The Time Is Right to Reform Your Approach to Managed Care

Pharmaceutical CommercePharmaceutical Commerce - May/June 2010

Not all managed care plans have the same influence on overall prescribing behavior, and not all geographies operate the same way

Over the last few years, the power of managed care plans to influence physicians and patients has grown significantly. Through the use of prescribing restrictions, such as step programs and prior authorization, as well as tiered formulary plans with varying co-payment amounts, payers can steer patients and physicians toward lower-cost drugs or to branded products for which they have advantageous contracting agreements.

There probably has never been a more critical time for pharmaceutical companies to re-evaluate and optimize their managed care strategies. Payers’ influence on healthcare treatments can only increase with the recent passage of healthcare reform, which will boost the pool of covered patients by tens of millions; and as generic equivalents of blockbuster products reach the market in droves over the next two years.

Use different metrics to evaluate plans

Determining a plan’s worth based upon its sheer size in covered lives and prescriptions is insufficient. Size isn’t the only variable worth considering when deciding which plans are worth your rebating dollars and which can be handled with much less investment and time. The most important metric to evaluate, which is somewhat related to size, is a plan’s influence within its geography.

Plans with substantial influence are those that affect how a brand performs with patients in other, surrounding plans. Certain plans can affect physician behavior, including what drugs they choose to prescribe. A plan’s influence can be evaluated based on factors such as co-payment amounts for your brand, prescribing restrictions, and prescription-rejection rates. The easier it is for a patient to get your drug — low co-payment amount, no prescribing restrictions, low rejection rates – the better the payer access. Better payer access should result in higher brand market share, but it doesn’t always because of a more influential plan’s decisions regarding your drug.

If the more influential plan has your brand in a less-than-desirable spot, perhaps with a high co-payment amount, physicians in that area likely will hesitate to prescribe it to avoid calls from the pharmacy when a patient is unwilling to pay for the therapy and would like a substitution. Since most physicians are not familiar with the formulary variances of different plans, they tend to “prescribe to” or choose drugs based upon the most influential plan.

Plans with low influence may not be worth rebate offers in return for advantageous formulary placement. Your money is better spent with the plans that change physician and patient behavior.

Create more holistic strategies

Historically, responsibility for payer strategies has been limited to managed care departments or the sales forces that call on and contract directly with plans. Decisions such as which plans are most important to contract with to obtain advantageous formulary placement and the proper rebating investment can be difficult since interested groups work in different departments. In turn, as contracting is settled and the effects are seen in the marketplace, marketing and sales tactics often are created in a similar fashion.

For optimal results, cross-functional teams need to decide how to handle each plan and geography. Marketing plans and tactics, such as co-payment or other patient-assistance programs, can be devised to complement managed care decisions and help offset plan drug shifts by making brands more affordable. Sales force alignments and territories can be evaluated and goals set based on local plan coverage and formulary placement.

Collaboration and accurate evaluation of managed care plans and strategies are vital today as payers prepare to expand with the implementation of healthcare reform. Now is the time to explore how your organization approaches managed care and take appropriate steps to optimize your results.


Dan Barton is SDI’s Senior Director, Managed Care Business Development. His expertise is in strategic alliances, new product development, and data partnerships. Dan has 18 years of industry experience spanning marketing, sales, managed markets, and commercial operations.

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