Top 5 Guidelines To Federal Market Success in 2020

By Cheryl Nagowski

As commercial payers and pharmacy benefit managers (PBMs) begin to merge and disrupt the balance of power in their favor, pharmaceutical manufacturers are taking a close look at the return on investment of market access activities. The focus of many managed care resources is turning toward traditionally underserved markets, to include the federal segment.

The “federal market” generally refers to the DoD healthcare program managed by the Defense Health Agency (DHA) and the Department of Veterans Affairs (VA) healthcare program managed by the Veterans Health Administration (VHA). These programs have traditionally represented tremendous untapped or undervalued opportunities for manufacturers. Massive resources are invested in pursuing coverage and uptake with regional plans, yet the VA and DoD, each of which offers more patients than any regional plan, are at times regarded as merely a statutory liability.

While complex legal obligations must be balanced, the federal market presents a meaningful business opportunity. When combined, the VA and DoD represent the fourth largest U.S. market, with more than 18.8 million enrolled lives.

To help manufacturers get their arms around this market, we’ve highlighted five critical elements that will impact the next 10 years — and beyond. But first, a brief refresh on VA and DoD systemwide changes in 2020.

DOD AND VA NEW MARKET STRUCTURES

DoD

• The DoD is implementing 21 large markets under the authority of the DHA, a small stand-alone Military Treatment Facility (MTF) market, and two health regions (Indo-Pacific and Europe).
• Regional market leaders will be uniformed personnel responsible for all healthcare delivered within their market, including direct care and purchased care.
• Manufacturers should consider how this new market structure will impact their operations. For instance, it may be advantageous for manufacturers to stop engaging DoD MTFs directly and instead turn outreach to market leaders.
• These newly appointed leaders should be approached strategically, with a purpose beyond providing a briefing on publicly available clinical information.
• There is both official and unofficial protocol when doing business with military members. Commercial account executives should be prepared to be flexible with these differences.

VA

• The VA continues to operationalize the MISSION Act into 2020, with tremendous progress made to date with establishing third-party administrators and retail pharmacy contracts.
• MISSION Act implementation will require IT modernization to ensure all systems support health-record management.
• It remains to be seen what the future of the VA will look like, with many speculating VA care will be structured more like TRICARE.
• Manufacturers should begin rethinking the full scope of the VA opportunity, especially as retail pharmacy access expands and wait times to see both primary care physicians and specialists decrease.
• Although only half of the 20 million eligible veterans are enrolled in VA care, many anticipate VA benefit enrollment will increase due to MISSION Act access-to-care reforms.

GUIDELINES FOR SUCCESS

1. New Engagement Strategies

Due to operating changes within both the VA and DoD formulary management divisions, the importance and perceived value of face-to-face interactions is decreasing. Both health systems are doing more with less. This, combined with the amount of information available through other means, has prompted VA and DoD decision makers to find new ways to cut “extra-curriculars” for their staff while keeping pace with the latest in drug education.

One approach has been the implementation of “academic detailers,” who are responsible for monitoring changes and developments for assigned disease states and communicating this information to pharmacy staff, physicians, and decision makers. Physician access is also decreasing, with many VA facilities allowing only one or two physicians from each specialty to engage with industry.

Manufacturers will benefit from seeking partnerships with VA and DoD stakeholders who align with the health systems’ priorities and objectives. This market makes multiyear strategies publicly available, which currently include better managing mental health, reducing opioid use, value- and outcomes-based contracting arrangements, pathways management, and a variety of other opportunities.

2. Don’t Get Shut Out (And Yes, It Happens)

Those well versed in navigating integrated delivery models often pride themselves on skillfully sidestepping the rules. While sometimes appropriate and effective, it is important to remember that federal facilities are governed by a strict hierarchy. Complicating perceptions of this issue is the fact that many VA specialists are part-time commercial physicians who often embrace the value and expertise provided by ad hoc sales rep engagement. However, they are not the enforcers of policy, regulations, or protocols that govern these systems. One phone call from an observing staff member to a facility pharmacy chief can result in an entire drug company being blocked. Repeat offenses can and have resulted in systemwide debarment for drug manufacturers.

Remember that the VA is contending with an access-to-care crisis in certain disease states. By simply adjusting tactical strategies to ensure they are in line with VA established protocols, manufacturers can ensure a meaningful and sustainable long-term partnership while not disrupting care for our veterans.

3. Innovative Contracting Solutions

There are many ways to get established within the federal community that go beyond product education. Developing innovative contracting structures is one key strategy that is a top priority for both VA and DoD. In fact, Congress wants federal procurement to focus on value-based solutions, hoping to bring the VA and DoD into the 21st century in outcomes-based alternatives.

It’s important to think of federal value-based approaches as more than simply pricing mechanisms. To be effective, the value-based proposition must be established in conjunction with the formulary management team and not simply a one-size-fits-all solution. A well-developed and effective value-based solution can affect the formulary placement tier of the drug. With these arrangements being exempt from best-price impact, combined with VA and DoD having appetites for everything “new and novel,” these markets present an excellent opportunity for innovative partnerships.

4. New-To-Market Ordering Limitations In VA

Although this isn’t a new concept, one of the more important elements for manufacturers to consider is the drug-procurement mechanism in the VA, especially for nonformulary products. Drugs are listed in the McKesson computer by generic name only — no brand-specific listing or differentiation. Therefore, when multiple products are listed in the computer by generic name, the least expensive product will be listed first, and this becomes the one that is ordered by the pharmacy service-procurement staff. While some exceptions may apply, this is the general rule.

For a nonformulary pharmaceutical to be prescribed by a provider in the VA, the drug product line item must first be activated or “turned on” in the VA medical center local drug list. Nonformulary products are always included in the McKesson computer’s list of available products, but until they are activated by Pharmacy Service, they will not appear in the medication order list that is viewed by providers. The Chief of Pharmacy Service (CPS) may direct the Automated Data Processing Coordinator (ADPaC) in Pharmacy Service to activate the drug based on a local pharmacy and therapeutic committee decision or a special patient need that is mutually agreed upon by the CPS and provider.

This scenario represents just one of many other unique considerations specific to federal market uptake. Simply “turning on” the product so that it is available for facility-level ordering, even under a nonformulary exception process, is critical and a common oversight. A VA- and DoD-specific strategic and tactical plan that takes into consideration functional transformations, unofficial rules of engagement, procurement limitations, and a variety of other concerns is key to optimizing a purchasing pathway in federal markets.

5. Rethink How To Properly Leverage Spillover

Manufacturers can expect a high level of spillover under both VA and DoD transformation. These systems seek to improve specialty drug management by narrowing product utilization to one preferred agent where there is therapeutic interchange. This is likely to be achieved with specialty-drug national contracts. The DoD also seeks to effectively establish and manage pathways for medical-benefit drugs. Community physicians participating in VA and TRICARE will be required to abide by these formularies or navigate the VA and DoD’s exception processes.

The VA and DoD healthcare programs are unique and therefore operate by a set of rules that, at times, can impose limitations to access if not carefully navigated. Pharma must remain agile during this time of major transformation, supporting and celebrating improved access to care for the nation’s war fighters and veterans.

CHERYL NAGOWSKI is VP, federal markets, at D2 Consulting.