Consolidation Forces Pharma to Rethink Commercial Strategies: Q&A with Beghou Consulting’s Rohit Gupta

Pharm Exec sat down with Rohit Gupta, vice president of analytics strategy and transformation at Beghou Consulting, to discuss how biopharma companies can revamp their commercial strategies to account for the increasingly complex prescribing environment in a rapidly consolidating health care industry.

Pharmaceutical Executive: Consolidation in the health care industry isn’t a new trend, but the move of physicians from independent practices to large hospital systems seems to be accelerating. What’s going on?

Rohit Gupta: There are several factors at play here. But you are right. This is an undeniable trend, and one biopharma must grapple with to improve commercial effectiveness. A study from the Physicians Advocacy Institute and Avalere Health found that nearly 70% of physicians are now employed by hospitals or corporations.

Some of this can be chalked up to financial pressures facing independent practices that were exacerbated by the pandemic. Additionally, joining a larger health care entity like an integrated delivery network (IDN) may appeal to physicians weary of the administrative work involved in running an independent practice (from staffing to insurance paperwork). Further, IDNs offer a built-in referral base of patients. At the end of the day, physicians who work for these larger entities can usually spend more time focusing on what they do best – caring for patients.

For all they gain, however, health care professionals lose decision-making power when they work for IDNs. They are required to make many of their prescribing decisions in line with their governing entity’s formularies, protocols, and pathways. It’s important to note that HCPs retain some latitude in their treatment decisions (at least for now). That said, the trend is clear: IDNs are exercising more and more control over HCPs’ prescribing decisions. And these shifts in HCPs’ prescribing power are changing the environment for biopharma companies that have historically been HCP-centric in their promotion.

What areas of biopharma commercialization does this shift impact?

Honestly, everything. But sales force alignment is the area where these trends are most acutely felt. In traditional sales force alignment strategies, HCPs were the focal point. However, IDNs must become a new focal point alongside HCPs.

While realigning the sales force around IDNs instead of only around HCPs is a key part of what biopharma needs to do to effectively sell into IDNs, the impact of these trends on biopharma commercial efforts goes well beyond alignment. It impacts every aspect of commercialization – from sales force sizing to marketing messaging.

Do biopharma companies need to shift all their focus away from HCPs and toward IDNs?

No. They need to adopt a two-pronged approach that addresses both groups. Certainly, IDNs are going to account for a bigger piece of biopharma companies’ commercial focus moving forward. However, as I noted earlier, HCPs still retain some autonomy in their prescribing decisions, so companies can’t ignore them. Companies need to appeal from the top down (via IDNs) and from the bottom up (via HCPs). So, if a company secures a favored position on an IDN protocol, sales reps must then educate HCPs about the protocol as well as the value of the drug to ensure pull-through.

Let’s set aside HCPs for a moment, since biopharma companies have long focused on them. Tell us more about how biopharma companies should approach IDNs.

IDNs are highly complex entities that are involved in all aspects of patient care – from preventative treatment to acute care to post-acute care monitoring.They are both economic and clinical buyers. As a result, the commercial “pitch” a biopharma company makes must be customized to address these multiple needs. For example, hospital readmission is a clinical problem, yes. But it is also a business problem. Therefore, real-world evidence of drug efficacy and patient adherence support are crucial considerations when IDNs are weighing formulary and protocol decisions. From a business perspective, so is drug pricing.

It's clear that an HCP-centric alignment model will fall flat in an IDN-dominated world; though, again, HCPs must remain a significant piece of a company’s commercial focus. But so will the promotional strategies that were built around appealing to HCPs. So, these industry shifts require a wholesale rethinking of commercial strategies.

What can pharma companies do to secure spots on IDN formularies and protocols?

Biopharma companies must start with a detailed understanding of each IDN, its business objectives and its various components – from member facilities to relationships with group purchasing organizations – and customize their promotional approach to each of these components of a health system.

Biopharma companies also need to engage with a wider set of stakeholders who play a role in prescribing decisions (department heads, procurement professionals, pharmacy directors, etc.) and tailor their promotional strategies for each, keeping in mind the IDN’s overarching business objectives throughout.

At the same time, companies must do what they have always done – appeal directly to individual physicians who treat patients day to day. I like to describe it as a “zoom out and zoom in” commercial model. Companies must “zoom out” to understand and support the broader business objectives of the health system. They must also continue to “zoom in” to the needs of individual physicians.

What do biopharma companies need to do to realign commercial efforts around IDNs?

It seems like a monumental challenge, but biopharma has an advantage it didn’t have even a decade ago: massive amounts of granular data. Because of the widespread implementation of electronic health records, and the increased availability of anonymized patient-level data, biopharma companies can deploy advanced analytics to uncover trends in patient outcomes and population health at different IDNs. By understanding the challenges different IDNs face, they can then develop promotional strategies that make clear how the company and its products and services can help the IDN address their challenges - whether that's smoothing the patient treatment journey or ensuring better health outcomes.

There are a few other keys pharma companies should keep in mind as they reframe their commercial strategies:

  • Start at the top: To maximize ROI, focus the most effort on the centralized IDNs that strictly dictate prescribing decisions for hospitals within their networks, as opposed to those with a looser governing structure.
  • Focus on sales rep skills: Companies must more rigorously assess sales rep skills during the recruitment process. After all, sales reps have a more complex promotional role, given the proliferation of stakeholders and influencers. Sales reps must be able to act on the insights biopharma companies generate from their analytics efforts and effectively navigate the various commercial pathways within IDNs.
  • Think long term: Focus on the long term when evaluating the impact of promotion to IDNs. Measuring ROI over only a year or two won’t provide valuable insight. To succeed in this environment, biopharma companies need to establish strong partnerships with IDNs. This effort takes time and will be difficult to measure in short time horizons. Measuring sales team performance can’t be strictly outcome focused. Instead, commercial leaders should track KPIs that point toward long-term success. For example, track influencers engaged alongside prescription-focused metrics to gauge rep success in making inroads at IDNs.
  • Don’t ignore HCPs: As we’ve discussed, though IDNs are exercising more and more control over prescribing decisions, HCPs still play a significant role. Therefore, companies must complement their newfound focus on IDNs with a sustained commitment to reaching and articulating value to HCPs.

Biopharma company commercial leaders need to be aware of these trends and begin to shift their focus to IDNs while still reaching the HCPs who have traditionally been the focus of commercial efforts in the industry. It’s a challenging transition that greatly increases the complexity of biopharma commercial efforts. But it’s a transition companies need to proactively make if they hope to build the fruitful relationships with IDNs that will drive commercial success in the future.