Regulatory Matters: Collaboration is key for Life (Sciences) in 2017 – Part One

Life Sciences, like life itself, is constantly evolving. The rigid, product-based environment of complementary but discrete healthcare specialists is rapidly being replaced with a fluid ecosystem where growing and global value chains and strategic alliances drive innovation and price competitiveness.

Secure collaboration is key as Greg Reh, Life Sciences sector leader at Deloitte says: ” All of the pressures that life sciences companies are under, be they cost, regulatory or operational, in some way shape or form can be de-risked by adopting a much more collaborative approach to R&D, to commercialization, to manufacturing and distribution”.

As increased collaboration touches every part of a Life Sciences business, there are a number of trends that will affect most companies during 2017.

Prepare for uncertainty in the compliance landscape

There has been a great deal written about the affect that the Trump administration will have on regulatory compliance.  Amid all the uncertainty, Life Sciences companies can’t take a ‘wait and see’ attitude. One thing we do know for certain is that new legislation and regulations will keep coming. Whether the pending regulations on medical devices in the EU  or MACRA  (the Medicare Access and CHIP Reauthorization Act) in the US, regulatory change does not stand still – not even for a new president!

We also know that there is greater focus on enforcement. According to law firm, Norton Rose Fulbright, almost one third of all securities class actions in the US in 2016 were against Life Sciences companies, a figure that had risen in each of the previous three years. The company noted that 56% of claims in 2014 were for alleged misrepresentations or omissions. In response, companies have been placing focus on effective marketing content management to develop appropriate quality control on promotional and advertising materials. In addition, enforcement is becoming more stringent is areas such as TCPA and FCPA – where last year the global generic drug manufacturer Teva International agreed to pay $519 million to settle parallel civil and criminal charges.

Within extended value chains, compliance becomes an increasingly collaborative process to ensure that information is available to the regulators. However, in compliance, collaboration is working both ways. Life Sciences companies need to be more collaborative as global regulators and enforcement agencies are already cooperating with each other. As global regulators and agencies share information and work together, it becomes even more important to manage compliance risk across the organization and beyond.

Deloitte recommends organizations managing compliance risk should:

• Shift from after-the-fact checks to 
real-time detection and resolution of compliance and quality events

• Provide the business with predictive risk insights and analytics

• Increase visibility into activities and quality events across global operations

• Identify opportunities to standardize compliance processes across business lines, strategic partners and markets

• Embed automation into compliance processes

Consumer price sensitivity continues to drive value-based pricing models

According to Statista, the sales of unbranded generic drugs almost doubled between 2005 and 2015. In Japan, the government has an objective of substituting 80% of branded drugs with generics by 2020. There is increasing price sensitivity within both the buyer and regulator communities. Within many economies, the depressed fiscal environment limits the potential for healthcare spending. Governments and insurance companies want to shift payment for product sales to patient outcomes. In fact, the U.S. Centers for Medicare and Medicaid Services (CMS) wants 90% of all Medicare payments to be value-based by 2018 .

This value-based pricing model places extra burdens on drug companies but also offers opportunities for the organzations to maintain the profitability within branded drugs. It provides the opportunity to look ‘beyond the pill’ to look more at the patient and what they’re doing. This requires end-to-end evidence management systems that exploit the masses of data created through managing patient outcomes to deliver value-added services around patient wellbeing, rather than simply selling more or more expensive drugs.

At OpenText, we would expect most digital transformation efforts to include an element to enable the correct environment for value-based pricing, especially as operational efficiencies and time to market are improved.

Part Two of this blog is available to read here.

Jaleel Shujath

Jaleel is an Industry Strategist in Life Sciences for OpenText, based near Washington DC.

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *