How a Beleaguered Industry Needs to Adapt – and Why it Doesn’t Have a Choice

By Peter Miller, CEO of OptiNose


The pharmaceutical industry has had a rough go of it lately.  Between negative headlines (with the recent Mylan EpiPen controversy only the latest controversy), congressional inquiries and calls from insurers and the medical community to defend the price of medications, today’s value-focused healthcare landscape presents an unprecedented set of challenges for the sector. 


This new level of pressure is exemplified by legislation currently under consideration in more than 10 states – including California, New York and Massachusetts – that would require drug manufacturers to disclose (and ultimately justify) costs of R&D, production and marketing.  This degree of regulated transparency would be unheard of in most industries.  But it underscores the need for pharmaceutical companies to adjust their approach and refocus on their core stakeholders in today’s quickly evolving and increasingly tightening healthcare ecosystem.


There are three core tenets pharma companies should keep in mind to ensure buy-in and trust from payers, physicians and patients – and of course investors –  as we all adapt to the current environment:

  • The story needs to start with the patient – being able to understand and quantify how new products coming to market will make a real difference for patients is essential to demonstrating value in a value-based system.


    For example, Johnson & Johnson has always been a leader in patient-focused initiatives, and companies such as Allergan are emerging as well, with the company’s Growth Pharma model.  Allergan has cited customer intimacy as a key focus, including a deep understanding of therapeutic area environments and a commitment to being responsive and service-oriented. 


    Similarly, as my company OptiNose worked to develop our product to treat chronic rhinosinusitis, we sought to root every decision we made against the backdrop of the patient disease. We engaged with patients and physicians through a study to understand the level of unmet need and to identify the product benefits vital to delivering a better outcome.  We found that chronic rhinosinusitis was afflicting nearly 28 million people a year in the U.S., (with nearly 18 million suffering severely most of the year), and that less than 25 percent of the physician specialists were happy with the current treatment options. 


  • Outcomes aren’t a dirty word – according to a recent survey of 42 U.S. health plans, they are increasingly focused on being able to pay for medications based how much the drug measurably helps the patient.  While the chief attention right now is on high-cost specialty drugs, the survey found that for some conditions as high as 63 percent of the insurers had “strong interest” in establishing outcomes-based contracts.


    Agreeing on key components like metrics, data collection and patient follow-up will all be a challenge.   But it’s also an opportunity. 


    Several of the big drug companies have signed some form of these type of deals, including Novartis’s value-based price agreement with Cigna and Aetna for heart-failure drug Entresto.  


    The lesson here is that while this type of change is never easy, it’s essential companies keep an open mind and acknowledge that a solutions-focused mentality will ultimately provide better outcomes to patients and all stakeholders.


  • Innovation is still key (even if it’s done differently) – a major challenge for the industry has been overcoming the criticism that as we move away from traditional R&D, incremental innovation becomes the mark.  “Me too” drugs and price hikes for branded drugs have become easy targets – understandably. 


    What’s key to remember is that innovation can occur in different ways.  It’s about communicating the benefits of other types of innovation and thinking outside the box. 


    We realized that by starting with carefully selected molecules that were already approved, OptiNose could develop new products based on our delivery technology that could significantly improve the current standard of care for patients (and significantly minimize drug development costs).  As long as you articulate how you are delivering value and what the end benefit is for patients, stakeholders’ appreciation for non-traditional innovation in the sector should continue to evolve.


Driven by pressures brought to bear on every player, our healthcare system has become quite dynamic in recent years.  At times of especially rapid and significant change like this, it’s vital the pharma industry focus on its core stakeholders and remain open to new approaches. Our industry has proven its capability to deliver significant value to patients—which is part of what makes the being an executive in the sector uniquely rewarding. I am confident that my peers will do what is necessary to adapt and grow in this new healthcare environment.


Peter Miller is CEO of OptiNose.  He previously was the Co-Founder and CEO of retail clinic pioneer Take Care Health Systems, and spent 15 years serving in executive positions at Johnson & Johnson.