Long-Term Changes Brought on by COVID-19
There has been much written of late about the effects of COVID-19 on the pharma industry, such as articles published by Axtria (see various posts on the Axtria Research Hub and Axtria Blogs. The question this blog addresses is simply what are the categories of long-term changes brought on by COVID-19 to the pharma industry? Not all long-term changes are necessarily those directly caused by or attributed to COVID-19.
This blog lists three categories of long-term changes brought on by COVID-19 to the pharma industry, with specific examples given in each grouping as noted below:
Long-term changes brought about directly from COVID-19. These changes include:
- Reduction in direct sales force contacts with healthcare professionals (HCPs). While a good portion of direct sales rep-physician contacts will return, there will be a permanent loss of in-person engagements.
- Movement to digital channels and indirect (virtual) engagements between industry personnel and HCPs as a result of a permanent decrease of in-person engagements between sales reps and physicians.
- Increase in the use of telehealth medicine between HCPs and patients. How will this shift in engagement affect the quality of care and health outcomes? The use of analytics can investigate these relationships and provide insights on how pharmaceutical companies can assist physicians in treating their patients.
- Increase in the use of analytics to estimate contact/engagement response relationships given the preceding changes. Current promotion-response models are focused on measuring the effects of the number of contacts on dollar sales or prescription (Rx) volume. Empirical models will need to be adapted to reflect a different objective function (e.g., outcomes vs. Rxs) and different measurements on promotion activity (e.g., customer engagement vs. primary detail equivalents (PDEs)).
- Changes in sales force strategy outcomes (sales force size, structure, and allocation) and sales operations outcomes (territory alignment, call planning, objective setting, incentive compensation, sales reporting) given changes in the access of sales reps to HCPs.
- Push to increase US self-reliance on the source for active pharmaceutical ingredients (APIs) and more broadly decrease dependency on China in the pharma supply chain.1 Legislation from Congress will likely accelerate this push through supply chain regulations on the pharma industry.
- Change the nature of work within pharma companies from gathering in a central location to working virtually.2 This change is not unique to pharma companies. However, one challenge here is the importance of idea creation and innovation in the pharma industry for sustained and future success, especially in R&D. How does a pharma organization maintain the cultivation and innovation of new ideas, which generally comes out of a process of interpersonal collaboration and interaction?2 Can this be sustained virtually?
- Change pharma R&D focus from anti-cancer to anti-virus drugs.3 While this effect may still be too early to see, the emphasis that pharma companies have invested in developing vaccines and therapeutic treatments may mean non-virus R&D projects are put on hold.
Long-term changes induced by COVID-19. These changes include:
- The deep economic recession has produced significant market access effects (loss of health insurance due to high unemployment), affordability effects (decrease in disposable personal income), and a shift in insurance coverage for economically affected people from private third-party commercial to Medicaid drug plans.
- One key outcome from recession effects on the drug industry is the growing importance of understanding and measuring economic dynamics and their impact on pharma commercial operations.
- Decreases in patient health outcomes due to the preceding market access and affordability effects, but also due to reductions in patient visits to their physicians, reductions in maintaining regular checkups and diagnostic tests, etc. Longer-term patient health outcome effects were also seen from the Great Recession of December 2007 – June 2009. Further, lockdowns and social distancing restrictions have limited interpersonal interactions, causing a rise in mental health disorders.
- Movement to greater importance on understanding local/sub-national dynamics (affects a range of analyses – marketing-mix, promotion-response, forecasting, etc.).
- Consolidation of group practices, hospitals, and healthcare systems given the economic hardship caused by patients delaying and/or stopping procedures.
- Increase in enrollment in pharma company Patient Assistance Programs (PAPs). One concerning economic trend is the growing number of long-term unemployed, where millions of jobs will be permanently lost due to the COVID-19 induced recession. This means long-term access issues to healthcare for this group of economically affected people.
- Increased brand-to-generic and biologic-to-biosimilar substitution, and a shift to mail order to lower drug costs. This effect is a direct outgrowth of affordability issues facing patients.
- Long term changes accelerated by COVID-19 on forces that already existed prior to the pandemic. These changes include:
- Movement to a government single-payer system. The very high unemployment and the resulting loss of health insurance for individuals have shown a weakness in the system of employer-sponsored health insurance.
- Stronger likelihood that the pharma industry will see permanent direct drug price controls. Expansion of the Medicare Part B International Price Index (IPI) imposed on the Medicare Part D drug program, as recently done by executive order by the Trump administration, is an example of this policy shift. Items a. and b. illustrate an increasing on-going trend of greater government involvement and regulation of the pharma industry.2
- Greater importance placed on understanding economic dynamics affecting everything across the pharma supply chain, from R&D portfolio investment to post-patent expiration.
- Shift to a value-based/outcomes-based commercial model design (CMD) as the cost of healthcare rises relative to affordability (both at the private individual and public sector levels).
- Greater importance placed on analytics in identifying and solving pharma problems across the entire project/product life cycle. Advanced analytics has taken on ever-increasing importance as pharma problems have become more complex and where the cost of inaction or being late in reacting to events becomes higher. Examples of advanced analytics include, but not limited to the following: optimization, simulation, forecasting/prediction, econometric analysis, Next Best Action (NBA), omnichannel marketing, and artificial intelligence (AI) /machine learning (ML).
- Greater importance placed on agility and resiliency on pharma company actions in anticipation of and reaction to events affecting the industry.2
Concluding Remarks – What Does this Mean for Clients?
The COVID-19 pandemic has added further uncertainty and challenges onto the pharma industry on top of what was already there. While COVID-19 has introduced new long-term changes directly caused by the pandemic, many other changes are induced from this event, and accelerating changes that were already brewing in the pharma environment. This blog has categorized the nature of these key long-term changes brought on by COVID-19, so pharma company executives can prioritize and then address each change facing them.
The good news is that all the changes noted here are solvable. Axtria has expertise in all aspects of pharma analytics, commercial operations, and business information management to help companies navigate through this time of change. Axtria would be delighted to help and ensure that your resource investments are properly optimized during these challenging times. Further, we can ensure that your innovative medicines continue to get to the appropriate patients so that they and the healthcare system may receive indicated benefits on patient health outcomes, improved quality of care, and lower overall treatment costs.
- Ayati N, Saiyarsarai P and Nikfar S. Short and long term impacts of COVID-19 on the pharmaceutical sector. DARU Journal of Pharmaceutical Sciences, published online 3 July 2020, available at https://doi.org/10.1007/s40199-020-00358-5.
- Kelleher K, Kumar K, Patel P, et al. Pharma operations: the path to recovery and the next normal. McKinsey & Company, published online 12 May 2020, available at https://www.mckinsey.com/industries/pharmaceuticals-and-medical-products/our-insights/pharma-operations-the-path-to-recovery-and-the-next-normal.
- Graupner H. Will coronavirus pandemic change big pharma’s long term focus? DW Akademie, published online 15 June 2020, available at https://www.dw.com/en/will-coronavirus-pandemic-change-big-pharmas-long-term-focus/a-53807139.