Paradigm Shift Provides Pharma with Strategic Partnership
Options for Outsourcing Health-economics Research

Although recent trends in pharmaceutical pricing and reimbursement have given rise to significant changes in drug development and marketing, the manner in which pharma companies outsource their health-economics research has remained unaltered. It now appears that change is coming. As internal research departments within pharma become increasingly overburdened, pharma companies are seeking a new, partnership-based business model with health-economics research firms that stands in stark contrast to the traditional, vendor-based arrangement that has characterized the business relationship for the past 25 years.

The movement toward a partnership-based relationship constitutes a real paradigm shift that wasn’t even possible until very recently, according to David Thompson, Ph.D., vice president, Global Health Economics, for i3 Innovus. “Historically, health-economics research firms were either too small, too specialized or too geographically limited for any one of them alone to be a viable sole-source partner for pharma,” he said. “But recent consolidation has given rise to a few large health-economics research firms, such as i3 Innovus, that have the depth and breadth to make the partnership-based business model a reality”.

The partnership-based business model involves the wholesale outsourcing of all of the health economics and outcomes research – database research, modeling, prospective research, dossier preparation and late phase studies – for a given compound or therapeutic area to one health-economics research consultancy that has the strategic expertise, analytic horsepower, and global reach needed to carry it out.

In comparison, the traditional, vendor-based business relationship has required personnel within pharma to set strategic and tactical objectives and then define specific projects to meet these objectives, which are farmed out in a competitive bidding process to the research vendors with the specialty expertise aligned to each specific project and lead to a fragmented collection of studies.

This fragmentation contributes to health economic research strategies that are unproductive and often wasteful, i3 Innovus President William Crown, Ph.D., concurred. “The traditional biopharmaceutical model of clinical development and marketing is broken, and clinical efficacy and safety are necessary, but insufficient, criteria for market success,” Crown said. “Most companies may realize this at some level, but lack a comprehensive understanding of the complete set of health economics research activities they should be undertaking across all stages of clinical development.”

“Bill [Crown] was the first to recognize the potential benefits of the partnership-based approach, and he has been at the forefront of communicating this business model to the pharma industry,” added Thompson. “When research firms are involved with the drug company’s strategic planning for multiple research projects, the pieces of the puzzle really fit together well, which saves time and money, and results in a more cohesive portfolio of research.”

Piecemeal approach has limitations

Under the current research outsourcing regime, individual research projects for which a drug company needs external assistance are identified by the company’s internal research department. The company then undergoes a protracted vendor bidding process to select the firm that best meets its data and budgetary needs.

This is a time-consuming process on the pharma side, requiring the development of a request for proposal (RFP), management of the bureaucratic competitive bidding process and intervention from purchasing and acquisition personnel to negotiate the terms of the contract. Time also is lost when a new research firm needs to conduct complex background research to get up to speed on a specific product or therapeutic area, Thompson explained.

“Often some of the work performed for new studies is repeated because one research firm may not have expertise in a particular area and therefore has to duplicate one or more elements of the study that already may have been done for a past study by other researchers,” he said.

Further, the vendor-based model compartmentalizes health economic research projects, resulting in data that do not always mesh with related data collected under different studies for other purposes. “The very nature of the vendor-based process leads to information gaps and redundancies because the research entity and the pharmaceutical company are not collaborating in a holistic manner,” he remarked. “When individual projects are distributed among vendors, drug companies miss out on economies of scale, the benefits of long-term planning and the consistency that human capital advances bring.”

Partnership-based model leads to “wrap-around” consulting

In Thompson’s view, many of these inefficiencies would be mitigated by the research entity becoming a partner in a client’s strategic and tactical research objectives. Using this partnership or “wraparound” business model streamlines the research process because a pharma company can work with a single research entity for all of its research needs.

“Both parties can examine the portfolio of products and where they are in development and then help to shape both the short-term and the long-range plans and research goals,” he said. “Together, we can develop a strategic plan and determine what pharmacoeconomic [PE] and outcomes studies companies should do to maximize product launch, support market access and foster favorable reimbursement.”

i3 Innovus designed this wraparound model to empower its staff members to serve as long-term and strategic partners to pharmaceutical companies for all of their outsourced research. Under this model, companies benefit from more cohesive development of the elements of a product evidence dossier, which yields better information in a more timely and cost-efficient way.

This concept took hold at i3 Innovus as the firm expanded its operations and its workforce, which now includes more than 200 employees globally. Crown, who developed the wraparound model, saw that i3, due to its size, level of expertise and experience in the field not only could deliver more effective PE and outcomes data at a lower overall cost, but it also would help pharmaceutical companies manage a growing problem: insufficient internal resources.

“As turnover in the health economics research field increases, many researchers working within biopharmaceutical companies are relatively young and inexperienced, and continuity in strategy is lost,” Crown said. Further, “cost-reduction efforts are forcing many companies to outsource portions of their research activities that historically would have been performed by internal staff,” he indicated.

For example, a major pharmaceutical company reported in August that it was transferring the majority of its U.S. clinical data management work to i3 StatProbe, a move that would result in the hiring of approximately 120 additional i3 StatProbe specialists.

Innovus identifies need for a better way

This increasing need for outsourced research certainly has helped drive the marketplace’s openness toward a more engaged health economics research partner. “In this economy, it is difficult to both manage head count and to hire. The i3 Innovus solution – which offers consultancy, expertise, the people to conduct the research, and a vision for incorporating all of the pieces of data into an overall plan – alleviates the burden for an overwhelmed, understaffed health economics unit within a pharmaceuticals company,” Thompson said.

i3 Innovus’ relationships with data technology innovator Ingenix and UnitedHealthCare, as well as its global acquisition of various health economics entities, put the company in a unique position to assume the partner role as a sole-source collaborator, according to Crown.

“I strongly believe that no other company in the industry has i3 Innovus' depth of scientific expertise, experience, global reach, and access to data,” he said. “Because of these characteristics, i3 Innovus is the perfect strategic partner for the industry’s health economics research.”

“I’m really excited to have the opportunity to work with Bill and our clients to implement and refine this new paradigm, Thompson added. In the 20 years I’ve been in this business, this is first time I’ve seen us have the chance to dramatically change the way we do things for the benefit of our clients and of ourselves. It’s a true ‘win-win’ scenario.”

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