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May 7th, 2016 at 1:03 pm

Pharmeceutical companies need to change their business strategies to keep up in the digital age


High drug prices are restricting people who need access to potentially life saving medications, from getting what they need. In the U.S. when government authorized patents expire, pharmaceutical companies rush to buy the patents and raise the prices of drugs by 6,000 percent. Martin Shkreli, at a conference, said he didn’t go far enough when raising the price of HIV drug Daraprim by more than 5,000 percent. Now with the rapid growth of digital and medical technology some may have to rethink their strategies for the future.

The ethics around drug prices are complex, and have created divisions on political, business and moral grounds. These debates have gone on for decades, and they are coming to a head right now. But another trend is about ready to disrupt pharma even more: The rise of the digital health-care ecosystem.


In the very near future, most drugs will have both a chemical and digital component, as every pill will have a companion mobile app that collects patient-specific data. We are entering an era in which this mobile data will be as important as a drug itself in the therapeutic management of the patient. Unlike traditional, passive therapies, the data will enable therapeutic recommendations that are tailored to the individual and actionable. Pharma companies must change their business strategies to go “beyond the pill,” and quickly understand how to create a business model that incorporates acquiring mobile data, medical devices, health IT, Big Data and the Internet of Everything.

Many pharmaceutical companies are in the midst of creating large-scale apps. We are starting to see mobile apps being developed that manage all aspects of health care: Drug adherence, individual content, patient activity and other data points. For apps to be useful, they need to provide better accessibility and connectivity to the health-care system in traditionally non-health-care settings, such as in the home.

With the aging of the population and the changes in health-care policy, there will be a push to develop more sophisticated and useful apps to create data loops between drugs (the concept of “beyond the pill”), diseases, and devices connecting to our mobile devices — and the existing health-care infrastructure. All of these elements will need to talk with one another.

The data generated and gathered by the apps will be mined to create recommendations that will be delivered directly back to patients and providers, using predictive algorithms. For example, a patient with heart failure will use a mobile app to manage the disease and, over time, the app will learn the patient’s patterns and be able to detect when the patient has missed a medication or is suffering from worsening disease.

Using exception-based algorithms, effective apps will notify concerned family members about disease-management goals, such as activity and diet, so they can offer support. While this type of artificial intelligence can save lives, there are worries about the overreaching impact on our lives. Elon Musk and other technology giants have chipped in $1 billion toward researching artificial intelligence to “benefit humanity” through a new nonprofit called OpenAI, devoted to creating intelligent machines or software. I think this is an incredibly valuable project for health-care AI: We want to make sure that health tech benefits humankind.

In 2016, we are going to see the rise of health-care algorithms. What do algorithms have to do with drug prices? While drug prices get a lot of media attention, we spend only 10 percent of our health-care dollar on drugs. Ninety percent — 16 percent of GDP, amounting to trillions of dollars — is spent on hospitals, doctors and long-term care. Meanwhile, in 2014, digital health investments were $6.5 billion, compared with $2.9 billion a year earlier. Investment dollars are now pouring into health-care (data) innovation.

Mobile health connected to therapeutics can help save huge amounts of money, as the efficiency of mobile is brought into the system. A December 2015 McKinsey & Company report, “How Pharma Can Win in a Digital World,” stated: “As health-care startups and technology giants move into what was traditionally the pharmaceutical domain, pharma companies will need to revamp their value propositions significantly.”

Changes in society (an aging population), policy (Affordable Care), and advances in smartphones, micro-sensors, batteries, and other technologies are changing the health-data game. Tech companies are rapidly creating a man-machine interface: Devices and pills with microchips can gather blood chemistry, record sleep patterns, heart rate, activity levels and other biometric measures. Pharma and device companies are creating HIPAA-compliant mobile apps; the apps being developed connect with enterprise-wide systems that will create data visualization, optimized security and ways to tweak devices in real time.

Much like Oracle and other companies changed the database industry with database management systems, emerging health-data companies will change medicine through health-data management. As tens of millions of people use an app, they will create a health data stream, which will be mined for many purposes, including perfecting artificial intelligence tools for health. Just as the Web created sub-industries based on search, health-data companies will emerge that use health data in a myriad of ways. The algorithms will become as valuable as the chemistry.

Currently, we are debating how to finance drug innovation while keeping prices reasonable. Democratic and Republican presidential hopefuls have raised the issue, advocating for different solutions, including reforming the FDA approval process, eliminating corporate restrictions on generics, and capping costs for drugs targeting serious health conditions.

It’s important that we plan for the next phase of pharma so we don’t hold back innovation. We want to make sure we are encouraging developers to create the New Pharma, and the New Health. It’s time to integrate digital into health care. As we go “beyond the pill,” integrating pharma with a holistic health ecosystem, all the stakeholders — the public, government, pharma and regulatory agencies — will have to understand and invest in the value of algorithms, and understand the shift. Data is the new drug.

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