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Darwin's Medicine blog

Professor Brian D Smith is an authority on the pharmaceutical industry and works at SDA Bocconi University and Hertfordshire Business School.

A butterfly flaps its wings

A series of articles in The Lancet may change our world

A well-known concept in chaos theory is the butterfly effect - the idea that complex systems can be so delicately balanced that small events, such as the flapping of a butterfly's wings, can have large effects, such as a hurricane. It's an idea that's familiar to those of us who study the evolution of the complex, adaptive system that is the life science industry and one that makes us look out for such trigger events. Just this week, as I geekily scoured the literature, I think that I, metaphorically, saw just such flapping. Let me explain before I get to talk about the potential for a hurricane in our industry.

The article that caught my eye - actually a series of articles - was in The Lancet, one of the oldest and most respected medical journals. The discussion crystallised a topic that's been bubbling for a while, but in the provider and payer literature so perhaps not on the radar of many marketers. To cut a fascinating but long story short, it's about a convergence of trends in healthcare. In almost all countries, the push is towards universal healthcare coverage, which is of course expensive. It's made more expensive by ageing populations, epidemiological shifts, patient expectations and technological possibilities, among other things. This laudable but costly global desire for everyone to be able to have at least basic care is running head first into the harsh realities of political economics. Ageing populations and other factors slow economic growth, a phenomenon known at the extremes as secular stagnation, and democracy and free movement makes it harder to tax citizens. This collision leads ultimately to a conundrum: How do we give everyone access to healthcare within limited budgets? 

One possible answer is something known as Right Care. Like all embryonic concepts, the academics are still arguing over exactly what it means but there's a consensus emerging around three related ideas. The first is that not every technologically possible treatment is offered to everyone: there are hard choices to be made about when it is sensible to treat and when it is not. The second is that, when treatment is appropriate, it must be cost-effective: this is the bang for bucks argument familiar to those of us involved in market access. The third is the corollary of the first two. Governments and insurers will have to say no to an increasingly large number of people and treatments: the era where what's possible equals what's available is passing.

Right Care will create a large and growing segment of people who want to buy their own care, even for advanced, expensive treatments

The transition from governments aspiring to universal coverage to settling for Right Care will be a gradual one but it's certainly on its way. I'm sure we'll look back on The Lancet articles and see them as a key event in creating the future of healthcare. And, like all environmental changes, it will create opportunities and threats for existing business models. Firstly, deciding rationally who and when it is sensible to treat will be difficult and that creates opportunities for everything from diagnostics to data analytics. It also threatens extinction to business models that choose not to get involved and try to push everything onto everyone. Secondly, in a world where bang for bucks is everything, single technology approaches are less likely to be the answer and combined technologies, from companion diagnostics to smart delivery technology, are the big opportunity. Business models that depend on technological silos will be endangered species. Finally, the discipline of Right Care will create a large and growing segment of people who want to buy their own care, even for advanced, expensive treatments. Right Care may be very rational but humans, especially affluent humans with sick children, are the very opposite of rational. They will demand and buy products and treatments no government or insurer will countenance. This creates an opportunity for pharma and medtech business models for whom affluent consumers are the primary target market; these need not be billionaires, just rich enough to pay more than their government is willing to. By the same argument, business models that remain stuck in the 20th century, when institutional payers were the only ones in town, will struggle to avoid commoditisation traps. 

The future, as William Gibson famously said, is already here: it's just unevenly distributed. In The Lancet articles, I think we see a little grain of the future. When your grandchildren laugh at how you used to sell products only to governments who used them to treat people just because they could, you will be able to look up The Lancet articles and say “Let me tell you about a butterfly”.

15th February 2017

From: Sales

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