Manufacturers can bring truly innovative drugs and medtech to market. But to health systems, it’s not just what manufacturers do that matters — how they do it matters too. Inextricably linked to the products they make, manufacturers bring prices, contracts, information, and value-added programs to market. A recent survey sheds light on how manufacturers can do what they do better.
Price fairly
A lot has been said about the high cost of drugs and medtech. Health system pharmacy directors echo this concern about spend and trend. Pricing products fairly is viewed as one of the most important attributes of a good business partner, but manufacturers receive low ratings on this behavior. Across 28 tested attributes, a gap analysis suggests that manufacturers fall short in this area more than any other.
Lower costs re-emerge as a leading want when pharmacy directors are asked open-ended questions about how manufacturers’ programs and contracts can be improved. In addition, many want to shift risk to manufacturers through value-based contracts. While high prices may maximize a manufacturer’s profits in the short term, there may be long-term costs when health systems and payers prefer alternative products down the road.
Be transparent
The second largest gap in manufacturer performance relates to a lack of transparency. Outcomes, costs, rebates, and processes may lack transparency. And health systems may be reluctant to agree to programs and contracts when the manufacturers’ goals and objectives are murky. Health systems and payers crave bias-free information and reject or discount information that’s been tainted. As one pharmacy director put it, “Give it to us straight.” Another says, “Show all relevant data, and don’t find loopholes to sugarcoat results.”
Suppressing, distorting, or spinning information can call honesty into question and erode trust, slowing or blocking efforts to implement new programs or execute new contracts with health systems and payers. Trust seems to be more easily lost than grown.
Keep it simple
While the gap analysis helps to identify other opportunities for manufacturers to improve, an unanticipated deficit emerging from responses to open-ended questions relates to simplicity. Simplicity comes in many forms — clear and concise communications, user-friendly processes, less-complicated contracts with fewer terms and conditions. That a health system would want simpler programs and contracts is quite rational, as complexity consumes time and resources. Faced with competing priorities and multiple options, health systems and payers will likely seek paths of least resistance.
So what’s a manufacturer to do?
Manufacturers that want to be viewed as good business partners and more successfully engage health systems and payers should price fairly, be transparent, and keep it simple. While this seems like a straightforward recipe for success, some manufacturers have difficulty delivering what their partners want, failing to recognize that some customer wants go beyond the product itself.
Survey results indicate which manufacturers are good business partners and which are falling short. Benchmarking is important, and manufacturers falling short of their partners’ expectations should mimic the leaders and adopt their best practices. Doing so will likely maximize returns on investments over the long term. Those in the middle of the pack can muddle forward, but in a dynamic market, being average can give manufacturers a false sense of security.
From geometry, we know that three points make a plane, and that’s why a three-legged stool is steady. If a manufacturer brings an innovative product to market and faithfully follows these three points, then health systems and payers alike would likely prefer that product. Perhaps more importantly, doing so would build a solid foundation for long-term relationships.
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