You are on page 1of 2

Current Topics in Bioscience Management Chapter 10: Managed Markets Managed Markets customers are entities that play

a key role in drug reimbursement and access and have the power to affect utilization of drugs and heatlhcare services. 2 large managed markets: Public (governmental) or Private (commercial) Government segments: Medicare (federal program for the elderly and disabled). Medicaid (federalstate program for low-income persons). Medicare: 44 million people. 25 million in the Medicare Part D. Medicaid: 55 million Department of Veterans Affairs and Department of Defense: 30 million Private part: Employers are the most important part of it, covering 170 million Americans In 2005 Private insurance represented 47% of drug spending. Medicaid 18.7%, Medicare 2, Out-ofpocket 25.4%. Other Public 6.5% In 2012, Private insurance represents 35.3% of drug spending, Medicare 28.5%, Out-of-pocket 18.3%, Medicaid 10.4%, Other public 7.5%. Managed markets: centerpiece of corporate and product strategy. Role: Developing and executing strategies to secure access and reimbursement for company products. Prescription is a key element for the physician. He has to choose between different drugs. If he is not sure about reimbursement, he will choose the one that is easily reimbursed for the customer. If there are too many administrative hurdles, he will also be reluctant to choose this kind of drug. Key Managed Markets responsibilities: - Developing a compelling value proposition for managed markets customers - Developing a robust contracting strategy - Determining how to allocate resources within and across the managed markets channels - Securing profitable formulary access - Ensuring sales forces are prepared to be successful in an environment that is heavily influenced by payers Strategy Development: Establishing pricing, reimbursement, and access strategies: - Establish access goals - Define payer value proposition - Determine contracting strategy - Segment and prioritize managed markets channels and accounts Tactical Planning: - Develop tactics and promotional resources: - Develop promotional messages and materials - Define and develop value-added programs - Develop account plans

Execution: - Implement strategies, tactics, and programs - Manage accounts - Secure formulary access - Coordinate pull-through activities - Train sales force Managed Markets Marketing defines the access goal required to support product uptake acceptance and success. That goal will vary based on the nature of the product and of the market environment. Typical Managed Care Formulary Structure Tier I Generics Co-Payment Lowest Tier II Preferred brands Co-Payment Higher Tier III Non-preferred brands Co-Payment Still Higher Tier IV Non-Formulary

Biologics and Disfavored specialty products products Co-Payment Highest on formulary Co-Payment Full cost often borne by patient

Receiving no reimbursement at all from key accounts, however, or reimbursement only after prior authorization is attained often sharply reduces a product's market potential. Managed Markets Marketing identifies key channels based on the nature of the product portfolio. The importance of a particular chanel typically depends upon the patient demographics associated with the product. Account importance can be assessed in terms of two key variables: - size, can be measured in a number of ways, including total covered lives, covered lives in a relevant demographic category, or prescription volume in a relevant market basket - level of control an account has in place to drive utilization toward preferred products.