The global future of medicine: Higher volume at a lower price?

By Ben Hargreaves

- Last updated on GMT

(Image: Getty/ADragan)
(Image: Getty/ADragan)

Related tags Pricing Generics Us Digital innovations

The issue of pricing is a familiar discussion for the pharma industry and Ruchin Kansal, of Virtusa, believes that there is the potential for a win-win situation.

The topic of drug prices has gone all the way to the top in the US, with President Trump applying pressure on certain companies, that saw them, at least temporarily, freeze drug prices earlier this year​.

However, such actions are not long-term solutions and, in a release announcing the US administration’s plans to counter drug pricing​, the President suggested that other countries were to blame – by paying less for treatments and thereby encouraging higher prices in the US.

However, when in-PharmaTechnologist (IPT​) spoke to Ruchin Kansal (RK​) about ways pharma could reduce drug prices, he expressed the opinion that the industry itself is capable of tackling the problem – by increasing the volume of drugs sold globally.

IPT: Could you explain how the issue of pricing is impacting the pharma industry?

RK:​ There is certainly a lot of press around pricing, here in the US, and there is a lot of pressure on the industry in this regard. Yes, pricing is an issue but the industry does invest a lot in innovation and there is a big cost of failure. Additionally, the medicines produced by the industry have a big value to society and so their cost is justified.

With that said, looking at it from a macroeconomic perspective globally then certainly the population globally is ageing and diseases are becoming more prevalent. There is an opportunity for the biopharma industry to serve populations in the billions. It means re-examining the whole model, whereby the US is the highest revenue market, to now looking at the global market to see how we can rework the revenue situation. Right now, the way the business model works is a higher price for a lower volume of medicines, maybe the industry needs to look at higher volume with a potentially lower price, by looking at the global market.

IPT: Higher volume at a lower price is the remit of the generics industry – how does your vision of the future of the industry include this part of the wider pharma industry? 

RK:​ I think generics are a good thing because they provide medicines at an affordable price to patients. At the same time, if the industry only focused on generics, we would never develop the innovative, new therapies needed. I think there is room for both globally but I think the industry needs to move towards increasing volume of all medicines – to reach an inflection point where it can generate the same revenues but at a lower price.

For example, the Asian economy, especially China, India and Singapore, is growing strongly and the disease burden is becoming similar to that seen as in the US and Europe – these are the areas that should be looked at for driving a global perspective.

IPT: There are movements occurring towards partnerships to attempt to encourage lower prices at a national level – such as US hospitals partnering to manufacture generics​. Do you foresee this trend developing and is there any way for pharma to engage?

RK:​ Today, you see a lot of movement towards the convergence of stakeholders, such as generic partnerships. This is partly to do with frustration at pricing, but it is also about providing a good consumer experience, starting at the value chain. I think this is an area where there is an opportunity for the industry to leverage strategic partnership to pool resources, collectively, to understand how to provide better care to patients, by understanding what is not working today.

IPT: One innovation in patient care was the development of a smart pill​ – does this fit into your vision of the future of healthcare?

RK:​ In our mind, we believe pharma should actively invest more in this kind of innovation. I have written about the concept of a new industry sub-section called the 'smart integrated medicine' –where every medicine has a smart component, which allows for an understanding of how a medicine is performing within the context of the body. This would allow for everything from 'active dosing' to monitoring patient adherence. The pharma industry has always monitored data on how a medicine performs in the body, through randomised, screenable trials, and increasing this potential allows for industry to broaden its role in engaging with patients.

IPT: Such advances in pill design come at a cost, especially to scale them. Do you predict the industry will be prepared to face the short-term costs?

RK:​ If you are within the leadership of a highly successful biopharma company then it is difficult to invest in the future – the future is unknown, but digital technology is where the wind is blowing; however, this has to be measured against what you know will see a return in the six months to a year. The leadership of the industry recognises the need to change but, in our minds, it needs to be the most highly successful companies that have dollars to invest in this future, in order to create the industrial level production capacities to lead the industry. This is what I mean by operating in a 'bipolar fashion' – deliberately investing in the future whilst focusing on the core business.

Ruchin Kansal, leader of the digital business strategy group’s healthcare team at Virtusa and author of “Redefining Innovation". He previously worked for Boehringer Ingelheim, as head of business transformation and innovation.

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