Five trends redefining the health sciences and wellness operating model 

In the past, innovative contracts have proved complicated to implement, costly to administer and convoluted to scale across different payers and geographies. Now, companies have the opportunity to resolve these problems; for example, through the use of platform technologies that allow data to be captured, shared and validated by different parties and thus reduce key barriers linked to administration and wide-spread adoption.

Agreeing on the data that actually demonstrate value is a more challenging issue. Stakeholders, especially payers and life sciences companies, need to agree on which outcomes are meaningful to them and the time frame for measurement. Increasingly, clinical data alone will not be sufficient to make these value assessments: real-world data linked to the efficiency and location of care delivery capture important potential cost-savings for hospitals and health systems. And of equal importance, patients’ increased quality of life and improved ability to adhere to medications – their experience – can be better measured and served by innovative contract approaches.

Ultimately, the data that will be of highest value will depend on a number of factors including the severity of disease and the ability to prevent, manage or treat it. For life sciences companies, it will also depend on which stakeholders are demanding the value (is it the consumer or the health system?) and how is that value being created (is it innovative products and services or an exquisite understanding of the customer)? In other words, deciding which outcomes data to prioritize should be directly informed by a company’s given business model.

• Because they create value through highly innovative products and services, breakthrough innovators should prioritize the collection of personalized clinical data, including genomic or other companion diagnostics.
• Efficient producers deliver the most value through their cost-effective delivery of treatments and services. As such, they need to capture data demonstrating they reduce the cost of care at the population level.
• For disease managers and lifestyle managers, non-clinical measures of outcomes will be critical to measure. Companies working in these business models must manage the holistic patient experience and access data that measure more humanistic types of value. For example, quality of life: an individual’s ability to remain in the workforce, live independently and avoid disease flare ups or side-effects are all meaningful outcomes to individuals living with chronic inflammatory or neurodegenerative conditions. Because these diseases affect significant numbers of people, the ability of medicines to reduce their number of disability-adjusted life years (a metric economists use to quantify the loss in productivity associated with ill health) should also be of interest to the employers and institutional health care systems that help pay for this care.

In order to demonstrate better measurable outcomes, accelerate the use of innovative contracts and position themselves to outperform, companies must:

• Proactively model how the use of products and services generate cost-savings for health systems and productivity gains for employers and individuals.
• Collaborate with consumer, technology and other organizations to develop digital tools and services that are easy to use and increase adherence to treatment and validate its effectiveness.
• Work with regulators to better use real-world data in product approvals and reimbursement decisions.
   

The health industry generates unprecedented volumes of data every year that sit in siloes, and because of this, the true and extended value that can be mined from it is very challenging to extract. Technical difficulties, regulatory reluctance and “ownership” issues make it difficult to break down these siloes. However, the greater challenge is often the attitude of companies themselves: companies too often view data only as an asset to protect. They are reluctant to increasing the ease with which their data can be transferred across systems fearing it might give competitors access to what they consider potential but unexplored and the possible unregistered IP that may lie within its analysis.

But with health data growing at an exponential rate, the reality is that no company can or should own more than a negligible fraction of the total volume. Nor should they want to: what matters is not the volume of raw data a company has on its servers (whether structured or unstructured), but the data it can access, interrogate and leverage. Owning data is a cost but accessing and interrogating data will generate insights and value to the health system. The value lies not in monetizing proprietary data assets, but in asking the right questions and connecting and combining disparate data streams to answer them.

To refuse to share or grant access to data therefore significantly slows the rate of meaningful progress in health. In the long term, as health care technologies link up, a connected, flexible information architecture will emerge to enable a qualitatively better level of health data liquidity. This frictionless, “superfluid” data environment will hold unlimited potential to drive new insights that can transform health care. For now, however, companies must take a more limited and tactical approach to the challenge of data. The two key questions all companies must address are:

• How can a company access the data they need?
• Which data are the most important to their business model?

Companies are already exploring multiple approaches to access the rich, longitudinal patient-level data held within health systems. Health systems in turn can benefit from allowing companies to connect and combine datasets and share insights. For example, the UK NHS could generate an estimated £4.6b (roughly US$6.33b) through operational savings, enhanced patient outcomes and wider economic benefits if it allowed companies access to its 55 million patient records.¹ While privacy and data security laws limit data sharing between health systems and life sciences companies, they can collaborate on workarounds such as “safe spaces” for data access, trusted research environments and arrangements with third-party data brokers.

With the advent of sensors and continuous data streams, these large longitudinal historic data sets may become less relevant and valuable to mine in the future. Dense and comprehensive seams of clinical and non-clinical data relevant to the patient-consumer – whether captured from sensors, social media, socioeconomic metrics or multiple other potential sources over a current discrete period in time – may prove to be more valuable. Ultimately, which data companies prioritize will depend on their business model approach:

• Breakthrough innovators should focus on genomic, phenotypic, biomarker and other data that can drive precision health, analyze and fine-tune patient response, and streamline clinical trials, by, for example, simulating control groups to predict outcomes.
• Disease managers need a range of personal clinical and non-clinical data to analyze complex chronic disease and select the right tools for personalized management, including the behavioral data that can help coach patients toward compliance and improved self-care.
• For efficient producers, the critical data are those that allow faster and more cost-effective decision-making at every point across the value chain, which helps with streamlining, automating and accelerating processes.
• Lifestyle managers need personalized data that allow them to proactively engage individuals about their health, predict consumer behavior and preferences and customize interactions.

