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July 2, 2015

PWC

21st Century Pharmaceutical Collaboration: The Value Convergence

By Health Research Institute

In the past, organizations working in different pockets of the health sector made decisions according to their own business priorities. But as pharmaceutical and life sciences pipelines rebound, consumer choice and provider cost-savings incentives are driving change in the industry’s commercial model. As US specialty drug spending hits an all-time high, purchasers, prescribers and patients are considering price as a key component of a drug’s expected health benefit.

In 2014, the US spent $373.9 billion on medicine, a 13.1% increase over 2013. Purchasers have taken notice, and are driving down drug costs using mandatory discounts and price protection clauses in formulary contracts. Patients are paying more for drugs as they switch to high-deductible health plans  and face larger out-of-pocket costs for specialty products. And physician groups and the government are becoming more concerned, and vocal, about the financial side effects of expensive new therapies. This is especially true as health systems shift to new payment models based on health outcomes, instead of volume of services provided.