UK: Defining A Drug's Value: Is Beauty In The Eye Of The Beholder?

Last Updated: 15 February 2017
Article by Sonal Shah

This week's blog is written by our US colleague, Sonal Shah, a Senior Manager in our Deloitte US Center for Health Solutions and first appeared in A view from the Center, Deloitte's Life Sciences & Health Care Blog.1 Sonal worked closely with us on our recent report Balancing the R&D equation: Measuring the return from pharmaceutical innovation 2016, conducting interviews with pharmaceutical companies based in the US and deriving key insights for the report chapters on 'Increasing pipeline value' and 'Reducing costs to launch'. Her blog considers the differences in interpretation that the main stakeholders might assign to the concept of value and how understanding and delivering against these different definitions of value, while challenging, will be necessary if drug innovation is to be sustained.

To what extent is beauty in the eye of the beholder?

They say that beauty is in the eye of the beholder – that each individual can look at the same object and perceive it differently. Could the same apply to the definition of value? Individuals' with different personal circumstances and experiences may perceive value differently. The same is probably true in health care.

Many consumers, journalists, and policymakers have been paying a lot of attention to the high prices of drugs lately. Some say that these prices are not in line with the benefit that these drugs bring but others say that the industry needs high prices to sustain pharmaceutical innovation, a costly endeavor. How can we continue to bring innovation to market and price drugs at affordable rates that reflect value?

Every year since 2010, Deloitte publishes a study on the return on pharmaceutical investment in innovation. Almost every year, we've seen these returns decline. Per the study, projected returns are at their lowest at 3.7 percent, as compared to the original high of 10.2 percent in 2010. One reason is the decrease in average peak sales per asset – from $816 million in 2010 down to $394 million in 2016.

In this year's report, we sought to understand how companies can increase the value of assets being brought to market. For biopharma, value could be defined as an increase in peak sales and internal rate of return (IRR). But how does the market define value, and can biopharma companies' value align with market value?

We interviewed commercial leaders who have worked on leading brands, that is, products that are at the top of their class (by revenue) for reasons other than being first to market, to understand how they differentiated those products from their competitors'. The message we heard was clear – deliver value to physicians, health plans, and patients. But how do these stakeholders define value?

The definition of value for many physicians is changing under value-based care. Under new payment models, hospitals and provider groups have financial incentives to reduce costs and increase the quality of care. Accordingly, many physicians are weighing their prescribing decisions more carefully, considering both the clinical and economic impact of their choices. As discussed in Delivering medical innovation in a value-based world, this means that biopharma companies likely need to tailor their value propositions to this need. We also heard from commercial leaders that a strong value proposition includes improving the clinical process and reducing other drivers of cost, such as hospitalizations or readmissions. Physicians and health systems are more likely to use products that help them meet value-based care goals.

Many health plans are raising the bar for value as they try to rein in drug spending. Several are taking a hard line on formulary decisions and implementing utilization controls for new, expensive treatments. Interviewees said drug manufacturers should understand early on in development how health plans define value for a given disease. They also said manufacturers should talk with medical and quality teams at health plans, and talk about more than price. Health plans' definition of value will likely set the criteria for market access, which may differ from the criteria for regulatory approval. Companies should consider identifying and incorporating clinical endpoints to demonstrate value to health plans in clinical trials, starting at Phase 2.

Patients are undeniably the most important stakeholder, at the center of the health care ecosystem. Patients might define value differently depending on their condition. For example, patients suffering from arthritis might most value the ability to walk without pain. This aspect of value can be captured through patient-reported outcomes (PROs) during clinical trials. We heard in interviews that developing and validating tools to capture PROs should be a priority for biopharma companies and initiated as early as Phase 1. Many companies could also gain greater patient engagement in clinical trials by using digital technology such as wearables. Patients who see value in the new drugs are more likely to demand them from their prescribers and health plans.

Ultimately, centering R&D strategies on delivering value to health care stakeholders could increase the returns on pharmaceutical innovation. Understanding and delivering against multiple definitions of value won't be easy, but it may be necessary to sustain drug innovation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.