Making a case when biotechs market their products to their most cost-conscious customers — managed care organizations — is far different than what a traditional pharmaceutical company might do with HMO partners. It’s all about the science. Not the cost.
Abstract
Translating new science to a non-clinical audience, explaining the subtleties of biotech, making the clinical case for a treatment – all are part of biotech marketing to MC0s. The question of value is at the heart of every transaction: How can the total course of therapy save money while delivering the desired clinical outcome?
Stephen Lash, PharmD, has crossed to the other side. After a quarter century at HMOs, pharmacy benefit managers, and health systems, listening to marketing messages from biotech and pharma companies, Lash has become the messenger. Hired two years ago as managed care clinical manager at Genentech, he is now its marketing voice to managed care organizations.
In the interdependent world of biopharmaceuticals, Lash’s move is a shift between knowledge links in the biotech supply chain. He is one of only three managed care clinical experts at the South San Francisco, Calif.-based company, the world’s largest biologics producer. He also has a strong clinical understanding of biopharmaceutical treatments.
Lash embodies the key to marketing biologics to managed care: The relationship essentially is a carefully orchestrated give and take among deep-knowledge workers.
NATURE OF THE BEAST
Biotech marketing comes down to the nature of biotechnology itself. “There has to be more education of the sales force and customer” when it comes to biotech marketing to managed care, says Michael Liebman, PhD, chief scientific officer for the Windber, Pa.-based Windber Research Institute, which focuses on women’s health, cardiovascular disease, and aging.
THE CAREFUL REVIEWER: John Watkins, RPh, MPH, of Premera Blue Cross, uses a formulary process driven by clinical and pharmacoeconomic elements, the latter of which, he says, is “becoming even more important because the cost is so high.”
PHOTOGRAPH BY JON BRUNK
In contrast to traditional pharmaceuticals, biopharmaceuticals involve more complicated patenting relative to genes, proteins, delivery, and function. Traditional pharmaceuticals are chemistry-based around small molecule delivery, and their manufacturers deal with the easier and clearer patents on these, says Liebman. Also, bio-pharmaceuticals have a broader range of activity and potential to generate immune responses, and there is greater complexity in getting biotech agents to the target site. “Someone marketing these products must understand both the benefits and the risks,” he adds.
THE TEACHER AND ADVOCATE: Stephen Lash, PharmD, says, “Payers have focused on the unit cost of therapy rather than the total cost of treatment.” Total cost, he says, is a better demonstrator of the value of biopharmaceuticals.
PHOTOGRAPH BY GLENN TRIEST
Gaining that understanding boils down to knowing, and being able to communicate, the underlying science. “Science is critical,” says Lash. “The major difference between bio-tech marketing and other types of marketing is the emphasis on science,” he says, adding that Genentech has hired pharmacists with managed care expertise to explain critical factors involved in appropriate patient selection of biotech drugs within health plans and other payers. “I don’t think it’s been explored adequately in the past — taking science to the payers.”
RAISING AWARENESS
Sales teams from biotech manufacturers who make regular calls on Premera Blue Cross almost always are domain experts like pharmacists, says John Watkins, RPh, MPH, pharmacy manager of formulary development for the Mountlake Terrace, Wash.-based health plan. It is their job to raise awareness of new products in the pipeline. “This process is carefully regulated by the Food and Drug Administration, and the sales people I deal with are true professionals.”
There isn’t a lot of room for hype. Manufacturers hoping to get a new biopharmaceutical treatment onto Premera’s formulary must run a formal gauntlet that starts with submission of a “product dossier.” The dossier must adhere to a 31-page format devised by the Academy of Managed Care Pharmacy («www.amcp.org»), in Alexandria, Va.
Once Premera receives the product dossier, the manufacturer can arrange a face-to-face meeting with the health plan, though this is not a requirement. “If they follow the document, we usually get what we want,” says Watkins. Still, most biotech drug makers opt to bolster their case by sending a medical science liaison to half-day monthly meetings that allow an hour for each company. Premera and the manufacturer then engage in a Q&A about the new product.
The first step in the ensuing formal review process is with the health plan’s pharmacy and therapeutics committee. A special outside panel provides a first review for oncology drugs before passing the dossier to the P&T committee.
Finally, an internal medical policy committee reviews the biopharmaceutical application in the context of varying policy, legal, and implementation factors. “They look for glitches,” says Watkins.
“Genentech feels very strongly that marketing efforts are taken only to professionals and then one-to-one with a specialist.”
