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With respect to targeting, positioning, and launching new drugs, the ACA reform stands for Adjust, Change, and Adapt.
With the Supreme Court's decision in June to uphold the Patient Protection and Affordable Care Act (ACA), life science companies gained access to 32 million potential new customers. While that's worth celebrating, the party may have ended before it began. For pharmaceutical companies to realize the benefits of new healthcare consumers, and to keep the ones they currently have, they'll have to make some substantial changes. And change is never easy.
Until 15 years ago, the model for marketing pharmaceuticals was akin to marketing pet or baby products, in that products were purchased by one person (the physician) and consumed by someone else (the patient). Since the end user had no input into the purchasing decision, marketing efforts were centered on the individual driving the decision—in this case, the prescribing physician.
With the emergence of DTC advertising in the late '90s, this model changed. Suddenly, the patient was thrust into the spotlight as another key decision-maker, and manufacturers had to formulate ways to speak to them. But even then, most DTC advertising led back to the physician, echoed by a chorus of "Ask your doctor if brand X is right for you."
Under the ACA, the target market has become more convoluted. The customer cannot be so clearly defined, and the criteria to satisfy these various stakeholders are disparate at best and conflicting at worst. The physician, patient, and payer audiences remain critical, but a platoon of other stakeholders has been added to the marketing mix. These include administrators, support staff, decision coaches, and purchasing groups, all of whom will be incentivized to achieve better outcomes at a lower cost.
To address these diverse groups successfully, pharmaceutical marketers will be forced to find ways to reach all of these audiences throughout their commercialization process.
A solid positioning and messaging platform sits atop every successful commercial strategy. It forms the basis for how companies seek to differentiate their products, while also guiding the sales and marketing initiatives to ensure total alignment internally and externally. Prior to the ACA, pharma built its positioning platforms almost entirely on two dimensions—efficacy and safety. Since the two most important questions that physicians want answered before prescribing a product are "Does it work?" and "Is it safe?," this approach has proven effective, if uninspiring. After all, not many industries can successfully launch a product on the basis that it works for some percentage of the population and probably won't hurt the consumer.
With the approval of the healthcare law, the conversation has moved beyond efficacy and safety to one of overall "value," which reflects the ACA's stated mission to deliver more effective care at a lower cost. Efficacy and safety are in no way diminished in importance, but they're also not enough to carry a product's positioning platform. They're table stakes for getting into the game.
Additional challenges such as the ability to demonstrate comparative efficacy will only increase in importance as reimbursement is more closely tied to outcomes and performance measures. In fact, the ACA includes funding for comparative effectiveness research estimated to reach $500 million by 2014. That should light a fire under some pharma manufacturers to initiate comparative research studies and take control of their messaging in this area before the government does it for them.
Pharmaceutical marketers must now create a value story around their products based on both clinical and economic outcomes. For example, the ability to connect the dots between fewer adverse events and fewer readmissions, resulting in lower total resource utilization with an attached dollar value will create a far more powerful story to stakeholder groups than data alone. Commercialization executives are realizing this and starting to incorporate health economics and outcomes research (HEOR) in their positioning and messaging matrix. Internal HEOR experts are now becoming integral members of the brand team.
While all of this suggests a heavily rational approach to positioning and messaging, the emotional component will also become increasingly important in a post-ACA world where shared decision making (SDM) continues to grow. Through a variety of online media options, patients are more informed than ever about their treatment options and are taking an active role in many decisions.
Reform legislation calls for pilot projects exploring SDM, which creates a formal process that lets patients participate in making "informed choices" about elective procedures. Both the Mayo Clinic and Dartmouth Hitchcock Medical Center have already embraced the concept and have launched shared decision making centers where doctors and decision-making coaches use aids to help patients weigh options on intervention and testing.
To patients and physicians, "outcomes" mean more than economics and analytics. There's a privilege and responsibility that comes with working in an industry that can advance human health and improve lives. Expressing outcomes through emotional drivers like quality of life will reach both caregivers and patients on a more visceral level.
There are relatively few industries where you can launch a product and know with virtual certainty how large your target market is, who the best customers should be, how and where you can reach them and what competitive products they're currently using. Plus, if any competitors try to enter the market, you'll have years of advance notice because all of the competitive data will be available in the public record.
Pharmaceutical marketers have operated under these favorable conditions for decades. Given the drug development cycle, by the time a product receives market clearance, pharmaceutical marketers are intimately familiar with their target customers, purchasing drivers, and how they intend to deploy their sales and marketing resources. The combination of pre-market conditioning leading up to launch, combined with the full-court press of an integrated commercial plan, provides a very efficient means to get immediate traction.
But the ACA creates scenarios that will force manufacturers to rethink their approach. Specifically, the move to tie financial incentives to a performance model rather than the standard "fee for service" model will necessitate a change in the marketing strategy and tactical approach for pharma manufacturers.
Guidelines for accountable care organizations are designed to integrate hospitals, doctors, and caregivers into a seamless entity to deliver cost-effective care. Providers will be rewarded for achieving clinical standards and performance benchmarks rather than procedures.
When the customer set or purchasing drivers change or expand, strategies by definition must follow suit. In nature as in business, the concept of "adapt or die" is as relevant as ever. The graves of many a once successful brand are marked by a steadfast dedication to the status quo.
What this means for commercializing pharmaceuticals is a shift in both the message and method of how products go to market. The direct selling method to physicians will no longer be viable on its own. A more organizational sales approach will be required to reach a multi-disciplinary team of decision makers that range from clinical subject experts to laypeople. This shift will have major downstream implications on the tactics used to support the marketing strategy. For example, sales teams will have to shift toward business-to-business sales strategies instead of relying on high frequency visits and sampling. Marketing channels should expand beyond the traditional media mix to include a broader, integrated approach designed to reach a more diverse audience. And multiple, customized communication vehicles will be required to address the varied interests, purchasing drivers, and clinical understanding of the key stakeholders.
Without question, the ACA will significantly impact how healthcare will be packaged, sold, delivered, and consumed. It also provides unprecedented opportunities for pharmaceutical manufacturers to access an enormous pool of new consumers. To capitalize on these new opportunities and to protect the franchises they've already built, pharmaceutical companies will be required to transform their thinking around long-held beliefs and basic assumptions, starting with identifying their customers and understanding their needs.
Gregg DiPietro is Senior Principal at Back Bay Life Science Advisors. He can be reached at email@example.com.