A Changing Landscape

Donna Kerney Correia, PhD Healthcare Industry

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It is cliché to say that the only constant is change. It is also cliché to say that the more things change the more they stay the same. Yet that is exactly how the healthcare, and the pharmaceutical space specifically, feels these days. We seem to move from companies merging to spinning off then back to merging. The last few years has seen a steady wave of this activity in varying forms with a range of healthcare companies.

Mergers and Acquisitions

Almost every day, the news includes some mention of pharmaceutical companies potentially buying one another – like Takeda courting Shire – or hospitals and health systems consolidating – like Care New England (RI) and Partners HealthCare or PBMs and insurers buying one another, like CVS buying Aetna, in what many refer to as “non-traditional partnerships”. And so many others too numerous to mention. Sometimes, just as quickly as the news breaks, there is a second story suggesting the deal is dead. And on it goes.

These deals are often touted to be in the name of more cost savings, better patient outcomes or increased access to services for communities. And in many instances those positive impacts may be realized. But as more and more organizations form partnerships through horizontal and vertical integration, there will be fewer players for manufacturers and their representatives to work with.

Consolidation is not new in healthcare, but the trend toward these “non-traditional partnerships” seems to be increasing.

Fewer Players Means Fewer Options

Fewer players means fewer options. Instead of having to work, for example, to secure product access with five PBMs, now it may be three. The ability or willingness to potentially sacrifice some level of coverage at one major health plan because there are so many others to talk to may be gone. With fewer players, each one would carry more weight. It would seem they have all the leverage and they are all important.

As consolidation continues, it becomes ever more important for manufacturers to stay in contact with payers. It becomes crucial to have conversations about how payers are looking at or managing a given category. “Non-traditional” contracting – like value-based or other risk-sharing arrangements – may need to be considered. With fewer players available to spread your risk, or negotiate product reimbursement, each one will need to be approached with a strategy that works for them and you. It also means making sure your expectations for launch or continued coverage are realistic in this environment.

There are definitely things that are changing in the broadly defined “healthcare space”. We all can get lost in the chaos of the rapid fire news cycle about M&A activity. But what remains as a goal is getting the right patient access to the right medication at the right time. Sometimes it’s just good to be reminded.

Viking Healthcare Solutions has established itself as the premier provider of corporate account services and strategic planning support for the pharmaceutical and biotech industries. VHS Insights, our research division, specializing in payer profiling, market research and analytics, can help you find answers to inform your payer strategy. We support traditional and rare/specialty products to create, maintain, defend, and protect access to your product throughout its lifecycle. Bank on our experience to help you achieve successful product commercialization. Contact us at www.vikinghcs.com/connect.

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