The collision between the “volume-to-value” movement and the pharmaceutical and biotech industries over the next few years will have a powerful impact on them and on the healthcare industry and on us as customers, patients, and payers.

On the one hand, pharma is perhaps the part of the healthcare industry least exposed to direct price regulation under the Obama reforms. The actual costs of pharmaceuticals have been rising as a percentage of what people spend on healthcare, and are seen as the part they have the least influence on. At the same time, many new drugs for cancer and other life-threatening diseases have come with astonishingly high price tags, often not fully covered by insurance (due to the high deductibles and co-pays of the new plans), and with few ways for regulators or the market to push back on them. The public perceives these huge price tags as threatening people with a Hobson’s choice of bankruptcy or death. In the volatile political atmosphere of the 2016 elections, this leaves the pharmaceutical industry highly exposed to political attack and actual new price regulation.

On the other hand, the pharmaceutical and biotech industries also potentially offer some of the best answers to bringing the cost of healthcare down through the use of personalized medicines, smart medicines, new methods of administration such as implants, as well as the possibilities glimmering at us from recent research of real breakthroughs in such important chronic disease areas as Alzheimers, diabetes, addiction, behavioral medicine, and functional medicine. For the most part, though, these answers remain potential. We will not see them adding to the “value” side of the equation until they become fully integrated into a system that is at risk for the health of its customers and using every trick in the handbook to bring those costs in line.

Who decides?

Importantly, who will be the decision-makers? That is broadening rapidly. In the old days, the buyers were just the doctors, and the price-setters were just the sellers — the pharmaceutical industry and the pharmaceutical distributors. Then increasingly the ranks of decision-makers came to include the hospitals and health systems and their buying consortia. Then major retail chains began negotiating prices down for the most common drugs and health plans began dictating generic replacements whenever possible. In the post-Obama world, the decision-makers in market setting for pharmaceuticals are coming to include everyone involved in healthcare costs: Clinicians and healthcare institutional leaders; inventors, entrepreneurs and investors; employers; insurers; government regulators; and consumers themselves.

Increasingly, all of these players will have at least some of the three basics that constitute a real market: reliable information, ability to choose, and incentive to choose well.

What’s the value?

Traditionally, the pharmaceutical and industries have defined the value they bring to the customer as simply the benefit of the drug: Does it cure, does it palliate? We are driving rapidly toward a future in which that value will be defined in a much more multi-variate way: What is the actual benefit, at what cost, delivered both to the patient and to the medical and payment systems supporting the patient in the context of systemic, connected, always-on care? That’s a big, big difference, and a much harder challenge to meet.

The pressure is already on.