Medicare Part D And Its Market Effects Medicare Part D Larry Olson, Director, Healthcare, Consumer Practice Area In just a few months, the prescription drug market will experience unprecedented change. When Part D of the Medicare Prescription Drug, Improvement and Modernization Act (MMA) goes into effect Jan. 1, 2006, more than 43 million Medicare beneficiaries will have the opportunity to benefit from prescription drug coverage. As Medicare patients get ready for the coming enrollment period, which will run from Nov. 15, 2005, through May 15, 2006, pharmaceutical manufacturers need to start developing and refining their creative, targeting, and messaging strategies for the long term. Throughout the process of preparing for Part D, companies can expect both significant opportunities and major challenges. Among the substantial opportunities Part D presents are the potential to: • Significantly increase drug use by the Medicare patient market that already accounts for about 50% of U.S. pharmaceutical sales. • Capture additional market share for branded products through innovative direct-to-Medicare patient communications strategies. • Drive increased prescription pull-through by effective alignment with physicians treating Medicare patients. To realize these opportunities, marketers must overcome a number of complex challenges. To succeed in the new MMA marketplace, they need to: • Develop effective outreach and educational programs that motivate Medicare eligible patients to enroll in Part D. • Protect market share in the face of increased brand and generic competition created by the Part D rules in more than 20 major drug classes. • Create targeted direct-to-Medicare patient marketing programs that reach low-income seniors. • Adapt to new roles that physicians expect of them in the new Part D environment. A Cross-Stakeholder View Pharmaceutical marketers must understand the impact of Part D on all their audiences — patients, physicians and managed care organizations (MCOs). Marketers must consider the different perspectives and vested interests of each group, since these differing viewpoints can have major implications for product performance. Some of the most important questions that brand managers must answer to create effective Part D strategies include: • How knowledgeable are patients about Part D and its enrollment options? What are their most trusted sources of information? • How will Part D change MCOs’ contracting, formulary reimbursement, and cost-sharing plans? • How will Part D affect prescription drug access, formulary availability, product preferences, treatment regimens, patient compliance, and prescribing for both Medicare and non-Medicare patients? • How will Part D impact doctors’ expectations of sales reps? • How will Part D influence disease management practices, and which categories will be most affected? Planning Now for the Road Ahead Recognizing the differing knowledge levels, expectations, and perspectives among different audiences, marketers need to develop distinct strategies for each of their constituencies. To create the right strategies for Medicare patients, marketers must: • Gain an understanding of the Medicare beneficiary population through segmentation by sex, income, insurance status, prescription payment patterns, prevalent disease states, comorbidity profiles, and prescription drug usage patterns. • Develop direct-to-Medicare patient communications and messaging strategies around specific products, tailored to targeted patient segments, especially low-income seniors. • Identify Medicare beneficiaries’ most trusted sources of information about Part D, to determine the best communication vehicles. To develop the most effective physician strategies, marketers need to: • Assess Part D’s influence on prescribing behavior for both Medicare and commercial lives. • Identify doctors’ perceptions about Part D’s impact on formulary availability and patients’ accessibility to brand name agents. • Determine what new roles physicians will expect sales reps to play in the Part D environment. To work most productively with MCOs, marketers have to: • Determine Part D’s impact on contract logistics. • Anticipate strategies and tactics that MCOs will employ to gain Medicare patient market share. • Examine how Part D will affect MCO benefit designs, including the changes planned to accommodate Medicare members and the influence Part D may have on commercial benefit programs. • Identify anticipated changes to formulary, drug reimbursement, generic use, and cost-sharing policies Clearly, research among all these audiences — both pre- and post-enrollment — will be critical to ensuring the creation of informed strategies that support success in the MMA Part D market. The marketers who come out ahead will be those most in tune with their audiences’ perceptions, concerns, and expectations — and most aware of how and where to reach and influence the stakeholders who will drive product performance in a new and highly competitive environment. Source of Information for Specific Brand Name Medications Carried by Plans The Doctor The Government, Medicare, or Social Security Administration The Pharmacist The Local Medicare Plan Offering Prescription Drug Benefits Drug Companies Family Members Friends or Colleagues The Internet Don’t Know NA More than half of Medicare patients will rely on their doctors for information about the branded drugs in their Part D plans. Source: GfK Market Measures, East Hanover, N.J. For more information, visit gfkmarketmeasures.com. GfK Market Measures, East Hanover, N.J., (formerly part of NOP World Health) has been providing both syndicated and custom solutions for more than 40 years, offering multistakeholder therapeutic class analyses and promotional effectiveness tools. For more information, visit gfkmarketmeasures.com. September 2005 VIEW on Marketing

Download PDF