Digital Innovation: Staying Ahead of the Curve

Companies in every industry are tapping into digital innovation to increase revenue, reduce costs and better serve customers. The pharmaceutical industry should be no exception. To date, the healthcare industry has contributed advances to telemedicine, robotic assistance and real-time monitoring devices among other technologies. However, the pace of pharma’s digital technology adoption remains slow due to the fear of escalating cybersecurity and privacy challenges, strict federal and state regulations and a need for more digital expertise.

While these obstacles are real, pharma companies need to become more aggressive in adopting digital innovation. Rather than looking at what their peers are doing in digital health, they need to anticipate new challengers in the healthcare industry, including innovative start-ups and established technology companies who are hungry for new markets. As we’ve seen with the announcement from Amazon, Berkshire and JPMorgan, even well-established companies are partnering with digital disruptors to challenge current industry practices.

Here are some steps pharma companies should take to stay ahead of this curve:

Kal Patel

Renew Commitment to Adherence. According to the CDC, one-half of patients cease taking their ongoing medications within a year of being prescribed. As a result, US society loses hundreds of billions of dollars in hospital bills and other forms of emergency medicine to treat chronic conditions that go unmanaged. Research suggests digital solutions that can improve drug adherence even incrementally represent a huge revenue opportunity. With just a 10 percent increase in adherence, there is an approximately $124 billion global pharmaceutical revenue opportunity. While the issue of adherence is not new to pharma companies, there needs to be a different approach to solving it – the current route of creating tens of thousands of standalone mobile apps has not worked for patients nor drug companies. As a group, the top 12 pharmaceutical companies have created over 1,000 health apps, yet growth in downloads across these apps has flattened out. One study published in JMIR mHealth and uHealth noted that many popular mobile apps don’t even capitalize on standard adherence guidelines for encouraging patient compliance.  

Adherence solutions work best when they are connected, contextualized and integrated into a patient’s life in a convenient way. For example, a connected inhaler for a patient with asthma can capture and send real-time data regarding the duration of inhalation, amount of inhalation and location of use, which can inform patients and caregivers on how well the patient is adhering to the assigned treatment regimen and whether it is improving the patient’s overall health. With innovations like this, pharma companies can also begin to collect data regarding therapies, patient demographics, adherence and engagement. This can lead to discoveries such as recognizing patients are over-using their rescue inhalers, which could indicate they may be having acute episodes. How can we better engage patients in a proper adherence protocol to best maintain their health?

Similarly, if a patient receives reminders to take a medication at an inopportune time, this lack of contextualized information may just lead the patient to delete the pharma’s app. Companies need to invest in machine learning and advanced analytics to make compelling digital health solutions. Getting a notification to inject your medication while you’re in a meeting isn’t helpful. An app needs to consider location, timing, and other personalized data that can make simple reminders much more effective.

Broaden the View of ROI. To keep up with the competition, pharmaceutical companies must make it a priority to invest in research and development (R&D) for digital health solutions in addition to traditional drug research. The current pharma business model of focusing only on new drug development instead of incorporating value-added technology and services is broken. In fact, studies show a steady decline in the productivity and ROI of pharma’s R&D investment. This requires a shift in thinking about potential returns that digital health solutions enable in the near term, such as improved adherence and market share, as well as the returns down the road, such as being prepared to operate in a connected world with entirely new business models. The challenge is moving from investing almost all R&D funds up front in the development of new drugs to a perspective that incorporates the value of software-based services and an approach of continuous improvement.    

Partner with Digital Experts. When it comes to developing life-saving drugs and blockbuster molecules, pharma companies have experience recruiting the best and the brightest. A typical biopharmaceutical has thousands of PhDs and MDs, but only a handful of software engineers and data scientists. Building a digital health team from the ground up with a combination of medical and consumer/patient expertise is a significant investment from a headcount and time perspective, not to mention the challenge of reconciling the drastic differences between a fast-paced technology culture and a regulated pharmaceutical culture. Instead, look to a partner with a core competency in software development to leverage external expertise, improve patient engagement and capitalize on better digital insights.

Some challenges to be aware of:

FDA Approval and File Management. Approval for new drug solutions and devices can take years. Every day that a drug is not on the market because of development or regulatory delays costs a pharmaceutical between $600,000 in lost revenue for niche products to an average of $8 million for blockbuster drugs. As pharmaceutical companies move from products that are solely drug-based to product lines that include tech-enabled services, these ‘beyond the pill’ business models carry with them an array of new and challenging regulatory implications. Pharmaceutical companies considering the addition of a digital component may rule it out if it may add risk to the launch of their billion-dollar molecule. FDA approval is required every time a drug formula changes or is otherwise updated, and this is no different for software updates on connected devices. If a therapy is already FDA approved, but the digital software component is updated, a pharmaceutical company needs to update its filing with the FDA. That is, unless there is proper union of the therapy and digital software component that allows independent but complimentary regulatory controls that are sufficient for FDA approval. This can be done by establishing a device master file with FDA for the digital software component. In that scenario, a pharmaceutical company can offload the ongoing file management for the digital component to its technology partner, thereby clearing a significant hurdle.

Potential Security & Privacy Breaches. As more devices become connected, the medical community must ensure the systems handling the medical device and patient data are highly secure to reduce the risk of breaches and protect patient data. Just last year, pharmaceutical company Merck & Co lost more than $135 million  in revenue due to a cyberattack that halted drug production. With connected solutions, pharma companies need to be even more vigilant of hacker threats. Personal data, including social security numbers on health records, are frequently sold on the dark web. Pharma companies should ensure that security and privacy technical controls, processes and experts are part of any new system they evaluate.

While the landscape won’t change overnight, patients will demand connected, seamless healthcare experiences, and there is a real economic opportunity for companies prepared to bridge the healthcare system/patient divide. Access to information and digital solutions facilitate a more proactive doctor-patient relationship and better health outcomes. To serve the modern patient and secure future revenue streams, major pharmaceutical companies need to embrace more meaningful investments in digital health as soon as possible.  

Kal Patel, M.D., is SVP of Digital Health, Flex.