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Perspectives on Managed Markets Innovation

Posted by Matt Breese on Jul 26, 2016

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What is a pharma managed market? At its core, a managed market ensures “access” for new and existing products, and successfully challenges the reach of generics. A market that pharma effectively manages can mean the difference between a successful and a disastrous launch of a new drug. It can also be a positive contributor to a manufacturer’s profit-and-loss statement.   

Growing Interest in Lower Cost

For years, there has been growing — some might say even extreme — interest in lowering the cost of healthcare. Typically, managed-care organizations (MCOs) utilize generic substitutions, denials, pre-authorizations and other strategies to help control costs. The newest cost-control strategy, however, is not reserved just for MCOs. Hospitals, health systems, physician practices, and payers and pharmacy benefits managers (PBMs) are implementing processes to highly manage certain chronic and acute diseases, especially those with high-cost therapies. More and more frequently, treatment planning is a three-part effort, involving the physician, the patient and the payer.

Research from Health Strategies Group in 2013 suggested that oncology, with its expensive drug treatments, risk of inappropriate use and the advent of numerous new oral agents, was a prime target for this type of careful management. To better manage costs, payers are:

  • Expanding member cost-sharing for oncology agents
  • Controlling use through rigorous drug utilization management and clinical pathways
  • Promoting pharmacy oversight of office-administered agents to restrict access
  • Implementing more stringent pharma review criteria
  • More closely managing the use of biologics

Europe: A Case in Point Pharma May Have Ignored

Rising drug prices, economic austerity and limited funding have been the status quo in Europe for years. Payers in Europe have considerable experience in tough pricing and formulary access negotiations to control healthcare costs. U.S. payers and PBMs have turned to their European counterparts for guidance in curtailing costs. Comparative effectiveness research and value-based pricing are terms that are now part of contract and pricing negotiations, which have, in turn, become highly technical discussions about the economics of drug therapy. Today, rather than just ensuring that all of the boxes are checked to ensure a drug can be reimbursed, pharma managed market teams must prove a drug’s value using payers’ terminology. Without an effective managed market team, drug companies and their products are at risk for being left out of the equation.

Evolving Managed Market Teams

Managed market teams create market access, but they don’t do it alone. While the managed market team is responsible for effectively communicating the value of a drug in terms the payers and PBMs want to hear, the health economics and outcomes research (HEOR) team puts the meat into the message. Both teams are vital to a successful managed market strategy. Even if a payer can potentially save millions of dollars in hospital bills by approving a drug, it will not reimburse a drug unless pharma’s managed market team and the HEOR team work together to produce:

  1. Solid clinical and economic evidence
  2. A clear and compelling message

Recent trends in pharma resourcing suggest that staffing managed market teams evolves in response to a changing healthcare marketplace. In particular, companies are finding it necessary to restructure resources to adjust to new customer segments, such as integrated delivery networks (IDNs) and accountable-care organizations (ACOs). The need to carefully manage clients and effectively prepare for complex reimbursement and pricing negotiations drives organizational staffing of managed market teams.

Pharma’s managed market teams also evolve in response to payer and PBM demands, such as the desired cost controls in oncology, by:

  • Demonstrating value through reduced medical costs and comparative effectiveness data
  • Offering increased support through patient assistance and cost-sharing programs
  • Being vigilant and monitoring progress in clinical pathways implementation
  • Encouraging physician advocates to influence brand placement
  • Researching key decision makers and appropriately targeting messages
  • Prioritizing activities that present the greatest opportunities and address the greatest threats

Evolution in pharma is healthy. It is a requisite characteristic of an agile company that recognizes and adjusts to change that is out of its immediate control.

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Topics: Industry Trends, Market Access, Payer