Capitalizing on the Affordable Care Act
We’ve all heard about the rollout the Affordable Care Act and the website’s technical issues. Despite that, enrollment numbers are improving and gaining strength. In fact, January’s numbers actually exceeded the month’s enrollment target and the number of enrolling young adults grew, from 24-27% – important since so much of the ACA’s projections are based on healthy, young people joining the ranks of the insured.
Still, with everyone (particularly the media and politicians) seemingly focused on the Affordable Care Act’s short-term progress, be it success or failure (and admittedly, enrollment is still below overall expectations), it’s important to take a longer term view. GlobalData estimates the new law will bring in $115 billion in new business over the next 10 year period. In fact, Medicaid enrollment alone is estimated to increase by 19.5 million people. In total, 32 million new customers are expected.
Why is this important for Pharma? Well, this new business could earn up to $35 billion in incremental profits. So, despite all the hand wringing over the ACA’s initial troubles, there is money to be made and the real question for pharma is how to capitalize on the new law over the coming years.
So, what are some of the trends and strategies these days and how can pharma take advantage of them?
First, as discussed in a previous post on managed markets, it’s all about outcomes and marketing towards them. Payers are moving away from a fee-for-service model to an ACO/MCO model, where reimbursement is based upon patient outcomes and overall value. The Managed Markets and Marketing teams must develop a strategy to cater to this new way of doing business – be it new messaging, contracting strategies or new clinical or economic studies. Pharmaceutical companies will need to prove to not only HCPs, but hospital and formulary administrators, the value of their drug and why it commands premium pricing over the competition. This may mean moving marketing efforts away from restricted access physicians and towards plan administrators who control the formulary selections.
Second, companies will require advanced use of data and analytics to understand and address each customer’s needs in the buying process – be it ACO, MCO, integrated health system administrator and even HCP. As one example, pricing models will need to be shared that delineate how the price was derived, how it compares to others, and how the population will ultimately benefit from it. These types of analytics go beyond the traditional analytics done today.
Third, another nuance worth noting is the actual patient base. The largest group of newly insured that is expected to enter the system is young adults, aged 19-29. According to the Kaiser Family Foundation, 29% were uninsured prior to the implementation of the ACA. This Millennial generation is technically savvy (no wonder the website issues have slowed enrollment) and expect to be marketed to in new ways. For Pharma marketers, using mobile, social and other digital media channels is important to make direct connections with these consumers. Running a DTC ad on the evening news is no longer enough. Developing creative, two-way strategies to digitally unite the brand with these patients will be important to meet this segment’s needs and drive sales.
Finally, pharma companies are shifting away from mass produced drugs for large populations and towards innovative, specialty drugs for niche markets where they can command a premium price. In fact, these drugs will be the biggest drivers of branded drug spend growth; spending is expected to increase 30% over the next five years. Additionally, biologics are growing and are expected to account for one in every five new drugs.
Given all these trends and strategies, can you look beyond the ACA’s short-term issues and implement a long-term strategy to capture payer, patient and therapeutic preference? Are you ready to take advantage of the law’s impact?
Have you already started? Let us know what you’re doing to launch your ACA strategy!