The Future Looks…Uncertain

Change is inevitable. Predicting the precise direction of change is difficult. While health care insurance in the United States has tended to evolve slowly, marked by pilot programs and less often by system-wide upheaval, the influence of those who seek to change the health consumer experience is gaining strength through converging private and governmental initiatives. Three years after the enactment of the Patient Protection and Affordable Care Act (PPACA) the health care environment is about to experience the start of one of the Acts key components, the Health Insurance Exchange (now branded by the government as Health Insurance Marketplace). Early signs suggest the Exchange directive has legs. How strong and fast are those legs is yet to be determined, but changes will impact providers within the full health care spectrum. Having a vision and means to rapidly assess the need for redirecting your resources is an urgent priority.

While the new online marketplace for selecting a health plan is in itself of interest and a subject for many industry prognosticators, it is the impact on health consumers, providers, payers and suppliers that will create new opportunities and risks across the Life Sciences industries. Tens of millions of individuals are expected to have health benefits where today they have none. New modes of financing, delivering, and managing health care will evolve, driven in distinctly different directions by regional variations in market dynamics and government policies. While most experts would agree that change is certainly coming, there is much less consensus on exactly what will change and to what degree such change will impact specific industries.

With just months to go before new qualified plans for individuals and small businesses begin to influence the vast health care environment, is it possible to prepare in advance for so many unknowns? The answer, from our viewpoint, is an absolute YES! Regardless of where you sit in this environment, our experience during the emergence of similar events provides us with confidence that solutions are possible. Past experience also provides confidence that despite many unknowns, the paths are manageable with a vision and a thoughtful plan.

California announced premiums for the 13 insurance plans participating in Covered California. The focus in the media has been on affordability of premiums because that is easiest to see. However, the impact on the consumer and on pharmaceutical products will be driven by out of pocket costs. And those are yet to be determined.

Preparing for 2014

Given the split in level of state support and enthusiasm for the new initiatives, it is unlikely that a simple national environment will emerge. Instead there is a high probability that variations in business drivers will emerge at the regional or state-level necessitating the ability to evaluate information at local levels, and translate this into targeted utilization of promotional resources.

The key to preparing in advance is an approach that expands evaluation beyond the drivers that directly impact your business today by looking at the objectives and practices across all players in the emerging landscape. From this unique perspective preliminary insights can be obtained, sufficient to craft a framework for detecting, evaluating and acting on change. This is not new really, as this approach has been used to successfully prepare for similar rapid market changes such as the Medicare Part D plans.

Lessons Learned and Other Options

When Medicare Part D emerged pharmaceutical manufacturers had to provide contract offers nine months before the plans would be active and without important data about the drug plans that they were used to having when developing contracts such as enrollment levels and potential sales. In addition, plan sponsors were often in flux themselves, as they were still working out the risks and opportunities of an unknown change in market dynamics. The best prepared Manufacturers were those that took the initiative in seeking out new sources of actionable information and adopting new ways to evaluate the landscape. Through proactive methods they were able to make well-informed judgments regarding initial direction for applying their resources and were prepared with methods to monitor and re-evaluate strategies in real-time.

In less than a year the landscape will once again be reshaped, and another variant of health benefits will appear. While there are considerable disagreements among experts regarding issues such as how successful these new plans will be, how many health consumers will enroll, and what level of benefits will be realized, there should be no debate over the need to start now to be prepared. There should also be no debate that solutions prior to January 2014 are feasible.

Take Action Now—Take Control

As 2014 approaches the Pharma industry needs an immediate, short-term action plan that focuses on monitoring, managing and effectively using newly evolving sources of information. Simultaneously, a long term vision of ACA must be established to guide the response to potential health care paradigm shifts that have been proposed for many years and may now be accelerated by the components of ACA.

What can you do now? We seek out actionable information, organize it, model it and track changes as the environment develops. In a business case where the behavior of health consumers, payers, regulators, and providers is expected to change, but the exact changes are unpredictable, then the ability to constantly monitor the environment in meaningful ways is critical to deriving optimal strategies for your business objectives.

What else can we do? First thing is to get a handle on the information and to seek out new sources of data that will inform your business decisions. Some immediate actions may include building tracking databases that incorporate qualitative and quantitative data sources, developing new KPIs and reporting tools, and mapping your resources to specific plans or segments.

Think broadly, look beyond your industry and understand the business objectives of other key players by obtaining unique business intelligence and expertise across all roles in this new environment. For example, Pharma needs to understand the objectives of the new insurance plans first in order to build a base of understanding from which future insights will be judged. In other words, try to gain the most complete picture of the marketplace changes in order to completely understand the impact on your part of the world.

The value of getting ahead of the changes cannot be overstated. The changes coming in 2014 are just the beginning. Clearly, there is significant impetus now behind efforts to change health care delivery and financing. How successful these initiatives will be will not be known for many years, but it is imperative for any pharmaceutical manufacturer to observed and evaluate the varied reshaping of the landscape.

The new plans may or may not be game-changing for your business. Perhaps to Pharma they will simply be additional plans that fit into the existing contract strategy and support mix. Or perhaps market dynamics will be such that we see significant shifts in volume from favorable to unfavorable pharmaceutical benefit designs or increased pressure to value price branded pharmaceuticals. Trying to predict the ultimate outcome many years down the road, resulting from a landscape being shaped by competing and powerful forces may not be time well spent. However, developing a vision for potential changes and building the tools and methods to direct that vision is indeed a very wise choice.