I am frequently contacted by clients who have important questions about their markets, such as the proportion of patients who may have this or that comorbidity or the number of patients taking their product for a specific purpose or indication. The most common place they want to turn for such information is payers, which to me is a clear indication that they don’t really understand what payers do—or can do. While it is true that payers cover the use of most drugs and do work to try to manage that use, outside of a very few special cases the payers tend to know considerably less about your markets than you do—and most are certainly much less interested than you are in such details.

As I have said many times, none of us have ugly babies—in that we all believe our products to be the best and the most important medicine in the pharmacopeia—but the truth is that payers only focus on a few areas of high use or high concern, leaving the market to take care of itself for the most part. Products are covered according to the policies the payer has in place; brands up to a certain price are placed on one tier and those over that price on another, so long as the therapeutic area is one that is covered. After the initial coverage decision is made there will be periodic “reviews,” but these are generally far from comprehensive and unless something major has happened in the market (such as the leader going generic or new safety concerns emerging) most reviews result in no changes in status.

I have seen dozens of studies of payers performed for companies seeking to get information that payers are simply incapable of providing with any accuracy. Now, for certain, if you pay pharmacy directors honoraria and ask them questions they will provide answers, and do so in good faith. But if you want an accurate answer, as opposed to just an answer, you may want to reconsider going to payers as your source. Payers, in most cases, defer to a physician’s discretion and professional judgment—remember, payers are not licensed to practice medicine. Because of this, the degree of control many wish to ascribe to payers just isn’t there, and neither is the level of information that many seem to think payers have at hand.

Connecting Diagnosis to Prescription

Most payers cannot connect a diagnosis to a prescription, so they are generally in the dark as to the “indication” for which the product is prescribed. They have tools, such as a “soft edit” (in which they can use the electronic file to determine if the patient has received prescriptions for similar drugs in the recent past) to assure that a patient has either tried and failed on a generic or that they are most likely to actually have the disease for which the drug is intended.

They can limit prescribing to specific specialties to garner some level of assurance of the appropriateness of the prescription, but beyond that most payers can’t tell you much about how the drugs are used in their system—only that they are used. They can prior authorize a drug to be sure it is used appropriately, but this can be very costly and time consuming so it is generally reserved only for very costly drugs. But even in those cases, they generally just take the physician’s word for it that the prescription is appropriate.

I was recently asked by a client to do a study of payers to determine what percent of the patients taking a certain drug were being treated for a “pre-disease” to prevent progression to a fully diagnosed case of the disease. Because the prescription database is seldom tied to the patient’s health record (outside of a staff model HMO) very few payers could even validate that the drug is actually being prescribed for patients who have the disease, much less know the number or percent receiving the drug who “almost” have it. There is simply no way for them to know this.

Multiple Drug Indications

Similarly, we are sometimes asked to poll payers to understand what percent of a drug’s prescriptions are for one indication versus another. Again, they do not know this (which makes the management of drugs with multiple but dissimilar indications a real challenge). Physicians, on the other hand—remember them, they are the ones who actually prescribe drugs for real people—can answer such questions. Asking a payer what percent of prescriptions for a drug are used for this or that indication is rather like asking Amazon.com to tell you what percent of the thermos bottles they sell are used for cold drinks as opposed to hot drinks. They can’t know it, but the people who use thermoses can!

If you wish to understand how a payer may reimburse your product and under what conditions, payers can be asked—although those familiar with the machinations of payers should be able to tell you the most likely coverage for your product without conducting research.

Specific Uses of Drugs

There are certain things for which payers are the best source for information, but they do not include issues at the patient level or relating to specific uses of your drug. Payers are managing massive budgets with thousands of different drugs, and usually under multiple plans with different terms and conditions for coverage of the drugs. They focus on a few key areas where they get the highest return for their efforts, and tend to set reimbursement and coverage decisions formulaically—generics at this level, brands at that level, specialty drugs at still another level.

Most payers do not micromanage because they don’t have the time or resources to do it and the return on their effort would be so low that it would be inefficient to try. Instead they focus on the big line items and the things that they can or must manage. They can’t spend time managing what some call “budget dust.”


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