Paul Darling co-authored this blog post with Pratap Khedkar.
Patient centricity was the rallying cry at last month’s eyeforpharma event in Philadelphia, with many speakers echoing the sentiment that the patient is at the center of what we do. That’s great in theory, and it has always been true for pharmaceutical products, but here’s one of the main reasons why patient centricity remains more of a talking point than standard business practice: The pharmaceutical industry has little control over ensuring that a patient benefits from a particular medicine. The patient may be at the center, but pharma is at the periphery.
Prescription drugs reportedly account for less than one-sixth of all U.S. healthcare costs, and the remainder—meaning the vast majority—of the intermediate cost and influence are controlled by the doctor, the provider system and the payer. It was simpler 10 years ago when the doctor was the driving influencer, but now pharmaceutical companies have to work with the payer and provider systems—moving from dealing with an individual stakeholder to working through organized and often multibillion-dollar business entities. These systems control the delivery and payment of patient care, and pharmaceutical companies are unable to focus solely on the patient without cooperating in this increasingly elaborate healthcare ecosystem.
In other words, patient centricity is important (and difficult), but the pharmaceutical industry really needs to focus on customer centricity. In addition to worrying about improving the lives of 200 million consumers (the patients, caregivers and families) and 200,000 physicians (on whose doors reps knock half a million times every day), pharma now has to serve 200 highly influential IDNs and payers, and they’re sophisticated buyers. To further complicate matters, the 200,000 physicians aren't answering the half a million daily knocks from reps. Instead, they’re turning their attention to digital media, so the industry has responded with a pharma digital deluge that outnumbers those door knocks.
Consumers are feeling more empowered as well, which is having an impact on the delivery of care. Most millennials, for example, don’t feel the need to have a primary care provider, considering the doctor a “secondary source.” One of pharmaceutical companies’ traditional customers—and primary conduits through which they’d reach patients—has become less influential in decision-making processes for treatments and therapies. (Not that those physicians are opening their doors to reps anyway.) Then there’s the industry’s perception issue: It’s tough to connect with patients when they think of pharmaceutical manufacturers as overpriced suppliers.
We’ve reached a crisis point. Pharmaceutical companies are trying to serve four customer types—consumers, physicians, provider organizations and payers—and are struggling to transition from the product-centric approach to the customer-centric imperative.
Many companies have started down the path toward customer centricity, launching digital marketing programs and hiring key account managers to address the needs of organized customers. Meanwhile, increased rebates have become universal, with the industry tripling rebates to more than $105 billion for brand medicines since 2013, according to PhRMA. Some companies also have created value-add programs for IDNs, but these investments often fall short of creating enough top-line impact.
More comprehensive and strategic changes are needed. Put simply—although it’s anything but simple—you need to reinvent the way you go to market. Find ways to engage organized customers with differentiated value propositions, and to re-engage physicians and patients using untraditional channels. And your new strategy won’t stick without first changing mindsets, and without putting significant energy into rethinking your operations to best enable the new approach.
If you’ve been adequately convinced that the impetus for change is real—and critical—these five tips might serve you well:
- The KAM is dead. Long live KAM! Most pharmaceutical companies have started KAM programs, but an overwhelming number of them have simply relabeled a salesperson as a KAM and have failed to develop good value-added programs for their customers. Push the reset button on your KAM program. Stop thinking of a KAM as a key account manager role and start thinking of it as an entire strategy: “key account management.”
- Learn to experiment, fail and adapt. We do this all of the time in R&D, but we don’t want to hear about it in the commercial realm. Start taking some commercial risks. One opportunity for learning is running value-add programs with payers and provider systems as part of a key account management strategy. Many pharmaceutical companies are beginning to try. Many of these efforts won’t work, but those early attempts are learning opportunities to help you fine-tune your approach across the board.
- Throw out the old market research manual. The existing ways of doing market research in the pharmaceutical industry—focusing on secondary sources and large-sample market research—no longer suffice. To learn about IDNs and payers, you need to blend the otherwise incomplete secondary data with KAM investigation and feedback. For physician and patient research, you’ll need analytics firepower to effectively tap into big data sources. The data will need extrapolation and triangulation, which means that you need to rethink—and likely reinvent—your market research capabilities.
- Think globally, act locally. B-to-B value propositions are hard to develop, and you’ll only need a few viable ones developed with the help of centralized marketing resources based on customer needs. But one size does not fit all, and deploying value propositions with the right customization requires a local approach. Establish your overall messaging and then take into account your various stakeholders’ needs and preferences on the ground. In the U.S., for instance, what resonates with an IDN in New York might fail to connect with an IDN in Tennessee.
- Invest in cross-functional collaboration and operations. Most companies think that operational support is easy to do once the strategy is working, but most strategies fail because of poor implementation and because current operations fight them. To enable the above changes, you should rethink your operations strategy and structure, and the associated technology. For instance, you need new above-brand marketing roles; a way to weave together customer interactions with medical, personal and digital; and leading indicator metrics to sustain your KAM strategy in the field. Has the time come for one customer operations division, rather than dividing into functional areas with sales ops and marketing ops?
Yes, patient centricity likely is one of the keys to the pharmaceutical industry’s success, but it’d be worth your while to focus on serving your myriad stakeholders more comprehensively—and in a more customized fashion. It’s time to change the conversation from how pharma can get closer to the patient to how pharma can be a more influential player throughout the healthcare ecosystem.
Pratap Khedkar and Paul Darling co-presented a keynote at eyeforpharma Philadelphia 2017 called "Delivering Impact through Customer-Centric Partnerships."