HEOR: From Proving Product Value to Proving Its Own Worth

Health Economics and Outcomes Research (HEOR) in the biopharmaceutical industry has been established for over 50 years, but rising drug prices, tightening payer budgets, and increasing competition have recently put the spotlight on the discipline. Healthcare ecosystem stakeholders (payers, patients, providers, policymakers, etc.) are demanding more robust evidence of value to support healthcare decision making as evidenced by major policy developments like the Inflation Reduction Act (IRA) and European Union Regulation on Health Technology Assessment (EUHTAR).

To meet these growing demands for evidence, HEOR functions within pharma need to optimize their organizational architecture and ways of working to deliver marketplace impact efficiently. Benchmarking empowers HEOR leaders with industry best practice to continuously grow and optimize their teams sustainably.

Previous benchmarking exercises have included aspects of HEOR as a component within Market Access or Medical Affairs functions.^1,2 This timely HEOR benchmarking exercise fills an unmet need for a more comprehensive review of the HEOR function and comes at a critical point of inflection for the discipline where many HEOR groups are experiencing organizational shifts and focused on effectively demonstrating their impact and value.

Scope

We conducted a 2024 benchmark of HEOR organizations based on qualitative and quantitative data from seven biopharmaceutical companies: one small (zero-10 billion USD annual revenue), three medium (>10-30 billion USD annual revenue), and three large (>30 billion USD annual revenue). Over 60 interviews were conducted with HEOR leaders and team members including representation from Global, Canada, EU, Japan, UK, and the US. The benchmark focused on collecting data and insights on the HEOR function’s operating model including organizational structure and positioning, team characteristics and capabilities, and ways of working.

Organizational structure and positioning

Pharmaceutical companies are generally organized into two major divisions – Commercial (customer-facing) and Research and Development (research, medical focused), to ensure the scientific integrity of research activities. HEOR holds a dual mandate—generating scientific evidence of value (aligned with Medical functions) and communicating this evidence to support healthcare decision-making (aligned with Commercial functions). Over the years, HEOR’s position has swung between these divisions, but within our sample of companies more HEOR functions have been integrated into the Commercial side, specifically within Value and Access teams, to better align value evidence generation with market access strategies. The HEOR functions in our sample companies are also mostly centralized, providing dedicated product and geographic level support with dedicated local HEOR support for major markets, including the US, as countries develop their own value assessment methods. There were no regional models in our sample of companies.

Other key trends:

• Platform functions.HEOR is an umbrella for multiple disciplines of evidence generation; platform (or centers of excellence) teams enable HEOR functions to scale and standardize these disciplines and efficiently support multiple products and geographies (see Figure 1).
• Real World Evidence (RWE). RWE has a broad range of applications and as a result, RWE is being produced by HEOR and other functions without clear roles and responsibilities, ultimately causing tension and inefficiencies such as duplication of efforts. Only some companies exclusively held RWE responsibilities within HEOR, while the remainder shared this capability with other functions.

Figure 1. Platform functions within core HEOR groups

Note: Platforms can be greater than or equal to one FTE

Team characteristics and capabilities

HEOR functions require a diverse team due to HEOR’s broad scope of disciplines and applications. All HEOR functions in our sample of companies had highly credentialed teams with a mix of discipline specialists and product strategy experts. Given this diversity, career development pathways need to be tailored to support the unique roles within HEOR, rather than a one-size fits all approach. Most HEOR functions in our sample had career development pathways documented, however these were mostly for team members working in a product centered role; pathways for specialist roles were identified as a key gap.

Other key trends:

• Talent. Recruiting for HEOR talent is highly competitive. HEOR leaders are retaining top talent through competitive salaries, allowing for remote/hybrid work policies, and increasing development opportunities. They are also looking at formalizing career pathways for individual contributor roles or propelling HEOR team members into different technical areas and geographic areas.
• Technological advancement. HEOR Teams are embracing digital technology and are investing in areas like AI, digital health, and real-time data analytics to provide insights for payer engagements. For example, some teams are using AI to conduct literature reviews, reducing the time to complete these routine HEOR activities from weeks to days. In another example, teams are utilizing digital health technologies to build registries for more robust data collection to better understand disease burden.

“I feel like population health organizations are starting to realize the power of the data they have and AI can now help them leverage that data to support decision-making. They are actively trying to build up their capabilities to effectively leverage that data in ways I haven't seen before and we have to keep up." - US Head of Field HEOR

• Translation: In our sample of companies, HEOR groups were often labeled as being “too academic” or “too publication focused” and were not fully effective at disseminating key evidence to their audiences. To combat this label, some companies are developing communication workshops to upskill storytelling capabilities and dissemination of HEOR evidence.

Ways of working

HEOR generates evidence that is applicable for a diverse group of stakeholders (Figure 2). To ensure that evidence generated is relevant and effectively reaches these groups, HEOR functions must collaborate closely with cross-functional internal stakeholders. While the established trifecta of HEOR, Medical Affairs and Market Access was well recognized as an effective commercialization model, interviewees identified the relationship between HEOR and clinical/regulatory teams as a key area for improvement; this was even when HEOR was positioned under the Medical organization.

