'Valuing' Managed Markets

Companies are shoring up efforts to market their products not only to doctors and consumers but also to the middlemen who are footing the bill. Analysts, of course, are asking what took so long.

When Pfizer reshuffled its business operations into separate units last month, it dedicated four divisions to specific therapeutic areas--and a fifth entirely to managed-care strategy and access. That move hints at a larger development within the pharmaceutical industry: Companies are increasingly gearing their R&D platforms around therapeutic areas that are most likely to gain traction with payers.

"Some executives have said that they want to know before they fully bring a product to market whether they can be effective in getting on formularies," said Kevin Barnett, who heads the managed-market practice at Campbell Alliance. "Clearly the days of focusing on the cash business and ignoring payers have changed."

With the launch of Medicare Part D, the government and private payers together now fund more than 85 percent of all drug purchases, according to Barnett, who noted that it's become common for press releases about new product launches to reference formulary and reimbursement challenges.

Pfizer is hardly the only company realizing that payers increasingly hold the reins on their financial future. Allergan recently asked Pacific Communications, which already works with the company's brand teams, to also handle the managed-markets account--essentially developing specific value messages to go along with the sales pitch. The company previously had separate agencies handling those two audiences.

"We're linking managed care, which is usually in a silo, with brand teams," said Craig Sullivan, executive vice president and management director at Pacific. "All the messages are aligned. We're saying the same thing to each audience."

One thing managed-care organizations has been saying to pharma for years is, show us the value. They want to see more real-world data on outcomes and cost comparisons?but pharma has largely ignored them. "Managed markets have been a relatively open book, but managed markets were not taken seriously," said Michael Russo, partner at the Bruckner Group, which specializes in managed-care strategy. "Drug company executives haven't been trained that way in the US. They're starting to see losses--and [are making] new policies."

Companies like Amgen are responding by conducting head-to-head studies with competitor products as well as compiling data to show how products are used outside of a controlled clinical-trial setting. "Payers are a different type of customer--they're sophisticated organizations," Barnett said. "For those companies that do well, the payer's view is that the pharma or biotech 'gets' managed care. That's the differentiating factor that we hear."