Case Study:
Managed Care Assessment
Situation
A fully integrated pharmaceutical company owned a portfolio of products that served a therapeutic category. It created strong brand recognition through extensive physician detailing and direct to consumer advertising.The therapeutic category was facing numerous changes at the time: managed care had recently become more aggressive in its management of the category, and generic and additional over the counter (OTC) competitors would be entering the market in the near future. Our client needed to understand the effect that this changing environment would have on this therapeutic category and more importantly its products' coverage. It was looking to establish a strategy for its portfolio as the market continued to evolve.
Client Needs
The pharmaceutical company needed to understand the current status of this therapeutic market in order to best manage its portfolio in the coming year. To do so, it needed to consider:- The change in managed care's perception and management of the therapeutic market over the past two years
- The importance with which managed care maintained a prescription reimbursement for the therapeutic category
- The way in which managed care had responded to prescription drugs that switched to OTC in the past
- The likelihood that managed care would reimburse OTC products for this therapeutic category
- The expected coverage changes that a generic, OTC or both would experience when it entered the market
Putnam's Role
Our project revolved around conducting primary research with managed care organizations. Our network of relationships allowed us access to many thought leaders in the managed care industry.During the project, we analyzed multiple scenarios that could occur in this therapeutic market over the next year. We gauged managed care's anticipation of a new generic prescription, a prescription becoming an OTC, or both occurring when a competitor's exclusivity expired later that year. In addition to understanding what managed care expected from the market, we analyzed the effect that each of these situations might have on our client's portfolio.
Recommendations
Our primary research with managed care revealed that this therapeutic category was changing significantly, with reimbursement importance on the decline. Managed care was more willing to reduce coverage of branded products than it had been in the past; our client therefore would face lower coverage among plans. This trend would prevail as the market continued to mature.
We were able to evaluate for our client how the competitor's loss of exclusivity would affect its branded portfolio. By knowing the detailed reasons driving managed care's decisions, we were able to provide actionable recommendations about how to approach these upcoming challenges.
In evaluating managed care's OTC coverage, we found plans unwilling to reimburse OTC products yet actively promoting their use over prescription products. We also learned that some managed care plans limited access to prescriptions with methods that were actually more costly than the plans perceived them to be. This gave our client an opportunity to discuss the effectiveness of cost management strategies with individual managed care plans and reinforce the importance of branded product access to both plans and members.