Commercialization 3.0: Achieving New Product Success In Health Care’s New Era

Changes in health care, with 80% of physicians now employed by systems and financial pressures affecting both providers and patients according to Beckers Hospital, are reshaping product adoption criteria. Physicians prioritize profitable treatments. A recent survey from Gallup found that 38% of US adults delay care because of costs, making affordability and value critical factors.

In this evolving landscape, in addition to a superior clinical profile, new products must demonstrate convenience, ease of integration, and reduced risk to succeed. Frameworks like the Diffusion of Innovation, developed by Everett Rogers, and the RAMPx model help to assess value propositions to meet stakeholder needs and overcome real-world barriers to adoption.

Addressing these evolving needs while a product is still in development enables companies to optimize their clinical trials, refine commercialization strategies, and prioritize product features that will resonate with their target audience.

The RAMPx model offers a structured and integrated approach to assessing the strength of a new product’s value proposition to ensure they not only meet the clinical needs of stakeholders but also overcome the real-world barriers to adoption and commercial success.

Introducing Commercialization 3.0: The Value Era

Less than 50% of new products achieve their revenue forecasts. With the increased costs of new product development averaging almost $2.3bn and an internal rate of return (IRR) on R&D investment of 4.1%, translating science into new and successful products is a critical corporate priority.

New product commercialization strategies have evolved significantly in response to changes in health care delivery, access, and stakeholder dynamics. These shifts can be categorized into three distinct phases—Commercialization 1.0, 2.0, and now the emerging Commercialization 3.0.

Commercialization 1.0: The Military Launch Model

This phase, spanning from the 1980s through the early 2000s, was characterized by the “Military Launch Model”. Pharmaceutical companies marketing a new generation of primary care drugs, fueled by the newly available individual-level prescribing data, relied on massive, highly trained sales forces deployed in a coordinated fashion to blanket the market.

Pfizer, at its peak, employed 11,000 sales reps, and many other companies followed suit, leading to an industry-wide expansion of sales forces from around 40,000 in the mid-90s to over 100,000 by 2005.

The goal was to drive adoption primarily through physician engagement, maximizing reach and frequency. The larger the sales team and the greater the effort to build relationships with doctors, the more successful the launch was deemed.

One warning signal that was largely ignored by the industry was Merck’s acquisition of Medco in 1993. This prescient move should have signaled that a shift toward a more centralized approach to access via pharmacy benefit managers (PBMs) could be coming. However, when the Federal Trade Commission (FTC) required Merck to divest Medco, which delayed the full realization of PBMs impact, the potential rise of PBMs went into hibernation.

Commercialization 2.0: The Access-Centric Model

By the mid-2000s, patent expirations of large primary care drugs had started, and companies shifted their focus toward specialty products, including biologics, rare diseases, and oncology.

The power to drive product demand began to move away from physicians and towards payors, particularly PBMs. These gatekeepers had more control over which drugs patients could access. The need to demonstrate clinical and/or economic value to payers rather than just physicians became paramount, and the competition to gain preferred formulary access led companies to offer increasingly greater rebates and discounts.

PBM negotiations on behalf of insurers to obtain price reductions from drug manufacturers created a gross-to-net bubble in 2023 that was estimated at $334bn.

Access is now the key to new product success. With three PBMs reportedly controlling drug access for 80% of insured lives in the US, formulary hurdles like step edits, prior authorizations, and high co-pays can significantly deter both HCPs from prescribing and patients from filling prescriptions, especially for the 51% of people enrolled in high-deductible health plans, according to the US Bureau of Labor Statistics.

PBM practices are increasingly under growing scrutiny by Congress but, to date, market access is still a key component of any company’s new product launch strategy.

Transitioning to Commercialization 3.0: The Value Era

Today, pharma stands at the threshold of Commercialization 3.0, where neither a large sales force nor access alone guarantees success and a new product’s clinical superiority is table stakes. This new commercial reality is driven by a growing scrutiny of healthcare costs.

Commercialization 3.0 focuses on a product’s ability to deliver immediate, compelling value to all stakeholders—patients, physicians, payers, and health systems, and calls for new strategies that make new products easy to adopt, affordable, and clearly demonstrate the benefits to all decision-makers.

Changing Physician Dynamics

Eighty percent of physicians are employees of hospitals or private equity groups, according to Becker’s Hospital Review. Physicians face income and productivity pressures, with 57% of them paid by salary with bonuses often tied to patient volume. These demands reduce the time available to meet with sales reps or evaluate new products, raising the bar for any new product to demonstrate immediate, compelling value.

Physicians are not just scientists — they’re managing busy practices. To gain their adoption, new products must take into consideration that in a physician’s world, time is money. A new product must demonstrate the following:

• Clear and compelling clinical superiority that makes a physician easily recognize the value a new product will bring to their patients 

• Integrate smoothly into practice without disrupting workflows or requiring significant retraining. 

• Anticipate and demonstrate patient demands, as the ability to activate patients to visit the practice to learn about a new product influences physician decision. While physicians often complain that DTC promotion to patients doesn’t provide a full picture of the benefits and drawbacks of new products, if the message is compelling, it will drive patient traffic. 

• Provide financial benefits for both the practice and the patient. Unfavorable reimbursement can slow adoption, even if a product is superior, as it may require a physician to spend increasingly valuable time filling out prior authorization paperwork or demonstrating that a patient has fulfilled the requirements of a step-edit. Any product that has a deleterious impact on practice income will suffer from slower adoption. 

• Show peer support, as physicians are influenced by the experiences and recommendations of trusted colleagues.  

• Reduce the risk of trial by making a new product easy to give to a patient in limited quantities so its effect can be evaluated without a significant investment on the part of the patient or risk to the physician. Alternatively, demonstrate the product’s benefits with real-world data rather than just clinical trial data.

Patients do not only consider the clinical benefits of a treatment, but emotions also such as fear and trust play a significant role in their choices. For new products to succeed, they must:

• Address affordability and accessibility, ensuring patients can easily afford and access the product. 

• Mitigate risk aversion by offering strong reasons for patients to switch while easing fears about potential downsides; 

• Tap into trusted networks that enable patients to learn about a new product from trusted sources including physicians, family, friends, online websites, and online communities. If these influencers support the product, it will be easier for patients to overcome emotional resistance and accept it.   

In Commercialization 3.0, success hinges on a new product’s ability to deliver clear, immediate value while addressing the practical, financial, and emotional concerns of both physicians and patients. The core strategy is to demonstrate holistic value, not just clinical efficacy, but also the ease of integration into practice, convenience for patients, affordability, and a de-risked trial for stakeholders.

In this new commercialization paradigm, success is proven by adoption based on tangible value that addresses the needs of increasingly time- and cost-pressured stakeholders, including patients, payers, and providers.

Part two of this article will focus on how companies can navigate Commercialization 3.0 and how the Diffusion of Innovation framework and RAMPx model can provide a structured approach for developing product value proposition and position new products for future commercial success.