Wednesday, November 28, 2012

Pharma's Adherence Revenue Pipe Dream

You've seen the headlines:

"Pharmaceutical Market Fails to Capture $188 Billion U.S. Revenue and $564 Billion Global Revenue Annually Due to Medication Non-Adherence"

"Poor adherence costs pharma $564 billion per year"

These numbers come from a study conducted by Capgemini Consulting with HealthPrize Technologies: "Estimated Annual Pharmaceutical Revenue Loss Due to Medication Non-Adherence."

On the cost side, the New England Healthcare Institute estimated that medication non-adherence is responsible for $290 billion in "otherwise avoidable medical spending" in the US alone each year.

"On the pharmaceutical revenue side, however, the impact of medication non-adherence had yet to be accurately quantified," said Capgemini in the executive summary of its report. "The market assumption relied upon to date, and quoted extensively, has been $30 billion globally, which we felt was a gross underestimate-prompting this project."

"Interventions to improve medication adherence should be top priority for the pharmaceutical industry," said Capgemini. It's not likely that the drug industry can capture all the revenue "lost" dues to non-adherence.

"While achieving 100% medication adherence is not possible," said Capgemini, "even a modest 10 percentage point increase in adherence could lead to a significant rise in pharmaceutical revenues, accompanied by improved health outcomes and decreased healthcare spending."

Is improving adherence -- even a "modest" 10 percent improvement -- a "pipe dream?"

Pipe dream or reality?
It's a pipe dream
It could happen
It depends



  1. I responded with "It could happen," but in my opinion it may not! The concern is how it gets done, efforts to date have been small and minimally effective. Partly because of the regulations, partly because patients seem to not value the service because it may not provide what they are looking for. Some companies do it right, but it starts with senior leadership making this a key organizational priority and there is not a lot of that. One company has had 4-5 heads of Patient Adherence over the last 7-10 years. Folks keep looking at it, but never really scale anything to a large extent. Key to success in my book is to have a patient centered mindset and the courage to stand up to legal/regulatory who often water down the program in order to mitigate risks. Thanks for bringing this up John!

  2. We agree with Robert Nauman. Ask patients what they would actually want in an adherence solution and it is often not what is offered. We polled 1,000 patients on a med for a chronic condition. Not surprisingly, very few desired a pharmacist-based or pure educational program or reminder device. The option of a rewards program was the overwhelming winner. In fact, patients greatly preferred the idea of $20 worth of rewards (points redeemable for gift certificates or other online mall items) over a $20 discount or rebate. Often, fun trumps utility. The non-adherence problem is largely a motivational or value issue, not simply a problem of cost or forgetfulness. There are no short-term benefits that come with taking medication. You need to build in the short-term benefits to make adherence compelling.


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