Risk-reduced cost management practices (No. 3)

3. Consumer-driven models

Consumer-driven healthcare is all about inspiring the consumers to choose and use. More like the philosophical and practical assessment mechanism, where one consumer might choose to buy a fully loaded luxury car verses the consumer, who would prefer a compact car model to his or her everyday basic need. Similarly, in the healthcare industry, one patient might opt for a more expensive drug or treatment that provides better quality of life compared to the one opting for an inexpensive treatment that offers adequate health benefit. Spiraling healthcare costs and consumer demand for greater flexibility are the reasons why many biotech companies are moving to consumer-driven healthcare system, which is defined as a system where consumers, not the company or insurance provider, determine how and where to spend their healthcare allotments.

The only obstacle foresees is the consumer education, if the average consumer is not well informed regarding the health benefits. The basic premise of consumer-driven healthcare is that if users of the healthcare benefit see the true costs of a service, and they are given incentives to help manage these costs, overall healthcare costs will decline rapidly while quality care is maintained. This is going to create a tremendous change in the cost-effective and affordable drug making environment for biotechnology companies, in particular and for all of the bio/pharmaceutical industry, in general.