The Year Payers Stopped Threatening - Pharmaceutical Executive


The Year Payers Stopped Threatening
The notion that employers would continue to pay the cost, whatever it was, has been turned on its ear.

Pharmaceutical Executive

Others do not share these stark viewpoints, and believe that there is much that can be done to build a framework for better cooperation. "One of the easiest areas where payers and manufacturers can cooperate—and still need to cooperate better—is in compliance," one pharmacy director said. Although many companies and payers publicly discuss how better compliance can improve therapeutic outcomes, and hence substantially enhance the value of pharmacological interventions, this is still an area that has seen insufficient cooperation and results. And that this remains such an area of opportunity for cooperation is especially surprising, given how frequently manufacturers and payers publicly discuss, at least, that it is in their mutual best interests to collaborate on effective compliance programs. As one managed care executive described it, "It really doesn't matter how little we pay for statins, when in the end the patient stops taking them within a year. The best way to improve the value payers receive—quickly—is in better compliance."

What is unmistakable is that a number of blockbuster products are losing their patent exclusivity in the next two years in disease areas that represent a significant share of the pharmacy budgets such as depression, hyperlipidimia, peptic ulcer, and gastric reflux disease. Given that more than a few of these treatments represent the current standard of care in their respective disease areas, payers are going to be in a much stronger position to compel utilization of low-cost generics in disease areas where generic products have not previously been among the leading therapeutic options. The longer payers are left to feel that their concerns are not being addressed by pharma companies, the more incentive they will have to adopt ever more stringent and restrictive prescribing criteria. This will result in the further development and implementation of processes and systems that will even more effectively produce greater efficiency in the utilization of healthcare resources. When you combine these trends, they suggest that pharma companies would be wise to work more proactively with payers now, to arrive mutually at solutions that address each of their concerns, rather than continue to go in different directions—a strategy that could prove advantageous in the short-term for pharma manufacturers but offer considerably less favorable long-term results.

It Takes Two Many payers charge that pharma manufacturers aren't providing all the information they need to make a formulary decision

Point Some manufacturers say that MCOs don't have the bona-fide ability to review and process all the information requested in formulary dossiers. Given their suspicion that much more information is requested than managed care payers utilize, some companies question the importance of expending significant resources to produce dossiers that they perceive are often not fully engaged.

Counterpoint Many MCO managers and executives do agree that it is often difficult to review all of the information presented in the dossiers. But they believe that their experience allows them to process dossiers faster than before and that they're able to excerpt information in a dossier that is particularly critical for different aspects of the decision-making process. In addition, MCOs feel strongly that between their internal resources and selective utilization of outside resources—primarily academicians—all of the relevant information is both analyzed and sufficiently taken into consideration. This is a change from years past, when payers simply recognized a lack of staff as part of the growth process.

Michael Russo and David Balekdjian are partners at The Bruckner Group, a strategy and research firm exclusively addressing the competitive revenue opportunities and strategic challenges of pharma manufacturers. David Balekdjian can be reached at (781) 245-4454, x222 or at


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