What is value-based care and how does it affect the pharmaceutical industry?

November 8, 2019

World’s health systems present similar challenges. Among other issues, they must deal with population aging and the need to adopt new technologies, with the consequent increase in costs involved. Much of the rising bill in health expenditure is explained by medical prescriptions. As an example, hospital expenditure in medications in Spain grew by 9.1% between 2017 and 2018, which is the largest increase of this item in the last 5 years. On the other side, general health spending barely rose 3.1%.

It is clear that the situation represents a challenge for governments and other key stakeholders in health. It is necessary to increase the efficiency of expenditure in medicines, providing the best possible health care, and at the same time avoiding the increasing weight of the “prescriptions” item in public accounts and patient pockets. In this context, we see the arise of the idea of ​​“value-based care”, a model in which the providers of health system are paid according to results and real improvements of patients’ health.

This new paradigm seems to test the adaptability of pharmaceutical industry for two fundamental reasons. First, the adoption of value-based care means that there are more and more evaluation criteria when it comes to defining whether a new drug has been successful or not. On the other hand, value-based care involves the use of real-world data, which is defined as “all information about health care that is collected outside the controlled restrictions of conventional randomized clinical trials in order to evaluate what is really happening in regular clinical practice”1. That is, the objective is to make conclusions about the effectiveness and safety of medications in the general population, not only through clinical trials, but through information collected from daily clinical practice.

A consequence of value-based care is the need to evaluate drugs throughout their use. This way, the traditional pharmaceutical playing field expands beyond activities strictly related to intervention and therapy. Upstream, the logic of seeking improvements in the well-being of population leads to opportunities in the prevention and identification of uncontrolled patients. Downstream, the following up and monitoring of the treatment, once the medications are already on the market, represents another extension to which they must attend.

In other words, the need to innovate affects the entire pharmaceutical value chain, which opens the door to new partnerships and strategic collaborations. These alliances will be fundamental in the process of reorganization of the pharmaceutical business model based on value-based care, helping to answer questions such as where to focus R&D expenses, how to position existing products and how to redesign the development cycle of New drugs Whatever the answer to these questions, it is clear that the use of technologies that allow a complete capture of real-world data, while taking into account security and data protection, will be crucial.

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1 Rodrigo, S. (2018). Estudios reales para la vida real. Rev Econ la Salud, 13(2), 236-247. (Translated from the original)



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Javier de Oca

CEO and Chairman of IOMED

Management Specialist, Passionate about Int. Cooperation & Africa