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The integration and digitization of fragmented data is about to transform pharmaceutical sales and marketing strategies. And physicians are ready to adopt the new business model of an e-prescribing network
The integration and digitization of fragmented data is about to transform pharmaceutical sales and marketing strategies. And physicians are ready to adopt the new business model of an e-prescribing network.
Real-time e-prescribing, electronic patient medical records, and a push from insurers to reduce prescription costs have created the conditions required to motivate investment and business process change throughout the healthcare industry.
Together, those three forces will tip the balance of power in the prescribing process, reducing the physician's role and increasing the influence of patient choice and big payer formularies. Pharma sales and marketing managers must balance their strategies and resource priorities among physicians, patients, and big payers based on individual customer return on investment (ROI), and potential lifetime product profitability. To accomplish that, companies must invest in new relational business intelligence systems that let them answer increasingly complex questions in near real time.
This article describes how the end-to-end integration of prescribing data, patient medical records, and insurance approval systems will change the way patients and physicians make prescribing decisions. At the same time, pharma sales and marketing organizations must reassess their sales and marketing investment mix.
The traditional prescribing pro-cess is highly fragmented and manual. (See "Heavy Congestion.") A 1999 study by the Institute of Medicine estimated that 90 percent of all US healthcare transactions took place by phone, costing the industry $280 billion annually, primarily for office staff and physician time as well as the telephone and fax charges. The same study estimated that every pharmacy call-back cost physicians practices $5–$7 to pull and review the chart and return the call. With the average physician writing 30 prescriptions a day and handling nearly another 30 requests for refills, the dollars add up quickly.
Historically, physicians spend more than 30 percent of their time making prescription deci-sions and doing follow-up reviews. They have to balance information received from pharma company reps, patients, payers, pharmacies, the research community, and their personal experience in clinical practice.
Over time, physicians develop a relatively small number of preferred treatments that typically constitute 75–80 percent of the prescriptions they write. Product launches that distribute samples, education, and promotional materials often represent the doctor's main chance to try out new therapies, evaluate their patients' experiences, and consider whether to add a new product to their preferred set.
Without additional input, most physicians will continue to prescribe treatments they know and trust. However, their behavior can be influenced. Recent studies indicate that 40 percent of US consumers research medication options on the internet. Nine out of ten times, when patients ask for a specific pharmaceutical during a visit with their doctor, they leave with the requested prescription in hand.
Managed care organizations and government formularies can influence doctor's prescribing preferences as well, but frequently, the system's complexity makes it difficult for doctors to make real-time connections between the patient's insurance plan and the insurer's formulary preferences or co-pay tiers. As a result, physicians often fail to prescribe according to formularies. Rather, the office staff handles pharmacy call-backs if a product is not on the approved list. Patient frustrations escalate when they are confronted with higher co-pays or out-of-pocket expenses for treatments with no way to understand or influence the potential tradeoffs between cost, effectiveness, and convenience.
The integrated digital prescribing era will create more collaborative physician–patient dialogues as manual systems become automated and tightly linked. The balance of power will be split more evenly among physicians, patients, and payers. E-prescribing systems available from such vendors as Allscripts provide physicians with handheld point-of-care devices that automatically display the prescription choices approved by the patient's insurer, including co-pay tiers and pre-approval requirements. The system can also provide Physicians Desk Reference information, including adverse reaction data, interaction warnings, and best practice prescribing guidelines.
Using a handheld computer, physicians can select a formulary product or request approval for off-formulary coverage. Prescriptions can then be printed, or, with more advanced systems, sent electronically to the pharmacy. Call-backs are eliminated because the system checks the patient's record for insurance eligibility and co-pay status. Pharmacies and doctors' offices participating in early e-prescribing trials noted a dramatic reduction in errors and call-backs, resulting in increased productivity and quality of life for both the physician's office and the pharmacy front desk. Hospital-based studies of e-prescribing consistently show errors decline by 50 percent or more.
Adding integrated electronic medical records (EMR) to the equation further reduces the trial and error associated with prescribing. Electronic systems can cross-check Rx choices against the patient's entire medical background, including drug allergies and other contraindications, by searching through multiple data sources such as pharmacies, other physicians, hospital records, and lab test results. Initially, those systems will take hold in care delivery communities that share scheduling, billing, referrals, and supply chain systems. Eventually, interconnecting local systems will help create a national information exchange.
