Defining Value Beyond Cost-EffectivenessBy Jan Hogewoning | Fri, 01/29/2021 - 15:53
Q: How can LSC help companies in the healthcare value chain?
A: LSC is a global management strategy consulting firm, founded in the US. Our first offices were in Milan and Madrid in 2004, born from a Gemini spinoff, now Capgemini. In Europe, we are focused on the pharmaceutical segment, such as Novartis and Roche, as well as clients in Germany, Spain and Italy. We have an office in San Francisco that serves new health tech companies that want to enter the EU and also the US market. In New Jersey, we have another office oriented to large pharmaceutical companies, such as Pfizer. Lastly, we have a very important office in Mexico City that manages all services for clients across Latin America. We also have a commercial office in Brazil but our analysts for the region are all based in Mexico City.
Our goal is to develop commercial models for each stakeholder in the value chain of the health sector. From governments, funds, investors, manufacturers and distributors to healthcare providers. This can include IMSS, hospital groups, insurance groups and many other players. We try to create the best scenario between stakeholders to maximize patients’ access to new therapies.
Q: How do you gain knowledge about different markets?
A: We ask this question at every meeting with our partners. Healthcare is unlike any other sector. It is difficult to see what is new, the latest trends or innovations. For us, the main sources of information are our clients. Through continuous conversations with them we determine the big questions, as well as their needs and the issues they face. From there, we deliberate a possible approach and solutions. Through multilateral thinking among our teams, we can link one situation with another. We are made up of 33 consultants who are solely focused on healthcare projects.
Q: What is the basis of a commercial model?
A: The key is to identify the need for the therapy. For example, to demonstrate the importance of publicly-funded coverage for a genetic therapy, we may create a model for the entire country that compares the value of this therapy against other treatments, taking into account a wide range of factors. On the other side, we need to collaborate with the company that offers this therapy. The company needs to demonstrate the added value of the therapy beyond price; for example, the importance of the therapy as part of an eradication plan for hemophilia in Mexico. This is more important from a business point of view than a cost-effectiveness analysis.
LSC works with both the government and the private sector at the same time. We provide the picture for the government while helping formulate a value proposal for companies that may not yet have access, the credibility or are too focused on their financial figures. Along with other players in the middle, we are technocrats connecting the different sides.
Q: How have you adapted your approach to the current government?
A: I speak with colleagues in the pharmaceutical industry every day. We are convinced that this government is not interested in the sector’s traditional commercial model, which is why it has shifted to UNOPS. UNOPS is not a strategy but a tool to evoke change.
I believe that pharmaceutical companies are not presenting an alternative commercial model to the government at the moment. In the last two years, they have focused on survival, instead of creating a new ecosystem with this government. The government’s tendency to move to price and the resulting response of people to try and protect the price is not a productive conversation. Both sides need to work together based on common goals. This requires public policy that looks at the entire economic model for health, not just from a pharma-economic perspective. To illustrate, the real problem is not the price of insulin. The problem is diabetes and how we can manage it. One medication from one company will not resolve this problem; you need an ecosystem. At the moment, there is a complete block on dialogue. Unfortunately, industry associations are completely lost on what to do.
Q: When trying to understand the government, where do you look?
A: Following the reforms, the Ministry of Finance is now in charge of negotiating the public healthcare budget. I do not think this is sensible because you have people making decisions without having in-depth knowledge of health issues. They could be supported by a committee or an adviser who provides information. If they do not receive any, they move to price. We know that this president wants to say something new. This is why you need to bring proposals that are more than just about money and that take into account the entire economic picture for health.
In the EU and US, there are public bodies like the NHS that carry out assessments of the added value of therapies. In Mexico and other emerging markets, the government does not have that kind of support. This is why private sector companies need to create that value-added picture themselves. The government is not thinking about what specific medication to buy. It is deliberating whether to spend US$1 on COVID-19 machines, on diabetes or on cancer. IT is looking at the broader picture.
Q: Do you publish any of your findings for a wider audience?
A: We sometimes invite a client to write an op-ed for a magazine, where they share their vision or their methodology. LSC also has a strong relationship with the International Institute for Health Futures (IIFS), a nonprofit organization focused on creating new methodologies and models for the sector.
Q: What institutions in Mexico are connecting the private sector with public sector stakeholders?
A: This task is primarily done by individuals, not institutions, who held positions in previous government administrations. Some are associated with a private company or are advisers to associations. There is a foundation for the development of the health system, FUNSALUD, but due to political motives, it is not very close to the government at the moment. Likewise, industry associations, such as AMIIF and AMIS, are unlikely to be trusted by the government. This is in part because they lack organization. In Europe, there are very clear mechanisms for negotiations between the pharmaceutical industry and the government. The private sector can negotiate, for example, the percentage of generics to be put in the market over the next five years. In Mexico, that is impossible. They can organize but do not have representative power before the government. They are outside of the game.
Q: What is your expectation for 2021?
A: My expectation is that we will continue to readapt our commercial offering. In the past, we focused a great deal on market access but that is not enough anymore. We need to move closer to public policy. We are trying to create strong relationships with other experts in policy and regulatory areas to build a more complex offering. This will allow us to demonstrate that there are other ways to source medicines than through UNOPS. UNOPS is good for 70 to 80 percent of purchases. But for innovative therapies, it is not the solution. These account for 25 to 30 percent of the budget and their added value is even higher.
Q: Have you been consulting on COVID-19-related areas?
A: We have been working very closely with a nonhealth-sector manufacturing company based in Sonora, advising them on how to implement a wise strategy to protect employees. The company has around 6,000 employees.
One of the problems is that while the government issued different sanitary orders for on-site operations, it did not provide a methodology on how to implement these. We are helping to translate the health language to real business needs. For example, we advised them to determine the comorbidity of their employees, so they could differentiate risk levels. This kind of thinking was completely new to them.
LifeSciences Consulants (LSC) helps organizations and managers in the life sciences industry to bring their innovative science or technology to the market by devising strategies to maximize their value proposition in every phase of the product life cycle.