From John Guarino, SVP, Managed Markets & Payer Strategy, Palio

More and more in the healthcare space, the success of a brand depends on having an understanding of managed markets.

Nearly all business in our industry is managed. In some way, third party payers, be they commercial or government organizations, are affecting most use of drugs. Manufacturers can’t afford to be unsuccessful in this critical part of our business. How often have you seen excellent marketing executed into the physician/nursing/pharmacy space, only to have a reimbursement hic-up derail that prescribing process and set back your efforts in that practice?

The managed markets space is critical to pharma/biotech success for two reasons: 1) it represents the goal line of patients actually receiving their prescriptions and them being paid for, and 2) payers are becoming institutional decision makers that drive physician use through the payer preference.

Companies tend to address the need of managed markets marketing by either making their efforts part of the overall brand strategy driven by the business unit responsible for sales of a specific product, or by carving out managed markets as its own entity, usually within the corporate accounts space, focusing on the entire portfolio. Each approach has advantages and disadvantages. What is critical to success is understanding what is different about marketing to these customers.

Conversations in the payer space look different than they do for health care providers. They revolve around not only clinical differentiation but also the value associated with those outcomes. FDAMA 114 (the section of the regulation guiding pharma marketing to “formulary decision makers”) requires a unique understanding of what types of data paint the value picture best. Companies will need to address what “directly related to” the drugs indicated uses are as well as what “competent and reliable” means for claims data analysis. Internal regulatory and compliance organizations struggle with these definitions, and a clear understanding is important in helping manufacturers find their voice.

The payer buying process is different than that of physicians. Coverage reviews and decisions can vary by customer and they may be triggered by new products, generic entrants, competitive proposals or just a desire to ensure appropriate use of the drugs they pay for. They generally tend to make decisions by committee, with many stakeholders chiming in. Their frame of reference is to allow enough alternatives to satisfy need, but to avoid excess cost. They have to think in terms of patient populations where physicians are making decisions on specific patient cases. Good marketing in this area ensures holistic approaches to messaging –– not only to pharmacy and medical staff within the plan, but also to financial decision makers, quality directors, physician opinion leaders, hospital system partners of the payers and even patients.

Patient payer benefit design often reflects increased patient cost-sharing, premiums, and OOP costs. This move will shift care more towards consumerism. Large institutional decision makers will have to consider how shifting cost will impact members, and manufacturers will have decisions to make about where best to place their advocacy dollars, and how to advocate for patients in a compliant and legal way.

The Patient Protection and Affordable Care Act (PPACA) or healthcare reform, will have a profound impact on the payers and how they run their business. Fixed medical loss ratios, the excise tax on insurers, and benefit design restrictions are just a few areas that will challenge the payers’ profitability, and they, in turn, will challenge manufacturers to make value a linchpin issue in their marketing messages. Comparative Effectiveness Research is a health care reform initiative that manufactures need to help drive, or they will suffer whatever other stakeholders produce. You can think of this as National Committee for Quality Assurance (NCQA) initiatives combining with health economics research.

Things like market access, reimbursement, effective pull through, and contracting profitability are all areas in which expertise is necessary. If your organization doesn’t have strength here you need to develop it… and fast! The market is moving towards these customers becoming more important, not less. An understanding of the differences and similarities between traditional marketing and payer marketing will help deliver the strategies and tactics that ensure access and reimbursement success so critical to the success of the brands you’re managing.