Chapter 10 - Managed Markets

Managed Markets plays a crucial role internally in a biotech/pharma company by developing and executing strategies to secure access and reimbursement for the company's products. This involves working with payers, such as insurance companies and government agencies, to negotiate contracts and coverage for the products. By ensuring that the products are accessible and reimbursed, Managed Markets helps the company generate revenue and maximize market penetration. This role is essential for the success of the company's products in the market.

The two categories of managed markets are government and commercial. Government-managed markets are those where the government plays a significant role in regulating and overseeing the market, such as healthcare systems in many countries. Commercial-managed markets, on the other hand, are driven by private companies and organizations that operate within a competitive market environment. These categories represent different approaches to market management and have distinct characteristics and dynamics.

Managed markets wield their power indirectly by assigning higher co-payments to disfavored products and utilizing restrictions that make it difficult to purchase certain drugs. This means that they are indirectly influencing the availability and affordability of certain drugs by making them more expensive or harder to access, thereby exerting their power over the market.

The Medicare Modernization Act was a significant change to the existing Medicare plan, which did force a change in operations for pharmaceutical companies. This act introduced the prescription drug benefit (Part D) to Medicare, which required pharmaceutical companies to negotiate prices with the government and offer discounted medications to Medicare beneficiaries. This change had a substantial impact on the operations and pricing strategies of pharmaceutical companies, making the statement false.

A high co-payment creates a financial barrier for patients, making it more difficult for them to afford their prescribed medications. This can lead to a decrease in patient adherence, as they may choose not to fill their prescription due to the higher cost. Therefore, the statement "The higher the co-payment tends to reduce the likelihood that a patient will fill the prescription" explains the problem of low prescription adherence caused by high co-payments.

The dominant US managed market segment is commercial managed care. This refers to health insurance plans that are provided by private companies and are typically offered to individuals and employees through their employers. Commercial managed care plans often involve a network of healthcare providers and require members to seek care within that network in order to receive the full benefits of their insurance coverage. This segment is dominant because it encompasses a large portion of the population who receive their healthcare coverage through private insurance providers.

The Managed Markets Segment refers to the discrete customer groups that are targeted by pharmaceutical companies, including trade, federal markets, MCO's (Managed Care Organizations), long term care, and Medicaid/Medicare. This segment focuses on understanding and meeting the needs of these specific customer groups in order to effectively market and sell pharmaceutical products.

The trade-off assessment for determining the effectiveness of contracting takes into account the benefits of contracting and the cost of contracting. This means that the potential advantages and disadvantages of entering into a contract are considered, as well as the financial implications of the contract itself. By evaluating both the benefits and costs, a company can make an informed decision about whether contracting is a viable option and if it will ultimately be beneficial in terms of value and profitability.

The Managed Markets Function refers to the people within a pharmaceutical company who are responsible for developing a strategy to obtain favorable payer coverage for the company's brands. This involves working with payers such as insurance companies and government programs to ensure that the company's products are covered and accessible to patients. The goal of the Managed Markets Function is to maximize the reimbursement and market access for the company's brands.

The introduction of a generic drug can potentially lower the formulary status of an existing drug like Lipitor. This is because the generic drug is considered bioequivalent to the existing drug, meaning it has the same active ingredients and produces the same effects in the body. As a result, insurers and healthcare providers may prefer to cover the more cost-effective generic option over the brand-name drug, leading to a potential decrease in the formulary status of the existing drug.

Managed market customers are entities that play a large role in drug reimbursement and have the power to affect the utilization of drugs. These customers have the authority to determine drug reimbursement procedures and can significantly impact the market for pharmaceutical products. Therefore, options A and B accurately describe managed market customers.

A major managed care plan steers prescribers away from disfavored drugs by implementing higher co-pays and requiring pre-authorization. Higher co-pays make the disfavored drugs more expensive for patients, discouraging their use. Requiring pre-authorization means that prescribers must seek approval from the managed care plan before prescribing the disfavored drugs, adding an extra step and potential barrier. By combining these two strategies, the managed care plan can effectively influence prescriber behavior and steer them towards using favored drugs instead.

The correct answer is "All of the above." Price is not used as the only consideration when defining the value proposition of a product because managed care plans also take into account the impact of the new product on existing treatments. If the benefits of the product outweigh the benefits of the current treatment, managed care plans may allow an increase in price that is offset by the benefits received. Additionally, if the company can demonstrate that their product represents a radical shift in treatment to improve the quality of life of the patient, managed care plans may also allow an increase in price. Therefore, price alone is not the sole determinant of the value proposition.

Marketing is not charged with supporting managed market sales in carrying out the responsibility of contract negotiation. While legal, finance, and contracting are all involved in the negotiation process, marketing typically focuses on promoting and advertising products or services, rather than negotiating contracts.

The correct answer is "All of the above." The question asks which managed market channels are responsible for the majority of drug expenditures in the US. The Department of Veterans Affairs, Department of Defense, Medicare, and Medicaid are all government programs that provide healthcare coverage and prescription drug benefits. These programs serve a large population and have significant purchasing power, which contributes to their role in driving drug expenditures in the US. Therefore, all of these channels play a part in the majority of drug expenditures in the country.

When a product is at a disadvantage compared to its competitors, it becomes difficult for the sales force to promote and sell it. This marketing effort is called a push through. It involves pushing the product aggressively in the market through various promotional activities, discounts, incentives, and persuasive tactics to overcome the disadvantages and increase sales. The aim is to create awareness, generate interest, and convince potential customers to choose the product despite its disadvantages.

