quality assurance in the pharmaceuticals industrytefen.com/uploads/tribune/tj9vygdo8t.pdf ·...

In many industries, particularly the pharmaceuticals sector, the strict regulatory requirements and the challenges of staying competitive in a fast-changing environment are not only increasing the pressure on sales, production and administrative functions, but also on quality assurance depart-ments. The QA team is now expected to keep control of quality, costs, reliability and speed, while also complying with regulations. If this is to be achieved, quality assurance must become a proactive process which ensures that product manu- facture adheres to specific standards and strives to con-tinuously improve results and eliminate errors. In a nutshell, products should be “fit for purpose” and “right first time”. By optimizing process reliability and efficiency, quality as-surance can bring about speedy and effective operational performance which still observes all statutory requirements. To ensure the sustainability of this success over the medium to long term, quality assurance also needs to lead quality enhancement initiatives, eliminate activities which do not add value, reduce the cycle time required to handle and re-solve quality issues, and lessen reoccurrence of deviations.

Achieving this is no mean easy and it is crucial that the right control system is clearly defined and closely enforced for meeting the required standards and attaining quality improvements along the way. In reality, many companies are experiencing troubles with this challenge, finding that support functions, such as quality assurance, are increasingly tied up with administrative activities, reducing the time

they can spend on the shop floor preventing issues and directly adding value to the end customer.

However, any trend such as this also provides us with many opportunities for optimizing and better organizing QA activities. We urge pharmaceutical companies to acknow-ledge the need to streamline their operations, improve flow and operational speed, while minimizing unnecessary tasks in which time and money is wasted. Now is the time for them to structure their organizations around the key processes that add value to patients and users.

This article presents Tefen’s holistic approach as a method of QA process optimization, aiming to help organizations pursue business growth by becoming more proactive when dealing with failures and/or risks, reducing fire fighting situ-ations and attaining higher levels of customer satisfaction. Moreover, with the use of lean methodologies and techniques, Tefen can help companies to significantly increase resour-ce efficiency and successfully manage high and fluctuating workloads.

Implementing process optimization

The holistic approach from Tefen starts with a diagnostic benchmarking stage, which assesses three key factors: a site’s strategic priorities, performance and practices. This then allows us to formulate customized recommendations for the specific objectives and constraints of each company,

Copyright © 2012 Tefen Management Consulting. All rights reserved.

Optimizing Processes and Organization

Quality Assurance in the Pharmaceuticals Industry By Pete Caldwell, Alex Sifniotis and Edite Laka


giving valuable insight into what other organizations with the same issues have done to improve their areas of low performance.

1. Strategic prioritiesBefore any structural changes are made, it is crucial to specify the priorities of each site. Conducting specially designed interviews gives us an understanding of the drivers, constraints and overall philosophy, with its principles and trade-offs. This then enables us to define high-level targets for cost, quality and delivery metrics. Once site priorities have been set, a process/function matrix is used to prioritize the key business processes within the scope. Processes are prioritized according to their impact on quality and drivers, such as workload per department, cost, lead-time, customer value etc.

2. Current state: Performance and practicesAn analysis of current practices at the site and their impact on performance forms the foundation for any change and is crucial to the success of the program. Workshops are used to identify the process steps, inputs and outputs, and to clarify accountabilities. These processes are map-ped, focusing on the most critical 10-20 QA processes. Customers, outputs, suppliers and inputs are specified for each of the processes and subsequently, each of the process steps is categorized as either value adding, non- value adding or required for sustainable business. In addition to process mapping, working practices should

be observed and analyzed. The aim of all this is to establish the impact of practices on quality and to quantify the per-formance in terms of lead-time, FTEs or other costs, before benchmarking performance levels with other sites in the industry. At this stage it is essential to invest time on site to develop root causes and agree action plans with the teams.

3. Future stateFor an organization to be successful it should have a clear vision and processes designed to maximize value to the customer. At this stage, each of the mapped proces-ses is analyzed, in close cooperation with the teams per- forming these activities, to determine the optimum measures for process streamlining and removal of any waste and NVA activities. Benchmarks and best practices are brought in, assessed and incorporated where suitable to improve QA activities. Once the processes have been streamlined, the structure can be designed to enhance their output. Roles, responsibilities, accountability and interfaces are re-designed whilst taking into account existing knowledge and skill levels. Roles and structures may also be bench-marked, to provide a view of how other similar companies are organised (see summary of Tefen’s 2012 QA organi-sation benchmark, below). A training plan is designed to enable speedy and effective transition. When the projec- ted benefits of the improved processes have been quantified,new performance targets are set and KPIs introduced to monitor and promote the effectiveness and reliability of each process.

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Figure 01: Benchmark of life sciences QA organisations, highlighting the functions involved in each QA process (management on the left, execution on the right)


4. RoadmapThe roadmap should translate all these recommendations into a tangible and explicit work plan to enable a com-plete, timely and successful implementation. This includes detailed work streams, responsibilities, timescales, and re-source requirements. The roadmap should clearly illustrate the exact route to be followed by the organization, in order

to achieve the desired future state, while also assessing the benefits of each work stream and prioritizing them accordingly. It is imperative that the quality leadership and management teams agree and sign off on the roadmap to guarantee a successful implementation phase.

