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The Official News & Technical Journal Of The International Society For Pharmacoeconomics And Outcomes Research
Policy Analysis

Addressing Regional Market Access Hurdles in Decentralized European Countries: An Innovative Segmentation Methodology for Optimal Industry Strategy

Mondher Toumi, Chair Market Access, University of Lyon 1, Lyon, France and Aurélie Millier, Project Manager, Creativ-Ceutical, Paris, France

Decentralization in Health Care–A Trend That Cannot Be Ignored
One of the most prominent trends in the European member state political organization is the empowerment of regions. Although some countries have a long standing history of regional organization (e.g. Italy, Spain) and some remain highly centralized (e.g. France), the trend of shifting power toward regions, including budget accountability, is consistent across Europe. This trend is also observed in health care in which policy making is increasingly being devolved to local health authorities alongside national bodies. Policies directed at pharmaceutical products are part of this process and this has major implications for health care companies. Indeed, beyond national payers, regional payers have a growing responsibility for health care spending. In most countries, the accountability for drug spending remains within the regional authorities while regional authorities rarely tend to directly negotiate prices of therapies. There is more and more incentive to concentrate on cost-containment of the budgets they hold. With health care payers in the developed world required to control their pharmaceutical budgets, in particular in the context of the current economic crisis, policy makers in a decentralized setting are also forced to decide on which therapies are used, and under what conditions.

Overall, decentralization processes seem to imply a new division of responsibilities between central and local governments, whereby central governments set overall objectives in terms of public health targets and corresponding funding, and regional entities are given the responsibility to locally implement these objectives in the way they consider most effective. The rationale behind giving regional authorities more scope in deciding by which means they are to achieve national objectives is that they have the best information at their disposal, such as local resources and health needs on the ground. Moreover, national authorities tend to focus more on long-term planning while shorter term objectives are defined at sub-national levels.

Thus, the typology between traditionally decentralized countries such as Spain, Italy, Sweden or Germany and countries with more centralized health care systems as in France or England tends to be much less clear-cut. In England, while strategic decisions in the National Health System remain in the hands of the powerful National Department of Health, power of execution is assigned to a large number of Primary Care Trusts (PCTs), each responsible for the provision and funding of health care services for populations ranging in size from 90,000 to over 1,259,000. Concretely, this means that PCTs are one of the main bodies with whom health care providers and the pharmaceutical industry have to engage with in order to develop in England. This has famously been the case for expensive life-saving therapies that were included in the local health care basket of some PCTs but excluded in others following market authorization, a phenomenon dubbed “postcode lottery” by critics of these geographic inequalities. While the role of the National Institute for Clinical Excellence (NICE) is to define a national health care basket, there is still scope for PCTs to include innovative therapies beyond the national requirements defined by NICE. Even in France, a country with a very strong political history of centralization, recent reforms have devolved significant budget and decision-making powers to 22 Agences Régionales de Santé.

As their regulatory responsibilities extend, regional health authorities therefore increasingly make use of the various management and policy tools at their disposal. Such policies can be either directed at the industry, the medical community or patients: local market authorizations and prescription guidelines, drug formularies, particular prescribing incentives and volume restrictions, patient deductibles, regulation of relations between doctors and industry representatives.

The increased power of regional bodies means that health care companies should be fully aware of local requirements along with national ones should they wish to remain present in these countries. To some extent, the growth of regional payer importance creates a “double hurdle” for companies, where a favorable national decision must be replicated at a regional level, among payers with different concerns, budgets and levels of sophistication. In a decentralized country, there can be great heterogeneity between regions’ health care budgets, general wealth, public health priorities, demographic and epidemiology characteristics. Moreover, as with countries, regional payers may use different methods to evaluate health technology, with some focusing exclusively on the budget impact of new products, while others are interested in establishing whether or not a new therapy is cost effective for use in their particular region, based on local epidemiology, costs and practices. In Italy for example, 16 of the 21 regions use binding national formularies, while 8 of the regions undertake some sort of local HTA. In other words, as with individual countries, access to regional markets cannot be achieved with “one fits all” approaches and require companies to understand the particular features of regions they wish to access.

But regionalization should also be viewed more positively: rather than being seen as extra hurdles, differing situations and requirements between regions might also present with new opportunities. Given the diversity and impact of regional payers on the use of different therapies, it is obvious that they require strategic attention from a pharmaceutical company. Ideally, companies should adopt a particular made-to-measure market access strategy for each region. Given the high number of regions in most countries and their great diversity, however, companies cannot reasonably rely on such an approach within their limited resources. Indeed, costs of local adaptation can be high and local requirements for data analysis and support can be very specific.

Between the ineffective “one size fits all approach” and the very costly individualized “made to measure” regional market access strategies, a compromise lies in segmentation of regional payers to identify groups that can be addressed with similar strategies. Segmentation is a term derived from marketing that aims at group people or organizations (i.e. health care regions) that are homogeneous in terms of how they respond to a particular marketing mix or in ways that are relevant for marketing planning purposes.

An Innovative Segmentation Methodology Applied to the 152 English Primary Care Trusts
We conducted a study to assess if segmentation of regional payers is an appropriate market access strategy. In order to achieve this, we developed a clustering methodology that would be suitable for the complexities of the regional payer environment. Furthermore, the methodology was validated by being applied to a real company facing regional market access challenges. The analysis was undertaken among the 152 PCTs in England. As budget holders, each individual PCT has freedom in regulating pharmaceutical products. As a result, one can observe significant local barriers to drug usage such as limits to prescribing within specific drug classes, different levels of disease awareness and availability of resources to tackle local epidemiology, as well as differences in PCT management, with a direct impact on drug usage. The high number of PCTs and the heterogeneity among them made the English context an ideal candidate to test the validity of regional payers’ segmentation.

