The University of California San Diego, Skaggs School of Pharmacy and Pharmaceutical Sciences Drug Commercialization course brings you lectures from both faculty and industry experts. With this course, recorded on campus at UCSD, we seek to share our access to top people in the field who bring an unprecedented range of expertise on drug commercialization. This course will cover pharmacoeconomic, marketing strategy, intellectual property strategy, portfolio management, managed markets and strategic alliances. It will also have a lecture case study from startup to success. In addition, the course will discuss post-marketing clinical trials or Phase 4 trials. These are conducted after a new drug has been approved by the regulatory agencies and launched. In these studies, the new drug is prescribed in an everyday healthcare environment using a much larger group of patients. This enables new treatment uses for the new drug to be developed, comparisons with other treatments for the same indication to be made, and determination of the clinical effectiveness of the new drug in a wider variety of patient types, and more rare side effects, if any, may be detected . Pre-marketing strategy should be instigated as early as Phase 1 clinical trials to ensure that the market's needs are incorporated into the new drug's overall development. Later phases when clinical results are presented at international medical conferences the marketing strategy is then refined in order to develop an awareness amongst the medical community who will be prescribing the new drug. In addition to the marketing strategy, pricing strategy and a tactical plan will be developed. Promotional material, and the sales force will be trained so that when the product is approved they can promote the drug to physician, pharmacist and nurses. This course is intended as part 3 of a series: Drug Discovery (https://www.coursera.org/learn/drug-discovery), Drug Development (https://www.coursera.org/learn/drug-development) and Drug Commercialization. We would highly recommend that you take the courses in order since it will give you a better understanding on how a drug is discovered in the lab before being tested in clinical trials and then launched in the market place.
Managed Markets and Sales Strategy I
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From the course by University of California San Diego
Drug Commercialization
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From the lesson
Managed Markets and Sales Strategy, Doral Fredericks, Pharm.D., MBA
Meet the Instructors
Williams S. Ettouati, Pharm.D.Director, Industrial Relations & Development; Health Sciences Associate Clinical Professor, N.S.
Skaggs School of Pharmacy and Pharmaceutical Sciences
Joseph D. MaAssociate Professor of Clinical Pharmacy
Skaggs School of Pharmacy and Pharmaceutical Sciences
Well, thanks for having me Williams. So as Williams said, my name is Doral
Fredericks. I am the vice president of Medical
Affairs and Global Communications, for Bausch + Lomb.
just to give you a quick background as to why I'm actually okay to talk about this,
since I'm not in sales, or I manage markets anymore.
I did my PharmD., MBA at USC, and then worked at a residency at Kaiser
Permanente in Harbor City, which sort of the port of LA area.
was there, got hired on, and was there for about a year, and decided the
industry was really where I wanted to, to go.
So I started out as an MSL with Aster Pharmaceuticals which became AstraZeneca.
Was there for about two and half years, and then moved over to Novartis for about
nine. And at Novartis I did a variety of
different things. As a medical science liaison, director of
the MSO group, as a director of the managed market, hence why I'm talking
about this. and then, finally left off as the
Regional Medical Head for the Western Uni, or the western part of the, the
States. and then moved over to Ista
Pharmaceuticals as a Vice President of Medical.
Ista was a small, opthalmic company, based in Irvine, which was recently
acquired by Bausch + Lomb. And so I was asked to stay on as the VP
of Medical and Global Communications with, with BNL.
So I've been with them since about last June.
All right. So I've done a variety of things in
industry, and glad to be here, talking to you today.
All right. All right.
So talking about kind of what, what I want you guys to achieve today.
Fairly easy. this'll be a casual lecture.
So please, ask questions as we go along if you have them.
because the more, I know this stuff already.
So it's better for you to ask me the things that you're interested in, and I
can give my insights on things. So what I'd like you to walk away from
this lecture, is to understand managed markets and, and how it's really working
in the new healthcare landscape. Because with the Affordable Care Act,
things are changing very quickly. 'Kay.
