On the end of intermediation in Healthcare
A few days ago, the profile of the National Institutes of Health, U.S. Department of Health and Human Services, published this post on its official X account:
Last year, $9 billion of the $35 billion that the National Institutes of Health (NIH) awarded for research was used for general administrative expenses, known as ‘indirect costs.’ Today, the NIH reduced the maximum indirect cost rate that research institutions can charge the government to 15%, which is higher than what many major foundations allow and much lower than the 60% or more that some institutions currently charge the government. This change will save more than $4 billion per year, effective immediately.
This post and the recent measure by the new Trump administration made me reflect on the decline of intermediation and traditional promotion in the industry (Pharma, Biotech or MedTech) regarding its business development within a budgetary space — mostly public in Europe — that is evidently declining due to several key factors. Simplifying the analysis, I could summarize them into five general blocks:
Changes in regulation and transparency:
Transparency laws have limited incentives and payments to doctors, reducing the effectiveness of the traditional medical visit model. At the same time, regulations on direct advertising to healthcare professionals have become stricter, forcing companies to change their promotional strategies.
Digitalization and access to information:
Doctors and pharmacists now have direct access to scientific information, clinical studies, and real-time treatment comparisons, reducing the need for intermediaries. Digital platforms and knowledge networks have replaced many of the functions previously performed by medical sales representatives. The rise of telemedicine and digital health has changed communication channels between doctors, patients, and laboratories.
The evolution of the Patient’s role:
Patients are more informed and actively involved in treatment decisions, influencing prescriptions and reducing the industry’s control over doctors. They will be incorporated as organizations into price and reimbursement evaluation processes for upcoming innovative treatments.
Greater pressure in commercial negotiations and Price & Reimbursement processes:
The consolidation of hospital groups and pharmacies has given more power to buyers and reduced the influence of pharmaceutical companies on individual doctors’ decisions. The pressure to cut costs has made public health systems — and private insurers in private-sector settings — take a central role in medication selection, displacing traditional medical representatives. A prime example is the tough MUFACE negotiation in Spain: 1.53 million mutualists, civil servants, facing great uncertainty regarding their healthcare coverage, at least until March 4, 2025 — the deadline for the third national tender in less than five months. The premium increase went from 17% to 33%, and finally to 41.20%, plus financial compensation in case of losses. The one who pays, rules.
New marketing and sales models:
The healthcare industry is shifting move towards digital marketing models, remote access, and continuous online training. Data-driven personalization enables more effective strategies than the massive medical visits of the past.
In fact, I wrote some posts on this topic a decade ago which, upon rereading today, remain relevant — though they need updated data:
Can the Pharmaceutical Industry Move Toward Product + Service Delivery? (ES version)
Hybrid Profiles for Hybrid Futures: Sales & Access. (ES version)
The Opportunity of Data and the Product-Service Orientation, Against the Pharma & BioTech Isomorphism. (ES version)
It is more than evident that the industry’s traditional intermediation and promotion are adapting to the shift in power: from doctors to healthcare systems, from physical visits to digital channels, and from direct influence to data- and evidence-based decision-making.
However, there is also significant gap for savings in national health systems by digitizing their IT systems, unifying databases, and avoiding the high percentages of misdiagnoses and duplicated or unnecessary medical tests.
EDUCATIONAL PILLS:
International Master in Medical Affairs. Program part of the educational offerings of the BioTech and Pharma School. In Memoriam César Nombela. Certified by the Catholic University of Ávila. Information
Advanced Management Program. IE Business School. Executive Development Programs. Information
READING PILLS:
Time well spent. Seth Godin’s blog.
Technologies Shaping the Future of Pharma. Dr. Bertalan Mesko, PhD, known as The Medical Futurist.
Hub-and-Spoke Biotechs: BridgeBio. The Century of Biology.
How can the process of drug development be improved? Petter Attia.
If we can make maternal deaths as rare as in the healthiest countries, we can save 275,000 mothers each year. Hannah Ritchie in Our World in Data.
Before Elon Musk, there was Howard Hughes, a multifaceted figure, left an indelible mark on history. Let’s delve into some fascinating facts about this enigmatic billionaire. Mani Writes on Medium.
STARTUP PILLS:
Investment oportunitties: Capital Cell.
Neko Health raises $260m Series B. Neko Health
BoleTic. February 2025. Tic Biomed.
PODCAST PILLS:
I have to admit that when it comes to podcasts, I’m quite behind on the episodes of Kaizen with Jaime Rodríguez de Santiago. I’ve been a member of the community almost since the beginning, and I’m catching up now. I highly recommend it for activating critical thinking and continuous improvement. It’s in Spanish, though there are some episodes in English.
EVENT PILLS:
[P4H] Action Plan Endorsment. March 6, 2025. Registration
Global Payer Forum 2025. Optimizing Patient Access Through Value-Based Healthcare. Alira Health
Understanding Pharma Market Access & Payers in Europe. March 25th, 2025 Cell for Pharma
EAA Spring Convention, April 2/3 in Berlin. April 2: EAA Roundtable on Medical Devices April 3: EAA Convention (on Medicinal Products) Registration
Fierce Pharma Engage — April 29 — May 1 | Town & Country Resort, San Diego, CA
Fierce Pharma Week — September 8–11 | Pennsylvania Convention Center, Philadelphia, PA.
