understanding managed markets

Understanding Managed Markets: Effective Marketing Research Structures & Activities to Maximize Payers Access & Insights


STUDY BACKGROUND

Benchmarking Report at-a-Glance

Featured Study Participants • Abbott Labs • Alcon • Amgen • GlaxoSmithKline • Jazz Pharmaceuticals • Johnson & Johnson • Novo Nordisk • Sepracor • Solvay • Ther-Rx • Xanodyne Pharmaceuticals

Information Types • 43 Figures and Tables • 24 Data Graphics • 18 Information Graphics • 14 Best Practices Spotlights

Combined Participant Facts Annual Revenues: From $500M to $10B Average of 21 years in Pharma Industry Each average 8 brands in-market

Report Length 65 Pages

While bio-pharmaceutical companies still direct the

bulk of their marketing and market research efforts

towards physician customers, the reality today is that

physicians are rapidly losing their influence over

patients’ drug utilization decisions.

Commercial and government payers are gaining

importance; third-party payers now manage the vast

majority of prescription drug expenditures. In fact, it is

estimated that third-party payers in the Managed

Markets sector currently control more than 80 percent

of patient access to prescription drugs in the United

States. As a result of this shift, commercial success of

new pharmaceutical products increasingly depends

upon anticipating the wants and needs of payers.

This shift, driven in part by the Medicare

Modernization Act and Medicare Part D, has

profoundly affected the pharmaceutical industry; and

many companies are now struggling to adjust to the

new order. Companies are refocusing marketing

strategies and revamping business operations to

Best Practices, LLC © (919) 403-0251 1


strengthen their relationships with Managed Markets customers. Pfizer, for

example, devoted a separate business division to managed care strategy and

access during a reshuffling of its organizational structure in 2007. And industry

observers have seen R&D platforms increasingly influenced by anticipated payer

response.

To succeed within this new market reality, pharmaceutical companies must access

payers and build relationships to develop the best possible Managed Markets

insights before product launch. Thus, it is vital that pharmaceutical leaders build

market research capabilities that are structured and tasked to effectively capture,

understand and communicate to their companies the concerns and interests of key

Managed Markets organizations.

STUDY METHODOLOGY

This report provides metrics, executive insights and best practices for the effective

operation of the Market Research function that is charged with collecting insights

from the pharmaceutical Managed Markets sector. Leaders of Market Research

and Managed Markets functions at pharmaceutical, biotech and medical device

organizations can use this report to identify tactics and critical success factors for

effectively accessing and acting upon the needs of third-party commercial and

government payers.

This report identifies the Market Research structures and activities that best

support the Managed Markets function in gaining payer access and insights

around pharmaceutical products, as well as captures executives’ best practices and

lessons learned for working successfully in the current payer-driven environment.

The report was created using a quantitative survey and field interviews. Best

Practices, LLC fielded an online benchmarking survey with managers and

executives representing Managed Markets or Market Research functions at

leading pharmaceutical and biotech companies. Analysts then conducted in-depth



interviews with selected research participants. The survey and interview collected

benchmark data on the following aspects of Managed Markets Market Research

(MMMR) organizations:

• Current and optimal structure and organizational fit

• Effectiveness of current structure

• Pre-launch research objectives

• Key global MMMR activities with greatest impact on strategic choices

• Timing of activities by product development phase

• Activities most effective for generating insights

• Activities most effective for accessing hard-to-reach partners

• Principal drivers of MMMR activities

• Percentage of research that is qualitative vs. quantitative

• Top Three most important types of pre-launch studies

• Anticipated changes in resource allocation levels

• Trends in use of vendors to gather payer information

• Projected changes in MMMR focus

• Best practices and pitfalls

KEY FINDINGS AT A GLANCE

A number of key findings and insights emerged regarding the effective operation

of Managed Markets Market Research organizations within pharmaceutical and

biotechnology companies. The following insights can be used to guide bio-

pharmaceutical leaders in evaluating and improving their own MMMR

operations.

