US health care is exponentially more complicated today than just 5 years ago. Even the most competent, experienced marketing teams may not anticipate or clearly understand the complex forces that are changing how we select, dispense, and reimburse for drugs and devices.
Changes in Traditional Customers
Pharmacy Benefit Managers (PBM) are your primary contracting conduit into commercial and Medicare Part D plans to assure formulary market access. The FTC approved the $29.1 billion ESI-Medco merger, further consolidating the PBM group. If your new product is not granted preferential access on a national PBM, you may be losing access to 70 million patients.
Manufacturers are starting to understand that contracting for preferential placement is not always effective, even if very deep discounts are offered. Many PBM formularies and payer benefits essentially allow brand coverage as only a last resort.
For example, if you pay the required rebate for listing a product as a Tier 3 brand (Non-Preferred Brand-Name Drugs and Preferred Specialty Drugs), your revenue may not be sufficient to meet anticipated sales projections, and you may not achieve a reasonable "return on contract" investment.
So, while traditional contracting methods are still important (depending on the product), they may not be enough.
Many new kinds of customers are emerging as the ACA dust settles, including Accountable Care Organizations (ACOs), plans offered on the Health Care Exchanges, Integrated Delivery Organizations (IDO) or Networks (IDN), or Medical Services Organizations. As a pharma or device manufacturer, you will need to understand what it takes to gain these new customers. Each one renders or coordinates patient care under arrangements with a health plan or payor in a way that transfers some financial risk for patient care to these customers. This financial risk gives them incentive to avoid costs, including costs associated with new pharmaceutical products and devices.
You will have to engage with these new customers at local and regional levels to understand how your products affect their costs and quality metrics. Keep in mind that discounts, while important, will be overshadowed by the product's demonstrated effect on health care outcomes.
Your marketing teams know the traditional channel and reimbursement barriers and how to overcome them in contracts. However, there are new barriers that are often invisible and potentially lethal to product uptake and share growth:
Covance can partner with you to develop your customized contracts solution. To learn more, click here