the business value chain in a tractable time frame is HARD.   

Ten years ago most pharmaceutical companies were still grappling with the definition of digital health and the role it would likely play in their industry. I believe that today, no one doubts the potential impact of digital health in the pharmaceutical value chain; however, how large an impact and how best to position digital health within Pharma ,still remains a question.  To my knowledge, few to no organizations have demonstrated a major return on investment to date.  Why? There have been a few early failures (for example, starting in 2012, Proteus and Otsuka Pharmaceuticals inked several large partnership deals to commercialize Otsuka’s products but ultimately the pill plus technology struggled to prove its utility in the market).  Turning pilots into scalable programs takes time, a well thought out strategy, good planning, and excellent execution. In the past, few efforts succeeded not only because they did not have the combination of features but also because no one knows what good looks like.

Today the role digital health plays in Pharma is two fold: 1) In R&D, to help discover new drugs by shortening discovery and development using informatics based approaches and 2) As a pill plus technology on the commercialization side to increase patient education, engagement, adherence, retention in clinical trials and so on.

A few major reasons why it is so hard is that the return on investment and key metrics are difficult to demonstrate and to measure in a tractable amount of time before the leaders lose interest, change posts or an organization is restructured. For example, a drug takes more than twenty years to demonstrate success in clinical trials and launch. Consequently, validating and scaling a process where a technology demonstrates that it can find better drug targets or help scientists make their compounds more druggable, can take many years.

On the commercialization end, a pill plus technology would need to demonstrate that it alone creates sufficient outcomes. For example, a good outcome could be significant improvement in patient adherence or patient engagement. This requires a thoughtfully designed pilot to “test” the hypothesis that the technology adequately drives outcomes on its own. In healthcare, where the very nature of defining “good” outcomes is fluid and changing, this makes putting metrics around a target health outcome difficult when the health outcome definition is evolving. Case in point, the impact of improved medication adherence can be tremendous to digital health companies, pharmacies, payer network agreements and health systems which are incentivized by pay for performance based on accreditation standards. The definition of medication adherence can fluctuate depending on the user. It is often used interchangeably with medication compliance and medication persistence. They are different. Furthermore pharmacy claims data uses different methods to calculate medication adherence (medication possession ratio and the proportion of days covered). Thus, if a pilot is set up across institutions where adherence metrics are different across institutions, this can cloud the outcome. Metrics can only be used to assess performance when there is truly an apples to apples comparison.

Another complexity is when there is controversy around the metric itself due to difficulties in standardization. One simple example, objective measures of conditions such as anxiety or pain are highly subjective depending on the individual. If a Pharma company is developing a pill plus technology for such conditions, just the measure itself is so highly variable that the outcome would be too weak to show any strong outcome. In other words, how can one plan a digital strategy to show strong health outcomes when the health care outcomes themselves are constantly evolving or where standards haven’t been developed? Metrics can be tricky and the devil is in the details when it comes to a demonstrable ROI.   

Finally, the next challenge is execution to scale the pill plus technology within the structure of an organization that is not traditionally configured to carry out such a task. Luck be with the leader who has to defend the final ROI against the original forecast.

All hope is not lost, the good news is that organizations have learned from the past and are better at understanding what to measure, how to measure it and what success might look like. They are becoming much more strategic about how to develop their digital health strategy.

Some Key Success Factors For Organizations

  • Alignment of business strategy with partnership goals and digital health company goals
  • Full commitment from leadership on a company innovation strategy
  • A well thought out organizational set up for executing on the innovation strategy
  • The right mix of talent that can orchestrate a strategy
  • Short measurable timelines or “sprints” tied to very concrete and feasible KPIs to achieve and demonstrate impressionable well defined outcomes
  • “Reasonable” forecasts and expectations
  • Outcomes driven executional team set up and operations
  • Budgets and allocations of budget that incentivize the strategic direction
  • Flexibility in taking on legal risk in unfamiliar territory
  • A means to retain institutional learning on past initiatives and those that are ongoing