No Single Structure Is Optimal: Many structure types can work effectively

for the Managed Markets Market Research function, and benchmark partners

use several different models. A more critical success factor than the structure

type is the level of research staff knowledge and understanding of the



Managed Markets sector. Developing staff specialization and expertise is the

key to making any structure begin to work from an MMMR perspective.

Manage Resource Competition: Brand team and Managed Markets research

projects generally have different targets (physician/patient vs. payer) and find

themselves competing for resources and attention. Avoid MM priorities being

defused or fragmented through resource competition. This can be a critical

pitfall.

Don’t Wait Until It’s Too Late to Develop MM Insights: MMMR

activities peak during Phase 3, though most benchmark partners are moving to

push these into earlier phases. This may prove most viable for breakthrough

medicines where pharmacoeconomic differences can be identified, and may

prove less effective for me-too drugs, as pushing research earlier may give

payers more time to develop strategies against undifferentiated products.

Role of Account Managers Is Expanding to Access MM Insight: Account

managers’ roles are expanding due to the increase of Managed Markets

influence in the pharmaceutical industry today. Account managers are seen by

most participants as the most reliable method for accessing hard-to-reach

partners. MM account managers play different valuable roles depending on

the type of product, its market-entry order, and its clinical profile.

Performance Guarantees/ Warranties: Eighty percent of benchmarked

companies have explored the concept of offering warranties but most find

usefulness limited due to unpredictable patient compliance and complex

Medicaid-related CMS submissions. The warranty concept seems best applied

for novel drugs in unique therapeutic categories where Medicaid is not a

major payer.



PITFALLS AND LESSONS LEARNED AT A GLANCE

Benchmark participants shared their collective experience of pitfalls and lessons

learned in developing a successful Managed Markets market research function.

Among these are the following:

• Duplicating research efforts between MM and MR groups. “Managed

Markets is not the only group that needs payer research anymore. Brand

teams and others are asking Market Research for payer information. If

Managed Markets is doing its own research, there can be unnecessary

duplication. There needs to be coordination of efforts.”

• Believing everything payers say – sometimes they don’t have as much

power as they say they do. “When you’re negotiating on tiers, you take

some payers very seriously—those with ability to deliver on their access.

Others exaggerate their influence. Account managers need to know when

they can walk away.”

DATA EXCERPTS AT A GLANCE

MMMR Structure Can Influence Effectiveness (an Excerpt)

Interviewed executives said organizations with dedicated research staff and

budgets—regardless of departmental location—are likely to be more effective

than those without. Dedication has several advantages, such as:

• Allows researchers to develop subject matter expertise

• Enables long-term or ongoing projects, where researchers produce regular MM updates

• Eliminates competition with brand teams for limited resource availability

• Puts the budget in the hands of the people asking the research questions

• Reduces potential duplication of work




BEST PRACTICES,®

LLCCopyrigh t © Best Practices®, LLC

MMMR Structure Can Influence EffectivenessBenchmark partners described three structural models for the MMMR function. Those using the two models involving dedicated resources noted improvements gained from reduced resource competition and increased subject matter expertise.

DedicatedMM

Resourceswithin MR

Market Research Department

Market Research Department

without dedicated MM Resources

with dedicated MM Resources

Dedicated MR Resourceswithin MM

Managed Markets Group

Competing requests for shared MR resources

Dedicated Resources ModelsNo Dedicated Resources

When Managed Markets has no dedicated resources for its market research needs, the group must compete with brand teams, commercial operations and other organizations for limited MR support. This model does not facilitate research staf f development of MM subject expertise.

Dedicated resources within either Managed Markets or Market Research gives MM directaccessto subject matter experts.

For smaller companies, dedicated staff for Managed Markets market research may

not be realistic; however, MM ownership of a

research budget can be a solution. For

example, an interviewed executive director of

Managed Markets at an emerging company

credited her success to budget access.

Figure 2.6 MMMR Structure Can Influence Effectiveness

Successful Access to Hard-to-Reach Payers (an Excerpt)

Account management is the approach that best opens doors to hard-to-reach

payers, according to survey respondents. More than three-quarters (78%) of study

participants ranked account management as “highly effective” for reaching

payers. Other approaches were ranked “highly effective” by no more than half the

benchmark class. “One-off” informational discussions with payers and peer-to-

peer meetings between clinical experts, physicians and contracting specialists

each were scored “highly effective” by 50 percent. A third of partners identified

“I think a lot of Managed Markets’ success comes down to where the dollars reside.”