To help ensure access to the data they need to drive clinical and commercial success, companies must:

• Develop trusted research environments, federated data system arrangements and other innovative solutions allowing vetted companies to access and use data.
• Work more closely with regulators and health stakeholders to establish norms for cybersecurity and other systemic standards that protect data integrity.
• Retrain or retain talent to develop proprietary algorithms and other data products that can accelerate R&D processes.
   

Increasingly, consumers and investors will use a different formula to evaluate tomorrow’s health care brands, putting greater emphasis on their environmental sustainability and wider social impact. A survey of nearly 15,000 consumers conducted by EY professionals in February 2021 found that 45% of respondents believe that sustainability is more important than it was one year ago.

Larry Fink, Chairman and CEO of BlackRock, also emphasized this “sustainability premium” in his 2021 letter to CEOs. Based on BlackRock’s analysis, companies with better environmental, social and governance (ESG) profiles in the automotive, banking and energy industries outperformed their peers – and not just in the court of public opinion. As Fink eloquently reminded the business community, “The more your company can show its purpose in delivering value to its customers, its employees and its communities, the better able you will be to compete and deliver long-term, durable profits for shareholders.”²

As the demand to measure and report sustainability practices grows, it’s highly likely that access to capital will be more closely tied to ESG disclosures. Indeed, through the first 11 months of 2020, investors in mutual and exchange-traded funds invested nearly US$290b in sustainable assets, a 96% increase compared with 2019. Moreover, anecdotal evidence suggests biopharma and medtech companies are receiving better terms on debt because of their sustainability compliance.

To improve their sustainability agendas, life sciences and health companies must tackle a more fundamental challenge: identifying which specific metrics they should monitor and report in the first place. It may seem obvious that products and services that help people manage or treat disease have enormous social value. But in ESG terms, these offerings aren’t just an “S” issue. Environmental and economic issues matter, too. There is a clear linkage between worsening climate and poor health due to the increased incidence of chronic diseases such as asthma and diabesity. Companies developing treatments for these conditions therefore have a responsibility to keep a critical eye on their manufacturing sites and supply chains.

The issue is that there are dozens of sustainability metrics in use today. With no standard agreement on what “good” looks like, companies have been free to emphasize the metrics where they excel and minimize the rest. Such selective reporting creates investor skepticism and holds the industry back in another fundamental way: it’s impossible to make meaningful comparisons between companies’ sustainability agendas.

Based on a review of metrics developed by the Global Reporting Initiative, the Sustainability Accounting Standards Board and others, we believe it is time for companies to prioritize sector-specific metrics linked to four different dimensions. These dimensions directly reflect the social and environmental value of health offerings and can be categorized according to the following themes:

• Responsible innovation: A measure that reflects how new products and services address unmet disease needs and cure both common and neglected health conditions.
• Access and affordability: A measure that indicates the improvement in public health that results from making life-saving therapies and services widely available and reasonably priced.
• Trust and quality: Companies need to have a strong focus on the quality, safety and security of the therapies and services they provide, including complying with ethical promotional practices.
• Health impact on climate change: Because climate change has direct health implications, companies need to measure their carbon emissions, water and waste management protocols to limit the additional disease burden caused by their environmental and supply chain practices.

Within each one of these dimensions are a number of metrics worth tracking. Metrics linked to responsible innovation, for instance, could include: the number of products and services aimed at curing or modifying disease and the number of products in a company’s portfolio that address unmet medical needs. Measures of affordability and access, meanwhile, could include scores on the Access to Medicines Index, a recognized benchmark of how biopharma product value improves health outcomes and enables access to needy patients. As companies focus on the metrics that reflect their core value proposition, they should also prioritize measures based on their business models.

• Breakthrough innovators, for instance, are likely to create the most value by emphasizing responsible innovations – especially curative products that address unmet medical needs around the globe.
• Disease managers, meanwhile, create value by building closer relationships with the patients they keep healthy through the optimal management of their chronic conditions. Ensuring their offerings maintain compliance with current regulatory guidelines will be a critical need. This includes emerging standards linked to the privacy and security of medical data generated from the use of medical products and services.
• Efficient producers create value by keeping people economically productive. Making sure their medicines and services are affordable and accessible to the greatest number of people is of the highest importance.
• Lifestyle managers primarily focus on consumer offerings linked to wellbeing or pre-disease. As such, they should focus on metrics that show their commitment to broader environmental sustainability (for example, through demonstrating cleaner manufacturing and supply chain practices). EY survey data indicates that 72% of consumer respondents believe that companies’ behaviours are as important as the products they sell, meaning companies need to show that they share customers’ broader ethical values to secure market share in consumer health.

To demonstrate their commitment to sustainability, companies must:

• Establish a framework for measuring progress against sustainability goals linked to four themes: responsible innovation, access and affordability, trust and compliance and climate change.
• Prioritize metrics based on their specific business models. Developers of breakthrough innovations are most likely to create the most value by focusing on the development of curative medicines that address unmet medical needs, including future global infectious diseases.
• Monitor and communicate how their sustainability initiatives drive improved shareholder returns and access to investor capital.

As these five trends transform the way we deliver health sciences and wellness, companies must understand that Future (Health) Value lies in unlocking the power of data to create Health Experience.