— Stephen Lash, PharmD, Genentech
Not surprisingly, Premera tracks the drug pipeline on its own, using online sources and the Pink Sheet, and relying on consultants such as a PBM and specialty pharmacy (SP).
Some studies find that direct-to-consumer advertising by biotech companies drives utilization, but Watkins has not seen consensus on the issue. “We use a process that is driven by clinical and pharmacoeconomic elements, and the latter is becoming even more important because the cost is so high.”
FOCUS ON COSTS
Genentech’s Lash agrees that the cost of biologics is a preeminent issue. “Biotech costs can be so unsettling to a payer,” he says, but he asserts that many health plans have traditionally viewed such costs through the wrong lens. “Payers have focused on the unit cost of therapy rather than the total cost of treatment,” a more accurate measure that better demonstrates the value of biopharmaceuticals. For example, in cancer care, plans have emphasized the up-front cost of chemotherapy without considering the ancillary costs of nausea, neutropenia, and follow-up care.
“Payers still focus on cost per dose. That’s one of the hardest things to change, because it’s the easiest thing to measure — vial versus vial.” The industry is still doing studies on the total cost of treatment and is developing a framework for payers to understand it. But, because of the complex interplay of factors, it’s not easy.
“Are you able to look at medical visits, infusion costs, ancillary costs? Some plans have great data capabilities but others do not,” Lash says. The type of MCO that you are also plays a factor. “If you’re a staff-model HMO and need 10 wheelchairs, that’s an easy call. I don’t know how many people can profile their cancer care” in the same manner, he says.
THORNY ISSUES
One difficulty in biotech marketing is that health plans are better at profiling a pharmacy database — billing is straightforward because of the unique National Drug Codes (NDCs) — than they are at profiling costs billed under the murkier category of medical services in the doctor’s office, where most biotech drugs are injected. Lash expects this difficulty to diminish as patients become able to self-administer more and more medications.
Lash is usually brought in on request from Genentech’s account managers, its product managers, and its SP division to help sort out thorny issues surrounding biologics with MCOs and other payer representatives, including pharmacy benefit managers and SPs. And thorns are as plentiful as biotech drugs.
“Some biotech drugs fall into market niches, so you need to distinguish them from those that occupy their own niche. For example, omalizumab (Xolair), Genentech’s anti-IGE (immunoglobulin E) therapy for asthma, is an injectable without market competition. So, the marketing goal is placement for appropriate patients on the formulary,” says Lash. In contrast, psoriasis drugs are very competitive, and the goal is to differentiate products — albeit still on the basis of science.
“Payers are trying to sort this out and figure out the best placement of biotech drugs. It’s still science but tuned to a payer’s coverage and restriction policies. That’s the difference with marketing to managed care: It encompasses appropriate use and monitoring, prior authorization, and recertification,” he says.
Recertification is a case in point. All patients must be monitored to ensure that they are doing well on a biotech drug and be recertified for continuing use. It’s more than just a “yes” or “no” on a drug.
TO THE RESCUE
Given the complexities and potential pitfalls in marketing biotech drugs to health plans, it’s not surprising that third-party organizations have arisen to conduct those tasks for biotech and pharmaceutical companies.
Bethesda, Md.-based MEDTAP International helps drug makers plan, build, and communicate the value message of health care interventions worldwide, analyzing factors such as economic models and outcomes. “It’s done very carefully,” says Mitchell DeKoven, MHSA, manager of reimbursement services for MEDTAP’s Center for Pricing and Reimbursement, when asked how biopharmaceuticals are marketed to managed care plans.
“Biotech drugs are very expensive, and it requires a convincing argument to demonstrate their value and subsequently receive appropriate reimbursement,” he says. MED-TAP typically becomes involved in marketing to MCOs early on — in phase 1 or phase 2 of clinical trials, or about 18 to 24 months from anticipated FDA approval.
“We conduct primary market research with medical and pharmacy directors, gauging their receptivity to the new product: How might the biologic fit into the benefit packages a plan offers? How would they manage it? What would be its likely formulary position?”
MEDTAP originally was organized in 1984 as the Battelle Memorial Institute “Medical Technology Assessment and Policy” Research Center. It incorporates findings from primary and secondary market research and other research initiatives into a comprehensive strategic reimbursement plan that might include coding strategies, payer/provider education programs (such as case-management services), and launch-to-payer planning — all of which are essential for seamless reimbursement. The company also utilizes payer advisory boards, or panels of key opinion leaders from payer groups, including medical directors, pharmacy directors, and others who sit on P&T committees.
How one biotech’s marketing program differs from those of big pharma.
