Who profits from improved patient adherence?

Aside from patients who get better health outcomes because of better adherence, who profits (either from increased revenues or lower expenses) from improved patient adherence?

On the revenue side are the pharmaceuticals. The simplest and most straight-forward answer is that pharmaceuticals would profit the most. After all, more adherence means more product usage, which means more product revenues. In “Where have all the Scientists Gone?“, Andrea LaFountain sets forth some calculations:

A $280 billion opportunity is left behind each year due to the failure of pharmaceutical companies to retain their customers. That’s the equivalent of the combined total global revenue in 2009 for the top six pharmaceutical companies. For an individual pharmaceutical company, that’s the equivalent of the cumulative lifetime revenue of launching a new blockbuster every year for the next 10 years.

On the expense side are health insurers and pharmacy benefit managers (PBMs). For example, recently, Express Scripts (a major PBM), published its report, “Complex Challenges: New Solutions” points out problem from the perspective of “pharmacy-related waste”. In other words, less pharmacy-related waste (or costs) for insurers/PBMs will translate into greater profits. The extent of pharmacy-related waste is shown in the graph below:

So which is the greater motivating factor — more revenues or less expenses? Presumably, the greater motivating factor will prompt new business models promoting patient adherence meaning better patient health outcomes.

What do you think?

4 Responses to “Who profits from improved patient adherence?”
  1. Michael Rooney, Patient Advocate says:

    I would be interested to see any accumulated data to expand on the health insurer side of this. In my work with the Managed Care Delivery System subcommittee of the Pennsylvania Medicaid I am aware of significant revenue loss by the MCO as patients who enter their systems cycle in when in need of service, but then fall off the Medicaid roles when not in need of acute services. In otherwords the MCO has no premium paid during times of relative health while they incured expense to stabilize that patient in time of need.
    To go back to your original conclusion, the Medicaid MCO may benefit on both the revenue and the expense side when patient become more adherent to all form of care (doctor visits, nutrition, pharmacy, well checks etc.).

  2. WE ALREADY KNOW better outcomes through improved adherence will generate significant cost savings to our health care system. Enabling patients to improve adherence truly is a Win-Win-Win, which will ultimately benefit everyone!

    I totally agree that the drug companies have the most to gain. So what’s new? Patients need incentives to be adherent. Drug companies are in the best position to Reward patients for good adherence by providing discounts and effective adherence tools. They can easily afford to provide medication reminders with every prescription sold, simply because they will sell more product. Why aren’t they doing this?

    • Michael Wong says:

      Susan asks a great question — If it’s so obvious, why aren’t pharmaceuticals doing more to solve adherence? Perhaps because the prospect of more revenues is not quite as painful as having to incur expenses, which is why there are a proliferation of pharmacy-based reminder systems? Would love to hear your thoughts!

      • There are a few challenges to pharmacos’ pursuit of adherence strategies –
        1 – It is easier and less expensive to follow – and measure – the scrips that are filled vs those that are not
        2 – The whole issue of non-adherence demands real focus. As long as a brand manager is leading the charge it is hard to get a share of their mind when there is so much else to focus on. My impression is the companies that have carved out adherence to adherence strategists/innovations and/or consumer areas will be able to focus.

        Regarding incentives to patients from pharma, to me this is a touchy area but i am sure there are ways to manage this. This industry is so tightly regulated that they have to be careful not to be seen as paying or incenting a patient to take their specific drug inappropriately.

        In any event I have done work that shows that there is more to adherence than incentives. The times I have seen incentives used the behavior changes right back to the old, negative behavior once the incentive is withdrawn. I just don’t see any entity – payor or pharma – being able to sustain incentives for a lifetime.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: