Your Customers and Your Market Access Are Changing!

Your Customers and Your Market Access Are Changing! - Covance BlogUS 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.

New Customer Categories

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.

Understanding Barriers

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:

  • Electronic Prescribing Systems (EPS) – The clinician will prescribe from a list of product alternatives, but these may not reflect your contract or even feature your product. You will need to understand the vendors, technology, and processes for client’s EPS (typically a part of Electronic Medical Records software), and these vary widely.
  • Member Benefit Design – Benefits are more complicated than ever before. Out-of-pocket expenses for plan members vary during the year because of deductibles and maximum coverage levels. Some plans essentially restrict patients to generics by setting high prices for branded products whether or not the products are tiered or rebated. For example, the cost difference between a Tier 1 Generic Drug and a Tier 2 Preferred Brand-Name Drug can exceed $100.
  • Coupon Access – Patients and doctors may not know about your coupons.
  • Referral Channels – Some products depend upon the adoption by or recommendation from specialists. Traditional referral patterns may change with the changes from health care reform, though, and you will need to understand these shifts.
  • Stocking Policies – Purchasing and inventory patterns of ACOs and IDNs may change as they become more cost-focused.
  • Comparative Effectiveness Research & Applied Clinical Pathways – Clinical decision-making is increasing done using formulaic decision trees that apply the findings of “best practices” (based on clinical research) to individual clinical practice. The doctor uses these “trees” to decide the treatment for a given patient. If a your product does not occupy the place in this pathway that you anticipate, then it may never be selected for patient use or it may be selected for a smaller segment of available patients than you expect.

Covance can partner with you to develop your customized contracts solution. To learn more, click here


This entry was posted in Health Economics & Market Access, Healthcare and tagged , by Steven Medina. Bookmark the permalink.

About Steven Medina

Steven Medina is the Vice President of Managed Markets Services at Covance. Mr. Medina has led the Covance Managed Market Services business since, July 2012. He has been a consultant for 25 years, 21 of them with healthcare manufacturing, specializing in on-going service solutions (system and business processing), account management, and systems implementation. Mr. Medina has extensive experience with contract management and sales and marketing. Before joining Covance, Mr. Medina worked for CSC as a Partner Level 2 where he was a Solution Leader for CSC’s HAALO (Healthcare Applications Augmentation and Leading-Edge Outsourcing) practice; IMS Health, where he ran the Delivery Services organization and was responsible for providing Managed Market Solutions; and Highpoint, where he was the Vice President of Managed Service. Mr. Medina has demonstrated the ability to work with clients to help them identify their needs to create a solution that meets their requirements as well as their budgets. He has been part of many large pharmaceutical firms’ projects and service agreements from start to finish. Mr. Medina received his Bachelor of Science in Computer Science from the Rensselaer Polytechnic Institute located in upstate New York.