Aligning Your Distribution Strategies With Payer Expectations

Pharmaceutical distributors play a vital role in U.S. healthcare. More than 90 percent of pharmaceutical sales are handled by distributors, who form a lifeline between the nation’s 1,300 drug manufacturers and over 180,000 pharmacies and dispensary points, write Terry Hisey and fellow authors at Deloitte.

When distribution strategies match payer expectations, this system runs smoothly. When strategies and expectations are misaligned, confusion results. The risk of error increases, and patients may experience delays or denial of access to the medications they need.

When Distribution Strategies Don’t Meet Payer Expectations

For payers, including health insurance companies, Medicaid and Medicare, the responsibility of paying for covered patients’ medications comes with a responsibility to assess the value of those payments. What do patients get, and is it worth what it costs?

Consequently, payers are frequently concerned with questions of value, which are linked to patient outcomes, as one study notes. Mere innovation, safety or overall health savings may not be sufficient to satisfy payers’ concern about value if evidence of improved health outcomes is not forthcoming.

For distributors, providing this information can be difficult. Distributors focus on moving pharmaceuticals from manufacturers to where they are needed. Concerns about health outcomes — and the data needed to evaluate them — can seem like they belong with healthcare providers, pharmacists or researchers, and not with distributors. Frustration can mount on both sides.

Meanwhile, manufacturers also express frustrations with distributors. In a survey of pharmaceutical manufacturers, more than one-half of respondents said that they wanted to see better distribution services “across the board,” writes Mike Fieri, founder and CEO at Orsini Specialty Pharmacy. These included better communication, more responsiveness, improved data services, greater flexibility and enhanced reporting.

How to Create Better Alignment

Payers want to see improved treatment outcomes result from the payments they make. Manufacturers want better information flow between themselves and distributors. Pharmacies and specialty organizations want timely, accurate deliveries.

In each of these instances, distributors can align expectations and demonstrate value through improved communication and use of available data.

In an article in Value in Health, Richard J. Willke and fellow researchers recommended three ways to create “win-win” scenarios that align pharmaceutical distribution strategies with payer expectations:

Create a shared understanding of high-value targets — one that also accounts for regulators’ perspectives.
Generate and communicate information efficiently between distributors and payers.
Offer value propositions that speak to payers’ needs.

When medications have been on the market for some time or are commonly prescribed, value-related data is simpler to locate. Distributors can more easily demonstrate how their strategies benefit payers.

Medications for rare diseases, however, pose challenges. Many such pharmaceuticals are relatively new or are prescribed in proportion to the population that has a particular disease — that is to say, they are prescribed rarely. Many rare diseases are treated through off-label applications of medications for other purposes.

In these situations, having more information benefits distributors. It also helps payers better understand distributors’ reasoning and contribution to the value of rare disease medications.

Choosing a single digital platform can streamline this process. Access to platform data can help distributors understand payers’ roles in context. Improved data analysis can lead to insights about payers’ value demands and expectations. Payers and distributors can communicate more effectively with one another and with other participants in the drug distribution process.