We collaborated with a global pharmaceutical company actively marketing its products in the UK. For one of its products, the company had the intuition that PCT differences were impacting its sales. The company hoped that the segmentation scheme would enable them to identify gaps between segment potential and results and to develop segment-specific actions to optimize market access (formulary inclusion, usage conditions, etc.) and ultimately drive sales of the company’s drug. Moreover, the therapeutic area chosen to test the validity of segmentation, depression, is particularly prone to variability in approaches amongst PCTs.

The first step consisted of extracting a wide range of PCT variables that could affect market access for pharmaceutical products in general and for the targeted product in particular. The data retrieved was rich and taken from several primary sources: the NHS Information Centre and individual PCT websites, Cegedim Dentrite’s OneKey+ database that collects and analyses information from all local NHS organizations, including all information from pharmacy, primary, secondary and tertiary care levels. Ultimately, the 64 variables collected for each PCT can be divided into 5 categories: population profile (age-gender distribution, immigrants, deprivation score), economic and financial information (assess whether the PCT spends beyond its targets), organization information (for example, the number of mental health practitioners, specific incentive schemes on mental issues and prescribing…), prescribing information (index of generic use, black box use, use of innovative medicines…) and medicines management indexes (such as the size of PCT medicine management teams).

Once all the variables were collected, methodological choices had to be made in order to achieve the most accurate clustering results. The variables we had at our disposal were quite exhaustive and provided crucial information on PCTs processes, actual practice, performance and population. While variables were often linked together (correlated), the information carried by the different variables could be correlated, but were never each variable gave was never fully redundant with each other. From a statistical viewpoint, the methodological challenge consisted of taking into account all the information contained in our dataset while producing a limited number of clusters for relevant segmentation purposes. Moreover, an additional technical difficulty lays in the fact that our dataset contained both quantitative and qualitative, ordinal or not, variables. We ran a variety of data mining procedures (principal component analysis on quantitative variables, multiple correspondence analyses on qualitative variables) in order to transform a number of the possible correlated variables into a smaller number of uncorrelated variables. We then performed a clustering method on the merged results (k means model) and a confirmatory analysis using clustering through pretopology technique.

To our knowledge, this methodology has not previously been applied to the pharmaceutical field. It enables the mixing of quantitative and qualitative variables and the analysis accounts for all the available information, whereas other methodologies might have been less integrative. The validity of the findings was supported by using pretopology methodology to confirm the cluster structure.

Using Segmentation to Identify Optimal Strategic Levers for Market Access in Regions
As a result, the methodology produced five groups of homogeneous PCTs (Fig.1). Based on the analysis of each cluster’s characteristics we were able to create profiles of each cluster, explaining the contexts, behaviors, constraints and opportunities present (or that were present). Various attributes differentiate the PCT clusters including their level of recognition and management of depression, their adoption of a new branded product as first line, second line or last resort, their level of concern about a budget goal, the level of usage of expensive recently approved products etc.

More specifically, the cluster analysis was used to highlight the various PCT attitudes toward adoption of a new branded antidepressant, and the level of recognition of depressed patients as well as the yearly number of prescription per depressed patient.

The cluster analysis led to the identification of specific strategies for each cluster based on a combination of two actions: 1) increase brand adoption, and 2) increase disease recognition and prescription, when the level of recognition or treated patients was lower than average. The analysis provided evidence for an optimized and customized market access strategy toward individual PCT. For example, a hierarchy of the clusters that had the highest potential regarding the two strategies separately and combined could be set.

Ultimately, the recommendation of the cluster analysis was to “invest” in cluster 1 for brand adoption and in cluster 4 by negotiating a second-line formulary inclusion. Cluster 3 was identified for investment in disease awareness and education. Cluster 2 was recommended as “maintain the same level of investment” and cluster 5 for “disinvestment”.

Advantages of Regional Payer Segmentation over Other Decision Making Methods
In the current environment of increasing decentralization of national health care systems, companies that wish to develop in the future must be aware of the new market access hurdles sub-national entities might represent and consequently optimally invest in resources to overcome them. But the heterogeneity in policies and requirements amongst decentralized health care decision-making bodies represent a challenge for a particular company with limited resources: neither “one size fits all” nor individual “made to measure” approaches to sub-national market access appear to be realistic and cost-effective options. Therefore, we explored a novel segmentation methodology to group together decentralized entities that can be addressed with similar market access strategies.

Interestingly, clustering can be used purely to reallocate resources within a fixed budget from regions with little potential to regions with unexploited potential. Moreover, while our analysis focused on regions within a single European country, cluster analysis can also be performed across multiple countries, with common regional market access strategies found at the European level. For example, an autonomous region in Spain could be found to benefit from a strategy similar to that directed to a region in Italy or Sweden.

The proposed segmentation methodology for optimal regional market access has many advantages over expertise-based approaches: it makes objective use of market data to overcome biases based on personal opinion, does not require company expertise, and can therefore be used by companies entering a new geographic or therapeutic market and crucially, allows for rational decision making.

Today the companies’ representatives, through their intuitive assessment of local environment are shaping the local strategy. The development of such methodology might be considered the solution and therefore lead to ignoring the insight of the company representative at the local level. The other risk would be driven by historical information collected for the purpose of the analysis in a fast-changing environment where practices and regulations change quickly and could easily make some of the variables used for the clustering obsolete. GP Consortia is a typical example of this, making the current analysis no longer relevant.

Therefore it is important that this tool remains a ‘tool’ and does not replace company experience and expertise and instead contributes to decision making. The value of this exercise is to show that clustering is feasible and could help support decision making in a fragmented environment.

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