The term "centerpiece" suggests that relationships with the Managed Markets channels are a central and essential component of both corporate and product strategy. This implies that these relationships play a crucial role in driving the success and overall direction of the company and its products.

Managed Markets is critical to helping a drug reach its full potential because it plays a major role in eliminating sales barriers. This division is responsible for creating the promotional platform to market the drug and holds relationships with outside sales channels. They are also the primary influence on prescribers. Additionally, the Managed Markets segment is the primary channel through which sales teams must go, as outlined by their product specific plan of action. By effectively managing these markets, the division can address and overcome any obstacles that may prevent the drug from reaching its full potential.

The correct answer matches the products with their positions on a typical managed care formulary structure. "Still higher" refers to Non preferred brands or Disfavored products, which are higher on the formulary than other products. "Full cost often borne by patient" refers to Generics, which are typically the lowest on the formulary and have the lowest cost for the patient. "Higher" refers to Preferred Brands, which are higher on the formulary than Generics but lower than Non preferred brands. "Highest on formulary" refers to Biologics and specialty products, which are the highest on the formulary and often have the highest cost for the patient. "Lowest" refers to Non preferred brands or Disfavored products, which are the lowest on the formulary.

Managed market sales and field sales typically interact by being both involved in the development of the plan of action or pull through plan. This suggests that both teams collaborate and contribute to the strategic planning process, working together to create a comprehensive and effective sales strategy. This level of interaction indicates that there is coordination and alignment between managed market sales and field sales, ensuring that they are working towards a common goal.

Managed markets can use the entry of new products of similar efficacy as existing blockbusters to their advantage by lowering the formulary status of the existing products, which drives their price down. Additionally, they can play new and existing product manufacturers off each other to negotiate more favorable pricing. Both options B and C explain how managed markets can use the entry of new products to their advantage.

Account Managers typically focus their efforts on areas such as pharmacy, medical, contracting, and quality. However, they do not typically focus their efforts on regulatory matters. Regulatory issues are usually handled by regulatory specialists or compliance teams within an organization. Account Managers may provide support or gather information related to regulatory matters, but their primary focus is usually on other aspects of the business such as sales, customer relationships, and account management.

The correct answer is A and B. Managed markets determine key channels by considering both the patient demographics associated with the product and the site of product use/site of care. This means that they take into account the characteristics of the target patient population as well as the specific locations or settings where the product will be used or administered. By considering these factors, managed markets can identify the channels that are most relevant and effective for reaching their target audience and delivering the product to the appropriate sites of care.

The managed markets team begins to collaborate with Drug Development and Health Economics and Outcomes Research to define clinical endpoints that substantiate the product's value proposition during Phase 2 and 3. This is because Phase 2 involves testing the drug's effectiveness and safety in a larger group of patients, while Phase 3 involves testing the drug in an even larger group of patients to confirm its effectiveness, monitor side effects, and compare it to commonly used treatments. Collaborating during these phases allows the team to gather the necessary data and evidence to support the product's value proposition.

Size and level of control in driving utilization of a product are the two variables used to assess account importance. Size refers to the magnitude or scale of the account, such as the number of customers, market share, or revenue generated. Level of control in driving utilization of a product refers to the ability of the account to influence the usage or adoption of a particular product or service. These two variables help determine the significance and impact of an account on overall business performance.

Physicians are likely to make bright line decisions in order to get into a routine and avoid potential prescription hassles. This means that by following a set of agreed-upon rules, they can streamline their decision-making process and minimize any complications or challenges that may arise when prescribing medications. By having a clear and consistent approach, physicians can reduce the likelihood of encountering obstacles or restrictions related to formulary requirements or FDA regulations. This approach also allows them to save time and effort by following a standardized procedure for prescribing medications.

Managed market sales do not use relationships with certain accounts to prioritize accounts when determining which should be given the greatest time and attention. This means that the level of relationship with certain accounts does not play a role in deciding which accounts should be given more priority.

Account managers are most striving to influence the status of products within the account's formulary. This means they are working to ensure that their products are included and given favorable positioning within the account's list of approved medications. By doing so, they can increase the likelihood of their products being prescribed and used by healthcare providers within the account, leading to increased sales and market share.

The role of the internal managed markets team is to ensure that the company receives the necessary reimbursement and access status for a product in order to maximize its performance throughout its life cycle. This involves conducting financial analysis and product valuation to determine the best pricing strategy and also launching effective marketing campaigns targeted towards patients. Therefore, the correct answer is "To make sure the company gets the reimbursement and access status required to maximize performance across the life cycle."

When defining an appropriate strategy for securing desired formulary access at target accounts, managed markets marketing must take into account various factors. These factors include the appropriate access goal, the key channels and key accounts, the product's value proposition, and the appropriate pricing and contracting strategies. However, the strength of the competition is not a factor that managed markets marketing needs to consider when defining their strategy.

The statement that is false is "It’s managed by public entities, which offer drug benefits consistent with the coverage." Medicare Part D is actually managed by private insurance companies that are approved by Medicare. These private insurance companies offer drug benefits that are consistent with the coverage guidelines set by Medicare.

Tier 2 status is not always essential for achieving product success because if the expected revenues after contracting are not attractive enough to justify aggressive discounting or rebates, it may not be worth pursuing. In other words, if the potential financial gains from securing Tier 2 status do not outweigh the costs and efforts required, it may be more beneficial for the company to focus on other strategies to promote and sell the product.