Managed Markets Analytics for Pharma – Prescription for Intelligence
Managed Markets in Pharma - A Primer
The managed care model has seen huge growth in the pharmaceutical industry in the US. It is estimated that 85% of all prescription drugs are today reimbursed through a managed care plan, and the remaining 15% of cash paid prescriptions is still shrinking. This proportion is even higher for expensive new specialty pharmaceuticals. Managed markets are the dominant channel for pharmaceutical firms and ensuring unfettered access to their drugs is a critical competitive advantage that could spell the difference between commercial success or failure of the drug.
In today's US healthcare model, there are several types of Managed Care Organizations (MCOs) and other intermediaries who influence the patient's access to pharmaceutical products:
- Retail / Commercial Health Plans and Pharmacy Benefit Management organizations (PBMs)
- Trade firms such as wholesalers and distributors
- Government Payers (Medicare Part D, Medicaid)
- Alternative care organizations
- Healthcare Institutions (Hospitals and Clinics)
Image: Key Organizations in the Managed Markets Channel
The role of MCOs is to ensure appropriate utilization of pharmaceuticals while controlling cost and maintaining quality of care. They do this by implementing various demand and supply controls on a drug such as formulary tier placement, prior authorization requirements, quantity limits, step therapy, co-pay requirements and so on. While these mechanisms are important in controlling costs and ensuring only appropriate utilization of drugs, they impact the competitive nature of the market by favoring certain "preferred" drugs over others. Thus, managed markets today have tremendous power to shape markets and influence the patterns of drug prescriptions and sales.
Role of the Managed Markets Account Manager
With the rise in prominence of managed care, the role of the Managed Markets Account Manager has emerged as a critically important cog in a drug manufacturer's channel strategy. Account managers (AMs) are on the front lines of establishing and maintaining the relationships with the various MCOs and intermediaries ("accounts") to ensure "preferred" and profitable access to the firm's drugs in the marketplace.
Image: The Account Manager is the Point of Contact between internal Pharma teams and the Managed Market customers
AMs work at a National and Regional level and are involved in all aspects of account planning, monitoring performance, recommending pricing and contracting strategies, tracking contracts and rebates and coordinating physician targeting and pull through campaigns with the sales reps. In addition, due to their managed markets expertise, AMs are also called upon to support many internal functions such as sales, finance, pricing and contract management, medical affairs and marketing with training, analysis and strategy advice.
Managed Markets Data for Account Managers
As the drug manufacturer's primary point of contact with the MCO, AMs are critically dependent on accurate information and powerful analytics tools to allow them to effectively manage and grow the relationships with the MCO accounts. To meet this need for intelligence, pharma companies often invest in acquiring data from syndicated and proprietary sources. To serve this demand, there are a whole host of established data providers in existence who have made a very lucrative market out of collecting, bundling and selling every aspect of pharmaceutical market data. Payer profiles, contact information, plan benefit designs and formulary structures, prescriber identities, prescription counts, pharmacy claims, drug volumes - they are all available for a price.
So, does all this information make life that much easier for an account manager? It turns out that in many cases, it does not. In fact, account managers' biggest complaint is usually of "drowning in data" when faced with the complexities of navigating the nuances of these complex data sets. This is a classic case of "data" being mistaken for "intelligence". While pharma companies often invest large sums of money in contracts for acquiring various data sources, often there is not enough investment in understanding what the right intelligence is that can be gained from them. As a result, Account Managers are faced with hours of work in extracting information from tools or feeds provided by different data providers, joining data sets manually to link accounts across data sets and exporting data into spreadsheets to produce metrics which they can use in their account planning and strategy. Every hour spent on this manual data analysis is time that is taken away from key account facing initiatives.
Alternately, larger firms may choose to invest in building data warehouses and custom analytics solutions that provide more advanced analytics capabilities on the underlying data sets. The custom solution approach is an expensive option to create and then maintain on an ongoing basis. This is often a last resort, based on the fact that there is no holistic solution available which meets the analytic requirements of account managers more cost effectively.
From Data to Intelligence – a change in mindset!
There is a better way. With large, robust, standardized and high quality data sources available in the market, there is a clear need for an analytics solution to be able to convert this data into actionable intelligence tailored to the needs of the account manager. Over the first quarter of 2012, Saama's Life Sciences Practice undertook an industry study to understand the real intelligence needed from an account manager’s perspective. This study included a broad based survey as well as a series of interviews with managed markets leaders and account managers from a wide cross section of US pharma firms. With the key insights gained from this study as well as a long track record of analytics experience in managed care, we are now in the process of developing an analytics solution specifically built for the needs of managed markets account managers.
In subsequent blog posts of this series, we will share various aspects of Saama’s solution approach and how it moves the needle from a data centric world to one focused on actionable business-focused intelligence. After all, that is where the real value of managed markets analytics can be unlocked. Stay tuned.