“What took me off guard when I began this job was that many payers were asking me, the manufacturer, for help,” says Genentech’s Stephen Lash, PharmD, whose responsibility it is to demonstrate the clinical value of his company’s products to third-party payers. “We’re trying to explain all aspects of biotech. That would be a much rarer experience in big pharma sales and marketing.”
Lash, Genentech’s managed care clinical manager, says that “In some ways, we’re acting as translators, in some ways, clinicians, and in some ways, contract workers, because we’re trying to help them make their decisions.”
In keeping with that role, Lash points out, Genentech has yet to place any direct-to-consumer advertising — a posture that has been well received by payers. “Genentech feels very strongly that marketing efforts are taken only to the professionals and then one-to-one with a specialist. Whether you plan to do direct-to-consumer advertising is a very common question from payers,” he says. Such advertising can create inordinate demand. When that happens, a health plan will often go into a defensive stance and actually engage in “counterdetailing” to persuade physicians not to prescribe the particular drug.
Because it has a large number of products in the pipeline, Genentech has to focus on the science and to cultivate long-term relationships rather than short-term gains from a sale.
Each MCO requires a unique approach. “Managed care is not like Medicare or Medicaid. MCOs have extensive flexibility to make their own formulary and coverage decisions. Each company is different than the next,” says DeKoven.
Another essential component of the marketing process involves determining a price, which is a delicate balancing act. If the price is too high, MCOs might balk. If the price is too low, the biotech manufacturer can’t recoup its investment. “Biopharmaceutical firms want to determine a reasonable price, while ensuring that all patients have access to the new technology. At the same time, MCOs want to make biologics available — but not go broke in the process.”
ENTER SPECIALTY PHARMACY
With the increased availability of biologics, along with their cost, pricing has become a key component of biotech marketing. “Biotechs used to represent about 1 percent of drugs; now they make up as much as 8 percent of the total pharmaceutical supply, and in the next five years we expect that to climb to 20 percent,” says L. Peter Smith, CEO of Pittsburgh-based Medmark Specialty Pharmacy, a subsidiary of Highmark Blue Cross Blue Shield.
Because most injectables are administered in the physician’s office, it is difficult to separate — and thus manage — the price of drug administration from the overall medical service fee. It is not unusual for some specialists to take a markup on injectables they buy, stock, and deliver to patients. In response, most MCOs developed “managed injectable programs” to steer physician purchasers through SPs — which can negotiate more favorable pricing with a drug maker.
Smith says that for payers, the problem was not only that an MCO was forced to pay a markup to the physician, there were no guidelines for using the drug in general. “It was always retrospective,” he says.
SPs occupy a special niche in the biopharmaceutical marketing chain, because they take an aggressive, ostensibly scientific, business-oriented approach to an area that is complicated on both scores — and is still amenable to local solutions. Pharmaceuticals that come under the NDC are covered under the pharmacy benefit, usually with a price determined by the PBM. Drugs linked to a disease deemed to be a “medical condition” — mostly injectables — are billed under the J-code as a service rendered in the medical office, the scenario leading to markups by physicians.
The approach of Medmark parent Highmark, says Smith, was to have physicians go through Medmark whenever they needed to write a prescription but, in return, physicians could raise their administrative fee to $400 — which still allowed the health plan to save money. This persuaded the physicians to get out of the buy-and-markup business. Also, every time a new prescription is written for a specialty drug, it goes through Medmark, which ensures that it is approved for the formulary and checks to see whether there’s a generic equivalent.
“This is a complicated area,” says Smith. For one thing, Medmark has tried to differentiate itself from earlier entrants into the SP area, which focused their sales and marketing efforts on physicians and limited themselves to a particular disease, such as hepatitis C or hemophilia.
“Most of our competitors were part of the problem. The payer was still paying a high price and was still not able to manage the use of the drug,” says Smith. Medmark’s strategy is to work directly with the payer from the beginning, developing the capability to buy and manage all injectables and infusible drugs. “We want the total carve-out,” he says. The idea is then to work backward to the physician.
Payers who originally balked at the model because they thought doctors would rebel against it are now moving toward it, says Smith. “We’ve been able to change the model without disrupting the physician relationship, so we’re getting a lot of interest,” he adds.
From a marketing perspective, it means that an SP like Medmark acts as an intermediary or facilitator between the manufacturer and the payer, getting the two together on price, getting the manufacturer the most data possible — “Manufacturers live for more data,” says Smith — and working with the manufacturer to get the most up-to-date guidelines on treatment.