I'd also like to give you an idea about the things that you have to think about,
with regard to putting together managed care strategy and a sales strategy.
And those are the two things. So if you get that, you're good.
So I'm going to break this down into kind of three ways.
The first one being sort of an overview of managed markets, the healthcare
landscape, and, you know, what we're really thinking about when we're talking
about managed care right now. 'Kay?
We'll then go into what makes up a good manage care strategy, and how that
relates to a sales strategy. Now have you guys had your marketing
lecture yet? The pieces of like, what goes into
marketing for commercialization product? I'll take that as a no.
[LAUGH] Alright. I'll be touching a little bit upon that,
normally that lecture comes first, but I know it's always changing based on when
the lecture available. So if you have any questions about how
that fits in, let me know. But, managed markets sales and marketing,
all really fit very closely together. So it's really important to understand
and think about aspects of each of them. 'Kay?
When we're thinking about the first thing is who our managed, managed markets
customers. There's two main things to really think
about. First one, they are entities that play a
key role into how drugs are delivered to patients, and the rates that they're
going to be paying for it. Alright?
they do exert a lot of influence now, especially more than ever, over the
choices of drugs that physicians and pharmacists can give to their patients.
and what's interesting is they can become, they can be public or private.
So the, the public is really the government paying.
And the government is becoming a larger and larger piece of this whole puzzle.
15 years ago, Medicare Part D didn't exist.
Medicaid was relatively small, and it was the manage care landscape was dominated
by, by the Signa's, the Aetna's and the United's.
That power is actually shifting, and I'll show you how that impacts pharmaceutical
industry, in just a minute. Okay?
So we when talk about sort of the largest manage care channels, what are we
thinking about? So the first one, are commercial plans.
And these are private entities that are either Manage Care Organizations, or
Pharmacy Benefit Managers. Okay?
What's interesting and something to keep in mind about these, is Manage Care
Organizations probably aren't quite as price sensitive as you might think.
It depends. It, it really depends on if they're an
integrated force, or if they're carved out.
And what I mean by that, is companies that sort of do disease state management
are much more conscious of the overall cost of care, as opposed to just the cost
of medications. So even though a medication may be little
bit more expensive, they may be willing to put it on formulary, because, overall
it may decrease utilization. Alright?
As opposed to, like, the Pharmacy Benefit Managers, or carve outs, in the Managed
Care Organizations that are interested only, well really only in price.
So a couple of things to keep in mind. People have different reasons for making
decisions. Alright?
Now, the commercial plans are really still the principle source of coverage
for a lot of people, specifically those who are employed or retiree coverage.
it covers about 100, 170 million Americans, and this, you know, continues
to grow as the population gets, it gets larger so, it's still a very, very
important piece. And they administer, like I said, either
medical or pharmacy benefits for these patients.
Medicaid is, as you guys are probably aware, a public source.
It's, it's a combination of federal and state funding for low income Americans.
All right? currently about 55 million Americans are
enrolled in the, in the different states. What's interesting is under the
Affordable Care Act, there's discussion that up to about 12.5 plus or minus a
million patients may actually go into the Medicaid system.
So you're going to have more patients in that piece.
And there's a continual struggle, because the Federal government doesn't want to
pay for it necessary. The States don't want to pay for it, so
it's like, we're getting these people in the system, but who's going to pay for
it? So it's always, always a challenge.
We then have Medicare, which is a government funded as well.
specifically for the elderly and disabled.
And this is the probably the fastest growing sector within the Managed Care
field right now. basically there's an expected increase in
current enrollees from about 46 million beneficiaries, to about 78 million
beneficiaries between 2010 and 2030. So a hugely growing segment.
And again, think about this. 15 years ago Medicare part D didn't
exist. So these 78 million patients that we're
talking about at 2030, had Medical coverage, but not necessarily
pharmaceutical coverage. So you can see how things are really,
really shifting in the landscape over the last, you know decade or so.
Alright, and then finally you have the DOD, and the Veteran's Administration,
which is about another 30 million folks covered under those plans, but again
though the government. So that gives you kind of the overall
landscape. Alright.
