What Managed Care Analytics Means to Pharma Brand Success – Part 1

Operating in the managed care system in the US healthcare market is challenging due to the complex environment. It is incredibly volatile and fragmented, with stakeholders ranging across various categories:

• Healthcare delivery systems like Integrated Delivery Networks (IDNs) and Preferred Provider Organizations (PPOs).
• Care systems like the Accountable Care Organizations (ACOs), Managed Care Organizations (MCOs), and Health Maintenance Organizations (HMOs).
• Governmental Point of Service (PoS) systems like Medicare and Medicaid.

The role of this managed care system is to ensure that the most appropriate medication and treatment options are accessible by the patients at affordable prices, hence improving the overall quality of life for patients through value-driven outcomes. But given the increasing market complexities, pharma account managers struggle to improve the contract performance of their drugs. The market complexities and overlapping fragments make it challenging to penetrate payer preferences, which lead to sub-optimal resource allocation across the various managed care systems.

Often, organizations that do not find answers to these challenges find themselves in a disadvantaged position. Research shows that the response to a promotional activity directed towards physicians whose patients have limited managed care access is 20% lower than those towards physicians whose patients have parity access¹. By having an unfavorable position in the managed care ecosystem, a drug’s promotional effectiveness takes a severe hit as well, resulting in a downward spiral of reduced access and poor performance.

There is a wealth of data covering various aspects of managed care markets such as payer profiles, plan benefit designs,  formulary structures, pharmacy claims, drug volumes, etc. The potential for analyzing this data and generating insights out of it is enormous and largely untapped.

Factors to decide The managed care strategy

When pharma companies are planning their managed care strategy, they need to keep these factors in mind:

1. Rebates: Every year, pharma companies spend millions of dollars on rebates to ensure their drugs get a favorable position in the formulary. But often, their investment does not have the desired return. Pharma companies, therefore, need to analyze the various factors which could impact the rebate return on investment and accordingly decide what the appropriate rebate amount should be. Such analyses include:
   • Spillover Analysis: Determines how change in the share of the practice of one category influences physicians prescribing in other categories.
   • Copay Elasticity: Determines how a product copay and its competitors, impacts its market share.
   • Deal Assessment: Evaluates the likelihood of success of a deal between a pharma company and a payer as analyzed through various factors such as payer size, payer control, market events, competitor position, etc.
   • Managed Care Influence: Along with the local drivers, managed care influence helps in optimizing resource allocation.
   
   
2. Payer Segmentation: There is a significant variation in the attributes, drivers, and behaviors of different payers, thus presenting the requirement to identify the segments where one should play and has a high likelihood of winning. Post a segmentation exercise, pharma companies should be able to identify meaningful and actionable segments, the drivers and barriers to utilizing segment opportunities and detailed segment profiles along with an action plan on deriving maximum value from the most relevant segments.
3. Insights Generation: Account managers need visibility on which accounts are the most important and which plans to  target; what drives their performance; how  they compare nationally vs. locally; how the formulary access varies, etc. They need to be able to have this data at  their fingertips to be able to make the most  of their time. There is a need for enterprise-grade next-generation reporting and business intelligence tools that can answer all the key questions anywhere, anytime.
4. Contracting: Pharma companies are usually unable to quantify the impact of contracting. Many questions need to be answered, such as how important a plan is, what controls on prescribing do they apply, what is the effect on a drug if it is moved up or down in tiers, what is the impact of higher or lower copay, etc. It is essential to have an integrated view of plan-related metrics and to be able to conduct what-if analysis to quantify the impact of contracting.

A proper analysis of managed care markets would equip the pharma companies to partner with payers adequately and positively impact their brand performance. Making the most of opportunities requires an understanding of opportunities at the intersection of local dynamics across patients, payers, and health systems. A comprehensive capability in managed care analytics enables critical account managers to make better, data-driven decisions at every step of the key account management process.

In Part 2 of our two-part series, read about the top areas where pharma account managers can leverage managed care analytics, in their constant endeavor of optimized contract performance, better formulary positions, and improved patient access and health outcomes.

REFERENCES

1. Rishi Bhandari, Brian Fox, Laura Moran, and Ziv Yaar’s ‘Get more from your pharma commercial spend using advanced analytics,’ August 2017. Available at https://www.mckinsey.com/industries/pharmaceuticals-and-medical-products/our-insights/get-more-from-your-pharma-commercial-spend-using-advanced-analytics