By Kim E. White and Christopher de Wolff
Payer organizations are becoming more powerful, and decision-making is moving further from physicians. No longer is it sufficient to obtain regulatory approval for a product and then persuade providers to prescribe or use it. To adjust to this shift in power, companies have to build their capability to gain timely and profitable access to the managed market segment globally. To meet increased demands for stakeholder value, market access considerations must be embedded throughout an organization. The key to meeting these demands is to define responsibility for market access across functional areas, and throughout the product life cycle.
|Figure 1. The diverse capabilities, strategic and tactical, that reside across multiple organizational units must be coordinated to gain market access.|
Medtech Industry and CMS
Around the world, payers are trying to get healthcare cost inflation under control. In the United States, healthcare reform measures are reshaping reimbursement policies for both government and private payers. CMS has been tasked with reducing the government’s spend on healthcare, and private payers are following the agency’s lead in an attempt to improve health outcomes at lower cost. This evolution is not limited to the US market—similar governmental policy measures are driving significant change globally.
One of the most dramatic developments affecting the global marketplace for manufacturers has been that payers, both public and private, have been demanding more data and evidence of products’ value. While the United States has lagged other parts of the world, tangible signs of the growing importance of comparative effectiveness research is becoming more common. Government incentives for health information technology (HIT) are indicative of a growing appetite for data. Payer surveys show that comparative effectiveness data is increasingly important in formulary decision making—and that current data is insufficient.
A New Model for Market Access
Market access has often been defined as those activities within commercial or sales and marketing divisions; those geared to cultivate relationships with managed care organizations to maintain product access, develop marketing programs, and work with the sales force to support effective selling in an environment influenced by managed care. Such a definition is far too narrow and requires expansion to include activities that maintain close contact and gain input from payers, government agencies, and relevant professional and patient organizations from the beginning of the product development process.
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Companies often label certain functions as market access, such as reimbursement, pricing, health outcomes, or outcomes research, and task them with a set of narrow, tactical responsibilities, as follows:This external perspective should inform stage gate decisions as well as influence the data gathering strategy to ensure the appropriate evidence is collected to support economic and clinical assertions. Organizationally, the refinement requires input and skills from many different parts of the company, including R&D, regulatory, and commercial teams, as well as those with market access or managed markets in their title. Market access is often loosely and inconsistently defined within organizations such that individuals and groups undertaking activities in support of market access don’t always realize that they have a responsibility for its success. Unless someone has the term in their title or job description, they often believe that market access is someone else’s responsibility.
- Negotiating a specific price for individual products from payers.
- Negotiating a product’s formulary position where relevant.
While these are necessary, they are not sufficiently broad to address all the requirements of market access. Typically these functions have become involved late in a product’s development—often around the time of an impending approval.
Market access activities are certainly needed to enable commercialization of a product. But to improve speed to market and to obtain the optimum price and revenue, organizations must be better prepared to meet the following demands:
- Provide strong evidence of clinical differentiation (and defend against commoditization).
- Influence benefit designs and government policy changes.
- Ensure that pipeline and marketed products are well positioned for commercial success in the changing reimbursement environment.
Looking forward, organizations must enhance their market access capabilities around monitoring trends, opportunities, and threats in the payer and government policy landscapes, incorporating these implications into product development and portfolio management decisions. Companies increasingly need to demonstrate the value of their products, not only to consumers but also to a variety of stakeholders and target audiences. Although some may define “value” in terms of cost and others may try to demonstrate a product’s clinical superiority, looking at both economic and clinical value is the most effective way to identify, understand, and respond to the needs of consumers and stakeholders. To accomplish this, companies need to align health economics, outcomes research, clinical and medical affairs, policy, and sales and marketing efforts to ensure all the requisite skills and activities are coordinated in a complimentary manner over the entire lifecycle to support the product’s goals.
In order to gain market access in this challenging environment, companies must increasingly present a compelling case outlining the economic and clinical value (ECV) of their products. While there are some similarities between an ECV approach and traditional marketing and market research, it is subtly different. Whereas traditional marketing may focus on physicians, economic and clinical value takes a broader stakeholder perspective, for example considering payer committees, hospital administrators, and even regulatory viewpoints in addition to those of consumers. An economic and clinical value story also tends to focus on aspects beyond features, benefits, and perceptions, and instead on the clinical results and comprehensive economic value that are becoming even more important to key stakeholders. This approach demands hard data due to the nature of the claims being made. To be credible, these data must be generated in a rigorous, objective fashion so that it will stand up to stakeholder scrutiny.
Embedding Market Access Capability across Your Organization
The resources and capabilities needed to perform these tasks do not reside within any single part of the organization, but are often spread across different silos and geographies that have had little experience working together. Although they do not need to be owned by a single organizational element, central coordination is beneficial, especially when these capabilities are newly established and nascent.
Consideration should be given to ensure market access optimization from R&D through mature stages of a product’s life cycle. Various parts of the organization must contribute in a coordinated manner, each bringing different technical skills and perspectives that need to be harnessed. Coming from different organizational or geographic units, these resources often have a hard time communicating even when they have a shared goal. Each brings a valuable and necessary perspective, but there is often no coordinating authority that has the whole market access and can assist in making sure everyone is on the same page.
This is a challenging role because it requires operating across the R&D and commercial organizational barrier and the ability to keep the big picture in focus, while also coordinating a series of tactical activities. Some elements of market access need to be applied strategically, such as what markets you are pursuing, in which order (where reference pricing is a concern), and how the portfolio is impacted by market access decisions for one product or geography. Other activities are more tactical in nature (e.g., contract management and evaluation) (see Figure 1).
As the customer base and its demands become somewhat of a moving target in response to the evolving healthcare environment, manufacturers will have to build and harness these market access capabilities. They will need to be responsive, flexible, and timely in providing the evidence to demonstrate the economic and clinical value of their products. While this will be an organizational challenge for many companies due to the haphazard way these capabilities have often evolved, it will soon become a requirement for maintaining a market presence—let alone market success.
The Path Forward
To gain access successfully to significant portions of the market for most drugs and medical devices, companies need to understand and meet an increasingly higher bar set by customers. These customers, be they payers, providers, or patients are demanding demonstration of economic and clinical value that exceeds that of existing products before agreeing to reimburse or purchase them.
Drug and device companies need to create a culture and mindset, supported by skilled resources, that is focused not only on getting a product over the regulatory hurdles, but also over the economic barriers to gaining market access. The myriad of activities needed to support the argument that will be most persuasive to the customer require comprehensive and well-coordinated market access capabilities spanning the entire product lifecycle.
Kim E. White is a consultant with Numerof & Associates, Inc., a management consulting firm that provides customized strategic and operational solutions to organizations in dynamic, rapidly changing industries. White leads the firm’s payer and market access practices and can be reached at [email protected].
Christopher de Wolff is a consultant with Numerof & Associates. He leads the firm’s pharmaceutical and medical device practice and can be reached at [email protected].