Personalized Medicine: Reimbursement and Marketing Challenges

November 25, 2014
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personalized_medicineWe are undoubtedly in the midst of major change in how healthcare is delivered, measured and paid for. As with all periods of great change, there are going to be winners and losers. One area I’ve been bullish about for a few years now is diagnostics and personalized medicine.

personalized_medicineWe are undoubtedly in the midst of major change in how healthcare is delivered, measured and paid for. As with all periods of great change, there are going to be winners and losers. One area I’ve been bullish about for a few years now is diagnostics and personalized medicine. As the US healthcare system moves from a volume based model to a value and outcomes based model, the ability to deliver the right treatment to the right patient at the right time means that personalized medicine, and the diagnostic products and services that make it possible, has an opportunity to be a real winner. The growth statistics and forecasts for this dynamic market sector make for interesting reading.

Diagnostics marketing faces key challenges in today’s healthcare environment however. Perhaps the biggest of these is in communicating value so that reimbursement decision makers understand the cost savings and patient outcomes improvements that many of these technologies offer. One of the keys to overcoming this challenge, I believe, is to position personalized medicine and diagnostics within the context of evidence-based medicine. This has been an area of some debate since “personalized medicine” emerged as part of the medical lexicon. Some practitioners rooted in evidence-based medicine, with its focus on large scale randomized clinical trials, saw personalized medicine as a competitor to the evidence-based model. I believe that is a misperception and a communications challenge. And as any good marketer knows, poor communication can lead to and misperceptions. And misperceptions can destroy good products. Diagnostics contribute to the overall body of evidence available to physicians. It is another decision making tool in the arsenal of good medical practice.

In terms of research and development of new drugs, the integration of companion diagnostics into clinical trials for new treatments of all kinds holds the promise of helping to make clinical development more efficient. And with recent news about the cost of bringing a drug to market — $2.6 billion according to the Tufts Center for the Study of Drug Development — anything that has the potential to identify failures early, streamline the process, reduce clinical development timelines and bring new treatments to market faster simply cannot be ignored.

Once seen as separate silos in the life sciences ecosystem, the fact is that today the pharmaceutical industry needs diagnostic technologies as an integral part of their approach to developing new treatments and evaluating their efficacy.

Reimbursement for these technologies remains challenging. Marketers have a key role to play here, as do clinical development teams at the companies developing diagnostic products and services. Communicating the value of of a test that costs (for argument’s sake) $3,500 can be challenging without compelling messaging supported by data. But effectively communicating how that $3,500 test could save $60,000 per year on a chemotherapy that is not going to work for that specific patient puts cost and value into a completely different framework, and allows for constructive engagement between the diagnostic innovator and reimbursement authorities.

Periods of great change often come with great challenges. Effective marketing and communications can be just as important to commercial success as clinical data and outcomes.