The integrated digital prescribing process should encourage patients and doctors to discuss cost and efficacy information and allow patients to more actively participate in drug selection. Both parties can consider a medication's effectiveness, convenience, cost, and risks according to the patient's situation. Doctors will also have more time to discuss compliance and quality-of-care issues. (See "Network Shortcut.")
Nearly 90 percent of US physicians use the internet either professionally or personally. About 20 percent use a handheld device, and several studies predict that, by 2005, as many as half of all US doctors will use such equipment as a core part of their clinical care delivery.
Over the next five years, as simple, secure, and affordable tools become more available, more physicians will adopt e-prescribing and EMR systems.
Already, vendors and service providers make it easy to install them. Packages such as Ready-Script come with links to major medical records systems. Web-based services such as Healinx make e-prescribing services available through web interfaces, allowing doctor's offices to avoid the use of complex, locally installed software. They are also working with insurers to gain reimbursement coverage for patient consultations delivered electronically.
Recent surveys show that about 11 percent of US physicians prescribe online occasionally and about 22 percent use some type of electronic medical records system. That use will likely double within 18 months. In several countries outside the United States, electronic systems have already become the norm. More than 50 percent of primary care physicians in the United Kingdom and New Zealand use e-prescribing and EMR systems. US adoption has been slow because of the fragmentation of service payment systems across federal and state governments as well as the many private insurers and large corporate self-insurers. Without a central payer, such as the UK's National Health Service, to drive use and to set data and workflow standards, US adoption has been limited to larger group practices and hospital-focused delivery communities. Consortia such as RxHub are now addressing that fragmentation.
The Patient Safety Institute, a nonprofit launched in December 2001, plans to provide physicians and hospitals with real-time, secure, patient centric medical records in five key areas: diagnoses, laboratory results, medications, allergies, and immunizations. The availability of secure, open technology and new data standards, including the Health Insurance Portability and Ac-countability Act (HIPAA), creates a technology and business environment in which it is possible to integrate and deploy large-scale, nationwide prescribing and EMR systems.
The interests of patients and insurers are also aligned in favor of integrated electronic systems. US consumers spend more than $100 billion annually on prescription medications. Insurers and employers are shifting more and more of the out-of-pocket burden to patients, particularly for newer, more expensive, brand name prescriptions. Multi-tier co-pays reaching $35 or more are increasingly common. Asked for higher co-pays for brand name products, consumers will want to know if the product is three times as valuable as the $5 or $10 choices.
Beyond the use of simple economics to encourage consumers to ask tough questions and push doctors to consider less expensive options, insurers also continually attempt to influence physician prescribing behaviors through formularies and onerous processes for requesting off-formulary coverage. E-prescribing tools, supported by patient-specific formulary information, plus up-to-date information about clinical results and therapeutic indications, will benefit physicians and shape the set of prescribing options they consider. E-prescribing studies show that 45 percent of participating doctors immediately increased compliance with formulary guidelines, even though less than 10 percent identify compliance as a reason to implement those systems. More than 80 percent say those systems improve delivery of care, and two-thirds say they help improve their personal efficiency.
Savvy sales and marketing organizations must rethink the allocation of assets to match the new balance of prescribing decision making power. The US pharma industry spends more than $13 billion annually marketing to physicians, compared with about $2.5 billion for direct-to-consumer (DTC) efforts. Even small shifts in spending can produce a major strategic business shift.
It is time to consider whether physician-focused field sales, educational events, and promotional budgets-a combined average of $8,000-$13,000 annually per physician-should continue to tower over DTC programs. Re-bates and discounts offered to big insurers also influence the market as they drive formulary placement, but they are rarely considered part of the sales and marketing budget. Pharma marketers must review the mix of traditional and electronic channels such as e-detailing and internet-based educational services as part of an across-the-board resource allocation assessment.
Physician marketing programs must promote and enable a collaborative doctor–patient dialogue that features more quality of care and compliance elements. Pharma sales and marketing teams will have to create both physician and patient programs that provide a range of choice and control as to when, where, and how doctors and patients choose to interact with the pharma company. Digital integration and delivery of information will be critical, as will a new approach to segmenting and targeting physician and patient customer groups. Three areas need particular consideration:
No one expects to remove doctors from the prescribing process. Rather, their role will evolve from issuing prescribing edicts to becoming more collaborative decision makers working with well-informed consumers who influence their own medication choices at the point of care. Pharma marketers must find ways to make that dialogue more collaborative and extend it beyond high-income, well-educated segments to a broader base of consumers-particularly the elderly and those with chronic conditions.