Case study

IntroductionA global pharmaceutical company had experienced increased deviations and claims over the past year, which alerted them to deterioration in product quality. Overload-ed with administrative tasks, the support functions had a low presence on the shop floor and were unable to pre-vent quality issues. The company needed to focus more on pursuing quality enhancement and strive to anticipate issues in advance instead of just reacting to “unexpected” events. In addition to the long term objective of corporate growth within the network through major cost reductions, the company had an initial target to reduce overall QA administrative workload and decrease the workforce from 30 to 25 FTEs by optimizing 14 QA processes.

Tefen was asked to apply the above problem-solving meth-odology and design a lean QA operation in order to improve quality performance and reduce administrative costs.

Strategic PrioritiesThe priority ranking approach revealed that the key site drivers were quality (non-negotiable and a top priority for

the site, especially bearing in mind recent quality issues) and cost (playing a key role in bringing new products to the site and satisfying clients). Meanwhile, the major constraint was perceived to be infrastructural manage-ment (the overwhelming QA workload and the organiza-tional structure - sub-optimal knowledge, skills, roles and responsibilities of personnel).

In light of the above, the strategic project objectives were agreed to be:

Enabling anticipation of issues instead of “fire-fighting” (quality)

Decreasing admin. activities to allow time for walkthroughs on the shop floor to identify issues, confirm SOP etc. and hence increase quality performance (quality)

Reducing overall QA workload and workforce from 30 to 25 FTEs (cost)

Current State: PerformanceFocusing on the priority areas, key performance data was collected from the site and assessed against relevant QA departments at similar pharmaceutical sites, using Tefen’s benchmarks, to identify areas for improvement.

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Costs Delivery FlexibilityLead-time Inventory Quality Productivity Headcount Layers, spans

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Strategic approach Technology, systems Facilities, layout Org structure Planning, scheduling QA & QC processes KPIs, mgt & routinesCulture, leadership

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Costs Delivery FlexibilityLead-time Inventory Quality Productivity Headcount Layers, spans

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Strategic approach Technology, systems Facilities, layout Org structure Planning, scheduling QA & QC processes KPIs, mgt & routinesCulture, leadership

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tefen Bench- marks

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Current State: PracticesThe next step in the site analysis was a review of current QA support practices. Detailed process mapping sessions were used to identify areas of low performance and high

cost, establishing major root causes and classifying each action as either value adding, non-value adding or sustain-ing activity.

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Assign case to pallet & update

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ReCommendatIonS1. Bldg 1- Ensure documents arrive organized and plastic-free to the archive – 5 min each*3,177 docs (2011) 2. COA generation to be done as part of lot review to avoid delays in release – as done for bldg 2 3. Work with other site to use the team site appropriately4. Work with IT to speed up COA generation5. Long-term: electronic batch records to eliminate handling of physical papers

4 10-20 Min wait for

each COA

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Current State

Current State with opportunities for improvement


Future State Tefen designed the future state in collaboration with the cli-ent. All this stage, waste was eliminated from all steps within each of the 14 QA processes that were chosen for analysis and new streamlined processes specified that would enable a more timely and efficient result for the internal / external process customers. The benefits from each of the quality improvements were quantified in terms of lead-time, FTEs or other costs so that individual initiatives could be prioritized accordingly.

RoadmapAn action plan was compiled with all recommendations and process owners were assigned to be responsible for the successful implementation. The roadmap was comprehensive, including tasks for all 14 processes, and distinguishing between quick wins, short, medium and long term benefits.

ResultsDirect process efficienciesPotential for improvement through the reduction of waste and elimination of non-value adding activities was found in each and every one of the 14 process analyzed. The total workload reduced by these improvements can be translated into 4.32 FTEs savings which can be deployed elsewhere.

Task-level efficiencies (reorganization of process/people distribution)Having mapped each of the 14 QA processes, a compari-son was done between the workload shown from these maps and the actual time being spent on these activities in the current situation. This comparison revealed a sig-nificant discrepancy between the two workloads, espe-cially regarding processes that were performed on a full or part time basis by a large number of individuals. In the most extreme situations, processes were spread across 13-14 QA associates, despite the workload requiring no more than 2-3 FTEs (according to process maps), lead-ing to significant losses of efficiency, and time and effort being wasted communicating and coordinating amongst this large group of participants. By reassigning roles and responsibilities and achieving a more balanced spread of the workload amongst associates, an extra saving of 2.3 FTEs was achieved.

Error reduction benefits (quality improvement)The high administrative workload of QA, together with its misplaced focus and removal from the shop floor was to a large extent responsible for the deterioration of product quality. Further to the efficiencies attained above, pro-cesses were redesigned to bring QA closer to the shop floor and prevent future quality issues from occurring. Some of the FTE savings above were reinvested in new processes, including the introduction of Gemba walks in order to optimize the quality system, ensure SOP compli-ance, identify further improvement potential, and prevent quality issues (by using risk assessment tools and moni-toring). In addition, the knowledge obtained during the Gemba walks was beneficial in ensuring that the SOPs reflected the latest internal and external guidelines and regulations.

Conclusion

A holistic approach of QA process optimization and orga-nization can generate a quality culture across a pharma-ceutical organization and help to overcome the challenges faced. The purpose of process optimization is to focus on value adding activities so that value and responsiveness to the customer are maximized and waste and delays are eliminated. Tefen shows how lean practices should be applied in an organization’s structure and processes to encourage continuous improvement.

