Trends and Innovation Shaping the Future of Healthcare Worldwide

Healthcare across the globe is at a moment of change. With rising costs and growing needs of aging populations, health systems are struggling to understand who should pay for care and how drugs should be priced. During the World Economic Forum Annual Meeting in Davos, Switzerland, a multistakeholder panel of experts discussed the transformation taking place in healthcare and the tough questions ahead that still need to be answered.

The panel kicked off by discussing consolidation. Among pharmaceutical companies, consolidation is common since research and development is expensive and companies are constantly facing a patent cliff, said Christophe Weber, president and chief executive officer, Takeda.

While mergers and acquisitions across pharmaceutical companies are likely to always happen, mergers in other healthcare sectors are changing from horizontal to vertical integrations. Among payers there had been several large deals that did not go through because the US Department of Justice was looking at them closely and deciding they were not good for competition, explained Michael F. Neidorff, chairman and chief executive officer, Centene.

“The [US] government and [Federal Trade Commission] have been pretty aggressive on horizontal combinations, and I agree we should not expect any more of them,” said Peter Orszag, former director, US Office of Management and Budget under President Barack Obama, and current vice chairman, Lazard, a merger advisory firm. “On the other hand, the really big deals last year that closed last year—CVS—Aetna and Cigna–Express Scripts—were both verticals and I think you’re going to see a lot more of that.”

That vertical integration will change the dynamic across healthcare industry players, he added, as the new vertically integrated entities will have data on drugs, on insurance claims, and on clinical outcomes all in one place. According to Orszag, having all that information in one place will allow for the easy creation of registries and make the equivalent of phase 4 studies, which take place after a drug is approved, much easier to perform.

Weber agreed that the benefit of vertical integration is generation of more real-world data on patient outcomes. Access to this sort of data will help provide a better picture of outcomes based on patient cohorts and subtypes.

“I think this is something we need to make the healthcare system more efficient,” he said. “At the moment, and for decades, we have relied on clinical trial data … and then, after that, it’s a little bit dark.”

In China, there is more effort to better connect information, explained Liu Jiren, chairman and chief executive officer of Neusoft, a technology company based in China. There has been innovation to make 1 platform to connect all the hospitals and small clinics in a city and to integrate the personal health records at hospitals, homes, and clinics.

“The data becomes the personal asset,” he said, with individuals able to download information through an app on their mobile phone and share the data when they go to any hospital or provider.

Having more integrated data on real-world outcomes will be beneficial for drug pricing, Weber said. More access to that data will allow for new ways to define the value of treatment and introduce more innovative pricing models.

“We can do outcome-based pricing models, we can do different subtype population pricing models, but we need data for that…” he said.

New pricing models will help when there are curative, but expensive treatments. Neidorff used the hepatitis C drugs as an example. They were expensive, but they treat and cure a disease that is even more expensive throughout the continuum of care, if patients develop cirrhosis of the liver and need liver transplants.

Technology that can help determine the right drug for the right patient will be crucial, he said. It could be possible to look at a patient’s genome and determine if a drug will or will not work.

“Now, if it’s going to work for someone, and it’s going to cost $150,000, that’s wonderful,” Neidorff said. But if the assessment determines the treatment is the equivalent of a Hail Mary pass and it’s likely not going to work, then that treatment won’t be used.

Orszag called the hepatitis C drugs a good example because they were such a bad example of the debate of high drug pricing. The drugs were worth it in terms of total medical spend, but the problem was churn in the system with US patients switching payers or going on and off public insurance.

His suggestion: a personalized health risk score similar to a financial credit score. The health risk score can be used to improve the risk adjustment paid to insurance companies, but also it would be used to create a pool of money. If someone’s health risk score declines relative to what was expected, the health insurance company pays into a pool and the companies that have patients whose health risk score improved relative to what was expected can draw from the pool of money.

“It helps attenuate exactly this problem which we face in area after area after area, because people are switching insurance so often,” Orszag said.

In China, the issue is not so much price of drugs, Jiren said. The problem, in a country of 1.3 billion people is diagnostics. Many of the best doctors are based in the biggest cities and the doctors in second-tier cities are simply not as good. The diagnostics in those cities are not as good, which means if a mistake is made, there is a lot of waste that occurs following that diagnosis.

Orszag added that drug costs aren’t actually the biggest issue in the United States, although it is a problem. Instead, research has shown that the United States simply pays more on average per unit of care than other countries do. There are higher prices on care delivered; the United States doesn’t necessarily deliver more care. In the healthcare delivery system, there are areas where spending money does not make much sense. He pointed to postacute care, calling the time when the patient leaves the hospital the “wild west” because there is a lot of variation in spending and in quality.

Weber pointed out, however, that despite the improvements needed in the US health system, the United States is still the country where the majority of innovation is coming from, with upwards of 70% of new products in the world coming from the United States. He added that the United States is also the country with the fastest adoption. Which means there is a lot of good about the US system mixed in with the negative.

“The upside to the fact we spend so much in the United States is there’s a lot of opportunity to bring cost growth down without harming outcomes, because there are these large inefficiency targets out there,” Orszag said.