Why pharma companies are going DTC

One of the hottest trends in the pharmaceutical industry today is direct-to-consumer (DTC) sales and services.

Drugmakers are turning toward a new way to sell their products, gather user data, and save money by eliminating the intermediaries in the pharmaceutical supply chain, experts say. But that could come with some consequences, such as further siloing the healthcare system.

At the end of August, pharmaceutical giant Pfizer announced a new website called PfizerForAll, which provides information on common health issues like migraines or the flu and connects patients to telehealth services and prescription delivery services so they can get treatments and diagnostic tests delivered to their homes. Pfizer promotes some of its own therapies, including Paxlovid for Covid-19 and Nurtec for migraines, on the site.

That move came after rival pharmaceutical company Eli Lilly started LillyDirect in January, through which the company delivers prescriptions straight to patients. Eli Lilly also partnered with Amazon Pharmacy in March to deliver some of its medications to consumers’ doorsteps, including Ozempic competitor Zepbound, a GLP-1 weight loss drug.

So, why are Big Pharma companies going direct-to-consumer? According to Robin Glass, president of virtual care company Included Health, there are multiple advantages.

For one, many employer insurance plans have refused to cover some popular, more expensive pharmaceuticals like GLP-1s. Selling these medications directly to consumers could skirt insurance denials, Glass told Healthcare Brew.

“One of the number one things that employers, who are big purchasers of healthcare in our country, are awake at night about the cost of some of these drugs,” Glass said.

Because pharmaceuticals typically go through a number of checkpoints (such as wholesalers, distributors, and pharmacies) before landing in consumers’ hands, pharma companies traditionally haven’t gotten much insight into the consumer experience with their products, according to Ron Gutman, co-founder and co-CEO of digital health company Intrivo.

Directly selling products to patients means drugmakers can collect that “last-mile data” that could help the manufacturers “continuously hone their solutions and create better and better and better drugs,” Gutman said.

“I’m very excited about the idea of giving [drug developers] more firsthand data,” Gutman said. “I think that bridging that disconnect, first and foremost, is a huge advantage for pharma.”

Eliminating some intermediaries could also be a huge cost-savings opportunity for pharma companies, he added. For example, when medications are sold through pharmacies, the pharmacies get a cut of the profit, but if drugmakers are selling directly to consumers, they don’t have to share that revenue.

Why now? While the DTC market has been around for years, there are some factors that make it a more feasible option for drugmakers now, according to Gutman.

Technological advances, for example, like telehealth have made it easier for pharma companies to pursue DTC services as one streamlined way to reach and communicate with patients.

In addition to technology, certain advances in drug development may have created opportunities for drugmakers to cash in now. For instance, Pfizer and Eli Lilly are testing oral versions of popular GLP-1s, which could make the medications even more popular. Pharma companies may want to cash in on those opportunities, Glass said.

But GLP-1 drugs are notoriously expensive, and there’s been a lot of national discourse around lowering the cost of healthcare—pharmaceuticals in particular, Glass noted—so any proposition to lower the cost of prescription medications would likely be welcomed by the public and investors.

The aftermath. Gutman and Glass see pharma companies operating in the DTC space as having some positive effects for the healthcare industry—but the trend could have some negative effects, too.

According to Gutman, the shift is largely positive, as it would cut out inefficiencies in the pharmaceutical supply chain and could lower drug costs for consumers.

“These particular players will have an unprecedented opportunity to take [out] a lot of these unnecessary steps along the way that are not adding value, or in some cases, depleting value,” he said.

Glass said DTC could empower patients to feel “a sense of agency over their healthcare” as well as understand the cost of that care. But she fears patients getting their prescriptions in one place and the rest of their care in another could further splinter the healthcare industry.

“I think there are a lot of really negative consequences of that kind of transactional and fragmented care,” Glass said. “I worry that that is costly to the healthcare system and also eroding broader value that can be created with a more longitudinal and holistic look at a person’s healthcare.”

Looking ahead. Eli Lilly and Pfizer’s moves will likely be closely watched by other Big Pharma players, and both Gutman and Glass foresee more drugmakers jumping on the bandwagon in the future.

Glass emphasized that companies should evaluate not just the market opportunity of DTC services and sales but also patient outcomes.

“We should be holding these companies to a really high standard for ensuring that they’re not creating yet more silos and fragmentation in the care,” she said.