Pete Caldwell, Managing Director, Tefen UKAlex Sifniotis, Senior Project Manager, Tefen UKEdite Laka, Consultant, Tefen UK

Background

The pace of transformation in the world leading health-care systems has increased dramatically in recent years, reshaping the nature of the pharmaceutical and medical devices marketplace.

In an uncertain economic climate, the progressive increase in resources absorbed by healthcare systems has made performance in the healthcare industry a central topic of both political and scientific debates. Recent health expen-diture analyses show a considerable variability of costs for health and non-health related goods and services, across countries but also within the regions and local health au-thorities of the same nation. This suggests that there could be an opportunity to reduce the costs of some items with a direct impact on the life sciences industry. In connection with this, the recent, deep and controversial healthcare budget cuts haunting health systems around the world include an in-depth review of the purchasing and supply conditions for drugs and medical devices.

As a result of this review, new purchasing trends have arisen, one example of which is the “spending review” approved by the Italian government. This sets reference prices for many key hospital medicines and medical devices (based on the lowest market prices), and further cost-containment measures for medicines in both the inpatient and outpatient sectors. Similar trends can be

found in other countries, including the greater purchasing power of the large GPOs (Group Purchasing Organiza-tions) in Germany, the stabilization of procurement hubs in the UK, the new tenders issued in the Nordic countries (often based on a collaborative approach and risk-sharing mechanisms between hospitals and providers) and the rise of “global service management” or a “pay for perfor-mance” approach. It seems likely that this cost-optimiza-tion trend is set to continue.

This huge pressure for cost-containment and the growth of purchasing systems has led to a multilayered body of institutional stakeholders, healthcare policy-makers and payers who are increasingly dictating or influencing what doctors can prescribe or implant. Life science companies find themselves having to address multiple stakeholders at different levels of the healthcare systems, each of them with varying needs and priorities. This complex structure means that the classical “muscle” approach of the phar-maceutical and medical devices sales force is no longer enough to increase the share of voice for a product and ensure a turnover in line with their company’s expectations.

Although the producers of medical products have already started to adapt to changing market needs by redesign-ing the organizational structure of their sales force and introducing new sales-supporting roles and competences (market access in primis), the results are still modest. In most cases, market access still focuses on mapping key


Taking market access a step further

Institutional Marketing – The Case for Change By Raffaele Fiorelli


stakeholders, with their roles and influence in the purchas-ing process and there is a lack of clear ideas about how to address their needs and ensure strategic interaction with the national health system. Moreover, the NHSs are starting to realize that pure cost-cutting on product and service purchasing is not a sustainable business model. They need to find a solution which focuses on alternative means of attacking their huge inefficiencies and signifi-cantly reducing costs.

The objective of institutional marketing initiatives, as ex-plored in this article, is to address these needs by creating “win-win” situations for both pharmaceutical/medical de-vice companies and the NHS. These should involve both clinical and institutional players and aim to forge new long-term relationships, which lead to concrete projects and the creation of a sustainable “healthcare environment”, with tangible benefits for both the companies and the NHS.

This article presents the results of a survey conducted by Tefen in Italy. This survey aimed to:

1. Investigate the key priorities of clinical and institutional stakeholders in the Italian NHS;2. Identify the key areas of focus for potential collaborations between life sciences companies and the Italian NHS;3. Identify the critical success factors and the main barriers to implementation of institutional marketing initiatives;

We will examine the survey results and discuss the rele-vant implications for the life sciences industry in this article.

Survey methodology

In all, Tefen surveyed 82 stakeholders from the Italian national health system, across 7 Italian regions. Institu-tional stakeholders accounted for the highest number of respondents, representing 55% of total responses, with

hospital pharmacy directors, hospital procurement admin-istrators, and regional hub directors accounting for more than 45% of the total institutional respondents. The key therapeutic areas represented by the clinical respondents were cardiovascular and metabolic diseases, oncology and onco-hematology, central nervous system diseases, respiratory diseases, and diagnostics.

The Italian regions were screened for several criteria, the main drivers of choice being population size, number of hospitals, presence of KOLs, and healthcare expendi-ture. Moreover, the target sample was defined to include regions characterized by different socio-economic and geographical contexts, political orientations of regional administrations, and models of healthcare provision. Institutional stakeholders were screened according to their role and relevance in the decision- making process for the purchase of drugs and medical devices. The clinical specialties were selected to have a significant sample of the therapeutic areas most represented in the product portfolio and pipeline of medical devices and pharmaceuti-cal companies.

Healthcare Sector Life Sciences Industry

Strong cost cutting pressure

Multi-layered purchasing system

Increasing number of decision makers, within hospitals

(clinical and administrative)

Increasing number of stakeholders outside

hospital settings (ASL, Regions)

Increasing relevance of centralized purchasing system

Increasing pressures to improve quality, efficiency and sustainability

Increasing outsourcing practice

Reduce costs withoutneglecting quality

Traditional commercial models no longer effective

Economically unsustainable

Difficulties in managing multiple stakeholders

Increasing product commoditization

Diminishing product differentiation

Looming patent cliff (Pharma)

Increasing focus on secondary and tertiary care

Poor public’s perception of Pharma / Biotech companies

Need for innovative value propositions

Figure 1 – The environmental conditions that create uncontested market space and represent opportunities for business growth for the life sciences industry


Key findings

As we can see, the dramatic pressure to contain health-care costs is influencing the actions and decisions of both institutional stakeholders and clinicians.