So how, or go ahead, sorry. >> What's difference between medical
coverage versus pharmaceutical coverage? >> The difference between medical
coverage and pharmaceutical coverage, specifically in the Medicare group or.
>> I have no idea because I'm not from the US, but either way, [INAUDIBLE].
>> Well, so, so typically medical coverage is revo, revolves around hospi-,
hospital visits, physician visits, anything that's not specifically a
pharmaceutical product. Alright?
and prior to, the early 2000s, patients who had Medicare coverage, unless they
bought supplemental insurance, didn't have pharmaceutical coverage.
Okay? Commercial plans typically did, but not
specifically for Medicare. Alright.
So overall today's environment of the landscape in the US 2011, health care
costs reached, reached about $2.7 trillion.
That's a big, big number and why everybody is talking about it.
But the interesting thing is you don't hear people talking necessarily as much
about healthcare as a whole, as you do about prescription drug coverage.
And I think a big reason for that is, because patients are more opt to pay a
larger portion of their prescription drug coverage bill, than they are if they're
over all medical coverage bill. So that's why there's a lot of dialogue
right now. Prescription drug pr, spending was
actually not that high, when you consider the overall landscape, at only about two
hundred and six, I say only, but $263 billion.
And that stayed relatively flat year over year.
It was only about a 2.9% growth, whereas the the overall health care spending grew
at about 4% per year. Okay, year over year.
So, there weren't a whole lot of notable changes with the Affordable Care Act
coming in, in line. We'll see a lot more of that in 2014.
But in 2013, what we did see that affected the pharmaceutical industry
specifically, were three things. First one, there was a provision in the
plan that allowed for dependents to stay on, or to move into their parent's
coverage up to the age of about 26. Okay, or up to the age of 26.
So it actually moved about 2.7 million people into having coverage, where they
didn't necessarily have it before. It's not to say all of them didn't have
it, but it certainly moved more people into the, the whole health care landscape
that would, before was there. It extended and increased the rebates
that pharmaceutical manufacturers had to pay for certain Medicaid plans.
And it also increased and changed the whole dynamic of, the the Medicare part D
structure, and the amount that, that pharmaceutical industry had to pay into
what was called the doughnut hole. Now, are you guys familiar with Medicare
part D and the doughnut hole at all? Okay no.
So, it's kind of complicated, I'll, I'll try to walk you through it, because
everything with the government is complicated.
Right? Basically, for some body that has
Medicare coverage, part D, which is their perscription drug coverage.
They're responsible, the beneficiary's responsible for about, and I'm going to
get these figures a little bit messed up, but, about the first 100, $325.
Okay, they, they pay the entire amount. That's considered their deductible.
It then goes into a second tier. And for the next, like, $2600 give or
take, of their drug coverage, they're responsible for 75% of it.
The plan pays for 25% of it. Okay.
It then goes into what's called the doughnut hole, for about another $6,000
or so. In that doughnut hole, for brand name
drugs, pharmaceu, pharmaceutical manufacturer needs to provide a 50%
discount on the brand of drugs. And then, for the rest of that 50%, the
beneficiary pays 47.5% of the cost, and the plan pays 2.5%.
'Kay? So the interesting dynamic here, is that,
as you, oh and the generics, by the way, is that same 75-25 split where the, the
patient actually pays for 75%. So the interesting dynamic when you get
to the doughnut hole, is that, while you may want to start a patient off on
generics, because they're fronting a lot of the burden, right, of the cost of the
drug. When you get to the doughnut hole, it may
actually be cheaper for them to be on a brand name medication, because of the
rebates pharmaceutical manufacturers are paying.
So, it's, it's, actually impacting, patient, or physician prescribing in a
lot of cases. Because the question becomes, do you
start a patient on a generic, or do you start them on a brand, knowing that when
they hit this doughnut hole, the costs are going to be less for them?
It's an interesting conundrum, but to something as all these things are rolling
out, that we're having to face.
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