Part D may have a far greater impact for products taken mostly by younger patients than for a product whose users are mostly
over age 65 (and therefore eligible for Medicare). A caveat to this, however, is that age alone can be a misleading indicator
of Part D's overall effect on a product; roughly one-third of all dual-eligibles—those enrolled in both Medicaid and Medicare—are
Take anti-psychotic drugs for example. If the brand team for this type of medication looked simply at age distribution, it
would notice that most patients are much younger than 65. Based on that finding alone, the team might conclude that Part D
would not significantly affect the product's market performance. But they would likely be wrong. Many people taking anti-psychotic
drugs are dual-eligible for both Medicare and Medicaid even though they are under 65. Currently, these patients receive drug
coverage under state Medicaid programs. However, these dual-eligible patients will begin receiving their drug benefit under
Medicare Part D in January 2006. Thus, Part D will be much more important for some categories than first glance would suggest.
(See "Medicare Patients at a Glance," )
Medicare patients at a glance
Management of the Disease State. Marketers must determine whether the conditions for which their products are indicated are managed differently in the senior
population than in the broader population and, if so, why. Are these differences a result of safety, efficacy, or economic
concerns? In addition, they need to understand how the management of those conditions might change under Part D. The availability
of the benefit may motivate physicians to alter their prescribing habits in various ways, posing new opportunities (and threats)
to Rx products. Different drugs will be affected in different ways, and each brand team must assess its own specific situation.
To illustrate how prescribing habits can change in the pre-Part D environment, a physician may treat older and younger hypertension
- The physician may be more likely to prescribe a branded angiotensin receptor blocker (ARB) to younger patients who are covered
by their employer's private health insurance and can afford higher co-pays.
- For older patients on multiple medications, who may be on fixed incomes and paying cash, the physician may be more likely
to prescribe a cheaper generic angiotensin-converting enzyme (ACE) inhibitor, such as lisinopril.
After Part D goes into effect, the older patient would qualify for drug coverage under Medicare and would be in a better position
to purchase the more expensive branded product. Therefore, in some cases, Part D could increase the demand (commonly referred
to as "induced demand") for branded products.
On the other hand, Part D contains many incentives to drive generic prescribing. The widespread use of e-prescribing, which
the legislation has mandated to begin in 2008, as well as point-of-sale counseling from pharmacists could also play a major
role in driving the use of generics. These factors can pose a threat to certain branded products and must also be considered.
The only way to make educated decisions is to assess MMA provisions that promote the use of generics and to conduct research
with MCOs, PBMs, and physicians to determine how categories are likely to be managed and how physicians' prescribing behaviors
could change. The outcome of this research will differ by product category and brand and will provide useful insights for
developing brand-specific Medicare strategies.
Geographic Distribution. On December 7, 2004, CMS announced new geographic regions for Medicare Part D, essentially redrawing the boundaries of competition
for pharma companies, MCOs, and PBMs. Assessing the distribution of a product's current access and reimbursement in managed
care and Medicaid, as well as current and potential patient populations across these regions, can help brand teams answer
another key question: What geographies are most important with respect to Part D?
For each of the 26 regions for Medicare Advantage and 34 regions for prescription drug plans (PDPs), a brand team must consider:
- What is the total number of Medicare beneficiaries in the region? What are their demographics (income, dual-eligible status)?
- What is the current access and reimbursement in the region for managed care and for Medicaid?
- How well is the brand performing in the non-Medicare population in the region?