Figure 2 – Survey coverage by geography and role in the NHS

Institutional

Position

Hospital Pharmacy ManagerHospital Procurement AdministratorRegional Hub DirectorASL General ManagerRegional planning ManagerHospital Chief Executive OfficerHospital Chief Financial OfficerOthers

17% 15% 14% 13% 9% 5%3% 24%

Geographical Distribution

Veneto

Lombardy

Lazio

Tuscany

Sicily

Emilia-Romagna

Campania

26%

29%1%

9%

13%

19%

3%

Position

Interventional CardiologistDiabetologistOncologistRadiologistLaboratory DirectorChief of Internal MedicineNeurologistOthers

14% 13% 13% 11% 10% 10%8% 21%

Geographical Distribution

Veneto

Lombardy

Lazio

Tuscany

Sicily

Emilia-Romagna

Campania

23%

27%

3%

14%

11%

16%

6%

Clinical

Figure 3 – Key priorities of institutional and clinical stakeholders of the Italian NHS

Institutional

Cost containment

Process re-engineering

Health pathway redesign

Therapy compliance improvement

Human resources development

Performance monitoring (KPIs)

Patient and stuff safety

Realworld evidence

Patient satisfaction

Supply-chain management

Green initiatives

No priority

Clinical

Low priority Medium priority High priority Max priority

0% 20% 40% 60% 80% 100%

23% 72%

5% 21% 44% 27%

6% 23% 41% 24%

19% 23% 39% 15%

11% 29% 37% 19%

13% 14% 21% 36% 16%

3% 46% 36% 12%

19% 47% 21% 6%

9% 66% 19% 5%

31% 48% 13%

9% 53% 29% 9%

Cost containment

Process re-engineering

Health pathway redesign

Therapy compliance improvement

Human resources development

Performance monitoring (KPIs)

Patient and stuff safety

Realworld evidence

Patient satisfaction

Supply-chain management

Green initiatives

0% 20% 40% 60% 80% 100%

7%7% 23% 60%

11% 33% 14% 27% 15%

11% 19% 25% 34% 11%

3% 32% 39% 24%

3%12% 24% 39% 22%

28% 27% 29% 12%4%

3% 34% 43% 19%

17% 39% 27% 15%

3% 21% 45% 30%

38% 31% 21% 9%

38% 54% 7%


More than ninety percent of institutional respondents underlined cost containment as their prime concern. Many prioritized activities aimed at increasing the efficiency of the system, such as in-hospital process re-engineering (seventy-one percent), health pathway redesign1 (sixty-five percent), and improvement of therapy compliance2 (fifty-four percent). Fifty-eight percent of institutional respondents thought that education and human resources development still represent a major priority for the NHS, followed by patient and staff safety (forty-eight percent).

More than half of institutional stakeholders (fifty-two percent) mentioned performance monitoring as a key fac-tor, although most of them revealed that their real prior-ity is to develop and share “operational” KPIs; facilitate benchmarking across interregional hospitals and health authorities and develop practical solutions to fill the current gaps and inefficiencies. In contrast, collection of real word evidence data3 is still seen to be a lower priority which only produces value-based data for the longer term. In the same way, although patient satisfaction is recognized as a key objective for the NHS, the current data collection methods and analyses are still too “subjective” and there-fore not seen to be a major driver for policy and decision making. Seventeen percent of institutional respondents also mentioned supply chain management (despite the emphasis placed on this by national and regional health authorities, the general perception is that there is a long way to go before efficient and effective processes can be implemented) and nine percent highlighted green initiatives (mainly intended as levers for cost reduction rather than corporate social and environmental responsibility).

Looking at the outcomes of the clinicians’ survey, we can soon see the difference to the priorities set by the insti-tutional respondents. Overall, clinicians assigned higher relevance to patient satisfaction (high or max priority for 75% of respondents), patient and staff safety (sixty-two percent), and therapy compliance improvement (sixty-three percent), while they were only partially interested in supply chain management and green initiatives. However, a surprisingly high percentage of clinicians have begun to realize the relevance of reducing system inefficiencies by redesigning in-patient processes (forty-two percent) and health pathways (forty-five percent), with a view to slashing delivery costs and maximizing system profitability, without neglecting the quality of care.

The current situation leaves untapped potential for collaboration between the life sciences industry and the national health systemAlmost 70% of the stakeholders surveyed were open to collaborations4 with life sciences companies, although the degree of this “openness” differs by organizational role and region. Overall the institutional players seem to be more inclined to work alongside the companies on initiatives aimed at improving the NHS efficacy and efficiency (78% of respondents agree or strongly agree that the NHS will benefit from collaborations with the industry). Roughly one third of the institutional respondents even perceive collaboration with the industry not only as an opportu-nity but as an actual need for the NHS to ensure future sustainability.

Although roughly 50% of the clinicians share the same perception of institutional actors, one in four of the remain-ing respondents do not look with favor on potential col-laborations with suppliers. The other 25% were neutral.

