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Video Transcript: Managing Managed Care: Changing Relationships between Payers, Pharma and Providers

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Increased payer influence. Product value messaging. Comparative effectiveness. How are manufacturers addressing these issues and others like them to launch and commercialize their products effectively? Join us to find out. “In the Know” starts now.

Hello and welcome to “In the Know,” your source for insight and analysis on the issues that matter to specialty pharma. I’m your host, Gina Clark.

Today, we’ll discuss how the formula for successfully launching new products has changed—and what new answers are out there for manufacturers. We’ll also explore how manufacturers, physicians and payers can change the way they interact to create potential improvements in healthcare delivery.

Here to help us with this is Bob Mauch, president of Xcenda. Bob, welcome to the program.

Bob: Thank you, Gina.

Bob, you work with a number of pharmaceutical companies that range in size from global giants to small biotech and medical device firms. In your discussions with them, what’s keeping them up at night? Are there a few common, macro issues that are drawing particularly significant attention?

Bob: Well Gina, the executives that we speak with are really going through a lot of change right now, so I think their trouble sleeping is real. There are really three main areas that they’re worried about right now. One is their pipelines. They need to come up with more innovator products and get them to market. The days of the me-too multi-billion dollar product really are over. The second is the FDA approval process. It’s slower than it’s been in a long time. Certainly, the FDA is more conservative with regard to risk in terms of safety and efficacy, so that process is slower, and many of those parts are now coming out with REMS programs associated with them. Lastly, is the macro health economic issue in terms of the days of unlimited spending in healthcare are also over. So whether we want to talk about health reform or just the increased influence of payers on decision-making, they really have to think about, what’s the value of their product as they go to launch.

Looking one level deeper, what are the real drivers behind these issues?

Bob: Well Gina, one is really the growth in the oncology and specialty market. I mentioned the me-too products, and you really just can’t bring those to market in a successful way anymore. That’s causing the manufacturers to really look at new and novel and really more complex biotechnology and oncology products. That’s a big driver right now, and also, the second piece of that is really the influence of the payer. For many years for a pharmaceutical product to be successfully launched, you really just had to focus on the physician. And then later on, there was a lot of focus on the consumers, and if you did a good job in communicating to physicians and communicating to consumers, you could have a pretty successful launch. Today you have to be equally effective in communicating to payers, and payers need different information. It’s not just about safety and efficacy; they want to know about the overall value of the product, what’s the economic profile. And if they are going to invest in that product, what will they expect to see in their plan, in terms of total cost.  

How are trends like industry consolidation impacting manufacturers’ ability to commercialize their products effectively?

BM: Really, industry consolidation is just a symptom of all the things that we’ve talked about. The market is changing very rapidly. We have less products coming to market, we have slower FDA approvals, we have more price pressure from payers. That means that the pharmaceutical manufacturers are looking for efficiencies. So when they merge in these big mergers, they’re looking for efficiencies in their general administrative costs, they’re looking for efficiencies in their sales and marketing, and they’re looking for efficiencies in R and D. They may get all these things through these mergers, but really the key is that they refocus their efforts on the changing marketplace, which is more value based.   

How has this increased focus on payers changed the way pharmaceutical companies should approach the market?

Bob: Well unfortunately many of them haven’t changed. We’ve seen announcements in many of the large publications about restructuring of sales organizations, many of that focused on payers, which you read as good news, but unfortunately, they’re using some of the very same techniques that they used with consumers and physicians now with payers, and most of the time that doesn’t work.

In your experience, then, what can pharmaceutical companies do differently that would allow them to be more successful?

Bob: Well there really are three things that they can focus on, and with all the change going on, it really seems more complex than that, but if they can just focus on these three things, I feel like they can be very successful even in the changing marketplace. One is to make sure that within their clinical trials as they’re approaching launch, probably within stage 3, that they add end points to those trials that would be meaningful to payers. So not just the FDA endpoints, but something that would show value, or something that would be interesting to a payer that’s not commonly done still today. Secondly, they really must understand how their product is differentiated from a value perspective. When they go to market, they really need to be able to communicate early and often, to both providers and payers about the value of that product. Lastly, they really need to understand what barriers are out there in the marketplace. As products, particularly specialty and oncology products come to market, there are significant reimbursement challenges, there are significant patient adherent challenges. So pharmaceutical manufacturers can be best prepared to educated physicians, patients, and others, and provide programs to make sure that we can overcome reimbursement challenges and adherence problems.    

Are there ways that the relationship between payers, manufacturers and providers needs to change?

Bob: Yeah, I really think so, you know when we look at healthcare efficiency, we’re looking for ways to provide more efficiency within healthcare. Pharmaceuticals are really a solution, not the problem. And if we can have physicians, payers, and pharmaceutical manufacturers working together to ensure appropriate utilization, that’s how we’re going to find the most cost effective use of those products.

Where do the physicians fit into this?

Bob: Well unfortunately, many times the physicians are left out of the process, and the best examples for cost effective care are when the physicians can drive that within their practices. There are examples out there right now where there are utilization management programs that don’t really involve the physician that might provide some short term savings to the payers, but are probably not good for the physician or for the patients.

Let’s turn our focus to comparative effectiveness, where your company has particular expertise. Are there any areas where comparative effectiveness will benefit pharmaceutical manufacturers?

Bob: I think so. Comparative effectiveness is really not new, and is something that pharmaceutical companies have been thinking about for a long time. But they haven’t really been forced to act on it, or forced to make it a part of their strategy. So we’ve discussed how the healthcare environment is changing, cost environment is changing, so therefore they really need to focus more on value. Comparative effectiveness and initiatives around comparative effectiveness, whether that’s private payers or public payers or through some sort of health reform, comparative effectiveness is here to stay. The companies that are prepared to measure their comparative effectiveness, and hopefully their comparative value, are going to be in the best position to win.

How do you expect comparative effectiveness will be rolled out in the United States?

Bob: Gina, right now we’re in the midst of a large discussion on health reform, and there certainly is comparative effectiveness language included in many of the health reform proposals. But really what’s most important is the understanding that comparative effectiveness is something that we will have to deal with on an ongoing basis from here on out. Whether that’s federally mandated through the health reform, or whether the private payers decide to do that on their own. They’re actually doing it now, and they have been for several years, it just hasn’t gotten as much attention. But the need for payers to understand the relative effectiveness of products, and also the relative value of products has been a part of their daily activities for a long time, and will really just become more important.   

How about REMS programs? In what ways will these benefit manufacturers?

Bob: I think REMS programs are a real opportunity for the pharmaceutical manufacturers. The FDA has really slowed their approval process, and REMS programs should give them more confidence to get products out on the market. Interestingly, we’ve noticed that REMS programs have increased and so have FDA approvals.  

Bob, I see we’re almost out of time. I want to thank you for your insight today.

Bob: Thank you, Gina.

And thank you for joining us—we’ll be back soon with another, all-new webisode. Until then, if it’s on your mind, it’s In the Know.

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