–Interviewed Executive Director



BEST PRACTICES,®

LLCCopyright © Best Practices®, LLC37

Q. Which activities are most effective for gaining access to hard-to-reach Managed Markets channel partners? (Rank each activity from 1 to7.)

Ranking Scale: 1=Not at all effective to 7=Extremely effective.

Approaches for Gaining Access

30%

20%

20%

20%

20%

20%

10%

0%

0%

0%

0%

Peer-to-peer meetings between departments (in person)Advisory board

One-off” informational discussions with payer (in person)

Qualitative interviews/focus groups (online)

Qualitative interviews/focus groups (telephone)

Quantitative surveys (online)

Quantitative surveys (mail)

Mock P&T committee

Peer-to-peer meetings between departments (telephone)

Qualitative interviews/focus groups (in person)

Quantitative surveys (telephone)

40%

70%Account management

One-off” informational discussions with payer (telephone)

None of the companies in the study

give high rankings to four of the activities.

Account Managers Provide the Best Access to the Hard to ReachMore than three-quarters of study participants find account managers a highly effective way to access hard-to-reach Managed Markets partners. No more than half rated any other activity as highly effective for access.

quantitative online surveys and qualitative interviews/focus groups conducted

either online or via telephone as “highly effective.”

Figure 4.3 Account Manager Provide the Best Access to the Hard to Reach

Interviewed study participants shared a variety of tactics and strategies that they

use successfully to improve access to hard-to-reach payers. The most widely used

of those are employing third-party vendors to ask the necessary questions of

payers and focusing on science, industry and overall customer value when

interacting with the Managed Markets sector.


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APPENDIX

TABLE OF CONTENTS

Table of Contents........................................................................................................................... 1

Figures and Tables ........................................................................................................................ 3

Executive Summary....................................................................................................................... 4

Introduction .................................................................................................................................... 4

Objective & Research Approach......................................................................................... 4

Project Participants ............................................................................................................. 5

Definitions & Abbreviations ................................................................................................. 7

Key Findings & Insights ...................................................................................................... 8

Structure & Organization ............................................................................................................ 11

Introduction ....................................................................................................................... 11

Organizational Fit .............................................................................................................. 11

Inability to Measure Value Limits Resources for Managed Markets................................. 20

Focus of Managed Markets Market Research.......................................................................... 24

Introduction ....................................................................................................................... 24

Pre-Launch Objectives...................................................................................................... 24


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Study Types ...................................................................................................................... 27

Research Drivers .............................................................................................................. 28

Data Types........................................................................................................................ 29

Effective Activities & Approaches for Payer Access & Insights............................................. 32

Introduction ....................................................................................................................... 32

Activities with High Decision Impact ................................................................................. 32

Best Approaches for Insights From MM Sector ................................................................ 33

Best Approaches to Hard-to-Reach Payers: Access & Insights............................................. 34

Understand and Demonstrate Interest in Customer Issues to Open Payers’ Doors ........ 36

Viewpoints on High-Rated Approaches..................................................................................... 40

Reduce the Size of Ad Boards to Facilitate Better Conversations ................................... 41

Expand Participant Parameters to Increase Advisory Board Diversity and Broaden Perspectives....................................................................................................... 41

Account Management Viewpoints..................................................................................... 42

Timing of Key Activities .............................................................................................................. 45

Begin Managed Markets Research Activities before Phase 3 to Ensure Clinical Trial Design Produces the Data That Payers Will Request .............................................. 47

MMMR Roles................................................................................................................................. 50

Current Trends in MMMR ............................................................................................................ 52

Companies Are Adapting Slowly to the New Paradigm:................................................... 53

Best Practices, Pitfalls & Success Factors .............................................................................. 57

Participants’ Best Practices .............................................................................................. 57

Pittfalls and Lessons Learned........................................................................................... 60

Appendix: Full Source Data ........................................................................................................ 63


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