The respondents open to work alongside with life sciences companies identified several areas of potential collabora-tion, prioritized by their attractiveness and feasibility. Over 50% of both institutional and clinical respondents agreed that the comparative effectiveness study and collection/analysis of real world data collection would benefit from support by the life sciences companies, due to the wealth of data and analytics skills available in some companies, particularly pharmaceuticals. Other areas where the respondents see companies adding value

1 Activity aimed at improving the integration of the care delivery across the different level of the system, e.g. primary, secondary, specialist and social care)2 Therapy compliance: extent to which the patient continues the agreed-upon treatment under limited supervision3 Collecting and reviewing the impact of diseases and treatments to find the most cost-effective options for personalized care4 Definition of collaborations provided to respondents during the survey: programs, projects, and activities aimed at improving the existing clinical, social, and economic outcomes achieved by the National Health System 5 Definition of collaborations provided to respondents during the survey: programs, projects, and activities aimed at improving the existing clinical, social, and economic outcomes achieved by the National Health System

Figure 4 – Degree of openness to collaborations with life sciences companies

Institut.

Clinical

Strongly Disagree

Disagree

Undecided

Agree

Strongly Agree

0% 20% 40% 60% 80% 100%

(Express to what extent you agree with the following statement: The NHS can benefit from the collaboration5 with life sciences companies)

4% 12%

5% 13%

13% 19%

43% 35%

35% 21%


through collaboration are in the health pathway redesign and in-hospital process reengineering (37% of institutional respondents, but only 11% of clinicians). About one out of four identified life sciences companies as potential part-ners for improving compliance and adherence to agreed therapies, by developing conjoint solutions and products to support patients along their therapy path. More than 20% of institutional respondents also identified opportuni-ties for collaborations by developing benchmarking studies

across structures and hospitals, both at a national and international level, to identify best-practices and set up knowledge-sharing mechanisms and processes. Seven-teen percent of institutional stakeholders said that they would be willing to start collaborations with companies to improve the supply chain management process, by de-veloping integrated systems for hospitals and local health authority inventory management.

The main causes of resistance identified by both clinical and institutional opponents are the current lack of clear legislation to regulate collaborations between the NHSs and the industry (eighty-two percent) and the lack of trust in life sciences companies (seventy-four percent), who are often perceived to be profiteers. Another potential barrier to the implementation of joint initiatives between the NHS and the industry is the perception that life sci-ences companies do not have the right competencies to cope with the major issues affecting the NHS (thirty-four percent). This concern was mainly raised by clinicians, with respect to patient management and health pathway redesign. Other barriers mentioned to a lesser extent by the detractors are the prohibited establishment of pro-fessional collaborations with one specific company, to preserve market competition and avoid anti-competitive conduct (seven-percent), the need to protect safety and privacy of patients data (three percent) or simply the fact that industry and NHS should not cooperate for ethical reasons (two percent).

On the other hand, institutional and clinical respondents agreed that the critical success factors for the successful implementation of institutional marketing initiatives are the identification of balanced objectives for each joint initiative, to meet the requirements of both companies and the NHS (sixty-three percent), the definition of project scope (thirty eight percent), the availability of companies to invest in long-term peer relationships with the NHS (twelve per-cent), the definition of structured governance to manage the joint projects, involving both clinical and institutional stakeholders at different levels of the health care system (eleven percent), and the availability of companies to “in-

vest on the NHS” without only considering their economic interests and ROI (three percent).

Life sciences companies are still struggling to ad-dress the evolving needs of the key stakeholders at the different levels of the NHSMore than two-thirds of the respondents said that they are aware of collaborations between the NHS and the in-dustry, but only fifteen percent believe that these initiatives bring “effective and concrete results”.

The main reasons identified as root causes of failure are the bureaucracy in the NHS (forty-two percent) which leads to long approval processes and slow implementa-tion and the unwillingness of healthcare administrations (twenty nine percent) and companies (twenty five percent) to invest in long-term programs. Other potential causes of failure include a project scope which is too wide (seven-teen percent though companies often focused on national rather than regional interests) or too narrow (fourteen percent thought that initiatives started as a pilot in small environments and were unconsciously not designed for scaling-up and systematically entering the daily flow of healthcare delivery). The causes of failure least mentioned were the lack of detailed project planning (twelve percent), the attitude of the industry considered reactive rather than confrontational or proactive (nine percent), and the lack of competences by company representatives (four percent).

At the end of the survey, when asked to rank the level of their satisfaction regarding the additional services provided by life sciences companies (excluding technical and clinical support), 58% clinicians showed satisfaction or full

Patients security Healthcare staff security Health Pathway Redesign Comparative effectiveness / RWE Process Reengineering Appropriateness & Benchmarking Patient adherence Patient and Staff Education Network improvement Supply Chain Management Patient Satisfaction Green Initiatives

Overall Results Institutional Players Clinical Players

Medium (=)Low (-) High (+) Medium (=)Low (-) High (+) Medium (=)Low (-) High (+)

Figure 5 – Main areas of potential collaborations between the NHS and the industry


satisfaction, while only 11% of the institutional respon-dents said that they were “fully satisfied”, and 34% revealed complete or partial dissatisfaction.

Implications for the life sciences industry

Pharmaceutical and medical devices companies have traditionally relied on an aggressive marketing and selling approach to promote their products. However, the social, demographic, and economic context in which the life science industry operates is changing dramatically to cre-ate new challenges. Several sectors are facing fast price erosion and decreasing volume growth rates, reducing the overall attractiveness of the markets. In this scenario, most companies are struggling to bring new products to the market or to find value propositions that can justify the prices charged with the value provided to the customers.

