Managed Care Market Research: Understanding Stakeholder Needs to Maximize Product Acceptance

This is the first of a two-part series examining managed care's profound influence on pharmaceutical prescribing and the challenges of conducting market research within managed care organizations. This month's eTip! focuses on the impact of managed care on prescribing behavior. September's issue will cover the characteristics and strategic applications of market research in the managed care arena.

Managed care organizations (MCOs), in short, appeared in response to the rising cost of healthcare. This medical management approach links patients, providers, third-party payers, and administrators together to theoretically deliver high-quality medical care cost-effectively. A key mandate of MCOs is deciding which services and products—among them pharmaceuticals—most economically meet patient needs.

As MCOs grow in influence, these decisions have an increasingly profound effect on pharmaceutical manufacturers. Recent figures suggest that more than two-thirds of all retail prescriptions are linked to MCOs¹. Prescription drug coverage is a major reason seniors struggling to reduce their out of pocket costs enroll in MCOs. When Medicare drug reform goes live in 2006, it will place greater reliance on MCOs to provide Medicare benefits. It's estimated Medicare will expand its share of retail pharmaceutical purchases from 16 to 45 percent when this occurs, and continue to rise².

As a result, drug manufacturers must develop a thorough understanding of the influence of MCOs to compete in this environment. Market research is the primary vehicle for achieving this insight. When armed with this intelligence, you can then develop and present an integrated program demonstrating how your product addresses patient care goals and cost concerns. This in turn will increase the likelihood an MCO will endorse your product, providing tremendous revenue opportunities.

But the interaction between the primary stakeholders is complex, and their concerns vary widely (see diagram below). All participants must make choices within the MCOs' limits. To further complicate marketing efforts, MCOs communicate with stakeholders in ways that are inconsistent with messages delivered by other participants, such as pharmaceutical manufacturers and employers. This disconnect hinders manufacturers' efforts, making it difficult to understand the dynamics driving prescription choice.

Success in this environment requires an in-depth understanding of the needs and behavioral drivers of each stakeholder. Your market research provider can help you develop strategies and tactics specifically tailored to their information needs. For example:

• What motivates MCOs to include or exclude certain products? What can you do to be seen as the most beneficial choice?
• Why will patients pay more out of pocket for certain drugs? What information sources do they use to reach this decision?
• How can you convince physicians that their treatment approach matches the MCOs objectives, and what bearing does formulary status have?
• How can pharmacists<