Specific investments will de-pend on each company's product portfolio, competitive position, and current market share and brand leadership with physicians and patients. The options range from sponsorship of consumer-focused therapeutic online discussion sites to diagnostic tools and physician education and training.
Postmarketing clinical trials designed to show product cost effectiveness as well as clearly improve therapeutic outcomes will be needed to win preferred status among formularies and to motivate consumer loyalty even when the patients have to cover out-of pocket charges. Those studies must clearly illustrate how a recently introduced-and expensive-brand name product beats out the cheaper generic and over-the-counter offers. Rebates and discounts alone won't work. Insurers and patients must be convinced that the economic, as well as the therapeutic, analysis is compelling. Pharma companies can work with e-prescribing databases and insurers to see that data about cost-effectiveness is widely communicated to both physicians and patients to help promote the collaborative prescribing decision making process.
Industry leaders now face flat revenue and frozen marketing budgets; thus prudent choices about where to reduce investments are as critical as determining where to expand. To date, no large pharma company has been willing to reduce field force staffing for fear of catastrophic losses in the trenches, even though some physicians are reducing rep access. That many doctors now spend more time online than they do in real-time conversations with sales reps signals that the tide is turning. Although the total number of field reps may not decline anytime soon, their per capita effectiveness must improve if pharma is to have any hope of continued profit and margin growth.
For the most part, internet-based marketing efforts have operated separately from field activities. Companies have also executed insurer rebate negotiations and DTC efforts but without integration with field rep activities. The question is, are pharma sales and marketing organizations getting a decent return from that expensive and fragmented go-to-market strategy?
Market opportunity assessments, sales force territory management strategies, internet initiatives, DTC ads, and insurer market message development have historically been organized around product-specific silos. Market information and the systems that analyze and interpret resource allocation decision making data have been implemented around product-specific questions, within each marketing resource domain-physician, DTC, or insurer-rather than across the whole spectrum. As a result, it is nearly impossible to calculate the total return a company receives from its combined investments in a single physician. Nor is it possible to assess and optimize the interactions among physicians, DTC marketing, and insurer sales and marketing programs. A new business model requires the coordination of those efforts to maximize the total profit of the product over time.
Business intelligence systems are critical to help sales and marketing professionals make decisions about resources and priorities. As the world of digital pa-tient data takes hold, it will be vital for those systems to integrate multiple data sources and formats to enable real-time overall views of investments and paybacks across customer segments, products, and therapeutic classes. (See "Pulling It All Together,")
Pulling It All Together
Coordinated marketing efforts that link direct and online physician-specific marketing efforts with formulary selections and DTC marketing must become the norm rather than the exception over the next several years. Pharma marketers' decisions about how much to invest in direct visits, samples, vouchers, promotional materials, and educational efforts with individual doctors will need to incorporate patient insurer profiles and historic levels of patient compliance once the scrips are written. DTC efforts will empower consumers to ask their physicians and their insurers the right questions as well as motivate compliance.
The end game is to realign resources so that the 15-20 percent of physicians who generate the majority of revenue get the greatest amount of the right resources. To do so, companies must align traditional and digital systems so that those who re-spond to one communication mode better than another are served in the way they prefer. It may also mean that some doctors, traditionally lavished with direct personal attention, may get fewer details or samples if the ROI analysis shows a lack of return.
Just as various physicians require different levels of investment and types of marketing outreach, individual products deserve unique levels and mixes of sales and marketing investments. Some products may go to market driven primarily by DTC efforts and limited physician educational efforts. Others might be pushed by aggressive insurer promotions and rebate programs. Perhaps only the most complex therapies will have targeted physician-focused, one-to-one marketing strategies. With marketing costs often surpassing R&D, optimization of sales and marketing investments against the potential total return on a product is the most critical element affecting product profitability.
Although the endpoint of allocating resources according to ROI-based customer segmentation and optimizing the go-to-market mix for each product seems clear, getting there is a challenge few marketers have tackled. Successful execution requires that companies realign their culture and their internal decision making processes extensively. It must start with senior leaders agreeing that the time has come to question the conventional wisdom about how pharmaceuticals are sold. It will move forward with development of a new business vision that calls for more segmented and differentiated market strategies. Careful executive consideration of strategies, ranging from support for the physicians' traditional role to investments that accelerate patient choice, should be part of the discussion.
New analytic tools will be needed to permit real-time queries and analysis of the information available from a broad range of internal and external sources. During the next five years, the most successful pharma companies will break out of their silos and assign resources based on individual physician ROI segmentation and go-to-market resource mixes tightly customized for each product and therapeutic class.