At the same time, the strong cost-containment pressure, the needs of the new stakeholders involved in the pur-chasing process and the limited availability of resources in the NHSs represent an opportunity for pharmaceuticals and medical devices companies to reshape their go-to-market strategy.

Several NHSs already implement “quick wins”, such as the reduction of expenditure on drugs and medical devices but these “quick and dirty” solutions are not enough to en-sure the long term sustainability of the healthcare systems. This is why most NHSs around the world are also starting to address the structural inefficiencies that characterize their hugely bureaucratic organizations. Institutional NHS stakeholders frequently realize that they do not have the resources or skills for this epoch-making change and they are now looking for partners from the industry. Parallel to this, clinicians are slowly opening up to potential collabora-tions with the suppliers. Overwhelmed by the continuous cost-cutting requests from their administrations, they are turning to industry companies for support.

These forces are reshaping the environment and the posi-tions of the different players in the health care arena, creat-ing the need for much greater collaboration. Although the economic case for change is clear in the national health systems, only few life sciences companies have managed to develop innovative value propositions to meet the need.

Supplier companies now have the chance to broaden their value propositions towards the national health systems and position themselves as real partners who can help address the key issues affecting health systems across the world. Establishing “win-win” collaborations (institutional marketing initiatives) with health care providers, they will not only help national health systems to achieve economic balance and sustainability but also achieve quick benefits

for themselves. Besides improving the “customer intimacy” with key stakeholders in an NHS, companies can begin to create feedback loops to capture outcome data and infor-mation. This will, in turn, help to establish a more dynamic relationship with healthcare payers and providers, enlarge their potential market and re-direct their R&D investments towards the real needs of the system (both in terms of pathologies and cost expectations).

The survey examined in this article shows that the areas of institutional marketing collaboration are disparate but also that the market is mature enough to support innovative business models based on a collaborative approach. The market access departments play a pivotal role in designing integrated packages of product and services to address the varying needs of stakeholders.

The implementation of a “collaborative” approach and institutional marketing projects will allow companies to diversify beyond their core offering, enabling different play-ers to build specific areas of expertise which give them a competitive advantage.

Conclusions

The traditional business model employed by life science companies has allowed them profitable returns for many years. However, external constraints are now placing huge pressure on this approach. From a positive perspective, this current situation offers companies the ideal opportu-nity to partner with healthcare systems, thereby promoting and conducting institutional marketing initiatives with the intent to generate benefits for the national health systems. These initiatives will allow the industry to build long-lasting relationships with institutional players, by collaborating in projects with a final pay-off for all participants.

If companies are to improve their performance through in-stitutional marketing initiatives, they will need to move fast to create their integrated product-service offerings and the supporting network and infrastructure to deliver them.

The transition will not be easy as it involves expansion of the company, its core offering and the development of new and more complex competences, but it does offer higher added value for the whole system. Bearing in mind that not all marketing initiatives will suit individual companies, now is the crucial time for companies to assess their cur-rent position, portfolio and pipeline, defining their individual strengths and key objectives. The future is bright for those companies which manage to switch towards a more col-laborative model and implement institutional marketing initiatives.

Raffaele Fiorelli, Consultant, Tefen Italy

The equation “number of units prescribed equals number of units sold” holds very rarely for pharmaceutical products whose consumption does not take place in controlled settings such as hospitals. Poor adherence to prescribed treatments may be due to a variety of factors, including intolerance to side effects, patient-perceived lack of effectiveness and administration difficulties (e.g. self-injections); this affects, to different degrees, the majority of diseases whose care takes place at the patient’s home. This issue has been increased by the recent trend, common in both Europe and the United States, of reducing hospitalization in favor of territorial care, in an effort to drive down the av-erage cost per patient, especially for longer-term diseases.

Non-adherence represents one of the most relevant healthcare challenges today: On the one hand, it costs billions of dollars in lost revenues to the global pharmaceutical in-dustry; on the other hand, it often increases overall costs for health-care providers or insurers due to the higher likeli- hood of complications and hospitalizations. Studies on the incidence and impact of this phenomenon are usually pathology-focused; the punctual quantification of overall costs associated is complex, so that an accurate quantification of the overall financial impact is not readily available. However, with several medical studies confirming non-adherence rates often in the range of 20% to 30% of the prescribed population at 12 months for long-term diseases (e.g. Parkinson’s and multiple sclerosis), the economic relevance becomes manifest. While adherence has traditio-nally been perceived as an issue of the health-care deli-

very system, taking the initiative to tackle the problem presents a growing opportunity for pharmaceutical companies to generate significant economic returns, directly and indirectly, especially in those therapy areas where the impact of lost revenues is highest.

These initiatives can lead to improvements in two significant areas:

Boost to sales volumes at no incremental sales efforts,maximizing the value extracted from the existing prescription base;

Improved relationships with the economic and adminis-trative actors influencing the sales process of pharma-ceutical products (e.g. regional agencies), supporting them in reaching their own health-care targets.

How can a pharmaceutical company design, develop and implement such an initiative? There are two main steps to be followed:

deeply understanding patients, the “consumers”; defining how to approach the health system.

