Sales and Marketing: Where the Buck Stops - Pharmaceutical Executive


Sales and Marketing: Where the Buck Stops
Pharma's ultimate customer is the employer—the guy who pays the health plan's bill. Here's what he wants to know about drugs. (It's not what you tell doctors.)

Pharmaceutical Executive

Employer Healthcare Objectives

Employers expect pharma representatives to approach them with an "employer frame of mind." Most employers share similar objectives when they offer healthcare benefits to employees. These include:

  • Providing competitive compensation and benefits packages in order to recruit high-quality talent
  • Providing competitive compensation and benefits packages in order to retain high-quality talent
  • Keeping the workforce healthy, which contributes to increased productivity of employees by minimizing absenteeism
  • Maintaining coverage for large, retired workforces, which in some cases is as large, if not larger than, the active population of worker families
  • Ensuring that healthcare coverage costs do not negatively affect the businesses' ability to maintain market share and profitability.

At the Employer´s Office: Understanding
Unlike hospitals, managed care organizations (MCOs) or insurance companies, employers rarely make all benefit-design decisions without outside support and advice. They do not have the expertise to make all decisions in this arena. Instead, they tend to consult with many diverse parties when making coverage decisions. Therefore, healthcare benefit and coverage decisions are often a complex result of a fragmented healthcare process. Larger employers assume most, if not all, of the risk for benefits. But at the same time, they delegate the granular decision-making to benefits managers, such as managed care organizations and pharmacy benefit managers (PBMs). Consultants are frequently hired to weave the components into a holistic healthcare tapestry. Coalitions do not serve individual employers but work with multiple employers on a regional level to support a variety of initiatives, including wellness, purchasing, and lobbying.

Activists and Passivists

Employers fall into two groups when it comes to designing and managing benefits: activists and passivists. Activists, typically larger employers, take a more significant role in benefits design and decision-making. They are typically self-funded, have performance criteria in their ASO (administrative services only) contracts, and meet frequently with benefits administrators. Passivists, on the other hand, are typically smaller employers that generally accept the recommendations of various healthcare advisors. Employer benefits consultants are increasingly pushing their clients to become more informed and active in their benefits management.

Regardless of employer size, few take a proactive approach to pharmaceutical product decision-making. Instead, many employers have taken a reactive approach. PBMs provide employers with annual and even semi-annual recommendations regarding formularies, coverage, and benefits design. Employers tend to accept most of these recommendations but they sometimes exercise veto rights on elements of these components.

Large employers analyze pharmacy and medical spend on a regular basis. They make changes in benefits after they see usage become more extensive or costly. Cost becomes more of an issue when the employer sees alternative therapies, such as generics or OTC drugs, as options. Some large employers have responded to overuse, for example, by adding an additional formulary tier for lifestyle drugs, proton-pump inhibitors, and non-sedating antihistamines.

The Interaction of the PBM and the Employer

Large employers engage PBMs as ASOs. The employers receive the rebates and discounts directly but they are processed through the PBM. However, employers struggle to quantify the true costs in terms of actual drug expenditures, particularly within the setting of rebates and discounts, which are most familiar to pharma. Employers warn against focusing solely on cost and not on outcomes. This highlights a need for more transparent contracts with PBMs, contracts that must include performance standards.

The Employer View on Benefit Trends

As the ultimate payers of healthcare coverage, employers drive benefit trends. Discussions with employers should focus on challenges from the employer's perspective. Pharma needs to present specific, actionable solutions to employer problems. If an employer has a significant diabetes population, he wants to control the cost of diabetes in his medical plan. One way might be to use a particular drug. However, not all employees will necessarily be candidates for that specific drug. So instead of presenting an educational program on its own drug therapy, a company would do better to work with the employer to develop a diabetes-specific initiative.


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