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Excerpted from Chapter 1, Section 2: "Structure and Staffing: Mid-size Companies." The full report contains detailed analysis of the structural and strategic characteristics that differentiate mid-size companies' managed markets departments from larger and smaller companies.

Mid-size Companies Have Less Infrastructure and Fewer Layers of Management

Perhaps the principal factor that differentiates mid-size companies from top-tier firms is the size of their departments. Whereas most top-tier companies have 100 or more FTEs in their managed markets departments, mid-size companies tend to have between 5 and 50 or so FTEs. Commercialization spending in these companies often is dwarfed by the likes of Pfizer, GlaxoSmithKline, Sanofi-Aventis, Novartis and Merck, all of which boast sales well over the $10 billion mark. Smaller budgets mean mid-size companies have to trim layers of management and reduce, or even eliminate, the number of FTEs dedicated to managed markets support infrastructure.

Only the largest mid-size companies, generally those with at least $3 or $4 billion in annual sales, have the budget or need for full-time employees in support roles such as government affairs, contracting, rebates, and government systems. For example, Company V, whose organizational structure is discussed in more detail in the case study that follows later in this section, is one of the larger mid-size companies with global sales of around $3 billion. Company V has about 15 account managers, yet only 2 FTEs are dedicated to each of contracting and marketing. Similarly, companies at this level usually do not have the resources to set up dedicated specialty units, such as a Medicare Part D group, for example, as Company U, a top-tier firm, did.

Structurally, mid-size and top-tier companies are similar in that both staff numerous national and regional account managers. Granted, top-tier companies have more resources, so they staff more account managers. However, the fundamental difference between the two groups comes at the management and infrastructure levels. Fewer layers of management at the majority of mid-size companies means only one director- or VP-level heads up the department, and perhaps only a handful of mid-level managers report in to him or her. By contrast, top-tier companies staff a VP at the top, with lower layers of executive directors, directors, and managers completing the structure. Less infrastructure means mid-size companies lack the resources to staff large specialty and support groups in contracting, government affairs, Medicare Part D, and even marketing. At the end of the day, mid-size managed markets departments consist almost entirely of account managers and minimal senior management.

 

Excerpted from Chapter 2, Section 3: "Analysis of Strategic Planning & Activities of Companies Conerning Part D." The full report outlines specifically how companies are adjusting their marketing and sales efforts in response to Medicare Part D.

Planning: Products & Providers

The most organized and prepared industry leaders have a detailed understanding of how Part D will affect their products and overall portfolio. For example, any products heavily used by seniors and dual-eligibles could see potentially positive or negative revenue changes. Brand managers and product teams need to evaluate how Part D will affect dual-eligibles’ products especially. Any products typically associated with Medicaid patients as well as seniors need special attention because dual eligibles were enrolled automatically in the Medicare Part D drug plan at the first of the year. Their participation in Part D replaces the previous arrangement where Medicaid paid for dual eligible beneficiaries’ prescriptions.

Pharmaceutical marketing departments suggest two main activities needed for planning and preparation to work with insurance providers. First, marketing functions need to project how new channels are likely to evolve in light of Part D.

The second goal is to integrate marketing’s Part D channel-planning into overall brand planning. Managed care executives responsible for these channels, such as commercial managed care and Medicaid, need to understand how Part D will affect these sectors. Group leaders admit to focusing on spillover effects of Part D on the broader payer environment.

Managed care executives at Company P said there is a sense that many top companies are waiting to see Part D’s effects before acting. The industry seems to be waiting to determine which coverage plans will claim the majority of the covered lives and which will be key players in the provider market. After the dust settles, then more companies will react by assessing their structures to meet the needs of Part D patient populations and the big players in the market.