This requires trying to get a deeper involvement (when impro-ving the relationship with economic buyers is a primary goal of the initiative) with an “institutional marketing” approach, or aligning key actors to receive regulatory authorization.Gaining an in-depth understanding of the end-users of medicaltreatments provides excellent insights about the root causesof non-adherence behaviors and how these could be acted upon to eliminate,


Bridging the Gap between Prescriptions and Salesby Luca Vegetti

Is maximizing prescription volumes really enough to unfold a drug’s full revenue potential?


or at least reduce, consumption barriers; this usually can be achieved through a four-step process

Get to know and segment non-customers: What is the actual non-adherence incidence? What are the characteristics of the patients in which it is concentrated (previous treatment history, stage of the disease, access to insurance, socio-demographic factors)? What are the characteristics of patients with the highest risk of turning into “non-customers”? Are there patient clusters characterized by irregular consumption, while others who discontinue altogether? This preliminary activity can rely on a mix of retrospective studies analysis and ad hoc activities; it provides a comprehensive perspective on “non-customers”, including their characteristics, larger and smaller clus-ters, and a preliminary set of nonadherence predictors.

Identify adherence barriers along the whole patient flow: What are the main factors turning patients into “non-customers”? What are the most critical steps experiencedby patients while moving across the different stages of their care path? At what stage do they discontinue treat-ment – if they ever started it? A detailed mapping and analysis of all the occurrences experienced by a patient andof all the interactions with the different actors (GPs, hospi-tals, specialists, health system, insurance, relatives, other care givers) from the time of initial presentation to the physician until the end of the care path highlights key con-sumption, barriers and the underlying rationales.

Map actionable levers: What are the main service compo-nents that could help overcome the barriers mapped along the patient flow? Is there anything the pharmaceutical company may do to lessen consumption barriers ex-perienced by patients, eventually focusing on specific targetclusters? What are the priority actions and the expected results? What are the desired interactions with institutional health providers and how can they be managed? Are there opportunities to build or improve the relationship with economic and administrative buyers?

Design intervention packages: Are there viable and cost-effective actions the pharmaceutical company may put in place to support treatment adherence – maximizing the value generated from actual prescriptions? What are the markets in which this solution is to be implemented? Are there specific legal issues or delivery requirements to

be dealt with at the national level? Is it appropriate to en- visage a “hot-housing” approach before planning a wide-spread launch? Who are the key individuals (medical, administrative) for whom an early involvement is to be planned?

Identifying and detailing a potential intervention strategy is not enough; its implementation must take place in someone else’s domain: that of the institutional health-care providers. Two different approaches and strategies may be envisaged, depending on the goals and priorities of the pharmaceutical company. At a minimum level, it can opt for a “low involve-ment” approach: communicate the initiative at the appropriateinstitutional level (national, regional), get all the required regulatory approvals and keep an update communication channelon the results of the initiative. Alternatively, the launch of an adherence focused initiative may involve a co-delivery withhealth-system actors, whereby the “front-end” provider is usually the health system, while the pharmaceutical company adds specific resources or components to reinforce some aspects of care provision.

There are various factors that affect the results of these two models (there may be a range of different outcomes between the two extremes):

Pharmaceutical company goals: whether the primary ob-jective is a sales growth by increasing treatment adherence, or strengthening the relationships with key influencers in administrative positions;

Initiative interdependence with institutional health-care delivery: the more the initiative foreseen is interconnec- ted to the existing care pathway (e.g. case management, such as in the first case discussed), the higher the need of co-delivery with the health system, while a more stand-alone approach can be undertaken in the case of an initiative that complements the health-care offering, for instance with a postprescription follow-up (e.g. the second case presented, on multiple sclerosis);

Product lifecycle stage: a higher degree of involvement might be envisaged, for instance, for a new treatment that is to undergo its market launch, often within a broader effort aimed at determining reimbursement status or formulary position;

Legislation: while some national legislations (in particular inthe US) facilitate direct contact between a pharmaceu-


tical company and a patient, others (such as, to different degrees, the European ones) impose more barriers, favoring (if not almost requiring) a co-delivery solution (where entities such as patient associations might be a subs-titute for health-system bodies). The final issue, once an initiative has been designed and the involvement of institutional health actors has been defined, is how to organize and align resources. At a higher level, this implies putting in place governance mechanisms: from an operational standpoint, detailing the competences needed and sizing the resources required to run the initiative. As the type of competences and the nature of resources required is somewhat different from the core of a phar-maceutical company’s operation and will likely have a tem-porary nature (due to product lifecycle and ROI consid-erations), different make-or-buy solutions must be evalu-ated to identify the most cost-effective solution.

How widespread is this model today? Are there any potentialpitfalls that must be taken into consideration while consi-dering such an initiative? Do actual results justify this kind of investment?Adherence-focused initiatives sponsored and undertaken by pharmaceutical companies are somewhat more common in the US, mostly due to lower regulatory barriers and the sizeof the revenue potential to be gained back. Anyway, des-pite the difficulty of coping with a highly fragmented legislative environment, these kinds of initiatives are gaining a foot-hold and demonstrating their relevance also in Europe, as the multiple sclerosis case suggests.

