Formulary Management. Although CMS worked with the United States Pharmacopeia (USP) to develop model formulary guidelines that MCOs and PBMs can use in developing their Part D formularies, the agency has made it clear that the USP guidelines will not be the definitive requirement under Part D. Instead, USP guidelines will provide one benchmark, while MCOs and PBMs serving as sponsors under Part D (with CMS approval) will determine their own formularies and how they manage individual drug categories. Thus, manufacturers not only must consider USP's Medicare formulary guidelines, they must also look to existing practices in managed care and must talk with individual MCOs and PBMs to determine how they manage specific therapeutic categories.

Managed Care and Medicaid. With the new "rules of engagement" laid out under Part D, marketers should analyze the potential effect of this program on other parts of their products' business, such as commercial managed care and state-sponsored Medicaid. Because Medicare Part D is designed to be a privately managed, publicly funded program, the same MCOs and PBMs that manufacturers have been dealing with for managed care will be plan sponsors under Part D. Thus marketers need to consider the potential for spillover from managed care to Part D and vice versa.

For example, conversations with decision makers from leading MCOs and PBMs suggest that plans will certainly look to their existing formularies when developing their Part D formularies. Thus, if a product currently has preferred formulary status with an MCO, the product may have some slight advantage when it comes to the plan's Part D formulary.

Select a Strategy Once a brand team has gained an understanding of how Part D is likely to affect its product, marketers can begin to develop an overall Medicare strategy and contracting approach. But first the team must establish its overall objectives and answer a series of key questions:

• How do we want to compete in Part D? Aggressively, moderately, selectively participate or not at all?
• How will we balance access and reimbursement with market share and profitability?
• What are the clinical and economic components of the product's value proposition and position?
• How should we approach contracting? Should it vary by type of customer and formulary position being offered?

Brand teams should establish a range of strategies, then evaluate their options using both quantitative and qualitative criteria to select the most appropriate one. They must define tactical initiatives and develop an implementation plan based on the critical Part D milestones that have been determined.

Broader Benefits While pharma companies are focused on initial planning for Part D, they should not lose sight of the broader ramifications of the benefit. As companies implement their strategies, the selling environment may change significantly, and as a result, some sales and marketing tactics may need to be adjusted. It is difficult to predict exactly what those changes will look like, but it is possible to identify where they are likely to take place: direct-to-consumer (DTC) marketing, managed care sales and account management, and field sales.