"How did you go bankrupt?" Bill asked. "Two ways," Mike said. "Gradually and then suddenly."
As Ernest Hemingway famously wrote in his 1926 novel, The Sun Also Rises, the nature of change often obeys a familiar pattern: at first, a slow, gradual evolution; and then, a quick, sudden transformation. This observation holds true across a wide array of phenomena and even seems to characterize a recent trend within the pharmaceutical industry: the proliferation of Direct-to-Consumer (DTC) platform offerings.
Early Movers in the DTC Pharma Market
Throughout the last few years, only a select few big pharma companies have broadened their sales offerings through DTC platforms. While obesity market leaders, Eli Lilly (LillyDirect) and Novo Nordisk (NovoCare Pharmacy), paved unique DTC paths to account for the explosion in demand for their GLP-1 drugs, most other leading companies in the industry held back – that is, until recently.
In July, President Donald Trump issued letters to 17 major pharma CEOs calling on them to enact Most Favored Nation (MFN) pricing for their “full portfolio of existing drugs… for every single Medicaid patient” which would align the prices of branded drugs in the U.S. to those in other developed nations. In the same set of letters, President Trump also instructed drugmakers to expand their DTC and Direct-to-Business (DTB) offerings for “high-volume, high-rebate prescription drugs so all Americans get the same low MFN prices that manufacturers already offer to third-party payers.”
How Drug Pricing Policy Is Accelerating DTC Pharma Innovation
In the weeks and months to follow, a more comprehensive DTC infrastructure quickly took shape across the industry.
Given the highly fluid nature of the policy environment, it stands to reason that additional industry players will establish drug-pricing partnerships with the Trump administration.
However, separate from these ongoing efforts, a plethora of other pharma companies have, in rapid succession, rolled out platforms of their own. Amgen, Boehringer Ingelheim, Bristol Myers Squibb, Genentech, Novartis, and others have all launched DTC sales offerings within the past month, and while the primary impetus behind this shift is almost certainly related to the regulatory environment (i.e., proposed tariffs), that is not to say there isn’t a more fundamental business case to be made in favor of DTC platforms for the pharma industry.
Strategic Considerations for Building a Direct-to-Consumer Pharma Model
The circumstances that originally incentivized Eli Lilly and Novo Nordisk to establish DTC platforms for their GLP-1 compounds are partially unique to the obesity market. As a result of the ongoing insurance coverage gaps in the space, Lilly and Novo began selling their GLP-1s directly to consumers, bypassing middlemen such as pharmacy benefit managers (PBMs) and wholesalers. This decision enabled cash-paying consumers to purchase the medication at a discounted rate, thereby increasing overall treatment access and affordability.
While this represented progress, access and affordability are not problems solely for patients whose insurance plans do not cover their condition (e.g., obesity). They’re also problems for patients who possess high-deductible plans or are outright uninsured. Moreover, when considering that – according to a recent survey conducted by Model N (a life sciences revenue management software solution), up to 40% of respondents had skipped or delayed a prescription due to financial concerns – the logic for advancing DTC platforms as another potential avenue for lowering drug costs becomes even clearer.
Though central to the overall calculus, increased access and affordability are not the only reasons pharma companies might consider pursuing DTC models.
Redefining Patient Engagement Through Direct Access and Digital Health
However, this willingness among consumers to embrace non-traditional avenues of healthcare is also connected to a much more fundamental phenomenon with which the industry must reckon. In many cases, traditional access models are proving insufficient, accelerating already declining levels of trust in healthcare and the pharmaceutical industry. According to research from Johns Hopkins University, public trust in the U.S. healthcare system fell from 71% to 40% in the years between 2020 and 2024.
Therefore, the question with which industry players must wrestle hinges on how they’ll embrace the innovation and creative thinking necessary for improving patient relationships while simultaneously navigating the myriad “countervailing winds of change” (e.g., patent cliff, stagnant R&D productivity, AI) that my colleague, Luke Otto, discussed in a recent white paper, Transforming Biopharma Operating Models for the Future.
DTC models represent one potentially meaningful way of doing so – by removing friction from the value chain, increasing access and affordability, and providing greater transparency and personalization, pharma companies can transform the impact they have on patient lives.
Operational Imperatives for Scaling a DTC Pharma Platform
However, this space is moving quickly; and while speed is often a virtue, other factors must be taken into consideration as well.
How Can Kenway Consulting Help?
If you believe your organization needs help answering any of the questions above or if you’re simply interested in learning more about the rapidly evolving DTC landscape, contact us to be connected to our team of experts.