The future of health policy: As health care and life sciences evolve, regulators are changing, too

By Neal Batra, principal, Deloitte Consulting LLP, and Anne Phelps, principal, US Health Care Regulatory leader, Deloitte & Touche LLP

In the US, we continually strive to expand access to health care, improve care quality, and reduce costs. Achieving those goals is rarely a straightforward path or a linear process. The COVID-19 pandemic illustrated that health care is never static. New diseases emerge, novel treatments are discovered, and technology advances. It is an evolving and dynamic process that requires health care and life sciences organizations to be agile. The regulatory bodies that oversee those sectors should be nimble as well so that they don’t hinder forward momentum.

In health care, regulatory bodies often have to keep up with new technological advances and changing business models that are driven by innovators and disruptors. As business models change, we expect some incumbent health systems, health plans, drug companies, and device manufacturers could push back on regulations that might threaten existing revenue streams.

Here are three factors that are shaping the future of regulation, and what we expect:

1. Health policy can transcend administrations: We see the Future of Health^TM as a true North that transcends politics and the agendas of changing administrations. US health policy has historically been somewhat monolithic—a blunt instrument that assumes medical issues affect everyone the same. However, we have noticed some regulatory consistency over the past couple of administrations. Moreover, many health care regulators are looking beyond ensuring compliance. In some areas, regulators have signaled an increasing level of flexibility and an eye toward the future. There also appears to be a recognition among regulators that the health care sector is evolving rapidly. This shift extends the compliance mindset into a catalyst mindset. When it comes to regulations, a catalyst mindset can be critical to helping the sector advance.

Going forward, we expect:

• Information silos will continue to be broken down.
• Consumers will become more empowered to make decisions about their health.
  
• There will be more emphasis on early detection, earlier diagnosis, and earlier intervention.
  
• Communications and data analytics from regulatory bodies will improve.

2. The White House and Congress can collaborate with life sciences companies: We expect it will be increasingly difficult for companies to hold on to existing business models and more traditional forms of reimbursement. Case in point: In May, the Biden administration said it supports the idea of waiving intellectual patent protections for COVID-19 vaccines to increase supply in underserved nations during a once-in-a-generation pandemic.¹ The pharmaceutical sector argues that this decision could weaken already strained supply chains and lead to inferior or counterfeit products.² Complicating the discussion (in some instances), is the funding provided by the US government. Taxpayer dollars helped to mitigate risk and covered some research and development (R&D) costs to develop and manufacture the vaccines. The complexities and nuances are extremely deep, requiring thoughtful, objective, and data-driven perspectives. The average cost of bringing a new drug to market was more than $2 billion in 2020; and returns on research and development (R&D) costs have been declining over much of the past decade, according to Deloitte research. Regulators of the future should balance the need for common good while allowing corporations to generate profits so that they have an incentive to invest more in R&D and innovate further. We expect life sciences organizations will continue to lean in on the discussion with regulators and other stakeholders in the interest of population/public health and the future of health.

Similarly, we expect some hospitals and health systems will urge lawmakers and regulators to protect their legacy business models. They might argue that more hospitals mean more capacity, which means a future pandemic is unlikely to shut down society. However, the pandemic helped underscore the importance of virtual health and alternative sites of care.  The experience also helped some health system leaders recognize the need for more diversified streams of revenue.

Going forward, we expect:

• More bipartisan collaboration over the development of drugs and drug pricing. Democrats and Republicans in Congress might decide to work together to regulate drug prices.
• Health policy will likely transcend the typical reimbursement fight and focus more on the coordination of care for patients and rewards for hospitals, health systems, and clinicians that deliver high-quality yet more efficient care.
  
• Lawmakers and regulators could make it easier for disruptive, consumer-focused, data-centric companies to succeed in the market. Interoperability, transparency, and increased mobility will likely make it more difficult for companies to control patient health information.
  

3. No crisis should go to waste: National and global emergencies have historically inspired change. Relative to many other countries, the US is doing a good job vaccinating its population, particularly older people—more than 80% or people over age 65 are fully vaccinated.³ There is a need to create mechanisms that will allow similar results with less effort. That doesn’t necessarily mean significant infrastructure investments. Instead, public-private partnerships could be encouraged. Distributed smart-sensor devices that link to a federal database, for example, could detect new infection hot-spots or emerging health threats.⁴ That could help the public sector determine where resources are needed during future health crises.

Going forward, we expect:

• Regulators may redefine their roles and become catalysts of change. For example, agencies might take on a bigger role in improving health by tapping into the mountains of data they have across federal agencies—from epidemiological hot-spots to provider claims analyses.
• The pandemic could help further define the lines of authority, supply chain, stockpiling, and overall preparedness for the next public health emergency. There is an expectation that this moment will occur again, and infrastructure will be critical.
  
• Lessons learned during the pandemic could allow us to leapfrog into the Future of Health.
  

The traditional orthodoxies in health care and life sciences are changing, and regulators are changing, too. It is important for business leaders to understand what is changing and how it might affect them. While some incumbent organizations are likely to push back against new business models, we expect regulators will allow progress to continue as new business models are created.

Endnotes:

1. Biden agrees to waive COVID-19 vaccine patents, but it's still complicated, Voice of America, May 5, 2021 

2. PhRMA Statement on Intellectual Property Waiver, Pharmaceutical Research and Manufacturers of America (PhRMA), May 5, 2021

3. For seniors especially, COVID can be stealthy, The New York Times, August 8, 2021

4. Wearable sensor may signal you’re developing COVID-19—even if your symptoms are subtle, University of California, San Francisco, December 14, 2020

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