Win "The Price is Right" with Healthcare Payers

Posted by: Lynn Clement on 8/7/2018

Published by Quirk's Media on August 8th, 2018

Long gone are the days when intelligent, artful marketing messages delivered to targeted healthcare providers by a sales representative lead to the highly coveted, quickly rising uptake curve.  As drug costs continue to rise, Payers in the U.S. healthcare system are doing everything in their power to control plan costs through prior authorization and step edits, and restrict access to perceived “me too” products and line extensions.  If you have ever conducted a Payer interview, the phrase, “We don’t pay for convenience” is a mantra you have probably heard.  Clinical and economic superiority are king in the minds of Payers and the key to formulary acceptance and patient access.

In addition, the rise of the Accountable Care Organization, and physician accountability for generic prescribing metrics, all elevate the importance of the Payer audience in your pricing decisions.  As you evaluate and set your pricing strategy, research with the Payer audience must be part of your go-to-market plan.  In our forecasting work for pharmaceutical products, we recommend including various coverage and access control options, informed by qualitative interviews with Payers, into any demand studies done with healthcare providers.  Access controls and pharmacy tier play a significant role in prescribing decisions, and you need to understand exactly HOW MUCH as you are forecasting uptake.  Although providers don’t often know the patient out-of-pocket cost for a drug, they do generally know if something is expensive and try to avoid at all costs the dreaded patient or pharmacy call-back.  

So! How do you execute a study with Payers effectively?  Here are some important tips:

  1. It all starts with a good respondent pool; a mix of Payer organizations, including small, medium, and large U.S. health plans and some Integrated Delivery Network (IDN) representation.   They all behave differently and are important to understand how different types of plans will respond.
  2. A strong understanding of the product category, fully exploring what they are doing today to manage it, if anything.  This exploration sets the tone for how aggressive they will be in trying to manage your product specifically.
  3. What is the competitive landscape like?  Is the space crowded?  Are there generic or low-cost alternatives?  Is there perceived unmet need in the category?  Each of these factors play a significant role in how they will treat your product when it comes to market.
  4. A good discussion around what they see as the benefits and potential challenges with your product.  Is it novel?  Does it offer cost offsets or other financial or economic benefits (prevents exacerbations, hospitalizations, etc.)?  Offering strong economic evidence of the value of your product is a compelling motivator for most payer organizations.
  5. Do you have comparative data against key competitive products?  While we understand this is a risky and expensive proposition, there is almost nothing more influential to a Payer than head to head clinical data showing your product is superior to the current standard of care. In nearly EVERY payer interview I have ever moderated (hundreds), that is the first question a Pharmacy or Medical Director will ask when they see the data versus placebo. 
  6. Test and communicate a well-defined target patient population, specifically if you are trying to charge a premium for the product. While some manufacturers are uncomfortable positioning their product as a niche player, Payers are more receptive to a premium priced product if it is targeted towards the patient population that is most in need of its benefits.   
  7. And finally, the interviewer needs to dig deep, and push beyond the obvious responses.  Often, we will use a technique where we explore an analog market with a similar structure.  How were new products handled by the plan when they came to market?  What did you actually do? How did you manage that space?  This reveals a lot about how the organization will approach your market when the time comes to evaluate your product.

Ultimately, the research needs to both inform and test your strategy, these insights should be leveraged in your demand research with HCPs as a direct input to your study design.  This will ensure you have the most accurate forecast heading to launch. 

Next time you are launching a product, don’t forget to include research with the most influential player in the space, the health plan Pharmacy Director or Medical Director.    

Tags: KJT Group | Market Research | New Product Development
Related Posts: Summer 2018