Manufacturers also have been receptive, he says, because they realize that spending on specialty drugs is increasing, and so they want a continuing dialogue with payers.
“For a manufacturer, the worst-case scenario is for the payer to make a decision on a specialty pharmaceutical without any manufacturer input. Payers welcome the intermediary model, because they’re trying to get control of spending without compromising care.”
The role of the SP further confirms that the marketing of biotech drugs to MCOs is a two-way street. “We probably extend as much outreach to biotech companies as they do to payers. We get very active to set up pricing and distribution,” Smith says. Among other things, the company develops a “pipeline report” that reports on anticipated new drugs that might compete with those already on the market.
THE NEW LANDSCAPE
Greg Weishar, president of PharmaCare Management Services, a Lincoln, R.I.-based SP, says apprehension and caution play big roles in biotech marketing, and that’s why “You don’t see the marketing machine and big sales forces like you do in big pharma.” Instead, biotech companies work in parallel with SPs, PBMs, distributors, and MCOs.
Traditional sales and marketing are typically not necessary. “These drugs are hard not to get on formulary,” explains Weishar. “These are small-distribution items. There’s no velocity on these drugs.”
With any given biotech drug, only 1 or 2 percent of the population, on average, will benefit — meaning the promotional strategy behind them should not be mass-market but, instead, an effort to identify patients who will benefit most. Citing rofecoxib (Vioxx), which Merck recalled in September after a study linked it to increased risk of heart attack and stroke, Weishar notes that it been marketed to general practitioners, osteopaths, sports-medicine specialists, and the public, when it should have been limited to arthritis sufferers who experienced adverse effects from other medications. “It was a mass-market approach,” says Weishar.
By the time a biotech drug is available, it is usually well known to the typically small group of doctors who would administer it. “These docs are well identified and are a subset of a subset of a subset. This is not marketing to hundreds of thousands or even tens of thousands of physicians, where there’s lots of competition among products. This is different. They get to a concise population of specialists,” he says.
For example, pegylated interferon alfa-2b (Pegintron), a hepatitis drug, is advertised to virologists specializing in that disease, about 1,000 across the country — and the manufacturer knows who those doctors are. “That’s where we come in. The drug either will work or it won’t, and the doctor will know it,” declares Weishar.
He views the industry in a transition in which most specialty drugs will move from being reimbursed as a medical benefit in a doctor’s office visit to pharmacy benefit. This trend is driven by the need for special pricing control but also for better visibility of patients and improved information access. Still, payers will never view biotech drugs as commodities. MCOs’ top concerns will remain access to the product, getting it priced right, ensuring that patients receive the right counsel and that they comply with guidelines for taking the drug.
“For a manufacturer, the worst-case scenario is for the payer to make a decision on a specialty pharmaceutical without any manufacturer input.”
— L. Peter Smith, Medmark
The marketing of biopharmaceuticals to MCOs wasn’t an issue two years ago, says an expert who surveys the field. “The key issue is that the landscape is dramatically different than even 18 months ago,” says Tom Baker, vice president for client strategy and analytics at the San Francisco-based Zitter Group. “Until recently, MCOs didn’t even care about biotech drugs. They were expensive but rare, and the total populations were small, like those for hemophilia and Gaucher’s disease. Now there are arthritis, hepatitis C, and the significant launch of omalizumab,” he says. The last represents the first time a biotech product was made available to a chronic care population, says Baker, who oversees a biannual national survey of managed care decision makers for biotech and other industries.
“In the old days, a biotech company would show up at an MCO and say, ‘We’ve got this new product, but it won’t affect you much.’ If you had good, cool science, that was enough,” he says, “Now, you have to have a good value message associated with a high-cost therapy and answer several key questions: Why should I make this widely available? Should I reserve this for a subset of patients? Why should I use this product and not that product? Do I need another psoriasis product when I’ve already got one?”
Differentiating value becomes more important when biopharmaceuticals compete for an indication — and it becomes one manufacturer’s word against that of another. In the category of red blood cell growth, for example, epoetin alfa (Epogen or Procrit) and darbepoetin alfa (Aranesp) are already available. “Payers don’t see these products as having significantly clinical differences,” says Baker.
As a result, biotech manufacturers increasingly will have to differentiate a product on the basis of such factors as the availability of prefilled syringes, dosing frequency, and rapidity of hemoglobin response. Manufacturers have not had to face these issues in the past. MCOs, for their part, are saying that patients should pay for a feature’s convenience, Baker says, adding, “In the past, the patient wasn’t even part of the equation.”
Welcome to the new world of biotech marketing.