Many internal partners struggle to grasp the full scope of HEOR's role and its relevance to their work or its impact on their external stakeholders. This lack of understanding is compounded by the absence of robust metrics that could effectively demonstrate HEOR's value to all stakeholders. Despite the critical role of HEOR, only a limited number of companies include HEOR experts on global product teams, and even fewer incorporate them into brand teams. This underrepresentation limits HEOR's ability to shape strategic decisions and leverage its unique methodologies and expertise to address business challenges.

"We need to dispel the misconception that HEOR only generates evidence for payers" - Health Economist

Figure 2. Value evidence generation supports internal stakeholder needs, driven by external stakeholders (payers, patients, and policy)

Other key trends:

• Desired collaborations.
  • Clinical Development: HEOR insights ensure trial designs address key evidence needs for payers and policy markets and align clinical outcomes with real-world applications.
  • Regulatory: Increasingly regulators themselves are also interested in HEOR disciplines such as RWE and PED to bolster the real-world relevance of trial data.
  • Government Affairs: HEOR inputs are directly relevant to key policy developments worldwide (eg, HTA, EU HTAR, IRA and PDAB requirements). HEOR evidence can also support the prioritization of unmet needs in certain disease areas by policy-makers.
  • Patient Advocacy:As patients increasingly are taking ownership for their healthcare, HEOR evidence empowers them to actively participate in shared decision-making with their physicians.
• Metrics. HEOR functions in our sample are largely focused on productivity or project management metrics (see Figure 3). Impact metrics are desired, however, HEOR functions havedifficulty attributing broader access and commercial impact to HEOR. In some companies, even though linking HEOR metrics to access/commercial metrics would resonate best with internal partners there exists a compliance challenge to directly connect research activities with sales number, prescribing impact, etc.

Figure 3. HEOR Productivity and Impact Metrics

• RWE responsibilities. Some companies have delineated RWE responsibilities by external audience or research type with limited success. Given HEOR’s broad scope and capabilities, senior leaders believe that HEOR is uniquely positioned to play a role in RWE governance across the company to ensure that RWE execution is streamlined, and that generated research is widely communicated.

“RWE experts are going to exist in various other functions because various external stakeholders are asking for RWE. It's going to be counter-productive to try to centralize execution of RWE...the strategic aspects should be centralized with HEOR." - Global/ US Head of HEOR

Conclusion

Recent shifts in HEOR functions across major pharmaceutical companies confirm a lack of internal understanding of the value of HEOR despite the robust external demand for evidence of value. HEOR is often perceived as too academic, with a disconnect in the translation of evidence to impact for external stakeholders. Many teams face challenges in effective dissemination of HEOR deliverables, citing issues such as the lack of storytelling capabilities, longer study timelines not meeting end-user or launch needs, and the lack of measurable metrics to demonstrate the impact of their work. We identified some companies that were proactively addressing these issues, investing FTE to specifically package and translate HEOR evidence for stakeholders and identifying communication channels for evidence dissemination.

The shift of HEOR organizations to Value/Market Access aligns HEOR closer to business and payer needs, potentially streamlining HEOR’s path for evidence to impact access. However, this shift could potentially limit career paths, investments in methodology, and evidence for healthcare providers and patients.

It is therefore essential that in this next iteration of the HEOR function, senior leaders prioritize the development of HEOR translation capabilities, coupling evidence communication planning with best-in-class evidence synthesis and HEOR/value storytelling. To demonstrate value internally, leaders should invest in impact metrics in collaboration with internal functions including compliance and harness technology for the required data collection. Finally, tailoring the HEOR value proposition to individual internal partner functions will also be important to demonstrate HEOR’s grasp of their stakeholder’s evidence needs. By addressing these areas, HEOR can better align itself with biopharmaceutical organizational goals and solidify its indispensable role in responding to the ever increasing access landscape challenges.

Yamini Misra, MBA, Vice President, Management Consulting Practice; Denise Garner, PharmD, MS, Manager, Value Evidence; Sarah Bandy, PharmD, PhD Manager, Value Evidence; and Sissi Pham, PharmD CEO; all with AESARA Inc.

Acknowledgement: We would like to thank Patricia Deverka, Amy Wu, and Kenneth Wu for their support and collaboration throughout this project. Their commitment and expertise were instrumental in bringing this project to fruition. We would also like to thank Kate Burslem, Elizabeth Brooks, John Byrd, Ruslan Horblyuk, Ruchik Patel, and Victoria Schliep who have helped support the benchmarking effort.

Disclosure: All facts, insights and opinions were generated through the research conducted in full by AESARA. Artificial Intelligence (AI) was used to assist with language edits and to enhance clarity.

References

1. Hochstrasser M, Grueger J, de Gorgolas M, Vaidyanathan S, BCG Members, BCG Market Access Roundtable. A New Era for Market Access: Organizing the Function’s Broader Strategic Role. Pharmaceutical Executive. 2023;43(5). Accessed September 19, 2024. https://www.pharmexec.com/view/new-era-market-access-organizing-function-broader-strategic-role
2. Algazy J, Garcia A, Ryan S, Westra A, Zemp A. A Vision for Medical Affairs 2030: Five Priorities for Patient Impact.; 2023. Accessed September 19, 2024. https://www.mckinsey.com/industries/life-sciences/our-insights/a-vision-for-medical-affairs-2030-five-priorities-for-patient-impact#/