Balancing the New Trend in HEOR Organizational Structure and Focus

Ross Maclean, MD

In the last year, there has been a movement within the pharmaceutical industry to consolidate many functions across the research, development, and commercial organizations. Recently, one big push has involved restructuring the health economic and outcomes research (HEOR) function, placing it under either the medical affairs pillar or under market access within the commercial pillar. The stated objective of these movements has been to create a more integrated, cost-effective approach to generate the evidence needed to support marketed products.

In a recent article titled “Big Pharma says ‘Thanks, but No Thanks’ to their own HEOR groups,” Professor Scott Ramsey from University of Washington comments to the importance of HEOR¹. He states: “High cost, low value medicine hasn’t disappeared, nor have the health care cost pressures facing individual patients, businesses, and governments. Providers and insurers will still try to ferret out what isn’t necessary and do what they can to mitigate the cost burden of what is necessary in healthcare. As long as the organizations that pay for these products ask for the information that HEOR provides, pharma will be obliged to supply it.”

John Graham, PharmD

Prof Ramsey is not alone. In addition to national-level changes such as the Inflation Reduction Act equipping the Centers for Medicare and Medicaid Services (CMS) with the authority to establish a new price for certain high utilization drugs, two other examples affirm the unrelenting, if not increasing, demand for HEOR evidence:

• State PDABs – In an effort to assess and potentially reduce high drug costs, 11 states have established prescription drug affordability boards (PDABs) to provide an additional layer of oversight for prescription drug costs². Clearly, pharmaceutical firms will need the evidence to support product use.
• CMS, AHEAD and health equity – In September 2023, CMS announced a new voluntary state total cost of care (TCOC) model: the States Advancing All-Payer Health Equity Approaches and Development Model (States Advancing AHEAD or AHEAD Model)³. CMS’s goal in the AHEAD Model is to collaborate with states to curb health care cost growth, improve population health, and advance health equity by reducing disparities in health outcomes. Again, CMS and state-level partners will seek evidence on the impact of novel treatments on health equity.

To be successful, HEOR requires executive leaders who have both scientific and managerial acumen; including a deep understanding of the multiple different methods that the discipline applies to generate evidence, the management skills to navigate complex, matrixed organizations, and the ability to distill complex strategic challenges at disease- and product-level and translate that to inform tangible tactics and value messages that may be delivered by multiple stakeholders in the market. Yet in many instances, the HEOR discipline and corresponding leadership has merged with other functional domains.

Biopharmaceutical companies are taking various approaches in structuring HEOR teams. Figure 1 below depicts advantage and perhaps disadvantages to certain models. For example, of the HEOR/RWE groups and moving the junior scientists into the respective organizations to report directly to potentially less experienced leaders. Other models include creating an evidence generation group within medical affairs or market access made up of junior scientists who are agnostic to therapeutic area and just deliver studies. As with all organizational change there are pros and cons, as illustrated in Figure 1.

Fig.1 Synopsis of the challenges and implications of relocating HEOR functions under Medical or Access

In cases where HEOR fits within medical affairs, the design fosters greater alignment between scientific communications and the medical evidence strategy for the disease. It also addresses the traditional disagreements on who is best positioned to own the medical evidence strategy as well as how to deliver upon that strategy. Finally, it allows companies to decrease the number of senior leaders by designing organizations that have leaders developing a strategy and scientists who will deliver upon the tactical evidence generation.

In cases where HEOR fits within market access, the design fosters single point accountability for product pricing and value demonstration. It provides greater commercial focus on HEOR to identify and generate the economic evidence required to secure and maintain access, and simplifies the balance between pricing, contracting and value demonstration. This approach also provides clear leadership from the market access organization on what the reimbursement strategy will be and all the tactics to achieve reimbursement.

While the medical or access reporting lines have the aforementioned benefits, there are risks and unintended consequences that must be acknowledged:

• Evidence in a vacuum - a siloed approach separating the evidence strategies for each stage of development as well as the post-approval strategies.
• Diminished impact – a limitation on the strategic impact that real-world data and evidence (RWD/RWE) can have in the early R&D phases including the integration of patient reported outcome (PRO) tools in clinical trials and inclusion of data elements intended to drive product labeling to achieve reimbursement.
• Dilution of methodology and outcomes – with the potential for having to rely on less experienced HEOR scientists for the technical HEOR expertise, there is a risk that studies will not be robust enough to support the desired disease or brand strategy.
• Inefficiency – given the dynamic RWD/RWE standards and best practices from regulators and the academic community, there is a need to have seasoned, experienced HEOR researchers who can interpret and apply the guidance in a manner that supports the development of robust data that meets industry standards.
• Professional development – organizational structure and uninformed leadership by different disciplines may limit the career progression of future HEOR leaders. The industry has benefited from a significant growth in strong scientists who are also capable leaders. In these new models it is the medical affairs or access leaders who lead and the HEOR/RWE individuals who deliver.

Recommendations

As these structural changes settle-in, we offer two recommendations

• Select the right leaders. It is critical that the pharma firms that have embraced HEOR realignment in the past year realize the unintended consequences on people and productivity, and balance the organizational design to position leaders who are able to lead across disciplines and who have both the technical abilities in HEOR as well as the leadership abilities to motivate teams.
• Deliver, deliver, deliver. The annual business cycle has not paused during all the organizational turmoil. Brand-level strategic and tactical planning for 2025, delivery of the commitments made for 2024, and business unit performance to address market and brand-specific challenges all remain in-play. Look to your top talent internally and trusted vendor partners externally to get the work done.

While there are clear benefits to combining the HEOR function into medical or access organizations there is also the potential that it may result in worse outcomes especially in the near-term. Companies who find a good balance of medical affairs-and-HEOR or access-and-HEOR leadership will find a competitive edge in the market.

References

1. Ramsey S.Big Pharma Says “Thanks, but No Thanks” to Their Own HEOR Groups.Downloaded from https://www.curtahealth.com/curta-on-call/curta-on-call-issue-1-bgnft-nwf35-swfyf-m3zjl-pz3nr on June 14, 2024
2. Putka S. Can individual states effectively cap prescription drug costs? MedPage Today. June 28, 2024. Accessed July 12, 2024. https://www.medpagetoday.com/publichealthpolicy/healthpolicy/110889?xid=nl_mpt_morningbreak2024-07-01&eun=g1854808d0r
3. States Advancing All-Payer Health Equity Approaches and Development (AHEAD) Model. CMS.gov. Accessed July 12, 2024. https://www.cms.gov/priorities/innovation/innovation-models/ahead