Beyond legislative concerns, there are at least two important potential pitfalls of the model that can explain why these ini-tiatives have been lagging behind in EU with respect to the US, and can thus provide insights for developing and fine-tuning further efforts:

The complexity of managing a multitude of health-systemactors (usually different bodies at local, regional and national level) not always aligned in terms of priorities and agenda;

The difficulty in quantifying a proven ROI, as these initiatives might be beneficial to the whole market for a given treatment, without significant impacts on market share (thus favoring competitors who did not invest money in the initiative).

There are also important factors that point to an increased relevance of this kind of initiative for the sales and marketing strategies of pharmaceutical companies:

Significant changes, both from new legislation issued inseveral key markets and from the ethical codes of pharmaceutical companies, on the scope of marketing instruments, and the necessity to find new destinations for part of the marketing budgets;

A track of previous experience in the design and manage-ment of adherencefocused efforts, whose best prac-tices can provide significant support in overcoming the two pitfalls mentioned above. The most relevant consideration remains the bottom-line impact. Data on actual nonadherence enable a backof- the-envelope calcula-tion of how large the potential revenues (and profits) to be recouped, while results from similar initiatives (the mul-tiple sclerosis case discusses good examples) provide a sense of how such efforts can turn into a moneymaking tool, enabling the company to fully capitalize on its sales and marketing budgets.

Case study

Case 1 Partnering with regions to reduce overall cost of Gastro-esophageal Reflux Disease careGastro-esophageal Reflux Disease (GERD) occurs when the lower esophageal sphincter (the valve separating the eso-phagus and stomach) does not close properly, allowing acid to back up into the esophagus; it is a chronic condition and may lead to more serious medical implications.

Several drugs are available for treatment, even though they usually account for roughly 40% to 50% of the overall healthservice cost of care; costs (both medication and others) rise quickly for patients migrating from a mild to a severe stage of the disease, a risk increased by the frequent non-adherence to both prescribed treatment and prescribed modifications to the individual’s lifestyle.

A leading global pharmaceutical company had to contend with reference prices for GERD treatments in some regions


of a large European market, leading to a potential loss of up to 60% of turnover and a risk of adoption of this scheme in all other regions.

The company approached the issue in regions still without a reference-price system by partnering with them to sup-port achieving budgetary goals by shifting the focus from theoverall cost of treatment to enhanced prevention and,especially, improved compliance for mild patients. In the part-nership, the company supported regions both in the designof levers (screening and prevention packages; case mana-gement system to enable follow-up, monitoring and out- reach on mild patients) and in their implementation in pilot roll-outs. This value proposition of “helping the healthsystem to create additional funds (or saving resources) what-ever the product choice” proved credible and effective, also avoiding stringent clinical trials or requirements of ethics committees.

The pilot tests provided satisfactory results. For the NHS, total pathology cost-oriented measures proved to be more beneficial than pure medications price-cutting, and also of- fered administrators a politically desirable outcome: savings through better health-care management. For the company, it avoided the expansion of price-reduction risk, while crea-ting incremental revenues through more systematic screening and enhanced compliance.

Case 2 Designing and implementing direct patient-support systems to boost multiple sclerosis treatment adherenceMultiple sclerosis (MS) is an autoimmune condition affecting the capability of nerve cells in the brain and spinal cord to communicate with each other; its course is characterized by relapses (acute attacks) leading to disability increases and intervals of disease stability. While no final cure is known, there are some drugs in the market (disease modifying thera-pies – DMT) enabling to slow disease progression, mostly by preventing new relapses and the ensuing disabilities. With an aggregate worldwide value of several billion dollars, the market for multiple sclerosis is dominated by four compa-nies; R&D pipelines suggest further entrants into this highly profitable market.

Treatment of multiple sclerosis is hampered by significant non-adherence issues. Long diagnosis time and poor communication at diagnosis, administration through selfin-jection, adverse effects, lack of a structured medical and social follow-up, and patientperceived treatment ineffective-ness are just some of the causes leading approximately 25 %–30 % of patients – as confirmed by several medical studies – to discontinue the prescribed treatment within 12 months. Additionally, efforts by the health system to tackle non-adherence issues are usually very poor, as there are no infrastructures or services that allow a punctual post-prescription follow-up; at most, some limited services are provided at the local level by patient associations. This “vacuum” of presidium of the postprescription phase provided pharmaceutical companies an opportunity to step in, designing and delivering additional services to support patients in keeping compliant to the prescription made. A detailed mapping of the patient flow (from prescription to end of treatment) enables the identification of “critical points,” which can be ranked in terms of the impact or feasibility of solution (costs, ease of implementation) and around which the company can build different service components (such as self-injection guides or the provision of in-house nurses) and their delivery systems (directly, especially where no legal constraints are in place, or through patient associa-tions or the national health service).

Detailed studies in settings where pharmaceutical companies provided patient-assistance services demonstrate a sig-nificant impact (and ROI), even in the short term, in terms of patient compliance; indirect benefits are achievable in terms of increased prescriptions due to a higher confidence in physicians. Additionally, this approach provides a po-tentially valuable defense for the incumbent product against potential new entrants with a more favorable adherence profile (e.g. tablets versus selfinjection), reducing the threat of market share dilution.

Luca Vegetti, Associate Partner, Tefen USA

The four-step process

Get to know and segment non-customers

1 2 3 4

Identify adherencebarriers along thewhole patient flow

Map actionablelevers

Designinterventionpackages

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